SEC Registration Nos.
2-69565 and 811-3101
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 45 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 45 XX
Calvert Tax-Free Reserves
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
__ Immediately upon filing __ on April 30, 1998
pursuant to paragraph (b) pursuant to paragraph (b)
__ 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
<PAGE>
Calvert Tax-Free Reserves
Form N-1A Cross Reference Sheet
Item number Prospectus Caption
1. Cover Page
2. Fund Expenses
3. Financial Highlights
Yield or Total Return
4. Investment Objective and Policies
Management of the Fund
5. Management of the Fund
6. Alternative Sales Options
Management of the Fund
Dividends and Taxes
7. How to Buy Shares
Management of the Fund
Net Asset Value
Reduced Sales Charge
When Your Account Will Be Credited
Exchanges
8. Alternative Sales Options
How to Sell Your Shares
9. *
Statement of Additional Information Caption
10. Cover Page
11. Table of Contents
12. General Information
13. Investment Objective
Investment Policies
Investment Restrictions
Portfolio Transactions
14. Trustees and Officers
15. Trustees and Officers
16. Investment Advisor
Administrative Services
Independent Accountants and Custodians
Method of Distribution
17. Portfolio Transactions
18. General Information
19. Purchases and Redemptions of Shares
Valuation of Shares
20. Tax Matters
21. Administrative Services
22. Calculation of Yield
Calculation of Yield and Total Return
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
PROSPECTUS-April 30, 1998
CALVERT TAX-FREE RESERVES
VERMONT MUNICIPAL PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
Investment Objective
Calvert Tax-Free Reserves Vermont Municipal Portfolio (the "Portfolio") seeks
to earn the highest level of interest income exempt from federal and Vermont
state income taxes as is consistent with prudent investment management,
preservation of capital, and its stated quality and maturity characteristics.
Calvert Tax-Free Reserves (the "Fund") is an open-end investment company that
consists of several portfolios, each of which has distinct investment
objectives and programs. The Vermont Municipal Portfolio is nondiversified,
and invests in investment grade municipal obligations with durations generally
averaging between four and nine years, though the Portfolio's holdings may at
any time have longer or shorter durations. There can be, of course, no
assurance that the Portfolio will be successful in meeting its investment
objective.
To Open An Account
The Portfolio offers three classes of shares, (i) Class A shares, with a sales
charge imposed at the time you purchase the shares ("front-end sales charge"),
(ii) Class B shares, which impose no front-end sales charge, but will impose a
deferred sales charge at the time of redemption, depending on how long you
have owned the shares ("contingent deferred sales charge, " or "CDSC"), and
(iii) Class C shares which impose no front-end sales charge but will impose a
CDSC on shares purchased after May 31, 1998 if sold within one year. Class C
shares are not available through all brokers. Class B and C shares have a
higher level of expenses than Class A shares, including Rule 12b-1 fees.
These alternatives permit you to choose the method of purchasing shares that
is most beneficial to you, depending on the amount of the purchase, the length
of time you expect to hold the shares, and other circumstances. See
"Alternative Sales Options" for further details. To open an account, call
your broker, or complete and return the enclosed Account Application. Minimum
initial investment is $2,000.
About This Prospectus
Please read this Prospectus before investing. It is designed to provide you
with information you ought to know before investing and to help you decide if
the Portfolio's goals match your own. Keep this document for future reference.
A Statement of Additional Information (dated April 30, 1998) for the Portfolio
has been filed with the Securities and Exchange Commission and is incorporated
by reference. This free Statement is available upon request from the Fund:
800.368.2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE
FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
FUND EXPENSES
A. Shareholder Transaction Costs
Maximum Sales Charge on Purchases Class A Class B Class C
(as a percentage of offering price) 3.75% None None
Maximum Contingent Deferred Sales Charge None 4.00%* 1.00**
(as a percentage of purchase price or
redemption proceeds, as applicable)
B. Annual Fund Operating Expenses - Fiscal year 1997
(as a percentage of average net assets)
Management Fees 0.61% 0.61% 0.61%
Rule 12b-1 Service and Distribution Fees None 1.00% 1.00%
Other Expenses 0.15% 1.11% 0.86%
Total Fund Operating Expenses1 0.76% 2.72% 2.47%
* A contingent deferred sales charge is imposed on the proceeds of Class B
shares redeemed within 4 years, subject to certain exceptions. That charge is
imposed as a percentage of net asset value at the time of purchase or
redemption, whichever is less, and declines from 4% in the first year that
shares are held, to 3% in the second, 2% in the third year, and 1% in the
fourth year. There is no charge on redemptions of Class B shares held for
more than four years. See "Calculation of Contingent Deferred Sales Charge"
below.
** A contingent deferred sales charge is imposed on the proceeds of Class C
shares redeemed within one year. That charge is imposed as a percentage of
net asset value at the time of purchase or redemption whichever is less. See
"Calculation of Contingent Deferred Sales Charge."
C. Example:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return; (2) redemption at the end of each period; and (3) for
Class A shares, payment of maximum initial sales charge at time of
purchase, and (4) payment of maximum applicable contingent deferred sales
charge for Class B and C.
1 Year 3 Years 5 Years 10 Years
Class A $45 $61 $78 $128
Class B
Assuming a complete $68 $104 $144 $213
redemption at end of period
Assuming no redemption $28 $84 $144 $213
Class C
Assuming a complete $35 $77 $132 $281
redemption at end of period
Assuming no redemption $25 $77 $132 $281
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return may be
higher or lower than those shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the Portfolio
may bear directly (shareholder transaction costs) or indirectly (annual fund
operating expenses).
1 Net Fund Operating Expenses after reduction for fees paid indirectly were
0.73% (Class A).
Shareholder Transaction Costs
are charges you pay when you buy or sell shares of the Portfolio. See "Reduced
Sales Charges" at Exhibit A to see if you qualify for possible reductions in
the sales charge. If you request a wire redemption of less than $1,000, you
will be charged a $5 wire fee.
Annual Fund Operating Expenses
are based on the Portfolio's historical expenses, except Other Expenses for
Class B and C which are estimates. Management Fees are paid by the Fund to
Calvert Asset Management Company, Inc. ("Investment Advisor") for managing the
Portfolio's investments and business affairs, and include an administrative
service fee paid to Calvert Administrative Services Company, Inc. The
Portfolio incurs Other Expenses for maintaining shareholder records,
furnishing shareholder statements and reports, and other services. Management
Fees and Other Expenses have already been reflected in the Portfolio's share
price and are not charged directly to individual shareholder accounts.
The Portfolio's Rule 12b-1 fees include an asset-based sales charge. Thus, it
is possible that long-term shareholders in the Portfolio may pay more in total
sales charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities Dealers,
Inc. In addition to the compensation itemized above (sales charge and Rule
12b-1 service and distribution fees), certain broker/dealers and/or their
salespersons may receive certain compensation for the sale and distribution of
the securities or for services to the Fund. See the Statement of Additional
Information, "Method of Distribution."
FINANCIAL HIGHLIGHTS
The following table provides information about the Portfolio's financial
history. It expresses the information in terms of a single Class A share
outstanding for the Portfolio throughout each period. The table has been
audited by those independent accountants whose report is included in the
Calvert Tax-Free Reserves Annual Report to Shareholders of the Fund for the
periods presented. The table should be read in conjunction with the financial
statements and their related notes. The current Annual Report is incorporated
by reference into the Statement of Additional Information.
Year Ended December 31,
Vermont Municipal 1997 1996 1995
Net asset value, beginning $16.33 $16.62 $15.34
Income from investment operations
Net investment income .82 .88 .87
Net realized and unrealized gain (loss)
on investments .26 (.25) 1.35
Total from investment operations 1.08 .63 2.22
Distributions from
Net investment income (.82) (.85) (.85)
Net realized gains (.14) (.07) (.09)
Total distributions (.96) (.92) (.94)
Total increase (decrease) in net asset value .12
(.29) 1.28
Net asset value, ending $16.45 $16.33 $16.62
Total return2 6.90% 3.98% 14.86%
Ratio to average net assets
Net investment income 5.11% 5.27% 5.35%
Total expenses3 .76% .77% .76%
Net expenses .73% .73% .75%
Expenses reimbursed - - -
Portfolio turnover 14% 24% 12%
Net assets, ending (in thousands) $50,194 $49,774 $60,203
Number of shares outstanding
ending (in thousands) 3,052 3,048 3,621
From Inception
(Apr. 1,1991)
Year Ended December 31, to Dec. 31,
1994 1993 199 1991
Net asset value, beginning $16.66 $15.83 $15.5 $15.00
Income from investment operations
Net investment income .87 .86 .84 .68
Net realized and unrealized gain
(loss)on investments (1.35) .82 .31 .58
Total from investment operations (.48) 1.68 1.15 1.26
Distributions from
Net investment income (.84) (.85) (.84) (.66)
Net realized gains - - (.06) (.02)
Total distributions (.84) (.85) (.90) (.68)
Total increase (decrease) in net
asset value (1.32) .83 .25 .58
Net asset value, ending $15.34 $16.66 $15.83 $15.58
Total return2 (2.88%) 10.84% 4.99 11.43% (a)
Ratio to average net assets
Net investment income 5.47% 5.25% 5.41% 5.97%(a)
Total expenses3 - - - -
Net expenses .73% .72% .62% .28% (a)
Expenses reimbursed - - - .06% (a)
Portfolio turnover 11% 5% 11% 8%
Net assets, ending (in thousands) $64,215 $67,634 $53,179 $38,828
Number of shares outstanding
ending (in thousands) 4,185 4,060 3,359 2,492
(a) Annualized
2 Total return does not reflect deduction of front-end sales charge.
3 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.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective
The Portfolio seeks to earn the highest level of interest income exempt from
Vermont and federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality characteristics of the
Portfolio. The Portfolio invests primarily in tax-exempt investment-grade
municipal obligations of the State of Vermont and its political subdivisions
("Vermont Municipal Obligations"). The Portfolio has no duration restrictions,
but the average portfolio duration is expected to be between four and nine
years, although it may vary significantly.
Under normal market conditions, the Portfolio attempts to invest at least 65%
of the value of its assets in Vermont Municipal Obligations. The Portfolio
will also attempt to invest the remaining 35% of its total assets in these
obligations, but may invest it in municipal obligations of other states,
territories, and possessions of the United States, the District of Columbia,
and their respective authorities, agencies, instrumentalities, and political
subdivisions. Dividends you receive from the Portfolio that are derived from
interest on tax-exempt obligations of other governmental issuers will be
exempt from federal tax, but may be subject to Vermont state income taxes.
Nondiversified
There may be risks associated with the Portfolio being nondiversified.
Specifically, since a relatively high percentage of the assets of the
Portfolio may be invested in the obligations of a limited number of issuers, the
value of the shares of the Portfolio may be more susceptible to any single
economic, political or regulatory event than the shares of a diversified fund.
Municipal Obligations
Municipal obligations in which the Portfolio may invest include, but are not
limited to general obligation bonds and notes of state and local issuers,
revenue bonds of various transportation, housing, utilities (e.g. water and
sewer), hospital and other state and local government authorities, tax and
revenue anticipation notes and bond anticipation notes, municipal leases, and
certificates of participation therein, and private activity bonds. See further
description below and the Statement of Additional Information.
Credit Quality
The credit quality of municipal obligations is determined by reference to a
commercial credit rating service, such as Moody's Investors Service, Inc.
or Standard & Poor's Corporation. In the case of any instrument that is not
rated, credit quality is determined by the Advisor under the supervision of the
Board of Trustees. Investment grade, as determined by a NRSRO, currently defined
as the top four rating categories, i.e., AAA, AA, A and BBB. Though still
investment grade, securities rated BBB/Baa possess certain speculative elements
and are generally more susceptible to changing market conditions. There is no
limitation on the percentage of the Portfolio's assets that may be invested in
unrated obligations. Such obligations may be less liquid than rated obligations
of comparable quality. Please refer to the Appendix in the Statement of
Additional Information for a description of the ratings used by these services.
Floating and Variable Rate Obligations
The Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield that is adjusted periodically based on changes in
the level of prevailing interest rates. Floating rate obligations have an
interest rate fixed to a known lending rate, such as the prime rate, and are
automatically adjusted when the known rate changes. Variable rate obligations
lessen the capital fluctuations usually inherent in fixed income investments,
which diminishes the risk of capital depreciation of investment securities in
the Portfolio and Portfolio shares. However, should interest rates decline, the
yield of the Portfolio will decline and the Portfolio and its shareholders will
forego the opportunity for capital appreciation of its portfolio investments and
of their shares.
Demand Notes
The Portfolio may invest in floating rate and variable rate demand notes.
Demand notes provide that the holder may demand payment of the note at its
par value plus accrued interest by giving notice to the issuer. To ensure the
ability of the issuer to make payment on demand, the note may be supported by an
unconditional bank letter of credit.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is, if
the market interest rates rise, the current principal value of a bond will
decline. In general, the longer the maturity of the bond, the greater the
decline in value. Because the Portfolio's average duration is between 4 and 9
years, it would be expected to be more affected by a rise in market interest
rates than a short-term money market fund, but less adversely affected by a rise
in market interest rates than a fund which invests in longer-term bonds.
Municipal Leases
The Portfolio may invest in municipal leases. A municipal lease is an
obligation of a government or governmental authority, not subject to voter
approval, used to finance capital projects or equipment acquisitions and payable
through periodic rental payments. There are additional risks inherent in
investing in this type of municipal security. Unlike municipal notes and bonds,
where a municipality is obligated by law to make interest and principal payments
when due, funding for lease payments needs to be appropriated each fiscal year
in the budget. It is possible that a municipality will not appropriate funds for
lease payments. The Advisor considers risk of cancellation in its investment
analysis. The Portfolio may purchase unrated municipal leases. The Fund's
Advisor, under supervision of the Board of Trustees/Directors, is responsible
for determining the credit quality of such leases on an ongoing basis. The Fund
will invest only in municipal leases that meet its credit quality restrictions.
Certain municipal leases may be considered illiquid and subject to the Fund's
limit on illiquid investments. The Board of Trustees/Directors has established
guidelines for determining whether a lease is illiquid. See the Statement of
Additional Information for the factors considered by the Board in determining
liquidity and valuation of leases.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis;
that is, delivery and payment for the securities normally take place 15 to 45
days after the date of the transaction. The payment obligation and the yield
that will be received on the securities are each fixed at the time the buyer
enters into the commitment. The Portfolio will only make commitments to purchase
such securities with the intention of actually acquiring the securities, but the
Portfolio may sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy.
Temporary Investments
From time to time for liquidity purposes or pending the investment of the
proceeds of the sale of Portfolio shares, the Portfolio may invest in and derive
up to 20% of its income from taxable short-term obligations of the US
Government, its agencies and instrumentalities. Interest earned from such
taxable investments will be taxable as ordinary income unless you are otherwise
exempt from taxation.
To minimize taxable income, the Portfolio may also hold cash which is not
earning income. It is a fundamental policy of the Portfolio that during normal
market conditions the Portfolio's assets will be invested so that at least 80%
of the Portfolio's annual income will be federally tax-exempt.
Financial Futures, Options, and Other Investment Techniques The Portfolio
can use various techniques to increase or decrease its exposure to changing
security prices, interest rates, or other factors that affect security values.
These techniques may involve derivative transactions such as buying and selling
options and futures contracts and leveraged notes, entering into swap
agreements, and purchasing indexed securities. The Portfolio can use these
practices either as substitution or as protection against an adverse move in the
Portfolio to adjust the risk and return characteristics of the Portfolio. If the
Advisor judges market conditions incorrectly or employs a strategy that does not
correlate well with the Portfolio's investments, or if the counterparty to the
transaction does not perform as promised, these techniques could result in a
loss. These techniques may increase the volatility of a fund and may involve a
small investment of cash relative to the magnitude of the risk assumed. Any
instruments determined to be illiquid are subject to the Portfolio's 10%
restriction on illiquid securities. See below and the Statement of Additional
Information for more details about these strategies.
The Portfolio may buy certain financial futures contracts to hedge its
investments in municipal bonds.
Under certain circumstances, the Portfolio may purchase and sell certain
financial futures contracts and certain options on futures contracts. A
financial futures contract obligates the seller of a contract to deliver - and
the purchaser of a contract to take delivery of - the type of financial
instrument covered by the contract. In the case of index-based futures
contracts, the obligation is in the form of a cash settlement at a specific time
for a specific price.
The Portfolio may only engage in futures transactions for the purpose of
hedging its investments in municipal bonds against declines in value and to
hedge against increases in the cost of securities the Portfolio intends to
purchase. A sale of financial futures contracts may provide a hedge against a
decline in the value of portfolio securities because such depreciation may be
offset, in whole or in part, by an increase in the value of the position in
the futures contracts. Similarly, a purchase of financial futures contracts
may provide a hedge against an increase in the cost of securities intended to
be purchased, because such appreciation may be offset, in whole or in part, by
an increase in the value of the position in the futures contracts.
Types of futures contracts purchased The Portfolio intends to deal in
futures contracts based upon The Bond Buyer Municipal Bond Index, a
price-weighted measure of the market value of 40 large, recently-issued
tax-exempt bonds, and to engage in transactions in exchange-listed futures
contracts on US Treasury securities. The Portfolio may also engage in
transactions in other futures contracts, such as futures contracts on other
municipal bond indexes that become available, if the investment advisor believes
such contracts would be appropriate for hedging the Portfolio's investments in
municipal bonds.
When the Portfolio purchases a futures contract, it will maintain an amount of
cash, cash equivalents (for example, commercial paper and daily tender
adjustable notes) or short-term high grade fixed income securities in a
segregated account with the Portfolio's custodian, so that the segregated
amount plus the amount of initial and variation margin held in the account of
its broker equals the market value of the futures contract, thereby ensuring
that the use of such futures contract is unleveraged. It is not anticipated
that transactions in futures will have the effect of increasing portfolio
turnover.
Closing out a futures position - Risks The Portfolio may close out its
position in a futures contract or an option on a futures contract only by
entering into an offsetting transaction on the exchange on which the position
was established and only if there is a liquid secondary market for the futures
contract. If it is not possible to close a futures position entered into by the
Portfolio, the Portfolio could be required to make continuing daily cash
payments of variation margin in the event of adverse price movements. In such
situations, if the Portfolio has insufficient cash, it may have to sell
portfolio securities to meet daily variation margin requirements at a time when
it would be disadvantageous to do so. The inability to close futures or options
positions could have an adverse effect on the Portfolio's ability to hedge
effectively. There is also risk of loss by the Portfolio of margin deposits in
the event of bankruptcy of a broker with whom the Portfolio has an open position
in a futures contract. The success of a hedging strategy depends on the
Advisor's ability to predict the direction of interest rates and other economic
factors. The correlation is imperfect between movements in the prices of futures
or options contracts, and the movements of prices of the securities which are
subject to the hedge. If the Portfolio used a futures or options contract to
hedge against a decline in the market, and the market later advances (or
vice-versa), the Portfolio may suffer a greater loss than if it had not hedged.
Other Policies The Portfolio may temporarily borrow money from banks to
meet redemption requests, but such borrowing may not exceed 10% of the value of
the Portfolio's total assets. The Portfolio has adopted certain fundamental
investment restrictions which are discussed in detail in the Statement of
Additional Information.
YIELD AND TOTAL RETURN
Yield refers to income generated by an investment over a period of time.
Yield measures the current investment performance of each class; that is, the
rate of income on the Portfolio's investments divided by the share price. Yield
is computed by annualizing the result of dividing the net investment income per
share over a 30 day period by the maximum offering price per share on the last
day of that period. Yields are calculated according to accounting methods that
are standardized for all stock and bond funds.
Taxable Equivalent Yield
The Portfolio may advertise its "taxable equivalent yield" for each class.
The taxable equivalent yield is the yield that you would be required to obtain
from taxable investments to equal the Portfolio's yield, all or a portion of
which may be exempt from federal income taxes. The taxable equivalent yield is
computed by taking the portion of the Portfolio's yield exempt from regular
federal income tax and multiplying the exempt yield by a factor based on a
stated income tax rate, then adding the portion of the yield that is not exempt
from regular federal income tax. The factor used to calculate the taxable
equivalent yield is the reciprocal of the difference between one and the
applicable income tax rate, which will be stated in the advertisement.
The Portfolio may advertise its total return for each class. Total return
is based on historical results and is not intended to indicate future
performance. Total return includes not only the effect of income dividends but
also any change in net asset value, or principal amount, during the stated
period. The total return of a class shows its overall change in value, including
changes in share price and assuming all of the dividends and capital gain
distributions are reinvested. A cumulative total return reflects the performance
over a stated period of time. An average annual total return reflects the
hypothetical annual compounded return that would have produced the same
cumulative total return if the performance had been constant over the entire
period. Because average annual returns tend to smooth out variations in the
returns, you should recognize that they are not the same as actual year-by-year
results. Both types of total return usually will include the effect of paying
the sales charge. Of course, total returns will be higher if sales charges are
not taken into account. Quotations of "return without maximum load" do not
reflect deduction of the sales charge. You should consider return without
maximum load figures only if you qualify for a reduced sales charge, or for
purposes of comparison with comparable figures which also do not reflect sales
charges, such as mutual fund averages compiled by Lipper Analytical Services,
Inc. Further information about the Portfolio's performance is contained in its
Annual Report to Shareholders, which may be obtained without charge.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the Portfolio's activities and reviews its
contracts with companies that provide it with services. The Portfolio is a
series of Calvert Tax-Free Reserves (the "Fund"), an open-end management
investment company, organized as a Massachusetts business trust on October 20,
1980. The other series of the Fund include the Money Market Portfolio,
Limited-Term Portfolio, Long-Term Portfolio, and the California Money Market
Portfolio.
The Fund is not required to hold annual shareholder meetings for the
Portfolio, but special meetings may be called for such purposes as electing
Trustees, changing fundamental policies, and approving management contracts.
As a shareholder, you receive one vote for the share of a Portfolio you own.
For matters affecting Portfolios or classes differently, only shares of that
Portfolio or class are entitled to vote.
Portfolio Managers
Investment selections for the Portfolio are made by David R. Rochat and
Reno J. Martini. Mr.Rochat is a Director and Senior Vice President of Calvert
Asset Management Company, Inc. He is a Trustee/Director and Senior Vice
President of First Variable Rate Fund, Calvert Tax-Free Reserves, Money
Management Plus, The Calvert Fund, and Calvert Municipal Fund, Inc., and is
primarily responsible for setting the investment strategy of the trading
department, utilizing over 20 years' experience in the securities and investment
community. Mr. Rochat joined Calvert Group in 1981 after establishing and
managing the municipal bond department at Donaldson, Lufkin, & Jenrette
Securities Corporation. Mr. Martini, a Director of Calvert Group, Ltd., and
Senior Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc., oversees management of all Calvert Group portfolios. He has
extensive experience in evaluating and purchasing municipal securities.
Calvert Group is one of the largest investment management firms in the
Washington, DC area.
Calvert Group, Ltd., parent of the Fund's investment advisor, transfer
agent, and distributor, is a subsidiary of Acacia Mutual Life Insurance Company
of Washington, DC Calvert Group is one of the largest investment management
firms in the Washington, DC area. Calvert Group, Ltd. and its subsidiaries are
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As of
December 31, 1997, Calvert Group managed and administered assets in excess of
$5.0 billion and more than 200,000 shareholder and depositor accounts.
Calvert Asset Management serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. (the "Advisor") is the Fund's
investment advisor. The Advisor provides the Fund with investment supervision
and management, administrative services and office space; furnishes executive
and other personnel to the Fund; and pays the salaries and fees of all Trustees
who are affiliated persons of the Advisor. The Advisor may also assume and pay
certain advertising and promotional expenses of the Fund and reserves the right
to compensate broker/dealers in return for their promotional or administrative
services. For its services during fiscal year 1997, the Advisor received a fee
equal to 0.60% of the Portfolio's average net assets.
Calvert Administrative Services Company provides administrative services for
the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, has been retained by Calvert Tax-Free Reserves to provide certain
administrative services necessary to the conduct of its affairs, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For providing such
services, prior to August 1, 1997, CASC received a total fee from Calvert
Tax-Free Reserves of $200,000 per year, allocated among the Portfolios based on
assets. Effective August 1, 1997, the fee structure changed. Exclusive of the
CTFR Money Market Portfolio, the Fund pays an annual fee of $80,000, allocated
among the remaining portfolios based on assets.
Calvert Distributors, Inc. serves as underwriter to market the Portfolio's
shares. Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter
and distributor. Under the terms of its underwriting agreement with the Fund,
CDI markets and distributes the Fund's shares and is responsible for payment of
commissions and service fees to broker/dealers, banks, and financial services
firms, preparation of advertising and sales literature, and printing and mailing
of prospectuses to prospective investors.
The transfer agent keeps your account records. Calvert Shareholder
Services, Inc. is the Fund's dividend disbursing and shareholder servicing
agent. National Financial Data Services, Inc. ("NFDS"), 1004 Baltimore, Kansas
City, Missouri 64105, is the transfer and dividend disbursing agent for the
Fund.
SHAREHOLDER GUIDE
Opening An Account You can buy shares of the Portfolio in several ways. An
account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the method
you choose for making your initial investment. Additional forms may be required
from corporations, associations, and certain fiduciaries. If you have any
questions or need extra applications, call your broker, or Calvert Group at
800.368.2748.
Alternative Sales Options
The Portfolio offers three classes of shares:
Class A Shares - Front-End Load Option
Class A shares are sold with a front-end sales charge at the time of
purchase. Class A shares are not subject to a sales charge when they are
redeemed.
Class B Shares - Back-End Load Option
Class B shares are sold without a sales charge at the time of purchase, but
are subject to a deferred sales charge if they are redeemed within four
calendar years after purchase. Class B shares will automatically convert to
Class A shares at the end of six calendar years after purchase.
Class C shares - Level Load Option
Class C shares are sold without a front-end sales charge at the time of
purchase. They are subject to a deferred sales charge if they are redeemed
within one year after purchase.
Considerations for deciding which class of shares to buy.
Income distributions for Class A shares will probably be higher than those for
Class B and C shares, because Class B and C have higher distribution expenses,
(See below). You should consider Class A shares if you qualify for a reduced
sales charge under Class A or if you plan to hold the shares for several
years. The Portfolio will not normally accept any purchase of Class B shares
in the amount of $250,000 or more. Class C shares are not available for
investments of $1 million or more. Brokers or others may receive different
levels of compensation depending on which class of shares they sell.
Shares are offered at net asset value plus a front-end sales charge as follows:
Amount of As a % of As a % of Allowed
to Dealers
Investment offering net amount as a %
of offering
price invested price
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less than $100,000 3.00% 3.09% 2.25%
$100,000 but less than $250,000 2.25% 2.30% 1.75%
$250,000 but less than $500,000 1.75% 1.78% 1.25%
$500,000 but less than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.00%*
*CDI may pay the dealer a finder's fee of up to 0.10% of the amount of
purchase on a purchase of over $1 million. CDI reserves the right to recoup
any portion of the amount paid to the dealer if the investor redeems some or
all of the shares from the Funds within twelve months of the time of purchase.
Sales charges may be reduced or eliminated in certain cases. See Exhibit A to
this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your
broker/dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance, your broker/dealer, or other
financial service firm through which your account is held, currently will be
paid periodic service fees at an annual rate of up to 0.15% of the average
daily net asset value of the Class A shares held in accounts maintained by
that firm.
Class B Shares
Class B shares are offered at net asset value, without a front-end sales
charge. With certain exceptions, the Portfolio will impose a deferred sales
charge at the time of redemption as follows:
Contingent Deferred Sales
Charge As A Percentage Of
Redemption During Net Asset Value At Redemption
1st Year Since Purchase 4%
2nd Year Since Purchase 3%
3rd Year Since Purchase 2%
4th Year Since Purchase 1%
5th Year Since Purchase and thereafter None
If imposed, the deferred sales charge is deducted form the redemption proceeds
otherwise payable to you. The deferred sales charge is retained by CDI. See
"Calculation of Contingent Deferred Sales charges and Waiver of Sales Charges"
below.
Class B shares that have been outstanding for six calendar years will
automatically convert to Class A shares, which are subject to a lower
Distribution Plan charge, without imposition of a front-end sales charge or
exchange fee. The Class B shares so converted will no longer be subject to
the higher expenses borne by Class B shares. Because the net asset value per
share of the Class A shares may be higher or lower than that of the Class B
shares at the time of conversion, although the dollar value will be the same,
a shareholder may receive more or less Class A shares than the number of Class
B shares converted. Under current law, it is the Advisor's opinion that such
a conversion will not constitute a taxable event under federal income tax
law. In the event that this ceases to be the case, the Board of Trustees will
consider what action, if any, is appropriate and in the best interests of the
Class B shareholders.
Class B Distribution Plan
The Portfolio has adopted a Distribution Plan with respect to its Class B
shares (the "Class B Distribution Plan"), which provides for payments to the
underwriter at an annual rate of up to 1.00% of the average daily net asset
value of Class B shares, to pay expenses of the distribution of Class B
shares. Amounts paid by the Portfolio under the Class B Distribution Plan are
currently used by CDI to pay others (1) a commission at the time of purchase
of 3% of the value of each share sold; and/or (2) service fees at an annual
rate of 0.25% of the average daily net asset value of shares sold by such
others, beginning in the 13th month after purchase.
Class C Shares
Class C shares are not available through all brokers. Class C shares are
offered at net asset value, without a front-end sales charge. With certain
exceptions, the Portfolio may impose a deferred sales charge of 1.00% on Class
C shares redeemed during the first year after purchase. If imposed, the
deferred sales charge is deducted from the redemption proceeds otherwise
payable to you. The deferred sales charge is retained by CDE. See
"Calculation of Contingent Deferred Sales Charges and Waiver of Sales Charges"
below.
Class C Distribution Plan
The Portfolio has adopted a Distribution Plan with respect to Class C shares
(the "Class C Distribution Plan"), which provides for payments at an annual
rate of up to 1.00% of the average daily net asset value of Class C shares, to
pay expenses of the distribution and servicing of Class C shares. Amounts
paid by each fund under the Class C Distribution Plan are used by CDI to pay
brokers and other selling firms (1) a commission at the time of purchase of
1.00% of the value of each share sold, and (2) beginning in the 13th month
after purchase, quarterly compensation at an annual rate of up to 0.75%, plus
a service fee as described above under "Class A Distribution Plan," of up to
0.25%, of the average daily net asset value of each share sold by such others.
Calculation of Contingent Deferred Sales Charge and Waiver of Sales Charges
Class B and Class C shares that are redeemed will not be subject to a
contingent deferred charge to the extent that the value of such shares
represents (1) reinvestment of dividends or capital gains distributions, (2)
shares held more than four years for Class B (one year for Class C) or (3)
capital appreciation of shares redeemed. Any contingent deferred sales
charge is imposed on the net asset value of the shares at the time of
redemption or purchase, whichever is lower. Upon request for redemption,
shares not subject to the contingent deferred sales charge will be redeemed
first. Thereafter, shares held the longest will be the first to be redeemed.
The contingent deferred sales charge on Class B Shares will be waived in the
following circumstances: (1) redemption upon the death or disability of the
shareholder, plan participant, or beneficiary ("disability" shall mean a total
disability as evidenced by a determination by the federal Social Security
Administration); (2) minimum required distributions from retirement plan
accounts for shareholders 70 1/2 and older (with the maximum amount subject to
this waiver being based only upon the shareholder's Calvert retirement
accounts); (3) return of an excess contribution or deferral amounts, pursuant
to sections 408(d)(4) or (5), 401(k)(8), or 402)(g)(2), or 401(m)(6) of the
Internal Revenue Code; (4) involuntary redemptions of accounts under
procedures set forth by the Fund's Board of Trustees; (5) a single annual
withdrawal under a systematic withdrawal plan of up to 10% per year of the
shareholder's account balance (minimum account balance $50,000 to establish).
Arrangements with Broker/Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount
of shares of the Fund and/or shares of other Funds underwritten by CDI. CDI
may make expense reimbursements for special training of a dealer's registered
representatives, advertising or equipment, or to defray the expenses of sales
contests. Eligible marketing and distribution expenses for Class B and C may
be paid pursuant to the Portfolio's Distribution Plan, and in compliance with
the rules of the NASD.
HOW TO BUY SHARES
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Portfolio payable to the Portfolio
and mail it with your and mail it with your
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64141-6544 64141-6739
By Registered, Calvert Group Calvert Group
Certified, or c/o NFDS, 6th Floor c/o NFDS, 6th Floor
Overnight Mail: 1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
Through Your $2,000 minimum $250 minimum
Financial Professional
At the Visit the Calvert Office to make investments by
check.
Calvert Office
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR FINANCIAL PROFESSIONAL, OR
CALVERT GROUP AT 800.368.2745
By Exchange $2,000 minimum $250 minimum
(From your account When opening an account by exchange, your new
in another Calvert account must be established with the same name(s),
taxpayer address and identification number as your existing
Group Fund) Calvert account.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*Please allow sufficient time for Calvert Group to process your initial
request for this service, normally 10 business days. The maximum transaction
amount is $300,000, and your purchase request must be received by 4:00 p.m.
Eastern time.
NET ASSET VALUE
Net asset value per share ("NAV") refers to the worth of one share. NAV is
computed by adding the value of all portfolio holdings, plus other assets,
deducting liabilities and then dividing the result by the number of shares
outstanding. This value is calculated at the close of the Portfolio's business
day, which coincides with the closing of the regular session of the New York
Stock Exchange (normally 4:00 p.m. Eastern time). The Portfolio is open for
business each day the New York Stock Exchange is open.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost.
If quotations are not available, securities are valued by a method that the
Board of Trustees believes accurately reflects fair value. The NAV of each
class will vary depending on the number of shares outstanding for each class.
All purchases of Portfolio shares will be confirmed and credited to your
account in full and fractional shares (rounded to the nearest 1/1000 of a
share).
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make sure
your investment is accepted and credited properly. Your purchase will be
processed at the offering price based on the next net asset value calculated
after your order is received and accepted. If your purchase is received by 4:00
p.m. Eastern time, your account will be credited on the day of receipt. If your
purchase is received after 4:00 p.m. Eastern time, it will be credited the next
business day. Any check purchase receiving without an investment slip may cause
delaying crediting. Your purchases must be made in US dollars and checks must be
drawn on US banks. No cash will be accepted. The Portfolio reserves the right to
suspend the offering of shares for a period of time or to reject any specific
purchase order. If your check is not paid, your purchase will be canceled and
you will be charged a $10 fee plus costs incurred by the Portfolio. When you
purchase by check or with Calvert Money Controller, those funds will be on hold
for up to 10 business days from the date of receipt. During that period,
redemptions against those funds will not be honored. To avoid this collection
period, you can wire federal funds from your bank, which may charge you a fee.
As a convenience, check purchases can be received at Calvert's offices for
overnight mail delivery to the transfer agent and will be credited the next
business day.
Certain financial institutions or broker/dealers which have entered into a
sales agreement with the Distributor may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow within a number of days
of the order as specified by the program. If payment is not received in the
time specified, the financial institution could be held liable for resulting
fees or losses.
EXCHANGES
You may exchange shares of the Portfolio for shares of other Calvert Group
Funds. Each exchange represents the sale of shares of one Portfolio and the
purchase of shares of another. Therefore, you could realize a taxable gain or
loss on the transaction.
If your investment goals change, the Calvert Group Funds has a variety of
investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions. However, the Portfolio is
intended as a long-term investment and not for frequent short-term trades. To
protect performance and to minimize costs, Calvert Group discourages frequent
exchanges and may prohibit additional purchases of Portfolio shares by persons
engaged in too many short-term trades. Shareholders (and those managing multiple
accounts) who make two purchases and two exchange redemptions of shares of the
same Fund or Portfolio during any 6-month period will be given written notice
that they may be prohibited from making additional investments. These policies
do not prohibit you from redeeming shares of the Funds and do not apply to
trades solely among money market funds. Before you make an exchange from a Fund
or Portfolio, please note the following:
Call your broker or a Calvert representative for information and a
prospectus for any of Calvert's other Funds registered in your state. Read the
prospectus of the Fund or Portfolio into which you want to exchange for
relevant information, including class offerings.
Complete and sign an application for an account in that Fund or
Portfolio, taking care to register your new account in the same name and
taxpayer identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have been
authorized and the shares are not in certificate form.
You may exchange shares on which you have already paid a sales charge at
Calvert Group and shares acquired by reinvestment of dividends and
distributions may be exchanged into another Fund at no additional charge.
Shares may only be exchanged for shares of the same class of another Calvert
Group Fund.
No CDSC is imposed on exchanges of shares subject to a CDSC at the time of the
exchange. The applicable CDSC is imposed at the time the shares acquired by
the exchange are redeemed.
The Portfolio reserves the right to terminate or modify the exchange privilege
in the future upon 60 days written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network 24 hour total return quotations and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers obtain prices, performance information, account balances, and
authorize certain transactions.
Calvert Money Controller Calvert Money Controller eliminates the delay of
mailing a check or the expense of wiring funds. You can request this free
service on your application. This service allows you to authorize electronic
transfers of money to purchase or sell shares. You use Calvert Money Controller
like an "electronic check" to move money ($50 to $300,000) between your bank
account and your Calvert Group account with one phone call. Allow two business
days after the call for the transfer to take place; for money recently invested,
allow normal check clearing time (up to 10 business days) before redemption
proceeds are sent to your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Fund shares. A debit entry will
appear on your bank statement. Share purchases made through Calvert Money
Controller will be subject to the applicable sales charge. If you would like
to make arrangements for systematic monthly or quarterly redemptions from your
Calvert Group account, call your broker or Calvert Group for more information.
Telephone Transactions Calvert may record all telephone calls. You may
purchase, redeem, or exchange shares, wire funds and use Calvert Money
Controller by telephone if you have pre-authorized service instructions. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent and their affiliates are not liable for acting in good faith
on telephone instructions relating to your account, so long as they follow
reasonable procedures to determine that the telephone instructions are genuine.
Such procedures may include recording the telephone calls and requiring some
form of personal identification. You should verify the accuracy of telephone
transactions immediately upon receipt of your confirmation statement.
Optional Services Complete the application for the easiest way to establish
services. The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your account
application. If you wish to add other options later, you may have to provide
Calvert Group with additional information and a signature guarantee. Please call
Calvert Investor Relations at 800.368.2745 for further assistance. For our
mutual protection, we may require a signature guarantee on certain written
transaction requests. A signature guarantee verifies the authenticity of your
signature, and may be obtained from any bank, trust company, savings and loan
association, credit union, broker/dealer firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.
Householding of General Mailings Householding reduces Fund expenses while
saving paper and postage. If you have multiple accounts with Calvert, you may
receive combined mailings of some shareholder information, such as statements,
confirms, prospectuses, semi-annual and annual reports. Please contact Calvert
Investor Relations at 800.368.2745 to receive additional copies of information.
Special Services and Charges The Portfolio pays for shareholder services
but not for special services that are required by a few shareholders, such as a
request for a historical transcript of an account. You may be required to pay a
research fee for these special services.
If you are purchasing shares of the Portfolio through a program of services
offered by a securities dealer or financial institution, you should read the
program materials in conjunction with this Prospectus. Certain features of the
Portfolio may be modified in these programs, and administrative charges may be
imposed by the broker/dealer or financial institution for the services rendered.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next net asset value calculated after your
redemption request is received and accepted. See below for specific
requirements necessary to make sure your redemption request is accepted (less
any applicable CDSC). Remember that the Portfolio may hold payment on the
redemption of your shares until it is reasonably satisfied that investments
made by check or by Calvert Money Controller have been collected (normally up
to 10 business days).
Redemption Requirements To Remember
To ensure acceptance of your redemption request, please follow the procedures
described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on
the next business day, but if making immediate payment could adversely affect
the Portfolio, it may take up to seven (7) days. Calvert Money Controller
redemptions generally will be credited to your bank account on the second
business day after your phone call. When the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary weekend
or holiday closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission, redemptions may be suspended or payment
dates postponed.
Minimum account balance is $1,000. Please maintain a balance in each of
your fund accounts of at least $1,000. Funds with a fluctuating net asset value
and a balance of less than $1,000 may be closed and the proceeds mailed to the
address of record. You will be given a notice that your account is below the
minimum and closed after 30 days if the balance is not brought up to the
required minimum amount.
HOW TO SELL YOUR SHARES
By Mail To: Calvert Group, P.O. Box 419544, Kansas City, MO 64141-6544 You
may redeem available shares from your account at any time by sending a letter of
instruction, including your name, account and Fund number, the number of shares
or dollar amount, and where you want the money to be sent. Additional
requirements, below, may apply to your account. The letter of instruction must
be signed by all required authorized signers. If you want the money to be wired
to a bank not previously authorized, then a voided bank check must be enclosed
with your letter. To add instructions to wire to a destination that has not been
previously established, or if you would like funds sent to a different address
or another person, your letter must be signature guaranteed.
Type of
Registration Requirements
Corporations, Letter of instruction and a corporate resolution, signed by
person(s)
Associations authorized to act on the account, accompanied by signature
guarantee(s).
Trusts Letter of instruction signed by the Trustee(s) (as Trustee),
with a signature guarantee. (If the Trustee's name is not
registered on your account, provide a copy of the trust
document, certified within the last 60 days.)
By Telephone
Please call 800.368.2745. You may redeem shares from your account by
telephone and have your money mailed to your address of record or wired to a
bank you have previously authorized. A charge of $5 is imposed on wire transfers
of less than $1,000.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial
request for this service (normally 10 business days). You may also authorize
automatic fixed amount redemptions by Calvert Money Controller. All requests
must be received by 4:00 p.m. Eastern time. Accounts cannot be closed by this
service. Unless they otherwise qualify for a waiver, Class B or Class C shares
of the Portfolio redeemed by Calvert Money Controller will be subject to the
Contingent Deferred Sales Charge.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group
Fund or Portfolio. You can only exchange between accounts with identical names,
addresses and taxpayer identification number, unless previously authorized with
a signature-guaranteed letter.
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may have
up to two (2) redemption checks for a fixed amount sent to you on the 15th of
the month, simply by sending a letter with all information, including your
account number, and the dollar amount ($100 minimum). If you would like a
regular check mailed to another person or place, your letter must be signature
guaranteed. Unless they otherwise qualify for a waiver, Class B or Class C
shares of the Portfolio redeemed by Systematic Check Redemption will be subject
to the Contingent Deferred Sales Charge.
Through your Broker
If your account is held in your broker's name ("street name"), you should
contact your broker directly to transfer, exchange or redeem shares.
DIVIDENDS, CAPITAL GAINS AND TAXES
Dividends from the Portfolio's net investment income are declared and paid
monthly.
Net investment income consists of the interest income, net short-term
capital gains, if any, and dividends declared and paid on investments, less
expenses. Distributions of the Portfolio's net short-term capital gains (treated
as dividends for tax purposes) and its net long-term capital gains, if any, are
normally declared and paid by the Fund once a year; however, the Portfolio does
not anticipate making any such distributions unless available capital loss
carryovers have been used or have expired. Dividend and distribution payments
will vary between classes; dividend payments are anticipated to be generally
higher for Class A shares.
Dividend Options
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money Controller).
Dividends and distributions may be automatically invested in an identically
registered account with the same account number in any other Calvert Group Fund
or Portfolio at net asset value. If reinvested in the same Fund account, new
shares will be purchased at net asset value on the reinvestment date, which is
generally 1 to 3 days prior to the payment date. You must be a shareholder on
the record date to receive dividends. You must notify the Fund in writing prior
to the record date to change your payment options. If you elect to have
dividends and/or distributions paid in cash, and the US Postal Service cannot
deliver the check, or if it remains uncashed for an extended period, it, as well
as future dividends and distributions, will be reinvested in additional shares.
No dividends will accrue on amounts represented by uncashed distribution or
redemption checks.
"Buying a Dividend"
At the time of purchase, the share price of the Portfolio may reflect
undistributed income, capital gains or unrealized appreciation of securities.
Any capital gains from these amounts which are later distributed to you are
fully taxable. On the record date for a distribution, the Portfolio's share
value is reduced by the amount of the distribution. If you buy shares just
before the record date ("buying a dividend") you will pay the full price for the
shares and then receive a portion of the price back as a taxable distribution.
Federal Taxes
Dividends derived from interest on municipal obligations constitute
exempt-interest dividends, on which you are not subject to federal income tax.
However, dividends which are from taxable interest and any distributions of
short-term capital gain are taxable to you as ordinary income. If the Portfolio
makes any distributions of long-term capital gains, then these are taxable to
you as long-term capital gains, regardless of how long you held your shares of
the Portfolio. Dividends attributable to interest on certain private activity
bonds must be included in federal alternative minimum tax for individuals and
for corporations.
If any taxable income or gains are paid, in January, the Portfolio will mail
you Form 1099-DIV indicating the federal tax status of dividends paid to you
by the Portfolio during the past year.
You may realize a capital gain or loss when you redeem (sell) or exchange
shares.
If you sell or exchange your Fund shares you will have a short or long-term
capital gain or loss, depending on how long you owned the shares which were
sold. In January, the Fund will mail you Form 1099-B indicating the proceeds
from all sales, including exchanges. You should keep your annual year-end
account statements to determine the cost (basis) of the shares to report on your
tax returns.
State and Local Taxes
Dividends derived from interest on Vermont state or local obligations are
exempt from Vermont personal income tax, as are dividends from obligations
issued by certain territories, such as Puerto Rico. The Portfolio will advise
you each January of the percent of dividends qualifying for this exemption. You
should consult your tax advisor with regard to how certain dividends affect you.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law may
require the Portfolio to withhold 31% of your dividends and certain redemptions.
In addition, you may be subject to a fine. You will also be prohibited from
opening another account by exchange. If this TIN information is not received
within 60 days after your account is established, your account may be redeemed
at the current NAV on the date of redemption. The Portfolio reserves the right
to reject any new account or any purchase order for failure to supply a
certified TIN.
EXHIBIT A - REDUCED SALES CHARGES (Class A Only)
You may qualify for a reduced sales charge through several purchase plans
available. You must notify the Fund at the time of purchase to take advantage
of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the dollar
amount of a new purchase of shares, but also the higher of cost or current
value of shares previously purchased in Calvert Group Funds that impose sales
charges. This automatically applies to your account for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent." You pay
the lower sales charge applicable to the total amount you plan to invest over
the 13-month period, excluding any money market fund purchases. Part of your
shares will be held in escrow, so that if you do not invest the amount
indicated, you will have to pay the sales charge applicable to the smaller
investment actually made. For more information, see the Statement of
Additional Information.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the Fund
at the reduced sales charge applicable to the group taken as a whole. The
sales charge is calculated by taking into account not only the dollar amount
of the shares you purchase, but also the higher of cost or current value of
shares previously purchased and currently held by other members of your group.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund shares at a discount, and
(iii) satisfies uniform criteria which enable CDI and dealers offering Fund
shares to realize economies of scale in distributing such shares. A qualified
group must have more than 10 members, must be available to arrange for group
meetings between representatives of CDI or dealers distributing the Fund's
shares, must agree to include sales and other materials related to the Fund in
its publications and mailings to members at reduced or no cost to CDI or
dealers. Members of a group are not eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund or portfolio of the Calvert
Group of Funds sold to (i) current or retired Directors, Trustees, or Officers
of the Calvert Group of Funds, employees of Calvert Group, Ltd. and its
affiliates, or their family members; (ii) CSIF Advisory Council Members,
directors, officers, and employees of any subadvisor for the Calvert Group of
Funds, employees of broker/dealers distributing the Fund's shares and
immediate family members of the Council, subadvisor, or broker/dealer; (iii)
Purchases made through a Registered Investment Advisor, (iv) Trust departments
of banks or savings institutions for trust clients of such bank or
institution, (v) Purchases through a broker maintaining an omnibus account
with the fund or portfolio, provided the purchases are made by (a) investment
advisors or financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting, or other
fee for their services; or (b) clients of such investment advisors or
financial planners who place trades for their own accounts if such accounts
are linked to the master account of such investment advisor or financial
planner on the books and records of the broker or agent; or (c) retirement and
deferred compensation plans and trusts, including, but not limited to, those
defined in section 401(a) or section 403(b) of the I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions from
another Calvert Group Fund automatically invested in another account with no
additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in the
same Fund, you may do so at the net asset value next computed after the
reinvestment order is received, without a sales charge. You may use the
reinstatement privilege only once. The Fund reserves the right to modify or
eliminate this privilege.
Prospectus
April 30, 1998
calvert tax-free reserves
vermont municipal portfolio
To Open an Account:
800.368.2748
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800.368.2745
Service for Existing Accounts:
Shareholders 800.368.2745
Brokers 800.368.2746
TDD for Hearing-Impaired:
800.541.1524
Calvert Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Calvert Group Website
http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
PROSPECTUS - April 30, 1998
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
Investment Objectives and Policies
Calvert Tax-Free Reserves California Money Market Portfolio seeks to earn the
highest interest income exempt from federal and California state income taxes
as is consistent with prudent investment management, preservation of capital,
and the quality and maturity characteristics of the Portfolio. The Portfolio
seeks to maintain a constant net asset value of $1.00 per share. There can be
no assurance that the Portfolio will be successful in maintaining a constant
net asset value of $1.00 per share. An investment in the Portfolio is neither
insured nor guaranteed by the US Government.
The Portfolio invests substantially all of its assets in Municipal Obligations
of the State of California. It may invest up to 25% of its assets in a single
issuer. Therefore, investment in the Portfolio may be riskier than an
investment in another type of money market fund.
To Open An Account
Call your broker, or complete and return the enclosed Account Application.
Minimum initial investment is $2,000.
About This Prospectus
Please read this Prospectus before investing. It is designed to provide you
with information you ought to know before investing and to help you decide if
the Portfolio's goals match your own. Keep this document for future reference.
A Statement of Additional Information (dated April 30, 1998) for the Portfolio
has been filed with the Securities and Exchange Commission and is incorporated
by reference. This free Statement is available upon request from the
Portfolio: 800.368.2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
The SEC maintains a Website at http://www.sec.gov that contains the Statement
of Additional Information, material incorporated by reference, and other
information regarding the Fund.
FUND EXPENSES
A. Shareholder Transaction Costs
Sales Load on Purchases None
Sales Load on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
B. Annual Fund Operating Expenses - Fiscal Year 1997
(as a percentage of average net assets)
Management Fees 0.51%
Rule 12b-1 Service and Distribution Fees None
Other Expenses 0.15%
Total Fund Operating Expenses 1 0.66%
1 Net Fund Operating Expenses after reduction for fees paid indirectly were
0.65%.
C. Example:
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each period:
1 Year 3 Years 5 Years 10 Years
$7 $21 $37 $82
The example, which is hypothetical, should not be considered a representation
of past or future expenses. Actual expenses may be higher or lower than those
shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the Portfolio
may bear directly (shareholder transaction costs) or indirectly (annual fund
operating expenses).
Shareholder Transaction Costs
are charges you pay when you buy or sell shares of the Portfolio. If you
request a wire redemption of less than $1,000, you will be charged a $5 wire
fee.
Annual Fund Operating Expenses
are based on the Portfolio's historical expenses. Management Fees are paid by
the Portfolio to Calvert Asset Management Company, Inc. ("Investment Advisor")
for managing the Portfolio's investments and business affairs, and include an
administrative service fee paid to Calvert Administrative Services Company,
Inc. The Portfolio incurs Other Expenses for maintaining shareholder records,
furnishing shareholder statements and reports, and other services. Management
Fees and Other Expenses have already been reflected in the Portfolio's yield
and are not charged directly to individual shareholder accounts. Please refer
to "Management of the Fund" for further information.
FINANCIAL HIGHLIGHTS
The following table provides information about the Portfolio's financial
history. It expresses the information in terms of a single share outstanding
throughout the period. The table has been audited by those independent
accountants whose report is included in the Annual Report to Shareholders for
the periods presented. The table should be read in conjunction with the
financial statements and their related notes. The current Annual Report to
Shareholders is incorporated by reference into the Statement of Additional
Information.
Year Ended December 31,
California Portfolio 1997 1996 1995
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .032 .031 .037
Distributions from
Net investment income (.032) (.031) (.037)
Net asset value, ending $1.00 $1.00 $1.00
Total return 3.28% 3.17% 3.78%2
Ratio to average net assets
Net investment income 3.22% 3.14% 3.69%
Total expenses3 .66% .69% .76%
Net expenses .65% .68% .75%
Expenses reimbursed .05% .03% -
Net assets, ending (in thousands) $321,001 $346,008 $300,351
Number of shares outstanding,
ending (in thousands) 321,126 346,124 300,544
2 Total return numbers do not reflect the Tender Option Agreement. 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.
3 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>
Year Ended December 31,
California Portfolio 1994 1993 1992
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .026 .022 .030
Distributions from
Net investment income (.026) (.022) (.030)
Net asset value, ending $1.00 $1.00 $1.00
Total return4 2.62%5 2.26% 3.08%
Ratio to average net assets
Net investment income 2.55% 2.22% 3.01%
Total expenses6 - - -
Net expenses .69% .69% .68%
Expenses reimbursed - - -
Net assets, ending (in thousands) $260,719 $296,984 $323,928
Number of shares outstanding,
ending (in thousands) 260,716 296,984 323,928
4 Total return has not been audited prior to 1994.
6 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>
From Inception
Oct. 16, 1989
Year Ended December 31, to Dec. 31,
1991 1990 1989
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .045 .059 .018
Distributions from
Net investment income (.045) (.059) (.018)
Net asset value, ending $1.00 $1.00 $1.00
Total return4 4.64% 6.04% 6.51% (a)
Ratio to average net assets
Net investment income 4.51% 5.83% 6.13% (a)
Total expenses6 - - -
Net expenses .60% .31% .12% (a)
Expenses reimbursed - .02% -
Net assets, ending (in thousands) $287,984 $240,469 $35,662
Number of shares outstanding,
ending (in thousands) 287,984 240,468 35,661
(a) Annualized
4 Total return has not been audited prior to 1994.
5 Total return numbers do not reflect the Tender Option Agreement. 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.
6 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>
INVESTMENT OBJECTIVES AND POLICIES
The California Money Market Portfolio seeks to earn the highest level of
interest income exempt from federal and California state income taxes as is
consistent with prudent investment management, preservation of capital, and
the quality and maturity characteristics of the Portfolio.
The Portfolio invests primarily in a diversified portfolio of municipal
obligations whose interest is exempt from federal and California state income
tax. Municipal obligations in which the Portfolio invests are short-term,
fixed and variable rate instruments of minimal credit risk and of high
quality. Short-term obligations have remaining maturities of one year or less.
The Portfolio maintains an average weighted maturity of 90 days or less.
California Money Market Portfolio invests at least 80% of its assets in debt
obligations issued by or on behalf of the State of California.
Under normal market conditions, the California Money Market Portfolio will
invest at least 80% of its total assets in municipal obligations whose
interest is exempt from federal and California state income tax, including
those issued by or on behalf of the State of California and its political
subdivisions ("Municipal Obligations"). The Portfolio will also attempt to
invest the remaining 20% of its total assets in such obligations, but may
invest it in municipal obligations of other states, territories and
possessions of the United States, the District of Columbia and their
respective authorities, agencies, instrumentalities and political subdivisions
or in short-term taxable money market-type instruments. See "Temporary
Investments" below. Dividends paid by the Portfolio which are derived from
interest attributable to California Municipal Obligations will be exempt from
federal and California state personal income taxes. Dividends derived from
interest on tax-exempt obligations of other governmental issuers will be
exempt from federal income tax, but will be subject to California state income
taxes.
Credit Quality
The Portfolio invests in municipal bonds and notes and tax-exempt commercial
paper within the two highest credit ratings categories: for example, AA and
AAA (or Aa and Aaa) for municipal bonds, and A-l and A-2 (or P-l and P-2) for
tax-exempt commercial paper. Municipal obligations rated within these
categories are judged to be of high quality by all standards.
The credit quality of municipal obligations is determined by reference to a
commercial credit rating service, such as Moody's Investors Service, Inc. or
Standard & Poor's Corporation. In the case of any instrument that is not
rated, credit quality is determined by the Advisor under the supervision of
the Board of Trustees. There is no limitation on the percentage of the
Portfolio's assets which may be invested in unrated obligations; such
obligations may be less liquid than rated obligations of comparable quality.
Please refer to the Appendix in the Statement of Additional Information for a
description of the ratings used by these services.
Floating and Variable Rate Obligations
The Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield which is adjusted periodically based on changes in
the level of prevailing interest rates. Floating rate obligations have an
interest rate fixed to a known lending rate, such as the prime rate, which
automatically adjusts when the known rate changes. Variable rate obligations
lessen the capital fluctuations usually inherent in fixed income investments,
which diminishes the risk of capital depreciation of portfolio investments and
Portfolio shares; but this also means that should interest rates decline, the
yield of the Portfolio will decline, causing the Portfolio and its
shareholders to forego the opportunity for capital appreciation of the
portfolio investments.
Demand Notes
The Portfolio may invest in floating rate and variable rate demand notes.
Demand notes provide that the holder may demand payment of the note at its par
value plus accrued interest by giving notice to the issuer. To ensure the
ability of the issuer to make payment upon such demand, the note may be
supported by an unconditional bank letter of credit.
The Portfolio may invest in structured money market instruments, where the
underlying security is a municipal lease. Generally, such instruments are
structured as tax-exempt commercial paper or variable rate demand notes, and
are typically secured by an unconditional letter of credit. In the unlikely
event that the letter of credit is not honored, the lease would present
special risks, such as the chance that the municipality might not appropriate
funding for the lease payments. Thus, the Advisor considers risk of
cancellation in its investment analysis. Certain leases may be considered
illiquid. In all cases, the Portfolio invests only in high-quality instruments
(rated in one of the two highest rating categories, or if unrated, of
comparable credit quality) that meet the requirements of SEC Rule 2a-7
regarding credit quality and maturity. See the Statement of Additional
Information.
When-Issued Purchases
New issues of Municipal Obligations are offered on a when-issued basis; that
is, delivery and payment for the securities normally take place 15 to 45 days
after the date of the transaction. The payment obligation and the yield that
will be received on the securities are fixed at the time the buyer enters into
the commitment. The Portfolio will only make commitments to purchase such
securities with the intention of actually acquiring the securities, but the
Portfolio may sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy.
Temporary Investments
For liquidity purposes or pending the investment of the proceeds of the sale
of its shares, the Portfolio may invest in and derive up to 20% of its income
from taxable short-term money market type investments. Interest earned from
such taxable investments will be taxable to you as ordinary income unless you
are otherwise exempt from taxation.
Other Policies
The Portfolio may temporarily borrow money from banks to meet redemption
requests, but such borrowing may not exceed 10% of the value of the
Portfolio's total assets. The Portfolio has adopted certain fundamental
investment restrictions which are discussed in detail in the Statement of
Additional Information.
YIELD
Yield refers to income generated by an investment over a period of time.
The Portfolio may advertise "yield" and "effective yield." Yield figures are
based on historical earnings and are not intended to indicate future
performance. The "yield" of a Portfolio refers to the actual income generated
by an investment in the Portfolio over a particular base period, stated in the
advertisement. If the base period is less than one year, the yield will be
"annualized." That is, the amount of income generated by the investment during
the base period is assumed to be generated over a one-year period and is shown
as a percentage of the investment. The "effective yield" is calculated like
yield, but assumes reinvestment of earned income. The effective yield will be
slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Taxable Equivalent Yield
The Portfolio may also advertise its "taxable equivalent yield." The taxable
equivalent yield is the yield you would have to obtain from taxable
investments to equal the Portfolio's yield, all or a portion of which may be
exempt from federal income taxes. The taxable equivalent yield for the
Portfolio is computed by taking the portion of the Portfolio's yield exempt
from regular federal income tax and multiplying the exempt yield by a factor
based on a stated income tax rate, then adding the portion of the yield that
is not exempt from regular federal income tax. The factor used to calculate
the taxable equivalent yield is the reciprocal of the difference between one
and the applicable income tax rate, which will be stated in the advertisement.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the activities and reviews its contracts with
companies that provide the Fund with services.
The Portfolio is a series of Calvert Tax-Free Reserves (the "Fund"), an
open-end management investment company, organized as a Massachusetts business
trust on October 20, 1980. The series of the Fund include the Money Market
Portfolio, Limited-Term Portfolio, Long-Term Portfolio, California Money
Market Portfolio, and the Vermont Municipal Portfolio.
The Fund is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes such as electing Trustees,
changing fundamental policies, or approving a management contract. As a
shareholder, you receive one vote for the share of a Portfolio you own. For
matters affecting only one Portfolio, only shares of that Portfolio are
entitled to vote.
Calvert Group is one of the largest investment management firms in the
Washington, DC area.
Calvert Group, Ltd., parent of the Portfolio's investment advisor, transfer
agent, and distributor, is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, DC Calvert Group is one of the largest investment
management firms in the Washington, DC area. Calvert Group, Ltd. and its
subsidiaries are located at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814. As of December 31, 1997, Calvert Group managed and
administered assets in excess of $5.0 billion and more than 200,000
shareholder and depositor accounts.
Calvert Asset Management serves as Advisor.
Calvert Asset Management Company, Inc. (the "Advisor") is the Portfolio's
investment advisor. The Advisor provides the Portfolio with investment
supervision and management; administrative services and office space;
furnishes executive and other personnel to the Portfolio; and pays the
salaries and fees of all Trustees who are affiliated persons of the Advisor.
The Advisor may also assume and pay certain advertising and promotional
expenses of the Portfolio and reserves the right to compensate broker/dealers
in return for their promotional or administrative services. For fiscal year
1997, pursuant to the Investment Advisory Agreement, the Advisor received a
fee of 0.50% of the Portfolio's average daily net assets.
Calvert Administrative Services Company provides administrative services for
the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor,
has been retained by the Fund to provide certain administrative services
necessary to the conduct of its affairs, including the preparation of
regulatory filings and shareholder reports, the daily determination of its net
asset value per share and dividends, and the maintenance of its portfolio and
general accounting records. For providing such services, prior to August 1,
1997 CASC received a total fee from the Fund of $200,000 per year, allocated
among the Portfolios based on assets. Effective August 1, 1997, the fee
structure changed, and the Fund (exclusive of CTFR Money Market Portfolio)
pays an annual fee of $80,000, allocated between the Portfolios based on
assets.
Calvert Distributors, Inc. serves as underwriter to market the Portfolio's
shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter and
distributor. Under the terms of its underwriting agreement with the Portfolio,
CDI markets and distributes the Portfolio's shares and is responsible for
payment of commissions and service fees to broker/dealers, banks, and
financial services firms, preparing advertising and sales literature, and
printing and mailing prospectuses to prospective investors.
CDI currently compensates broker/dealer firms at rates up to 0.20% of the
average daily net assets maintained in Portfolio accounts administered by the
respective firms. CDI may also pay additional concessions, including non-cash
promotional incentives such as merchandise or trips, to dealers employing
registered representatives who sell a minimum dollar amount of shares of the
Fund and/or shares of other Funds underwritten by CDI. CDI may make expense
reimbursements for special training of a dealer's registered representatives,
advertising and equipment, or to defray the expenses of sales contests.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's shareholder servicing agent.
National Financial Data Services, Inc. ("NFDS"), 1004 Baltimore, Kansas City,
Missouri 64105, is the transfer and dividend disbursing agent for the Fund.
SHAREHOLDER GUIDE
How to Open An Account
Getting Started
Regardless of the investment option you choose (see below), the enclosed
application must be completed and signed for each new account. When multiple
classes of shares ore offered, please specify which class you which to
purchase. Additional documents may be required for corporations, associations
and certain fiduciaries, and for investments in Calvert's tax-deferred
retirement plans. For more information about account options mentioned below,
contact your broker or our shareholder services department at 800.368.2748.
HOW TO BUY SHARES
CTFR California Money Market Portfolio shares are sold without a sales charge.
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the Portfolio payable to the Portfolio
and mail it with your and mail it with your
application to: investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64141-6544 64141-6739
By Registered, Calvert Group Calvert Group
Certified, or c/o NFDS, 6th Floor c/o NFDS, 6th Floor
Overnight Mail: 1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
At the Calvert Visit the Calvert Office to make investments by check.
Office
WHEN YOUR ACCOUNT WILL BE CREDITED
Your purchase will be processed at the next NAV calculated after your order is
received and accepted. All of your purchases must be made in US dollars and
checks must be drawn on US banks. No cash will be accepted. The Portfolio
reserves the right to suspend the offering of shares for a period for time or
to reflect any specific purchase order. If your check does not clear the bank,
your purchase will be canceled and you will be charged a $10 fee plus costs
incurred by the Portfolio.
When you purchase by check or with Calvert Money Controller, the purchase will
be on hold for up to 10 business days from the date of receipt. During the
hold period, any redemptions will be held until the Transfer Agent is
reasonably satisfied that the purchase payment has been collected. Drafts
written on a money market portfolio during the hold period will be returned
for uncollected funds. To avoid this hold period, you can wire federal funds
from your bank, which may charge you a fee. As a convenience, check purchases
can be received at Calvert's offices for overnight mail delivery to the
Transfer Agent and will be credited the next business day. Any check purchase
received without an investment slip may cause delayed crediting.
Money Market Dividends
If your wire purchase is received by 5 p.m. ET, your account will begin
earning dividends on the next business day. Exchanges begin earning dividends
the next business day after the exchange request is received by mail or
telephone. Purchases received by check will begin earning dividends the next
business day after they are credited to the account.
OTHER CALVERT GROUP FEATURES
Calvert Information Network
For 24 hour performance and account information call 800.368.2745 or visit
http://www.calvertgroup.com.
You can obtain current performance and pricing information, verify account
balances, and authorize certain transactions with the convenience of one phone
call, 24 hours a day.
Account Services
By signing up for services when you open your account, you avoid having to
obtain a signature guarantee. If you wish to add services at a later date, a
signature guarantee to verify your signature may be obtained from any bank,
trust company and savings and loan association, credit union, broker/dealer
firm or member of a domestic stock exchange. A notary public cannot provide a
signature guarantee.
Calvert Money Controller
Calvert Money Controller allows you to purchase or sell shares anytime from
anywhere with ease, without the time delay of mailing a check or the added
expense of wiring funds. Use this service to transfer up to $300,000
electronically. Allow one or two business days after you place your request
for the transfer to take place. Money transferred to purchase new shares will
be subject to a hold of up to 10 business days before redemption requests will
be honored. Transaction requests must be received by 4 p.m. ET. You may
request this service on your initial account application.
Telephone Transactions
You may purchase, redeem, or exchange shares, wire funds and use Calvert Money
Controller by telephone if you have pre-authorized service instructions. You
receive telephone privileges automatically when you open your account unless
you elect otherwise. For our mutual protection, the Fund, the shareholder
servicing agent and their affiliates use precautions such as verifying
shareholder identity and recording telephone calls to confirm instructions
given by phone. A confirmation statement is sent for most transactions; please
review this statement and verify the accuracy of your transaction immediately.
Exchanges
Calvert Group of Funds offers a wide variety of investment options that
includes common stock funds, tax-exempt and corporate bond funds, and money
market funds (call your broker or Calvert representative for more
information). We make it easy for you to purchase shares in other funds should
your investment goals change with changes in market conditions. The exchange
privilege offers flexibility, by allowing you to exchange shares on which you
have already paid a sales charge from one mutual fund to another at no
additional charge.
Complete and sign an account application, taking care to register your new
account in the same name and taxpayer identification number as your existing
Calvert account(s). Exchange instructions may then be given by telephone if
telephone redemptions have been authorized and the shares are not in
certificate form.
Before you make an exchange, please note the following:
Each exchange represents the sale of shares of one portfolio and the purchase
of shares of another. Therefore, you could realize a taxable gain or loss.
Shareholders (and those managing multiple accounts) who make two purchases and
two exchange redemptions of shares of the same Portfolio during a six month
period will be given written notice and may be prohibited from placing
additional investments. This policy does not prohibit a shareholder from
redeeming shares of any Portfolio, and does not apply to trades solely among
money market funds.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days written notice.
Combined General Mailings
Join us in our efforts to conserve paper and save on postage.
If you have multiple accounts with Calvert, you may receive combined mailings
of shareholder information, such as account statements, confirmations of
transactions, prospectuses and semi-annual and annual reports.
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may have up
to two (2) redemption checks for a fixed amount sent to you on the 15th of the
month, simply by sending a letter with all information, including your account
number, and the dollar amount. If you would like a regular check mailed to
another person or place, your letter must be signature guaranteed.
Special Services and Charges
The Funds pay for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript
of an account or a stop payment on a draft. You may be required to pay a fee
for these special services; for example, the fee for stop payments is $25.
If you are purchasing shares through a program of services offered by a
broker/dealer or financial institution, you should read the program materials
in conjunction with this Prospectus. Certain features may be modified in these
programs, and administrative charges may be imposed by the broker/dealer or
financial institution for the services rendered.
Minimum Account Balance is $1,000 per Fund, per Class
Please maintain a balance in each of your Fund accounts of at least $1,000. If
the balance in your account falls below the $1,000 minimum during a month, a
$3 fee will be charged to your account, or the account may be closed and the
proceeds mailed to the address of record. You will receive a notice that your
account is below the minimum, and will be closed or charged if the balance is
not brought up to the required minimum amount within 30 days.
DIVIDENDS, CAPITAL GAINS AND TAXES
Dividends from the Portfolio's net investment income are accrued daily and
paid monthly. Net investment income consists of interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of net short-term capital gains
(treated as dividends for tax purposes) and net long-term capital gains, if
any, are normally paid once a year; however, the Portfolio does not anticipate
making any such distributions unless available capital loss carryovers have
been used or have expired.
Dividend Payment Options (available monthly or quarterly)
Dividends and any distributions are automatically reinvested in the same
Portfolio at NAV (no sales charge), unless you elect to have the dividends of
$10 or more paid in cash, (by check or by Calvert Money Controller). Dividends
and distributions from any Calvert Group Fund or Portfolio may be
automatically invested in an identically registered account in any other
Calvert Group Fund at NAV. If reinvested in the same Fund account, new shares
will be purchased at NAV on the reinvestment date, which is generally 1 to 3
days prior to the payment date. You must notify the Funds in writing to change
your payment options. If you elect to have dividends and/or distributions paid
in cash, and the US Postal Service cannot deliver the check, or if it remains
uncashed for an extended period, it, as well as future dividends and
distributions, will be reinvested in additional shares. No dividends will
accrue on amounts represented by uncashed distribution or redemption checks.
Federal Taxes
In January, your Fund will mail you Form 1099-DIV indicating the federal tax
status of any reportable dividends and capital gain distributions paid to you
during the past year. Generally, dividends and distributions are taxable in
the year they are paid. However, any dividends and distributions paid in
January but declared during the prior three months are taxable in the year
declared. Dividends and distributions are taxable to you regardless of whether
they are taken in cash or reinvested. Dividends, including short-term capital
gains, are taxable as ordinary income. Distributions from long-term capital
gains are taxable as long-term capital gains, regardless of how long you have
owned shares.
Other Tax Information
To the extent that exempt-interest dividends are derived from earnings
attributable to California Municipal Obligations, they will also be exempt
from state and local personal income tax in California. The dividends may be
subject to California franchise taxes and corporate income taxes if received
by a corporation subject to such taxes. A letter will be mailed to you in
January detailing the percentage invested in California the previous tax year.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law
requires us to withhold 31% of your reportable dividends, and possibly 31% of
certain redemptions. In addition, you may be subject to a fine. You will also
be prohibited from opening another account by exchange. If this TIN
information is not received within 60 days after your account is established,
your account may be redeemed (closed) at the current NAV on the date of
redemption. Calvert Group reserves the right to reject any new account or any
purchase order for failure to supply a certified TIN.
HOW TO SELL SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after your redemption
request is received. The proceeds will normally be sent to you on the next
business day, but if making immediate payment could adversely affect the
Portfolio, it may take up to seven (7) days. Calvert Money Controller
redemptions generally will be credited to your bank account on the second
business day after your phone call. Remember, investment made by check or
Calvert Money Controller may be subject to a hold before shares can be
redeemed. When the New York Stock Exchange is closed (or when trading is
restricted) for any reason other than its customary weekend or holiday
closings, or under any emergency circumstances as determined by the Securities
and Exchange Commission, redemptions may be suspended or payment dates
postponed.
Net Asset Value - "NAV"
NAV refers to the worth of one share. NAV is computed by adding the value of
all portfolio holdings, plus other assets, deducting liabilities and then
dividing the result by the number of shares outstanding. For Portfolios with
more than one class of shares, the NAVs of each class will vary daily
depending on the number of shares outstanding for each class.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost.
Money Market securities are valued according to the "amortized cost" method,
which is intended to stabilize the NAV at $1 per share. If quotations are not
available, securities are valued by a method that the particular Fund's Board
of Trustees/Directors believes accurately reflects fair value.
The NAV is calculated at the close of each business day, which coincides with
the closing of the regular session of the New York Stock Exchange (normal 4
p.m. ET). Each Fund is open for business each day the New York Stock Exchange
is open. All purchases will be confirmed and credited to your account in full
and fractional shares (rounded to the nearest 1/1000 of a share). A money
market portfolio may send monthly statements in lieu of immediate
confirmations for purchases and redemptions.
Follow these suggestions to ensure timely processing of your redemption request
By Telephone
You may redeem shares from your account by telephone and have your money
mailed to your address of record or electronically transferred or wired to a
bank you have previously authorized. A charge of $5 may be imposed on wire
transfers of less than $1,000.
Written Requests
Calvert Group, PO Box 419544, Kansas City MO 64141-6544
Your letter should include your account number and fund and the number of
shares or the dollar amount your are redeeming. Please provide a daytime
telephone number, if possible, for us to call if we have questions. If the
money is being sent to a new bank, person, or address other than the address
of record, your letter must be signature guaranteed.
The following requirements may also apply to your account:
Type of Registration Requirements
Corporations, Letter of instruction and corporate resolution,
signed
Associations by person(s) authorized to act on the account,
accompanied by signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s) (as
Trustees), with a signature guarantee. (If the
Trustee's name is not registered on your account,
provide a copy of the trust document, certified within
the last 60 days.)
<PAGE>
Prospectus
April 30, 1998
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
To Open an Account:
800.368.2748
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800.368.2745
Service for Existing Account:
Shareholders 800.368.2745
Brokers 800.368.2746
TDD for Hearing-Impaired:
800.541.1524
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Calvert Group Website
http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
Prospectus April 30, 1998
Calvert Tax-Free Reserves Money Market
Portfolio Institutional Class
4550 Montgomery Avenue, Bethesda, Maryland 20814
Investment Objective and Policies
Calvert Tax-Free Reserves (the "Fund") Money Market Portfolio (the
"Portfolio") seeks to earn the highest interest income exempt from federal
income taxes as is consistent with prudent investment management, preservation
of capital, and the quality and maturity characteristics of the Portfolio.
The Money Market Portfolio seeks to maintain a constant net asset value of
$1.00 per share. There can be no assurance that the Portfolio will be
successful in maintaining a constant net asset value of $1.00 per share. An
investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government.
Purchase Information
The Money Market Portfolio offers two classes of shares, Class O, described in
and offered by another Calvert Tax-Free Prospectus, and the Institutional
Class (the "Class"), offered by this Prospectus.
To Open An Account
Complete and return the enclosed Account Application. Minimum initial
investment is $1,000,000.
About This Prospectus
Please read this Prospectus before investing. It is designed to provide you
with information you ought to know before investing
and to help you decide if the Portfolio's goals match your own. Keep this
document for future reference.
A Statement of Additional Information ("SAI") (dated April 30, 1998) for the
Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available upon request from
the Fund: 800.317.2274.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
The SEC maintains a Web site at http://www.sec.gov that contains the Statement
of Additional Information, material incorporated by reference, and other
information regarding the Fund.
Table of Contents
Fund Expenses 2
Financial Highlights 2
Investment Objective and Policies 3
Yield 4
Management of the Fund 5
Shareholder Guide
How to Buy Shares 6
When Your Account Will be Credited 6
Exchanges 7
Other Calvert Group Services 7
How to Sell Your Shares 7
Dividends and Taxes 8
<PAGE>
FUND EXPENSES
A. Shareholder Transaction Expenses Institutional Class
Sales Load on Purchases None
Sales Load on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees $5 for wire under $50,000
Exchange Fee None
B. Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.30%
Rule 12b-1 Fees None
Other Expenses 0.05%
Total Fund Operating Expenses 0.35%
C. Example:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return; and (2) redemption at the end of each period:
1 Year 3 Years 5 Years 10 Years
$4 $11 $20 $44
The example, which is hypothetical, should not be considered a representation
of past or future expenses. Actual expenses may be higher or lower than those
shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the Class may
bear directly (shareholder transaction costs) or indirectly (annual class
operating expenses).
Shareholder Transaction Expenses
are charges you pay when you buy or sell shares of the Class.
Annual Fund Operating Expenses
have been restated to reflect expenses anticipated in the current fiscal year.
Management Fees include the advisory fee paid by the Portfolio to Calvert
Asset Management Company, Inc. (the "Advisor") for managing its investments
and business affairs, and the administrative service fee paid to Calvert
Administrative Services Company. The Portfolio incurs Other Expenses for
maintaining shareholder records, furnishing shareholder statements and
reports, and other services. Management Fees and Other Expenses have already
been reflected in the yield of the Class and are not charged directly to
individual shareholder accounts. Please refer to the section "Management of
the Fund" for further information.
FINANCIAL HIGHLIGHTS
The following table provides information about financial history. It expresses
the information in terms of a single share outstanding throughout each period
for Class MMP (the predecessor class to the Institutional Class). The table
has been audited by those independent accountants whose reports are included
in the Annual Reports to Shareholders. The table should be read in conjunction
with the financial statements and their related notes. The current Annual
Report to Shareholders is incorporated by reference into the SAI.
October 2,
Year Ended 1995 through
December 31, December 31,
1997 1996 1995
Net asset value,
beginning of period $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, end of period $1.00 $1.00 $1.00
Total return 1 3.12% 2.68% .79%
Ratio to average net assets:
Net investment income 3.37% 2.65% 3.19%(a)
Total expenses 2 .63% 1.29% 1.35%(a)
Net expenses .62% 1.28% 1.34%(a)
Expenses reimbursed (.04%) - -
Net assets, end of period
(in thousands) $51,087 $33,160 $41,736
Number of shares outstanding
at end of period (in thousands) 51,084 33,153 41,732
(a) annualized
1 Total return is not annualized.
2 Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
INVESTMENT OBJECTIVE AND POLICIES AND RISKS
Calvert Tax-Free Reserves Money Market Portfolio seeks to earn the highest
level of interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital, and the quality
and maturity characteristics of the Portfolio.
The Money Market Portfolio invests primarily in a diversified portfolio of
municipal obligations whose interest is exempt from federal income tax.
Municipal obligations in which the Portfolio invests are short-term, fixed and
variable rate instruments of minimal credit risk and of high quality. The
Portfolio invests in municipal bonds and notes and tax-exempt commercial paper
within the two highest credit ratings categories or, if unrated, are
determined by the Advisor to be of comparable quality. Short-term obligations
have remaining maturities of one year or less. The Portfolio maintains an
average weighted maturity of 90 days or less. During normal market conditions,
the Portfolio's assets will be invested so that at least 80% of its annual
income will be tax-exempt.
Credit Quality
The credit quality of municipal obligations is determined by reference to a
commercial credit rating service, such as Moody's Investors Service, Inc. or
Standard & Poor's Corporation. If an instrument is not rated, credit quality
is determined by the Advisor under the supervision of the Board of Trustees.
High grade, as determined by a NRSRO, is currently defined as the top two
rating categories, i.e., AAA/Aaa, and AA/Aa. There is no limitation on the
percentage of the Portfolio's assets that may be invested in unrated
obligations; such obligations may be less liquid than rated obligations of
comparable quality. The ratings used by these services are described in the
Appendix to the Statement of Additional Information.
Variable Rate Obligations
The Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield that is adjusted periodically based on changes in the
level of prevailing interest rates. Floating rate obligations have an interest
rate fixed to a known lending rate, such as the prime rate, and are
automatically adjusted when the known rate changes. Variable rate obligations
lessen the capital fluctuations usually inherent in fixed income investments.
This diminishes the risk of capital depreciation of investment securities in a
Portfolio and, consequently, of Portfolio shares. However, if interest rates
decline, the yield of the Portfolio will decline, causing the Portfolio and
its shareholders to forego the opportunity for capital appreciation of the
Portfolio investments and of their shares.
Demand Notes
The Portfolio may invest in floating rate and variable rate demand notes.
Demand notes provide that the holder may demand payment of the note at its par
value plus accrued interest by giving notice to the issuer. To ensure the
ability of the issuer to make payment on demand, the note may be supported by
an unconditional bank letter of credit.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is, if
the market interest rates rise, the current price or value of a bond will
decline.
Municipal Leases
The Money Market Portfolio may invest in structured money market instruments,
where the underlying security is a municipal lease. Generally, such
instruments are structured as tax-exempt commercial paper or variable rate
demand notes, and are typically secured by an unconditional letter of credit.
In the unlikely event that the letter of credit is not honored, the lease
would present special risks, such as the chance that the municipality might
not appropriate funding for the lease payments. Thus, the Advisor considers
risk of cancellation in its investment analysis. Certain leases may be
considered illiquid. In all cases, the Portfolio invests only in high-quality
instruments (rated in one of the two highest rating categories, or if unrated,
of comparable credit quality) that meet the requirements of SEC Rule 2a-7
regarding credit quality and maturity. See the Statement of Additional
Information.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis; that
is, delivery and payment for the securities normally take place 15 to 45 days
after the date of the transaction. The payment obligation and the yield that
will be received on the securities are each fixed at the time the buyer enters
into the commitment. The Portfolio will only make commitments to purchase
these securities with the intention of actually acquiring them, but may sell
these securities before the settlement date if it is deemed advisable as a
matter of investment strategy.
Temporary Investments
For liquidity purposes or pending the investment of the proceeds of the sale
of its shares, the Portfolio may invest in and derive up to 20% of its income
from taxable short-term money market type investments. Interest earned from
such taxable investments will be taxable to you as ordinary income unless you
are otherwise exempt from taxation.
Other Policies
The Portfolio may temporarily borrow money from banks to meet redemption
requests, but such borrowing may not exceed 10% of the value of its total
assets. The Portfolio has adopted certain fundamental investment restrictions
which are discussed in detail in its Statement of Additional Information.
Unless specifically noted otherwise, the investment objective, policies and
restrictions of the Portfolio are fundamental and may not be changed without
shareholder approval.
YIELD
Yield refers to income generated by an investment over a period of time for
each class.
From time to time, the Money Market Portfolio Institutional Class may
advertise "yield" and "effective yield." Yield figures are based on historical
earnings and are not intended to indicate future performance. The "yield" of
the Class refers to the actual income generated by an investment in
Institutional Class over a particular base period, stated in the
advertisement. If the base period is less than one year, the yield will be
"annualized." That is, the amount of income generated by the investment during
the base period is assumed to be generated over a one-year period and is shown
as a percentage of the investment. The "effective yield" is calculated
similarly, but, when annualized, the income earned by an investment in
Institutional Class shares is assumed to be reinvested. The "effective yield"
will be slightly higher than the "yield" because of the compounding effect of
this assumed reinvestment.
"Tax Equivalent Yield"
Money Market Portfolio Institutional Class may also advertise its "tax
equivalent yield." The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the yield, all or a
portion of which may be exempt from federal income taxes. The tax equivalent
yield is computed by taking the portion of the Portfolio's effective yield by
a factor based upon a stated income tax rate, then adding the portion of the
yield that is not exempt from regular federal income tax. The factor which is
used to calculate the tax equivalent yield is the reciprocal of the difference
between 1 and the applicable income tax rate, which will be stated in the
advertisement.
MANAGEMENT OF THE FUND
The Board of Trustees supervises the activities and reviews its contracts with
companies that provide the Fund with services.
Calvert Tax-Free Reserves Money Market Portfolio Institutional Class is a
class of Calvert Tax-Free Reserves Money Market Portfolio ("CTFRMM"), a series
of Calvert Tax-Free Reserves, a Massachusetts business trust organized on
October 20, 1980. Prior to July 31, 1997, CTFRMM offered Class MMP, which has
been discontinued. The original class of CTFRMM (Class O) and the CTFRMM
Institutional Class shares represent interests in the same portfolio of
investments and are identical in all respects, except:
(a) the classes may have different transfer agency and administrative
service fees;
(b) postage and delivery, printing and stationery expenses will be
separately allocated;
(c) the classes will have different dividend rates due solely to the
effects of (a) and (b) above.
The Fund is an open-end diversified management investment company. The Fund is
not required to hold annual shareholder meetings, but special meetings may be
called for certain purposes such as electing Trustees, changing fundamental
policies, or approving a management contract. As a shareholder, you receive
one vote for each share of the Portfolio you own. For matters affecting only
one Portfolio, only shares of that Portfolio are entitled to vote. For matters
affecting only one class, only shares of that class are entitled to vote.
Calvert Group is one of the largest investment management firms in the
Washington, DC area.
Calvert Group, Ltd., parent of the Portfolio's investment advisor, shareholder
servicing agent, and distributor, is a subsidiary of Acacia Mutual Life
Insurance Company of Washington, DC Calvert Group is one of the largest
investment management firms in the Washington, DC area. Calvert Group, Ltd.
and its subsidiaries are located at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. As of December 31, 1997, Calvert Group managed and
administered assets in excess of $5.0 billion and more than 200,000
shareholder and depositor accounts.
Calvert Asset Management serves as Advisor to the Portfolio.
Calvert Asset Management Company, Inc. (the "Advisor") is the Portfolio's
investment advisor. The Advisor provides the Portfolio with investment
supervision and management; administrative services and office space;
furnishes executive and other personnel to the Portfolio; and pays the
salaries and fees of all Trustees who are affiliated persons of the Advisor.
The Advisor may also assume and pay certain advertising and promotional
expenses of the Portfolio and reserves the right to compensate broker-dealers
in return for their promotional or administrative services.
The Advisor receives a fee based on a percentage of the Portfolio's assets.
Pursuant to the Investment Advisory Agreement, the Advisor is entitled to
receive an annual advisory fee of 0.25% of the first $500 million of average
daily net assets, 0.20% of the next $500 million, and 0.15% on assets of $1
billion or more.
Calvert Administrative Services Company provides administrative services for
the Portfolio.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor,
has been retained by Calvert Tax-Free Reserves to provide certain
administrative services necessary to the conduct of its affairs, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For providing
such services to the Institutional Class, CASC receives 0.05% of the average
daily net assets of the Class.
Calvert Distributors, Inc. serves as underwriter to market the Money Market
Portfolio's shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter and
distributor. Under the terms of its underwriting agreement with the Fund, CDI
markets and distributes the Portfolio's shares and is responsible for
preparation of advertising and sales literature, and printing and mailing of
prospectuses to prospective investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's shareholder servicing agent.
National Financial Data Services, Inc. ("NFDS"), 1004 Baltimore, Kansas City,
Missouri 64105, is the transfer and dividend disbursing agent for the Fund.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Class in several ways which are described here and
in the chart below.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open. Additional forms may be
required from corporations, associations, and certain fiduciaries. If you have
any questions or need extra applications, call Calvert Group at 800.317.2274.
Share Price
The Portfolio's shares are sold without a sales charge.
The price of one share is its "net asset value," or NAV. NAV is computed by
adding the value of a Portfolio's investments plus cash and other assets,
deducting liabilities and then dividing the result by the number of shares
outstanding. The NAV is calculated at the close of the Portfolio's business
day, which coincides with the closing of the regular session of the New York
Stock Exchange (normally 4:00 p.m. Eastern time). The Portfolio is open for
business each day the New York Stock Exchange is open. The Portfolio's
securities are valued according to the "amortized cost" method, which is
intended to stabilize the NAV at $1.00 per share.
All purchases of Portfolio shares will be confirmed and credited to your
account in full and fractional shares (rounded to the nearest 1/100 of a
share). The Portfolio may send monthly statements in lieu of immediate
confirmations of purchases and redemptions.
HOW TO BUY SHARES
Method Initial investment Additional Investments
By wire $1,000,000 minimum $25,000 minimum
Wire investments to:
State Street Bank and State Street Bank and
Trust Company Trust Company
Boston MA Boston MA
ABA# 011000028 ABA# 011000028
FBO: CTFRMM FBO: CTFRMM
Institutional Fund 718 Institutional Fund 718
Wire Account Wire Account
#9903-765-7 #9903-765-7
Your name and Your name and
account number account number
By Exchange $1,000,000 minimum $25,000 minimum
(From your account in another Calvert Group fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.
Your purchase will be processed at the NAV calculated after your order is
received and accepted. A telephone order placed to Calvert Institutional
Marketing Group by 11:00 a.m. Eastern time will receive the dividend on Class
shares declared that day if federal funds are received by the custodian by 5
p.m. Eastern time. Telephone orders placed after 11:00 a.m. will begin earning
dividends on Class shares the next business day. If no telephone order is
placed, investments begin earning dividends the next business day. Exchanges
begin earning dividends the next business day after the exchange request is
received by mail or telephone.
All of your purchases must be made by wire. No cash or checks will be
accepted. The Fund reserves the right to suspend the offering of shares for a
period of time or to reject any specific purchase order.
EXCHANGES
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another.
If your investment goals change, the Calvert Group Family of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The exchange
privilege is a convenient way to buy shares in other Calvert Group Funds in
order to respond to changes in your goals or in market conditions. Before you
make an exchange from a Fund or Portfolio, please note the following:
Call the Calvert Institutional Marketing Group for information and a
prospectus for any of Calvert's other Funds registered in your state. Read the
prospectus of the Fund or Portfolio into which you want to exchange for
relevant information.
Complete and sign an application for an account in that Fund or Portfolio,
taking care to register your new account in the same name and taxpayer
identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have been
authorized and the shares are not in certificate form.
Shares on which you have already paid a sales charge at Calvert Group may be
exchanged into another Fund at no additional charge. Shares acquired by
reinvestment of dividends or distributions may be exchanged into another Fund
at no additional charge. Except for money market funds, if you make a purchase
at NAV, you may exchange that amount to another fund at no additional sales
charge.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
For 24 hour performance and account information call 800.368.2745 or visit
http://www.calvertgroup.com.
You can obtain current performance and pricing information, verify account
balances, and authorize certain transactions with the convenience of one phone
call, 24 hours a day.
Telephone Transactions
You may purchase, redeem, exchange shares, or wire funds by telephone if you
have pre-authorized service instructions. You receive telephone privileges
automatically when you open your account unless you elect otherwise. For our
mutual protection, the Fund, the shareholder servicing agent and their
affiliates use precautions such as verifying shareholder identity and
recording telephone calls to confirm instructions given by phone. A
confirmation statement is sent for most transactions; please review this
statement and verify the accuracy of your transaction immediately.
Combined General Mailings
Join us in our efforts to conserve paper and save on postage.
If you have multiple accounts with Calvert, you may receive combined mailings
of shareholder information, such as account statements, confirmations of
transactions, prospectuses and semi-annual and annual reports.
Special Services and Charges
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical transcript
of an account or a stop payment on a draft. You may be required to pay a fee
for these special services.
HOW TO SELL YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after your redemption
request is received in good order.
Redemption Requirements To Remember
To ensure that your redemption request is in good order (acceptable), please
follow the procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on
the next business day, but if making immediate payment could adversely affect
the Portfolio, it may take up to seven (7) days. When the New York Stock
Exchange is closed (or when trading is restricted) for any reason other than
its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Securities and Exchange Commission,
redemptions may be suspended or payment dates postponed.
Redemption proceeds are normally paid in cash. However, at the sole discretion
of the Portfolio, the Portfolio has the right to redeem shares in assets other
than cash for redemption amounts exceeding, in any 90 day period, $250,000 or
1% of the NAV of the Portfolio, whichever is less, or as allowed by law.
If you sell shares by telephone or written request, you will receive dividends
through the date the request is received and processed. Calvert encourages you
to notify the Institutional Marketing Group for any redemption over $10
million per day.
Telephone
Please call the Institutional Marketing Group at 800.317.2274. You may redeem
shares from your account by telephone and have your money mailed to your
address of record or wired to a bank you have previously authorized. Same-day
wire redemptions may be ordered by calling the Institutional Marketing Group
by 11:00 a.m. Eastern time. All other wires will be transmitted the next
business day. A charge of $5 may be imposed on wire transfers of less than
$50,000. See "Telephone Transactions."
Minimum account balance
Please maintain a balance in your account of at least $1,000,000. If, due to
exchanges or other redemptions, the account falls below $1,000,000, or you
fail to invest at least $1,000,000, it may be closed and the proceeds mailed
to you at the address of record. You will be given notice that your account
will be closed after 30 days unless you make an additional investment to
increase your account balance to the $1,000,000 minimum.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group
Fund or Portfolio. You can only exchange between accounts with identical
names, addresses and taxpayer identification number, unless previously
authorized with a signature-guaranteed letter.
Mail To: Calvert Institutional Marketing Group, 4550 Montgomery Avenue,
Bethesda, Maryland 20814
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Fund number, the
number of shares or dollar amount, and where you want the money to be sent.
The letter of instruction must be signed by all required authorized signers.
If you want the money to be wired to a bank not previously authorized, then a
voided bank check must be enclosed with your letter. If you do not have a
voided check, you must enclose a letter on corporate letterhead, signed by one
or more authorized signers.
DIVIDENDS AND TAXES
Each year, the Portfolio distributes substantially all of its net investment
income to shareholders.
Dividends from the Portfolio's net investment income are declared daily and
paid monthly. Net investment income consists of interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses.
Dividend payment options
Dividends and any distributions are automatically reinvested in additional
shares of the same Portfolio, unless you elect to have the dividends of $10 or
more paid in cash (by check). Dividends and distributions from the Portfolio
may be invested in shares of any other Calvert Group Fund or Portfolio with no
additional sales charge. You must notify the Portfolio in writing to change
your payment options. If you elect to have dividends and/or distributions paid
in cash, and the US Postal Service cannot deliver the check, or if it remains
uncashed for six months, it, as well as future dividends and distributions,
will be reinvested in additional shares. No dividends will accrue on amounts
represented by uncashed distribution or redemption checks.
Federal Taxes
In January, the Portfolio will mail you Form 1099-DIV indicating the federal
tax status of dividends and any capital gain distributions paid to you by the
Portfolio during the past year. Dividends and distributions are taxable to you
regardless of whether they are taken in cash or reinvested. Dividends,
including short-term capital gains, are taxable as ordinary income.
Distributions from long-term capital gains are taxable as long-term capital
gains, regardless of how long you have owned Portfolio shares. A portion of
the Portfolio's dividends may qualify for the dividends received deduction for
corporations.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes on
your investment, depending on the laws in your area. You will be notified to
the extent, if any, that dividends reflect interest received from US
government securities. Such dividends may be exempt from certain state income
taxes.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law may
require the Portfolio to withhold 31% of your dividends. In addition, you may
be subject to a fine. You will also be prohibited from opening another account
by exchange. If this TIN information is not received within 60 days after your
account is established, your account may be redeemed at the current NAV on the
date of redemption. The Fund reserves the right to reject any new account or
any purchase order for failure to supply a certified TIN.
CALVERT TAX-FREE RESERVES MONEY MARKET PORTFOLIO OVERVIEW
The Calvert Advantage
An investment in the Calvert Tax-Free Reserves Money Market Portfolio relieves
institutional investors of a variety of management and administrative burdens
associated with the direct purchase and sale of money market instruments.
Calvert's experienced Portfolio Management Team will select the appropriate
investments; survey the market for the best buy and sell terms; schedule and
monitor maturities and reinvestments; conduct ongoing credit analysis; record
all portfolio transactions; and oversee receipt, delivery and safekeeping of
securities.
And when interest rates are stagnant or declining, Calvert's staff of seasoned
research analysts and network of traders know how to use the yield curve to
help you seek a higher rate of return.
Profile
The Portfolio is a no-load, open-end diversified tax-exempt money fund
designed for institutional and individual investors. It consists of two
classes; O Shares and Institutional Class. An investment in the Portfolio is
neither insured nor guaranteed by the US Government and there can be no
assurance that the Portfolio will be able to maintain a stable net asset value
of $1.00 per share.
Investment Objective
The Portfolio seeks to earn the highest level of interest income exempt from
federal income tax as is consistent with preservation of capital and liquidity.
Investment Policy
The Portfolio invests in high quality municipal obligations with maturities of
one year or less and maintains an average maturity of 90 days or less.
Investment Quality
The Portfolio invests in short-term municipal securities eligible under Rule
2a-7 of the Investment Company Act of 1940.
Dividends
Dividends are declared daily and paid monthly (on the next to last day of each
month). Our system provides complete access to all invested principal plus
dividends on a same-day basis. Income derived from certain portfolio holdings
may subject certain investors to the Alternative Minimum Tax.
Purchases
Purchases made for same-day credit must be received by 5:00 p.m. E.T.
Notification must be made to the Institutional Marketing Group by 11:00 a.m.
E.T. on the day the funds will be received. Normally, purchases received will
be credited to earn dividends the following business day. Maximum purchase
without prior notification is $10 million per day.
Redemptions
Shares of the Portfolio may be redeemed for same-day payment until 11:00 a.m.
E.T. Otherwise, redemption proceeds will be sent the next business day.
Maximum redemption without prior notification is $10 million per day.
Please read the prospectus carefully before investing. Institutional investors
who wish to obtain more information and a prospectus about Calvert Tax-Free
Reserves Money Market Portfolio (Class O and Institutional Class) can call
toll-free at 800.317.2274, or write to:
Calvert Group
Attn.: Institutional Marketing Group
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
<PAGE>
PROSPECTUS - April 30, 1998
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Long-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
Investment Objectives
Calvert Tax-Free Reserves Money Market Portfolio seeks to earn the highest
interest income exempt from federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and maturity
characteristics of the Portfolio.
The Money Market Portfolio seeks to maintain a constant net asset value of
$1.00 per share. There can be no assurance that the Portfolio will be
successful in maintaining a constant net asset value of $1.00 per share. An
investment in the Portfolio is neither insured nor guaranteed by the US
Government.
Calvert Tax-Free Reserves Limited-Term Portfolio seeks to earn the highest
level of interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital, and the quality
and maturity characteristics of the Portfolio.
Calvert Tax-Free Reserves Long-Term Portfolio seeks to earn the highest level
of interest income exempt from federal income taxes as is consistent with
prudent investment management, preservation of capital, and the quality and
maturity characteristics of the Portfolio.
Purchase Information
The Money Market Portfolio offers two classes of shares, Class O, described in
and offered by this Prospectus, and Institutional Class, offered by another
Calvert Tax-Free Reserves Prospectus. The Long-Term Portfolio offers three
classes of shares, (i) Class A shares, with a sales charge imposed at the time
you purchase the shares ("front-end sales charge"), (ii) Class B shares, which
impose no front-end sales charge, but will impose a deferred sales charge at
the time of redemption, depending on how long you have owned the shares
("contingent deferred sales charge, " or "CDSC"), and (iii) Class C shares
which impose no front-end sales charge but will impose a CDSC on shares
purchased after May 31, 1998 if sold within one year. See "Alternative Sales
Options." The Limited-Term Portfolio offers only Class A shares, with a
front-end sales charge.
About This Prospectus
Please read this Prospectus before investing. It is designed to provide you
with information you ought to know before investing and to help you decide if
the goals of a Portfolio match your own. Keep this document for future
reference.
A Statement of Additional Information (dated April 30, 1998) for each
Portfolio has been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available upon request from
the Fund: 800.368.2748. The Commission maintains a web site
(http://www.sec.gov) that contains the SAI, material incorporated by
reference, and other information regarding registrants that file
electronically with the Commission.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE FEDERAL OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank, and are not federally insured by the FDIC, the Federal
Reserve Board, or any other agency. When investors sell shares of the Fund,
the value may be higher or lower than the amount originally paid.
FUND EXPENSES
A. Shareholder Transaction Costs Calvert Money Market Portfolio
Class O
Sales Load on Purchases None
Sales Load on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
B. Annual Fund Operating - Expenses -Fiscal Year 1997
(as a percentage of average net assets)
Management Fees 0.45%
Rule 12b-1 Fees None
All Other Expenses 0.20%
Total Fund Operating Expenses1 0.65%
A. Shareholder Transaction Costs Limited-Term Long-Term
Portfolio Portfolio
Maximum Sales Charge on Purchases Class A Class A
(as a percentage of offering price) 1.00% 3.75%
Maximum Contingent Deferred Sales Charge None None
(as a percentage of purchase price or redemption proceeds, as applicable).
A. Shareholder Transaction Costs Class B Class C
Maximum Sales Charge on Purchases
(as a percentage of offering price) None None
Maximum Contingent Deferred Sales Charge 4.00%* 1.00%*
(as a percentage of purchase price or redemption proceeds, as applicable).
B. Annual Fund Operating - Expenses-Fiscal Year 1997
(as a percentage of average net assets)
Management Fees 0.60% 0.61%
Rule 12b-1 Service and Distribution Fees None 0.09%
Other Expenses 0.10% 0.17%
Total Fund Operating Expenses1 0.70% 0.87%
Management Fees 0.61% 0.61%
Rule 12b-1 Service and Distribution Fees 1.00% 1.00%
Other Expenses 0.83% 0.58%
Total Fund Operating Expenses1 2.44% 2.19%
* A contingent deferred sales charge is imposed on the proceeds of Class B
shares redeemed within 4 years, subject to certain exceptions. That charge is
imposed as a percentage of net asset value at the time of purchase or
redemption, whichever is less, and declines form 4% in the first year that
shares are held, to 3% in the second, 2% in the third year, and 1% in the
fourth year. There is no charge on redemptions of Class B shares held for more
than four years. See "Calculation of Contingent Deferred Sales Charge" below.
** A contingent deferred sales charge is imposed on the proceeds of Class C
shares redeemed within one year. That charge is imposed as a percentage of net
asset value at the time of purchase or redemption whichever is less. See
"Calculation of Contingent Deferred Sales Charge."
1Net Fund Operating Expenses after reduction for fees paid indirectly were: MM
Class O - 0.64%, Limited-Term Class A - 0.69% and Long-Term Class A - 0.85%.
Example: You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return; (2) redemption at the end of each period; (3) for Class
A shares, payment of maximum initial sales charge at time of purchase, and (4)
payment of maximum applicable contingent deferred sales charge for Class B and
C.
Redemption at end of period
Fund 1 Year 3 Years
Money Market
Class O $7 $21
Limited-Term
Class A $17 $32
Long-Term
Class A $46 $64
Class B
Assuming a complete
redemption at end of period $65 $96
Assuming no redemption $25 $76
Class C
Assuming a complete
redemption at end of period $32 $69
Assuming no redemption $22 $69
Fund 5 Years 10 Years
Money Market
Class O $36 $81
Limited-Term
Class A $49 $96
Long-Term
Class A $84 $141
Class B
Assuming a complete
redemption at end of period $130 $202
Assuming no redemption $130 $202
Class C
Assuming a complete
redemption at end of period $117 $252
Assuming no redemption $117 $252
The example, which is hypothetical, should not be considered a representation
of past or future expenses. Actual expenses may be higher or lower than those
shown.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor in the
Portfolios may bear directly (shareholder transaction costs) or indirectly
(annual fund operating expenses).
Shareholder Transaction Costs
are charges you pay when you buy or sell shares of a Portfolio. If you request
a wire redemption of less than $1,000, you will be charged a $5 wire fee. See
"Reduced Sales Charges" at Exhibit A to see if you qualify for possible
reductions in the sales charge for the Limited- or Long-Term Portfolios.
Annual Fund Operating Expenses
are based on historical expenses, except Other Expenses for Class B and C of
the Long-Term Portfolio, which are estimates. Management Fees are paid by the
Fund to Calvert Asset Management Company, Inc. ("Investment Advisor") for
managing each Portfolio's investments and business affairs, and include an
administrative service fee paid to Calvert Administrative Services Company,
Inc. Each Portfolio incurs Other Expenses for maintaining shareholder records,
furnishing shareholder statements and reports, and other services. Management
Fees and Other Expenses have already been reflected in the share price for the
Limited- and Long-Term Portfolios, and in the yield for the Money Market
Portfolio and are not charged directly to individual shareholder accounts.
The Rule 12b-1 fees of the Long-Term Portfolio include an asset-based sales
charge. Thus, long-term shareholders in the Portfolio may pay more in total
sales charges than the economic equivalent of the maximum front-end sales
charge permitted by rules of the National Association of Securities Dealers,
Inc. In addition to the compensation itemized above (sales charge and Rule
12b-1 service and distribution fees), certain broker/dealers and/or their
salespersons may receive certain compensation of the sale and distribution of
the securities or for services to the Fund. See the Statement of Additional
Information, "Method of Distribution."
Financial Highlights
The following tables provide information about the financial history of the
Class O shares of the Money Market Portfolio and the Class A shares of
Limited- and Long-Term Portfolios. They express the information in terms of a
single share outstanding for the respective Portfolio throughout each period.
The tables have been audited by those independent accountants whose report is
included in Calvert Tax-Free Reserves Annual Report to Shareholders for the
periods presented. The tables should be read in conjunction with the financial
statements and their related notes. The current Annual Report to Shareholders
is incorporated by reference into the Statement of Additional Information.
Class O Shares
Year Ended December 31,
Money Market Portfolio 1997 1996
Net asset value,
beginning of year $1.00 $1.00
Income from investment operations
Net investment income 0.33 .033
Distributions from
Net investment income (0.33) (.033)
Net asset value, end of year $1.00 $1.00
Total return2 3.38% 3.33%
Ratio to average net assets:
Net investment income 3.32% 3.28%
Total expenses3 .65% .65%
Net expenses .64% .64%
Net assets, end of year
(in thousands) $1,405,350 $1,550,731
Number of shares outstanding at
end of year (in thousands) 1,405,404 1,550,724
Money Market Portfolio 1995 1994
Net asset value,
beginning of year $1.00 $1.00
Income from investment operations
Net investment income .040 .028
Distributions from
Net investment income (.040) (.028)
Net asset value, end of year $1.00 $1.00
Total return2 4.02% 2.81%
Ratio to average net assets:
Net investment income 3.93% 2.75%
Total expenses3 .62% -
Net expenses .61% .62%
Net assets, end of year
(in thousands) $1,740,839 $1,344,595
Number of shares outstanding at
end of year (in thousands) 1,740,948 1,344,668
2 Total return prior to 1994 is not audited.
3 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.
Year Ended December 31,
Limited-Term Portfolio 1997 1996
Net asset value, beginning of year $10.69 $10.72
Income from investment operations
Net investment income .42 .44
Net realized and unrealized gain
(loss) on investments .01 (.03)
Total from investment operations .43 .41
Distributions from
Net investment income (.42) (.44)
Total increase (decrease) in net asset value .01 (.03)
Net asset value, end of year $10.70 $10.69
Total return4 4.07% 3.94
Ratio to average net assets:
Net investment income 3.91% 4.12%
Total expenses5 .70% .71%
Net expenses .69% .70%
Portfolio turnover 52% 45%
Net assets, end of year (in thousands) $490,180 $512,342
Number of shares outstanding at
end of year (in thousands) 45,808 47,922
Year Ended December 31,
Limited-Term Portfolio 1995 1994
Net asset value, beginning of year $10.59 $10.72
Income from investment operations
Net investment income .45 .39
Net realized and unrealized gain
(loss) on investments .13 (.13)
Total from investment operations .58 .26
Distributions from
Net investment income (.45) (.39)
Total increase (decrease) in
net asset value .13 (.13)
Net asset value, end of year $10.72 $10.59
Total return4 5.55% 2.42%
Ratio to average net assets:
Net investment income 4.21% 3.60%
Total expenses5 .71% -
Net expenses .70% .66%
Portfolio turnover 33% 27%
Net assets, end of year (in thousands) $457,707 $544,822
Number of shares outstanding at
end of year (in thousands) 42,690 51,424
4 Total return is not annualized and does not reflect deduction of
front-end sales charges.
Total return prior to 1989 is not audited.
5 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.
Year Ended December 31,
1993 1992
$10.68 $10.65
.38 .49
.04 .03
.42 .52
(.38) (.49)
.04 .03
$10.72 $10.68
4.02% 4.99%
3.59% 4.58%
- -
.67% .71%
14% 5%
$663,305 $567,419
61,861 53,140
Year Ended December 31,
1991 1990
$10.61 $10.61
.64 .67
.03 .00
.67 .67
(.63) (.67)
.04 .00
$10.65 $10.61
6.46% 6.50%
5.99% 6.35%
- - -
.73% .77%
1% 12%
$294,308 $151,580
27,644 14,286
Year Ended December 31,
Limited-Term Portfolio 1989 1988
Net asset value, beginning $10.55 $10.45
Income from investment operations
Net investment income .67 .60
Net realized and unrealized gain
(loss) on investments .06 .10
Total from investment operations .73 .70
Distributions from
Net investment income (.67) (.60)
Total increase (decrease) in
net asset value .06 .10
Net asset value, ending $10.61 $10.55
Total return6 7.12% 6.82%
Ratio to average net assets:
Net investment income 6.35% 5.71%
Total expenses7 - -
Net expenses .78% .81%
Portfolio turnover 21% 68%
Net assets, ending (in thousands) $132,510 $145,305
Number of shares outstanding,
ending (in thousands) 12,487 13,771
6 Total return is not annualized and does not reflect deduction of
front-end sales charges.
Total return prior to 1989 is not audited.
7 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.
Year Ended December 31,
Long-Term Portfolio 1997 1996
Net asset value, beginning of year $16.81 $17.31
Income from investment operations
Net investment income .87 .93
Net realized and unrealized gain
(loss) on investments .50 (.46)
Total from investment operations 1.37 .47
Distributions from
Net investment income (.87) (.95)
Net realized gains (.03) (.02)
Total distributions (.90) (.97)
Total increase (decrease) in net asset value .47 (.50)
Net asset value, end of year $17.28 $16.81
Total return6 8.41% 2.89%
Ratio to average net assets:
Net investment income 5.16% 5.50%
Total expenses7 .87% .89%
Net expenses .85% .86%
Expenses reimbursed - -
Portfolio turnover 41% 41%
Net assets, end of year (in thousands) $50,966 $52,945
Number of shares outstanding at
end of year (in thousands) 2,950 3,149
Year Ended December 31,
(Cont'd)
Long-Term Portfolio 1995 1994
Net asset value, beginning of year $15.83 $17.15
Income from investment operations
Net investment income .95 .93
Net realized and unrealized gain
(loss) on investments 1.53 (1.33)
Total from investment operations 2.48 (.40)
Distributions from
Net investment income (.91) (.92)
Net realized gains (.09) -
Total distributions (1.00) (.92)
Total increase (decrease) in net asset value (1.48) (1.32)
Net asset value, end of year $17.31 $15.83
Total return6 16.05% (2.30)%
Ratio to average net assets:
Net investment income 5.71% 5.73%
Total expenses7 .87% -
Net expenses .85% .81%
Expenses reimbursed - -
Portfolio turnover 58% 98%
Net assets, end of year (in thousands) $57,359 $47,267
Number of shares outstanding at
end of year (in thousands) 3,314 2,985
Year Ended December 31,
Long-Term Portfolio 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) on investments .83 .20
Total from investment operations 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 return8 11.12% 7.60%
Ratio to average net assets:
Net investment income 5.59% 6.06%
Total expenses9 - -
Net expenses .78% .82%
Expenses reimbursed - -
Portfolio turnover 97% 196%
Net assets, ending (in thousands) $55,204 $45,665
Number of shares outstanding,
ending (in thousands) 3,219 2,799
Year Ended December 31,
(Cont'd)
Long-Term Portfolio 1991
Net asset value, beginning $15.35
Income from investment operations
Net investment income .97
Net realized and unrealized gain
(loss) on investments .78
Total from investment operations 1.75
Distributions from
Net investment income (.99)
Net realized gains -
Total distributions (.99)
Total increase (decrease)
in net asset value .76
Net asset value, ending $16.11
Total return8 11.77%
Ratio to average net assets:
Net investment income 6.39%
Total expenses9 -
Net expenses .78%
Expenses reimbursed -
Portfolio turnover 276%
Net assets, ending (in thousands) $43,774
Number of shares outstanding,
ending (in thousands) 2,718
8 Total return is not annualized and does not reflect deduction of
front-end sales charges.
Total return prior to 1989 is not audited.
9 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.
Year Ended December 31,
1990 1989 1988
$15.64 $15.20 $14.75
.97 1.03 1.01
(.27) .41 .46
.70 1.44 1.47
(.99) (1.00) (1.02)
- - -
(.99) (1.00) (1.02)
(.29) .44 .45
$15.35 $15.64 $15.20
4.74% 9.81% 10.27%
6.60% 6.66% 6.78%
- - -
.82% .85% .85%
- - .04%
264% 284% 553%
$40,182 $46,402 $43,101
2,618 2,967 2,835
INVESTMENT OBJECTIVE AND POLICIES
Money Market Portfolio
The Money Market Portfolio seeks to earn the highest level of interest income
exempt from federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics of the Portfolio.
The Money Market Portfolio invests primarily in a diversified portfolio of
municipal obligations whose interest is exempt from federal income tax.
Municipal obligations in which the Portfolio invests are short-term, fixed and
variable rate instruments of minimal credit risk and of high quality. The
Portfolio invests in municipal bonds and notes and tax-exempt commercial paper
within the two highest credit ratings categories or, if unrated, are
determined by the Advisor to be of comparable quality. Short-term obligations
have remaining maturities of one year or less. The Portfolio maintains an
average weighted maturity of 90 days or less.
Limited-Term Portfolio
The Limited-Term Portfolio seeks to earn the highest level of interest income
exempt from federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics of the Portfolio.
The Limited-Term Portfolio invests primarily in a diversified portfolio of
municipal obligations with interest exempt from federal income tax. Municipal
obligations in which the Portfolio invests are fixed and variable rate
investment-grade (medium and higher) obligations. Fixed rate investments are
limited to obligations with remaining maturities of 3 years or less; variable
rate investments may have longer maturities.
Long-Term Portfolio
The Long-Term Portfolio seeks to earn the highest level of interest income
exempt from federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics of the Portfolio.
The Long-Term Portfolio invests primarily in a diversified portfolio of long
term, investment-grade municipal obligations, the interest of which is exempt
from federal income tax. Investments by the Portfolio are not limited as to
remaining maturities.
Municipal Obligations
Municipal obligations in which the Limited- and Long-Term Portfolios may
invest include, but are not limited to general obligation bonds and notes of
state and local issuers, revenue bonds of various transportation, housing,
utilities (e.g. water and sewer), hospital and other state and local
government authorities, tax and revenue anticipation notes and bond
anticipation notes, municipal leases, and certificates of participation
therein, and private activity bonds. See further description below and the
Statement of Additional Information.
Credit Quality
The credit quality of municipal obligations is determined by reference to a
commercial credit rating service, such as Moody's Investors Service, Inc. or
Standard & Poor's Corporation. If an instrument is not rated, credit quality
is determined by the Advisor under the supervision of the Board of Trustees.
Investment grade, as determined by a NRSRO, is currently defined as the top
four rating categories, i.e., AAA/Aaa, AA/Aa, A and BBB/Baa. Though still
investment grade, securities rated BBB/Baa possess certain speculative
elements and are generally more susceptible to changing market conditions.
There is no limitation on the percentage of each Portfolio's assets that may
be invested in unrated obligations; such obligations may be less liquid than
rated obligations of comparable quality. The ratings used by these services
are described in the Appendix to the Statement of Additional Information.
Variable Rate Obligations
Each Portfolio may invest in variable rate obligations. Variable rate
obligations have a yield that is adjusted periodically based on changes in the
level of prevailing interest rates. Floating rate obligations have an interest
rate fixed to a known lending rate, such as the prime rate, and are
automatically adjusted when the known rate changes. Variable rate obligations
lessen the capital fluctuations usually inherent in fixed income investments.
This diminishes the risk of capital depreciation of investment securities in a
Portfolio and, consequently, of Portfolio shares. However, if interest rates
decline, the yield of the invested Portfolio will decline, causing the
Portfolio and its shareholders to forego the opportunity for capital
appreciation of the Portfolio's investments and of their shares.
Demand Notes
Each Portfolio may invest in floating rate and variable rate demand notes.
Demand notes provide that the holder may demand payment of the note at its par
value plus accrued interest by giving notice to the issuer. To ensure the
ability of the issuer to make payment on demand, the note may be supported by
an unconditional bank letter of credit.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is, if
the market interest rates rise, the current principal value of a bond will
decline.
Municipal Leases - Money Market Portfolio
The Money Market Portfolio may invest in structured money market instruments,
where the underlying security is a municipal lease. Generally, such
instruments are structured as tax-exempt commercial paper or variable rate
demand notes, and are typically secured by an unconditional letter of credit.
In the unlikely event that the letter of credit is not honored, the lease
would present special risks, such as the chance that the municipality might
not appropriate funding for the lease payments. Thus, the Advisor considers
risk of cancellation in its investment analysis. Certain leases may be
considered illiquid. In all cases, the Money Market Portfolio invests only in
high-quality instruments (rated in one of the two highest rating categories,
or if unrated, of comparable credit quality) that meet the requirements of SEC
Rule 2a-7 regarding credit quality and maturity. See the Statement of
Additional Information.
Municipal Leases - Limited-Term and Long-Term Portfolios
The Limited-Term and Long-Term Portfolios may invest in municipal leases. A
municipal lease is an obligation of a government or governmental authority,
not subject to voter approval, used to finance capital projects or equipment
acquisitions and payable through periodic rental payments. There are
additional risks inherent in investing in this type of municipal security.
Unlike municipal notes and bonds, where a municipality is obligated by law to
make interest and principal payments when due, funding for lease payments
needs to be appropriated each fiscal year in the budget. It is possible that a
municipality will not appropriate funds for lease payments. The Advisor
considers risk of cancellation in its investment analysis. The Portfolio may
purchase unrated municipal leases. The Advisor, under supervision of the Board
of Trustees, is responsible for determining the credit quality of such leases,
on an ongoing basis. The Limited- and Long-Term Portfolios will invest only in
municipal leases that meet its credit quality restrictions. Certain municipal
leases may be considered illiquid and subject to the Portfolios' limit on
illiquid investments. The Board of Trustees has established guidelines for
determining whether a lease is illiquid. See the Statement of Additional
Information for the factors considered by the Board in determining liquidity
and valuation of leases.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis; that
is, delivery and payment for the securities normally take place 15 to 45 days
after the date of the transaction. The payment obligation and the yield that
will be received on the securities are each fixed at the time the buyer enters
into the commitment. The Portfolios will only make commitments to purchase
these securities with the intention of actually acquiring them, but may sell
these securities before the settlement date if it is deemed advisable as a
matter of investment strategy.
Temporary Investments
For liquidity purposes or pending the investment of the proceeds of the sale
of its shares, the Portfolios may invest in and derive up to 20% of its income
from taxable short-term money market type investments. Interest earned from
such taxable investments will be taxable to you as ordinary income unless you
are otherwise exempt from taxation.
Financial Futures, Options, and Other Investment Techniques
The Long-Term Portfolio can use various techniques to increase or decrease its
exposure to changing security prices, interest rates, or other factors that
affect security values. These techniques may involve derivative transactions
such as buying and selling options and futures contracts and leveraged notes,
entering into swap agreements, and purchasing indexed securities. The
Portfolio can use these practices either as substitution or as protection
against an adverse move in the Long-Term Portfolio to adjust the risk and
return characteristics of the Portfolio. If the Advisor judges market
conditions incorrectly or employs a strategy that does not correlate well with
the Portfolio's investments, or if the counterparty to the transaction does
not perform as promised, these techniques could result in a loss. These
techniques may increase the volatility of a fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. Any
instruments determined to be illiquid are subject to the Long-Term Portfolio's
10% restriction on illiquid securities. See below and the Statement of
Additional Information for more details about these strategies.
The Long-Term Portfolio buys certain financial futures contracts to hedge its
investments in municipal bonds.
Under certain circumstances, the Long-Term Portfolio may purchase and sell
certain financial futures contracts and certain options on futures contracts.
A financial futures contract obligates the seller of a contract to deliver -
and the purchaser of a contract to take delivery of - the type of financial
instrument covered by the contract. In the case of index-based futures
contracts, the obligation is in the form of a cash settlement at a specific
time for a specific price.
The Long-Term Portfolio may only engage in futures transactions for the
purpose of hedging its investments in municipal bonds against declines in
value and to hedge against increases in the cost of securities it intends to
purchase. A sale of financial futures contracts may provide a hedge against a
decline in the value of portfolio securities because such depreciation may be
offset, in whole or in part, by an increase in the value of the position in
the futures contracts. Similarly, a purchase of financial futures contracts
may provide a hedge against an increase in the cost of securities intended to
be purchased, because such appreciation may be offset, in whole or in part, by
an increase in the value of the position in the futures contracts.
Types of futures contracts purchased
The Long-Term Portfolio intends to deal in futures contracts based upon The
Bond Buyer Municipal Bond Index, a price-weighted measure of the market value
of 40 large, recently-issued tax-exempt bonds, and to engage in transactions
in exchange-listed futures contracts on US Treasury securities. The Long-Term
Portfolio may also engage in transactions in other futures contracts, such as
futures contracts on other municipal bond indexes that become available, if
the investment advisor believes such contracts would be appropriate for
hedging its investments in municipal bonds.
When the Long-Term Portfolio purchases a futures contract, it will maintain an
amount of cash, cash equivalents (for example, commercial paper and daily
tender adjustable notes) or short-term high grade fixed income securities in a
segregated account with its custodian, so that the segregated amount plus the
amount of initial and variation margin held in the account of its broker
equals the market value of the futures contract, thereby ensuring that the use
of such futures contract is unleveraged. It is not anticipated that
transactions in futures will have the effect of increasing portfolio turnover.
Closing out a futures position - Risks
The Long-Term Portfolio may close out its position in a futures contract or an
option on a futures contract only by entering into an offsetting transaction
on the exchange on which the position was established and only if there is a
liquid secondary market for the futures contract. If it is not possible to
close a futures position entered into by the Long-Term Portfolio, it could be
required to make continuing daily cash payments of variation margin in the
event of adverse price movements. In such situations, if the Long-Term
Portfolio has insufficient cash, it may have to sell portfolio securities to
meet daily variation margin requirements at a time when it would be
disadvantageous to do so. The inability to close futures or options positions
could have an adverse effect on the Long-Term Portfolio's ability to hedge
effectively. There is also risk of loss by the Portfolio of margin deposits in
the event of bankruptcy of a broker with whom the Long-Term Portfolio has an
open position in a futures contract. The success of a hedging strategy depends
on the Advisor's ability to predict the direction of interest rates and other
economic factors. The correlation is imperfect between movements in the prices
of futures or options contracts, and the movements of prices of the securities
which are subject to the hedge. If the Long-Term Portfolio used a futures or
options contract to hedge against a decline in the market, and the market
later advances (or vice-versa), the Portfolio may suffer a greater loss than
if it had not hedged.
Please refer to the Long-Term Portfolio's Statement of Additional Information
for further information on financial futures contracts.
Other Policies - Money Market, Limited- and Long-Term Portfolios
Each Portfolio may temporarily borrow money from banks to meet redemption
requests, but such borrowing may not exceed 10% of the value of its total
assets. Each Portfolio has adopted certain fundamental investment restrictions
which are discussed in detail in its Statement of Additional Information.
Unless specifically noted otherwise, the investment objective, policies and
restrictions of each Portfolio are fundamental and may not be changed without
shareholder approval.
YIELD AND TOTAL RETURN
Yield refers to income generated by an investment over a period of time.
The Money Market Portfolio may advertise "yield" and "effective yield" for
each class. Yield figures are based on historical earnings and are not
intended to indicate future performance. The "yield" of the Money Market
Portfolio refers to the actual income generated by an investment in the
Portfolio over a particular base period, stated in the advertisement. If the
base period is less than one year, the yield will be "annualized." That is,
the amount of income generated by the investment during the base period is
assumed to be generated over a one-year period and is shown as a percentage of
the investment. The "effective yield" is calculated like yield, but assumes
reinvestment of earned income. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed reinvestment.
Limited- and Long-Term Portfolios
Yield measures the current investment performance of each class; that is, the
rate of income on a Portfolio's investments divided by the share price. Yield
is computed by annualizing the result of dividing the net investment income
per share over a 30 day period by the maximum offering price per share on the
last day of that period. Yields are calculated according to accounting methods
that are standardized for all stock and bond funds.
Taxable Equivalent Yield - Money Market, Limited- and Long-Term Portfolios
Each Portfolio may advertise its "taxable equivalent yield" for each class.
The taxable equivalent yield is the yield that you would be required to obtain
from taxable investments to equal the Portfolio's yield, all or a portion of
which may be exempt from federal income taxes. The taxable equivalent yield is
computed by taking the portion of the Portfolio's yield exempt from regular
federal income tax and multiplying the exempt yield by a factor based on a
stated income tax rate, then adding the portion of the yield that is not
exempt from regular federal income tax. The factor used to calculate the
taxable equivalent yield is the reciprocal of the difference between one and
the applicable income tax rate, which will be stated in the advertisement.
The Limited- and Long-Term Portfolios may advertise total return for each
class. Total return is based on historical results and is not intended to
indicate future performance.
Total return includes not only the effect of income dividends but also any
change in net asset value, or principal amount, during the stated period. The
total return of a class shows its overall change in value, including changes
in share price and assuming all of the dividends and capital gain
distributions are reinvested. A cumulative total return reflects the
performance over a stated period of time. An average annual total return
("return without maximum load") reflects the hypothetical annual compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average annual
returns tend to smooth out variations in the returns, you should recognize
that they are not the same as actual year-by-year results. Both types of total
return usually will include the effect of paying the sales charge. Of course,
total returns will be higher if sales charges are not taken into account.
Quotations of "return without maximum load" do not reflect deduction of the
sales charge. You should consider these return figures only if you qualify for
a reduced sales charge, or for purposes of comparison with comparable figures
which also do not reflect sales charges, such as mutual fund averages compiled
by Lipper Analytical Services, Inc. Further information about the Portfolio's
performance is contained in its Annual Report to Shareholders, which may be
obtained without charge.
MANAGEMENT OF THE FUND
The Board of Trustees supervises Portfolio activities and reviews its
contracts with companies that provide it with services.
The Portfolios are series of Calvert Tax-Free Reserves (the "Fund"), an
open-end management investment company, organized as a Massachusetts business
trust on October 20, 1980. The series of the Fund include the Money Market
Portfolio, Limited-Term Portfolio, Long-Term Portfolio, California Money
Market Portfolio, and the Vermont Municipal Portfolio.
The Money Market Portfolio offer two classes of shares, Class O and the
Institutional Class. The Long-Term Portfolio offers three classes of shares -
Class A, Class B, and Class C. The Classes have different sales charges and
other expenses which will result in different performance. They also have
different shareholder servicing, conversion and exchange privileges. For
information on the Institutional Class, contact Calvert at 1-800-317-2274. The
Money Market Portfolio Institutional Class is not offered by this prospectus.
The Fund is not required to hold annual shareholder meetings for any of the
Portfolios, but special meetings may be called for such purposes as electing
Trustees, changing fundamental policies, and approving management contracts.
As a shareholder, you receive one vote for each share of a Portfolio you own.
Matters affecting Portfolios or classes differently, such as Distribution
Plans, will be voted on separately by the affected Portfolio(s) or class(es).
Portfolio Managers
Investment selections for the Limited- and Long-Term Portfolios are made by
David R. Rochat and Reno J. Martini. Mr. Rochat is a Director and Senior Vice
President of Calvert Asset Management Company, Inc. He is a Trustee/Director
and Senior Vice President of First Variable Rate Fund, Calvert Tax-Free
Reserves, Calvert Cash Reserves, The Calvert Fund, and Calvert Municipal Fund,
Inc., and is primarily responsible for setting the investment strategy of the
trading department, utilizing over 20 years' experience in the securities and
investment community. Mr. Rochat joined Calvert Group in 1981 after
establishing and managing the municipal bond department at Donaldson, Lufkin,
& Jenrette Securities Corporation. Mr. Martini, a Director of Calvert Group,
Ltd., and Senior Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc., oversees management of all Calvert Group portfolios.
He has extensive experience in evaluating and purchasing municipal securities.
Calvert Group is one of the largest investment management firms in Washington,
DC area.
Calvert Group, Ltd., parent of the Fund's investment advisor, shareholder
servicing agent, and distributor, is a subsidiary of Acacia Mutual Life
Insurance Company of Washington, DC Calvert Group is one of the largest
investment management firms in the Washington, DC area. Calvert Group, Ltd.
and its subsidiaries are located at 4550 Montgomery Ave., Suite 1000N,
Bethesda, MD 20814. As of December 31, 1997, Calvert Group managed and
administered assets in excess of $5.0 billion and more than 200,000
shareholder and depositor accounts.
Calvert Asset Management serves as Advisor to the Fund.
Calvert Asset Management Company, Inc. (the "Advisor") is the Fund's
investment advisor. The Advisor provides the Fund with investment supervision
and management, administrative services and office space; furnishes executive
and other personnel to the Fund; and pays the salaries and fees of all
Trustees who are affiliated persons of the Advisor. The Advisor may also
assume and pay certain advertising and promotional expenses of the Fund and
reserves the right to compensate broker/dealers in return for their
promotional or administrative services. For its services during fiscal year
1997, the Advisor received a fee equal to 0.59% of the Limited-Term
Portfolio's average net assets, and 0.60% of the Long-Term Portfolio's average
net assets. The Advisor received a fee of 0.45% from the Money Market
Portfolio until August 1, 1997, at which time the fee changed to 0.20%.
Calvert Administrative Services Company provides administrative services for
the Fund.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor,
has been retained by Calvert Tax-Free Reserves to provide certain
administrative services necessary to the conduct of its affairs, including the
preparation of regulatory filings and shareholder reports, the daily
determination of its net asset value per share and dividends, and the
maintenance of its portfolio and general accounting records. For providing
such services, prior to August 1, 1997, CASC received a total fee from Calvert
Tax-Free Reserves of $200,000 per year, allocated among the Portfolios based
on assets. Effective August 1, 1997, the fee structure changed. Class O of the
Money Market Portfolio pays an annual rate of 0.26%. The remaining Portfolios
of the Fund pay an annual fee of $80,000, allocated among the Portfolios based
on assets.
Calvert Distributors, Inc. serves as underwriter to market the Fund's shares.
Calvert Distributors, Inc. ("CDI") is the Fund's principal underwriter and
distributor. Under the terms of its underwriting agreement with the Fund, CDI
markets and distributes the Fund's shares and is responsible for preparation
of advertising and sales literature, and printing and mailing of prospectuses
to prospective investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc. is the Fund's shareholder servicing agent.
National Financial Data Services, Inc. ("NFDS") 1004 Baltimore, Kansas City,
Missouri 64105, is the transfer and dividend disbursing agent for the Fund.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares of the Portfolios in several ways which are described here.
An account application accompanies this prospectus. A completed and signed
application is required for each new account you open, regardless of the
method you choose for making your initial investment. Additional forms may be
required from corporations, associations, and certain fiduciaries. If you have
any questions or need extra applications, call your broker, or Calvert Group
at 800.368.2748.
Limited-Term Portfolio - Class A Only
Shares are offered at net asset value plus a front-end sales charge as follows:
Allowed to
As a % of As a % of Brokers as a
Amount of offering net amount % of offering
Investment price invested price
Less than $50,000 1.00% 1.01% 1.00%
$50,000 but less than
$100,000 0.75% 0.76% 0.75%
$100,000 but less than
$250,0000 .50% 0.50% 0.50%
$250,000 and over 0.00% 0.00% 0.00%*
*CDI may pay the dealer a finder's fee of up to 0.10% of the amount of
purchase on Limited-Term purchases of over $1 million. CDI reserves the right
to recoup any portion of the amount paid to the dealer if the investor redeems
some or all of the shares from the Funds within twelve months of the time of
purchase.
Sales charges may be reduced or eliminated in certain cases. See Exhibit A to
this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker/dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance, your broker/dealer, or other
financial service firm through which your account is held, currently will be
paid periodic service fees at an annual rate of up to 0.15% for the
Limited-Term Portfolio of the average daily net asset value of the Class A
shares held in accounts maintained by that firm.
Long-Term Portfolio
Alternative Sales Options
The Long-Term Portfolio offers three classes of shares:
Class A Shares - Front-End Load Option
Class A shares are sold with a front-end sales charge at the time of purchase.
Class A shares are not subject to a sales charge when they are redeemed.
Class B Shares - Back-End Load Option
Class B shares are sold without a sales charge at the time of purchase, but
are subject to a deferred sales charge if they are redeemed within four
calendar years after purchase. Class B shares will automatically convert to
Class A shares at the end of six calendar years after purchase.
Class C shares - Level Load Option
Class C shares are sold without a front-end sales charge at the time of
purchase. They are subject to a deferred sales charge if they are redeemed
within one year after purchase.
Considerations for deciding which class of shares to buy.
Income distributions for Class A shares will probably be higher than those for
Class B and C shares, because Class B and C have higher distribution expenses,
(See below). You should consider Class A shares if you qualify for a reduced
sales charge under Class A or if you plan to hold the shares for several
years. The Long-Term Portfolio will not normally accept any purchase of Class
B shares in the amount of $250,000 or more. Class C shares are not available
for investments of $1 million or more. Brokers or others may receive different
levels of compensation depending on which class of shares they sell.
Class A
Class A shares of the Long-Term Portfolio are offered at net asset value plus
a front-end sales charge as follows:
Allowed to
As a % of As a % of Brokers as a
Amount of offering net amount % of offering
Investment price invested price
Less than $50,000 3.75% 3.90% 3.00%
$50,000 but less than
$100,000 3.00% 3.09% 2.25%
$100,000 but less than
$250,000 2.25% 2.30% 1.75%
$250,000 but less than
$500,000 1.75% 1.78% 1.25%
$500,000 but less than
$1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.00%*
*CDI may pay the dealer a finder's fee of up to 0.25% of the amount of
purchase on Long-Term purchases of over $1 million. CDI reserves the right to
recoup any portion of the amount paid to the dealer if the investor redeems
some or all of the shares from the Funds within twelve months of the time of
purchase.
Sales charges may be reduced or eliminated in certain cases. See Exhibit A to
this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a portion to
your broker/dealer. Upon written notice to dealers with whom it has dealer
agreements, CDI may reallow up to the full applicable sales charge. Dealers to
whom 90% or more of the entire sales charge is reallowed may be deemed to be
underwriters under the Securities Act of 1933.
In addition to any sales charge reallowance, your broker/dealer, or other
financial service firm through which your account is held, currently will be
paid periodic service fees at an annual rate of up to, up to 0.25% for the
Long-Term Portfolio of the average daily net asset value of the Class A shares
held in accounts maintained by that firm.
Class A Distribution Plan
The Long-Term Portfolio has adopted a Class A Distribution Plan (the "Class A
Distribution Plan"), which provides for payments, which are currently limited
by the Fund's Underwriting Agreement to 0.25% annually of the average daily
net asset value of Class A shares, to pay expenses associated with the
distribution and servicing of those shares. Amounts paid by the Fund to CDI
under the Distribution Plan are used to pay to dealers and others, including
CDI salespersons who service accounts, service fees at an annual rate of up to
0.25% of the average daily net asset value of Class A shares, and to pay CDI
for its marketing and distribution expenses, including, but not limited to,
preparation of advertising and sales literature and the printing and mailing
of prospectuses to prospective investors. For fiscal year 1997, the Long-Term
Portfolio paid 0.09% in Class A Distribution Plan expenses.
Class B Shares
Class B shares of the Long-Term Portfolio are offered at net asset value,
without a front-end sales charge. With certain exceptions, the Long-Term
Portfolio will impose a deferred sales charge at the time of redemption as
follows:
Contingent Deferred Sales
Charge As A Percentage Of
Redemption During Net Asset Value At Redemption
1st Year Since Purchase 4%
2nd Year Since Purchase 3%
3rd Year Since Purchase 2%
4th Year Since Purchase 1%
5th Year Since Purchase and thereafter None
If imposed, the deferred sales charge is deducted form the redemption proceeds
otherwise payable to you. the deferred sales charge is retained by CDI. See
"Calculation of Contingent Deferred Sales charges and Waiver of Sales Charges"
below.
Class B shares that have been outstanding for six calendar years will
automatically convert to Class A shares, which are subject to a lower
Distribution Plan charge, without imposition of a front-end sales charge or
exchange fee. The Class B shares so converted will no longer be subject to the
higher expenses borne by Class B shares. Because the net asset value per share
of the Class A shares may be higher or lower than that of the Class B shares
at the time of conversion, although the dollar value will be the same, a
shareholder may receive more or less Class A shares than the number of Class B
shares converted. Under current law, it is the Advisor's opinion that such a
conversion will not constitute a taxable event under federal income tax law.
In the event that this ceases to be the case, the Board of Trustees will
consider what action, if any, is appropriate and in the best interests of the
Class B shareholders.
Class B Distribution Plan
The Long-Term Portfolio has adopted a Distribution Plan with respect to its
Class B shares (the "Class B Distribution Plan"), which provides for payments
to the underwriter at an annual rate of up to 1.00% of the average daily net
asset value of Class B shares, to pay expenses of the distribution of Class B
shares. Amounts paid by the Portfolio under the Class B Distribution Plan are
currently used by CDI to pay others (1) a commission at the time of purchase
of 3% of the value of each share sold; and/or (2) service fees at an annual
rate of 0.25% of the average daily net asset value of shares sold by such
others, beginning in the 13th month after purchase.
Class C Shares
Class C shares are not available through all brokers. Class C shares are
offered at net asset value, without a front-end sales charge. With certain
exceptions, the Long-Term Portfolio may impose a deferred sales charge of
1.00% on Class C shares redeemed during the first year after purchase. If
imposed, the deferred sales charge is deducted from the redemption proceeds
otherwise payable to you. The deferred sales charge is retained by CDI. See
"Calculation of Contingent Deferred Sales Charges and Waiver of Sales Charges"
below.
Class C Distribution Plan
The Long-Term Portfolio has adopted a Distribution Plan with respect to Class
C shares (the "Class C Distribution Plan"), which provides for payments at an
annual rate of up to 1.00% of the average daily net asset value of Class C
shares, to pay expenses of the distribution and servicing of Class C shares.
Amounts paid by each fund under the Class C Distribution Plan are used by CDI
to pay brokers and other selling firms (1) a commission at the time of
purchase of 1.00% of the value of each share sold, and (2) beginning in the
13th month after purchase, quarterly compensation at an annual rate of up to
0.75%, plus a service fee as described above under "Class A Distribution
Plan," of up to 0.25%, of the average daily net asset value of each share sold
by such others.
Calculation of Contingent Deferred Sales Charge and Waiver of Sales Charges
Class B and Class C shares that are redeemed will not be subject to a
contingent deferred charge to the extent that the value of such shares
represents (1) reinvestment of dividends or capital gains distributions, (2)
shares held more than four years for Class B (one year for Class C) or (3)
capital appreciation of shares redeemed. Any contingent deferred sales charge
is imposed on the net asset value of the shares at the time of redemption or
purchase, whichever is lower. Upon request for redemption, shares not subject
to the contingent deferred sales charge will be redeemed first. Thereafter,
shares held the longest will be the first to be redeemed.
The contingent deferred sales charge on Class B Shares will be waived in the
following circumstances: (1) redemption upon the death or disability of the
shareholder, plan participant, or beneficiary ("disability" shall mean a total
disability as evidenced by a determination by the federal Social Security
Administration); (2) minimum required distributions from retirement plan
accounts for shareholders 70 1/2 and older (with the maximum amount subject to
this waiver being based only upon the shareholder's Calvert retirement
accounts); (3) return of an excess contribution or deferral amounts, pursuant
to sections 408(d)(4) or (5), 401(k)(8), or 402)(g)(2), or 401(m)(6) of the
Internal Revenue Code; (4) involuntary redemptions of accounts under
procedures set forth by the Fund's Board of Trustees; (5) a single annual
withdrawal under a systematic withdrawal plan of up to 10% per year of the
shareholder's account balance (minimum account balance $50,000 to establish).
Arrangements with Broker/Dealers and Others
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing registered
representatives who have sold or are expected to sell a minimum dollar amount
of shares of the Fund and/or shares of other Funds underwritten by CDI. CDI
may make expense reimbursements for special training of a dealer's registered
representatives, advertising or equipment, or to defray the expenses of sales
contests. Eligible marketing and distribution expenses may be paid pursuant to
the Fund's Rule 12b-1 Distribution Plan, and in accordance with the rules of
the NASD.
Each of the Distribution Plans may be terminated at any time by a vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class.
How to buy shares
(be sure to specify which class you are buying)
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the appropriate payable to the appropriate
Portfolio and mail it with Portfolio and mail it with
your application to: your investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO Kansas City, MO
64141-6544 64141-6739
By Registered, Calvert Group Calvert Group
Certified, or c/o NFDS, 6th Floor c/o NFDS, 6th Floor
Overnight Mail: 1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
Through Your $2,000 minimum $250 minimum
Financial Professional
At the Calvert Visit the Calvert Office to make investments by check.
Office
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR FINANCIAL PROFESSIONAL, OR CALVERT
GROUP AT 800.368.2745
By Exchange $2,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be established with
the same name(s), address and taxpayer identification number as your existing
Calvert account.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investment
*Please allow sufficient time for Calvert Group to process your initial
request for this service, normally 10 business days. The maximum transaction
amount is $300,000, and your purchase request must be received by 4:00 p.m.
Eastern time.
NET ASSET VALUE
Net asset value per share ("NAV") refers to the worth of one share. NAV is
calculated at the close of each business day, which coincides with the closing
of the regular session of the New York Stock Exchange (normally 4:00 p.m.
Eastern time). The Portfolios are open for business each day the New York
Stock Exchange is open. All purchases of Portfolio shares will be confirmed
and credited to your account in full and fractional shares (rounded to the
nearest 1/100 of a share for the Money Market Portfolio and to 1/1000 of a
share for the Limited- and Long-Term Portfolios). The Money Market Portfolio
may send monthly statements in lieu of immediate confirmations of purchases
and redemptions.
The Money Market Portfolio shares are sold without a sales charge.
Money Market Portfolio: NAV is computed by adding the value of the Money
Market Portfolio's investments plus cash and other assets, deducting
liabilities and then dividing the result by the number of shares outstanding.
The Portfolio's securities are valued according to the "amortized cost"
method, which is intended to stabilize the NAV at $1.00 per share.
Limited-Term and Long-Term Portfolios: NAV is computed by adding the value of
all portfolio holdings, plus other assets, deducting liabilities and then
dividing the result by the number of shares outstanding. Portfolio securities
and other assets are valued based on market quotations, except that securities
maturing within 60 days are valued at amortized cost. If quotations are not
available, securities are valued by a method that the Board of Trustees
believes accurately reflects fair value. For the Long-Term Portfolio, the NAVs
of each class will vary depending on the number of shares outstanding for each
class.
When Your Account will be Credited
Before you buy shares, please read the following information to make sure your
investment is accepted and credited properly.
All of your purchases must be made in US dollars and checks must be drawn on
US banks. No cash will be accepted. The Fund reserves the right to suspend the
offering of shares for a period of time or to reject any specific purchase
order. If your check is not paid, your purchase will be canceled and you will
be charged a $10 fee plus costs incurred by the Portfolio. When you purchase
by check or with Calvert Money Controller, those funds will be on hold for up
to 10 business days from the date of receipt. During that period, the proceeds
of redemptions against those funds will be held until the transfer agent is
reasonably satisfied that the purchase payment has been collected. Drafts
written on the Money Market Portfolio against such funds will be returned for
uncollected funds. To avoid this collection period, you can wire federal funds
from your bank, which may charge you a fee. As a convenience, check purchases
can be received at Calvert's offices for overnight mail delivery to the
transfer agent and will be credited the next business day. Any check purchase
received without an investment slip may cause delayed crediting.
Money Market Portfolio
Your purchase will be processed at the net asset value calculated after your
order is received and accepted. If your wire purchase is received after 5:00
p.m. Eastern time, your account will begin earning dividends on the next
business day. Exchanges begin earning dividends the next business day after
the exchange request is received by mail or telephone. Purchases received by
check will begin earning dividends the next business day after they are
processed to the account.
Limited-Term and Long-Term Portfolios
Your purchase will be processed at the next offering price based on the next
net asset value calculated for each class after your order is received and
accepted (less any applicable CDSC).
Certain financial institutions or broker/dealers that have entered into a
sales agreement with the Distributor may enter confirmed purchase orders on
behalf of customers by phone, with payment to follow within a number of days
of the order as specified by the program. If payment is not received in the
time specified, the financial institution could be held liable for resulting
fees or losses.
Exchanges
Each exchange represents the sale of shares of one Portfolio and the purchase
of shares of another. Therefore, you could realize a taxable gain or loss on
the transaction.
If your investment goals change, the Calvert Group of Funds has a variety of
investment alternatives that includes common stock funds, tax-exempt and
corporate bond funds, and money market funds. The exchange privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond
to changes in your goals or in market conditions. Before you make an exchange
from a Fund or Portfolio, please note the following:
Call your broker or a Calvert representative for information and a prospectus
for any of Calvert's other Funds registered in your state. Read the prospectus
of the Fund or Portfolio into which you want to exchange for relevant
information, including class offerings.
Complete and sign an application for an account in that Fund or Portfolio,
taking care to register your new account in the same name and taxpayer
identification number as your existing Calvert account(s). Exchange
instructions may then be given by telephone if telephone redemptions have been
authorized and the shares are not in certificate form.
Shares on which you have already paid a sales charge at Calvert Group and
shares acquired by reinvestment of dividends and distributions may be
exchanged into another Fund at no additional charge. Shares may only be
exchanged for shares of the same class of another Calvert Group Fund.
No CDSC is imposed on exchanges of shares subject to a CDSC at the time of the
exchange. The applicable CDSC is imposed at the time the shares acquired by
the exchange are redeemed.
Limited-Term and Long-Term Portfolios: Shareholders (and those managing
multiple accounts) who make two purchases and two exchange redemptions of
shares of the same Fund or Portfolio during any 6-month period will be given
written notice that they may be prohibited from making additional investments.
This policy does not prohibit you from redeeming shares of the Funds and do
not apply to trades solely among money market funds.
Each Portfolio reserves the right to terminate or modify the exchange
privilege in the future with 60 days written notice.
Other Calvert Group Services
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers obtain prices, yields, performance information, account balances,
and authorize certain transactions.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the
expense of wiring funds. You can request this free service on your
application. This service allows you to authorize electronic transfers of money
to purchase or sell shares. You use Calvert Money Controller like an
"electronic check" to move money ($50 to $300,000) between your bank account
and your Calvert Group account with one phone call. Allow two business days
after the call for the transfer to take place; for money recently invested,
allow normal check clearing time (up to 10 business days) before redemption
proceeds are sent to your bank.
You may also arrange systematic monthly or quarterly investments (minimum $50)
into your Calvert Group account. After you give us proper authorization, your
bank account will be debited to purchase Portfolio shares. A debit entry will
appear on your bank statement. If you would like to make arrangements for
systematic monthly or quarterly redemptions from your Calvert account, call
your broker or Calvert for more information.
Telephone Transactions
Calvert may record all telephone calls.
You may purchase, redeem, or exchange shares, wire funds and use Calvert Money
Controller by telephone if you have pre-authorized service instructions. You
automatically have telephone privileges unless you elect otherwise. The Fund,
the transfer agent and their affiliates are not liable for acting in good
faith on telephone instructions relating to your account, so long as they
follow reasonable procedures to determine that the telephone instructions are
genuine. Such procedures may include recording the telephone calls and
requiring some form of personal identification. You should verify the accuracy
of telephone transactions immediately upon receipt of your confirmation
statement.
Optional Services
Complete the account application for the easiest way to establish services.
The easiest way to establish optional services on your Calvert Group account
is to select the options you desire when you complete your account
application. If you wish to add other options later, you may have to provide
us with additional information and a signature guarantee. Please call your
broker or Calvert Investor Relations at 800.368.2745 for further assistance.
For our mutual protection, we may require a signature guarantee on certain
written transaction requests. A signature guarantee verifies the authenticity
of your signature, and may be obtained from any bank, savings and loan
association, credit union, trust company, broker/dealer firm or member of a
domestic stock exchange. A signature guarantee cannot be provided by a notary
public.
Householding
Householding reduces Fund expenses while saving paper and postage expense.
If you have multiple accounts with Calvert, you may receive combined mailings
of some shareholder information, such as statements, confirms, prospectuses,
semi-annual and annual reports. Please contact Calvert Investor Relations at
800.368.2745 to receive additional copies of information.
Special Services and Charges
The Portfolios pay for shareholder services but not for special services that
are required by a few shareholders, such as a request for a historical
transcript of an account. You may be required to pay a research fee for these
special services.
If you are purchasing shares of a Portfolio through a program of services
offered by a securities dealer or financial institution, you should read the
program materials in conjunction with this Prospectus. Certain features may be
modified in these programs, and administrative charges may be imposed by the
broker/dealer or financial institution for the services rendered.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next net asset value calculated after your
redemption request is received and accepted. See below for specific
requirements necessary to make sure your redemption request is acceptable.
Remember that your Portfolio may hold payment on the redemption of your shares
until it is reasonably satisfied that investments made by check or by Calvert
Money Controller have been collected (normally up to 10 business days).
Redemption Requirements to Remember
To ensure acceptance of your redemption request, please follow the procedures
described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you on
the next business day, but if making immediate payment could adversely affect
a Portfolio, it may take up to seven (7) days. Calvert Money Controller
redemptions generally will be credited to your bank account on the second
business day after your phone call. When the New York Stock Exchange is closed
(or when trading is restricted) for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances as
determined by the Securities and Exchange Commission, redemptions may be
suspended or payment dates postponed.
Minimum account balance is $1,000.
Please maintain a balance in each of your fund accounts of at least $1,000. If
the balance in your money market account falls below the $1,000 minimum during
a month, a $3 fee will be charged to your account. This fee is paid to the
portfolio to offset the generally higher costs of small dollar accounts. Funds
with a fluctuating net asset value and a balance of less than $1,000 may be
closed and the proceeds mailed to the address of record. You will be given a
notice that your account is below the minimum and closed after 30 days if the
balance is not brought up to the required minimum amount.
How to Sell Your Shares
Draftwriting (Money Market Portfolio only)
You may redeem shares in your Money Market Portfolio account by writing a
draft for at least $250. If you complete and return the signature card for
Draftwriting, the Portfolio will mail bank drafts to you, printed with your
name and address. Generally, there is no charge to you for the maintenance of
this service or the clearance of drafts, but the Fund will charge a service
fee for drafts returned for insufficient funds. The Fund will charge $25 for
any stop payment on drafts. As a service to shareholders, shares may be
automatically transferred between your Calvert accounts to cover drafts you
have written. The signature of only one authorized signer is required to honor
a draft.
By Mail To: Calvert Group, PO Box 419544, Kansas City MO 64141-6544
You may redeem available shares from your account at any time by sending a
letter of instruction, including your name, account and Fund number, the
number of shares or dollar amount, and where you want the money to be sent.
Additional requirements, below, may apply to your account. The letter of
instruction must be signed by all required authorized signers. If you want the
money to be wired to a bank not previously authorized, then a voided bank
check must be enclosed with your letter. To add instructions to wire to a
destination that has not been previously established, or if you would like
funds sent to a different address or another person, your letter must be
signature guaranteed.
Type of
Registration Requirements
Corporations, Letter of instruction and a corporate resolution, signed by
Associations person(s) authorized to act on the account, accompanied by
signature guarantee(s).
Trusts Letter of instruction signed by the Trustee(s) (as Trustee),
with a signature guarantee. (If the Trustee's name is not
registered on your account, provide a copy of the trust
document, certified within the last 60 days.)
By Telephone
Please call 800.368.2745. You may redeem shares from your account by telephone
and have your money mailed to your address of record or wired to a bank you
have previously authorized. A charge of $5 is imposed on wire transfers of
less than $1,000.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial request
for this service (normally 10 business days). You may also authorize automatic
fixed amount redemptions by Calvert Money Controller. All requests must be
received by 4:00 p.m. Eastern time. Accounts cannot be closed by this service.
Unless they otherwise qualify for a waiver, Class B or Class C shares of the
Long-Term Portfolio redeemed by Calvert Money Controller will be subject to
the Contingent Deferred Sales Charge.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert Group
Fund or Portfolio. You can only exchange between accounts with identical
names, addresses and taxpayer identification number, unless previously
authorized with a signature-guaranteed letter.
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may have up
to two (2) redemption checks for a fixed amount sent to you on the 15th of the
month, simply by sending a letter with all information, including your account
number, and the dollar amount. If you would like a regular check mailed to
another person or place, your letter must be signature guaranteed. Unless they
otherwise qualify for a waiver, Class B or Class C shares of the Long-Term
Portfolio redeemed by Systematic Check Redemption will be subject to the
Contingent Deferred Sales Charge.
Through your Broker
If your account is held in your broker's name ("street name"), you should
contact your broker directly to transfer, exchange or redeem shares.
DIVIDENDS AND TAXES
Each year, the Portfolio distributes substantially all of its net investment
income to shareholders.
Dividends from the Money Market Portfolio's net investment income are declared
daily and paid monthly. Net investment income consists of interest income, net
short-term capital gains, if any, and dividends declared and paid on
investments, less expenses.
Dividends from the Limited- and Long-Term Portfolios' net investment income
are paid monthly.
Net investment income consists of interest income, net short-term capital
gains, if any, and dividends declared and paid on investments, less expenses.
Each year, the Portfolios distribute substantially all of their net investment
income to shareholders. Dividend and distribution payments will vary between
classes. Dividend payments are anticipated to be generally higher for Class A
shares.
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Portfolio at net asset value (no sales charge), unless you elect to have the
dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions may be automatically invested in an
identically registered account with the same account number in any other
Calvert Group Fund or Portfolio at net asset value. If reinvested in the same
Fund account, new shares will be purchased at net asset value on the
reinvestment date, which is generally 1 to 3 days prior to the payment date.
You must be a shareholder on the record date to receive dividends. You must
notify the Fund in writing prior to the record date to change your payment
options. If you elect to have dividends and/or distributions paid in cash, and
the US Postal Service cannot deliver the check, or if it remains uncashed for
an extended period, it, as well as future dividends and distributions, will be
reinvested in additional shares. No dividends will accrue on amounts
represented by uncashed distribution or redemption checks.
"Buying a Dividend"
At the time of purchase, the share price of the Limited- or Long-Term
Portfolios may reflect undistributed income, capital gains or unrealized
appreciation of securities. Any capital gains from these amounts which are
later distributed to you are fully taxable. On the record date for a
distribution, a Portfolio's share value is reduced by the amount of the
distribution. If you buy shares just before the record date ("buying a
dividend") you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.
Federal Taxes
Dividends derived from interest on municipal obligations constitute
exempt-interest dividends, on which you are not subject to federal income tax.
However, dividends which are from taxable interest and any distributions of
short-term capital gain are taxable to you as ordinary income. If the
Portfolio makes any distributions of long-term capital gains, then these are
taxable to you as long-term capital gains, regardless of how long you held
your shares of the Portfolio. Dividends attributable to interest on certain
private activity bonds must be included in federal alternative minimum tax for
individuals and for corporations.
If any taxable income or gains are paid, in January, the Portfolio will mail
you Form 1099-DIV indicating the federal tax status of dividends paid to you
by the Portfolio during the past year.
You may realize a capital gain or loss when you redeem (sell) or exchange
shares of the Limited-Term or Long-Term Portfolios.
If you sell or exchange your Limited-Term or Long-Term Portfolio shares you
will have a short or long-term capital gain or loss, depending on how long you
owned the shares which were sold. In January, the Fund will mail you Form
1099-B indicating the proceeds from all sales, including exchanges. You should
keep your annual year-end account statements to determine the cost (basis) of
the shares to report on your tax returns.
Other Tax Information
You may be subject to state or local taxes on your investment, depending on
the laws in your area. A letter will be mailed to you in January detailing the
percentage invested in your state the previous tax year. Such dividends may be
exempt from certain state income taxes.
Taxpayer Identification Number
Federal law requires that you provide your correct Social Security or Taxpayer
Identification Number ("TIN") on a signed certified application or Form W-9.
If not provided, the Portfolios may be required to withhold 31% of any
dividends or redemptions, and you may be subject to a fine. You will also be
prohibited from opening another account by exchange. If this TIN information
is not received within 60 days after your account is established, your account
may be redeemed at the current NAV on the date of redemption. The Portfolios
reserve the right to reject any new account or any purchase order for failure
to supply a certified TIN.
Exhibit a - Limited-Term and Long-Term Portfolios (Class A Only)
You may qualify for a reduced sales charge through several purchase plans
available. You must notify the Fund at the time of purchase to take advantage
of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the dollar
amount of a new purchase of shares, but also the higher of cost or current
value of shares previously purchased in Calvert Group Funds that impose sales
charges. This automatically applies to your account for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent." You pay
the lower sales charge applicable to the total amount you plan to invest over
the 13-month period, excluding any money market fund purchases. Part of your
shares will be held in escrow, so that if you do not invest the amount
indicated, you will have to pay the sales charge applicable to the smaller
investment actually made. For more information, see the Statement of
Additional Information.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the Fund
at the reduced sales charge applicable to the group taken as a whole. The
sales charge is calculated by taking into account not only the dollar amount
of the shares you purchase, but also the higher of cost or current value of
shares previously purchased and currently held by other members of your group.
A "qualified group" is one which (i) has been in existence for more than six
months, (ii) has a purpose other than acquiring Fund shares at a discount, and
(iii) satisfies uniform criteria which enable CDI and dealers offering Fund
shares to realize economies of scale in distributing such shares. A qualified
group must have more than 10 members, must be available to arrange for group
meetings between representatives of CDI or dealers distributing the Fund's
shares, must agree to include sales and other materials related to the Fund in
its publications and mailings to members at reduced or no cost to CDI or
dealers. Members of a group are not eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund or portfolio of the Calvert
Group of Funds sold to (i) current or retired Directors, Trustees, or Officers
of the Calvert Group of Funds, employees of Calvert Group, Ltd. and its
affiliates, or their family members; (ii) CSIF Advisory Council Members,
directors, officers, and employees of any subadvisor for the Calvert Group of
Funds, employees of broker/dealers distributing the Fund's shares and
immediate family members of the Council, subadvisor, of broker/dealer; (iii)
Purchases made through a Registered Investment Advisor, (iv) Trust departments
of banks or savings institutions for trust clients of such bank or
institution, (v) Purchases through a broker maintaining an omnibus account
with the fund or portfolio, provided the purchases are made by (a) investment
advisors or financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting, or other
fee for their services; or (b) clients of such investment advisors or
financial planners who place trades for their own accounts if such accounts
are linked to the master account of such investment advisor or financial
planner on the books and records of the broker or agent; or (c) retirement and
deferred compensation plans and trusts, including, but not limited to, those
defined in section 401(a) or section 403(b) of the I.R.C., and "rabbi trusts."
Established Accounts
Shares of the Long-Term Portfolio may be sold at net asset value to you if
your account was established on or before September 15, 1987, or April 30,
1988 for the Limited-Term Portfolio.
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions from
another Calvert Group Fund with a sales charge automatically invested in
another account with no additional sales charge. Purchases made at net asset
value ("NAV"). Except for money market funds, if you make a purchase at NAV,
you may exchange that amount to another fund at no additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in the
same Fund, you may do so at the net asset value next computed after the
reinvestment order is received, without a sales charge. You may use the
reinstatement privilege only once. The Fund reserves the right to modify or
eliminate this privilege.
Prospectus
April 30, 1998
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Long-Term Portfolio
To Open an Account:
800.368.2748
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800.368.2745
Service for Existing Accounts:
Shareholders 800.368.2745
Brokers 800.368.2746
TDD for Hearing-Impaired:
800.541.1524
Calvert Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Calvert Group Website
http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
Calvert Tax-Free Reserves
California Money Market Portfolio
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data
Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 2
Purchases and Redemptions of Shares 3
Dividends and Distributions 4
Tax Matters 4
Valuation of Shares 5
Calculation of Yield 5
Advertising 6
Trustees and Officers 6
Investment Advisor 8
Administrative Services 8
Transfer and Shareholder Servicing Agents 9
Independent Accountants and Custodians 9
Portfolio Transactions 9
General Information 9
Financial Statements 10
Appendix 10
Investors must reside in California to purchase shares of the
Portfolio.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION -April 30, 1998
CALVERT TAX-FREE RESERVES
CALIFORNIA MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder
Information: (301) 951-4820 Services: (800) 368-2745
Broker (800) 368-2746 TDD for the
Services: (301) 951-4850 Hearing-
Impaired: (800) 541-1524
This Statement of Additional Information is not a
prospectus. Investors should read the Statement of Additional
Information in conjunction with the Portfolio's Prospectus, dated
April 30, 1998, which may be obtained free of charge by writing the
Portfolio at the above address or calling the telephone numbers
listed above.
INVESTMENT OBJECTIVE
The California Money Market Portfolio (the "Portfolio") is a
series of Calvert Tax-Free Reserves (the "Fund"), designed to provide
individual and institutional investors in higher tax brackets with
the highest level of interest income exempt from federal and
California state income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and
maturity characteristics prescribed for the Portfolio. The Portfolio
invests in high quality municipal obligations with maturities of one
year or less and maintains an average maturity of 90 days or less.
The Portfolio further seeks to maintain a constant net asset value of
$1.00 per share. There is, of course, no assurance that the Portfolio
will be successful in meeting its investment objective or maintaining
the Portfolio's net asset value constant at $1.00 per share because
there are inherent risks in the ownership of any investment.
Dividends paid by the Portfolio will fluctuate with income earned on
investments.
INVESTMENT POLICIES
The Portfolio seeks to earn the highest level of interest
income exempt from federal and California state income taxes as is
consistent with prudent investment management, preservation of
capital, and the quality and maturity characteristics of the
Portfolio.
The Portfolio invests primarily in a diversified portfolio
of municipal obligations whose interest is exempt from federal and
California state income tax. Municipal obligations in which the
Portfolio invests are short-term, fixed and variable rate instruments
of minimal credit risk and of high quality. Short-term obligations
have remaining maturities of one year or less. The Portfolio
maintains an average weighted maturity of 90 days or less.
Under normal market conditions, the Portfolio attempts to
invest 100%, and will invest at least 80%, of its total assets in
debt obligations issued by or on behalf of the State of California
and its political subdivisions ("California Municipal Obligations").
Dividends paid by the Portfolio which are derived from interest
attributable to California Municipal Obligations will be exempt from
federal and California state income taxes. Dividends derived from
interest on tax-exempt obligations of other governmental issuers will
be exempt from federal income tax, but will be subject to California
state income taxes.
The credit rating of the Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating
and variable rate demand notes upon the following conditions: the
Portfolio has right of demand, upon notice not to exceed thirty days,
against the issuer to receive payment; the issuer will be able to
make payment upon such demand, either from its own resources or
through an unqualified commitment from a third party; and the rate of
interest payable is calculated to ensure that the market value of
such notes will approximate par value on the adjustment dates. The
remaining maturity of such demand notes is deemed the period
remaining until such time as the Portfolio has the right to dispose
of the notes at a price which approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. A
municipal lease is an obligation of a government or governmental
authority, not subject to voter approval, used to finance capital
projects or equipment acquisitions and payable through periodic
rental payments. The Portfolio may purchase unrated leases. The
Fund's Advisor, under the supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality
of such leases on an ongoing basis, including an assessment of the
likelihood that the lease will not be canceled. Certain municipal
leases may be considered illiquid and subject to the Portfolio's
limit on illiquid securities. The Board of Trustees/Directors has
directed the Advisor to treat a municipal lease as a liquid security
if it satisfies the following conditions: (A) such treatment must be
consistent with the Portfolio's investment restrictions; (B) the
Advisor should be able to conclude that the obligation will maintain
its liquidity throughout the time it is held by the Portfolio, based
on the following factors: (1) whether the lease may be terminated by
the lessee; (2) the potential recovery, if any, from a sale of the
leased property upon termination of the lease; (3) the lessee's
general credit strength (e.g., its debt, administrative, economic and
financial characteristics and prospects); (4) the likelihood that the
lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of nonappropriation"), and (5) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease; (C) the Advisor
should determine whether the obligation can be disposed of within
seven days in the ordinary course of business at approximately the
amount at which the Portfolio has valued it for purposes of
calculating the Portfolio's net asset value, taking into account the
following factors: (1) the frequency of trades and quotes; (2) the
volatility of quotations and trade prices; (3) the number of dealers
willing to purchase or sell the security and the number of potential
purchasers; (4) dealer undertakings to make a market in the security;
(5) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of the transfer); (6) the
rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability
to dispose of the security; and (D) the Advisor should have
reasonable expectations that the municipal lease obligation will
maintain its liquidity throughout the time the instrument is held by
the Portfolio.
Obligations with Puts Attached
The Portfolio has authority to purchase securities at a
price which would result in a yield to maturity lower than that
generally offered by the seller at the time of purchase when it can
acquire at the same time the right to sell the securities back to the
seller at an agreed upon price at any time during a stated period or
on a certain date. Such a right is generally denoted as a "put." The
Portfolio may not acquire obligations subject to puts if immediately
thereafter, with respect to 75% of the total amortized cost value of
its assets, the Portfolio would have more than 5% of its assets
invested in securities underlying puts from the same institution. The
Portfolio may, however, invest up to 10% of its assets in securities
underlying unconditional puts from the same institution.
Unconditional puts are readily exercisable in the event of a default
in payment of principal or interest on the underlying securities. The
Portfolio must limit its portfolio investments, including puts, to
instruments of high quality as determined by a nationally recognized
statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit of banks with assets of
one billion dollars or more; commercial paper or other corporate
notes of investment grade quality; and any of such items subject to
short-term repurchase agreements.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. To
minimize taxable income, the Portfolio may also hold cash which is
not earning income. It is a fundamental policy of the Portfolio that
during normal market conditions the Portfolio's assets be invested so
that at least 80% of the Portfolio's annual income will be
tax-exempt. While the Portfolio has the authority to invest in
short-term taxable obligations, the Portfolio has not done so since
its inception and, barring unusual market conditions, does not expect
in the future to invest in taxable obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the
securities held in the Portfolio are subject to changes in market
value based upon the public's perception of the creditworthiness of
the issuer and changes in the level of interest rates (which will
generally result in both changing in value in the same way-both
experiencing appreciation when interest rates decline and
depreciation when interest rates rise). Therefore, if in order to
achieve higher interest income, the Portfolio remains substantially
fully invested at the same time that it has purchased securities on a
when-issued basis, there will be a greater possibility that the
market value of the Portfolio's assets may vary. No new when-issued
commitments will be made by the Portfolio if more than 50% of the
Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Portfolio will meet its obligations from then available cash flow,
sale of securities or, although it would not normally expect to do
so, from sale of the when-issued securities themselves (which may
have a market value greater or less than the Portfolio's payment
obligation). Sale of securities to meet such obligations carries with
it a greater potential for the realization of capital losses and
capital gains which are not exempt from federal income tax.
INVESTMENT RESTRICTIONS
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the
Portfolio's outstanding shares. Shares have equal rights as to
voting. A majority of the shares means the lesser of (i) 67% of the
shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares. The Portfolio may not:
(1) Purchase common stocks, preferred stocks, warrants, or other
equity securities;
(2) Issue senior securities, borrow money, or pledge, mortgage,
or hypothecate its assets, except as may be necessary to secure
borrowings from banks for temporary or emergency (not leveraging)
purposes and then in an amount not greater than 10% of the value of
the Portfolio's total assets at the time of the borrowing. Investment
securities will not be purchased while any borrowings are outstanding;
(3) Sell securities short, purchase securities on margin, or
write put or call options. The Portfolio reserves the right to
purchase securities with demand features. See "Variable Rate Demand
Notes" and "Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except to the
extent that the purchase of municipal obligations in accordance with
the Portfolio's investment objective and policies, either directly
from the issuer, or from an underwriter for an issuer, may be deemed
an underwriting;
(5) Purchase securities which are subject to legal or
contractual restrictions on resale, i.e., restricted securities, or
other securities which are not readily marketable assets, including
repurchase agreements not terminable within seven days, with respect
to no more than 10% of its total assets;
(6) Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or oil and gas
interests, but this shall not prevent the Portfolio from investing in
municipal obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if those trustees
of the Portfolio, each of whom owns more than 1/2 of 1% of the
outstanding securities of such issuer, together own more than 5% of
such outstanding securities;
(8) Make loans to others, except in accordance with the
Portfolio's investment objective and policies or pursuant to contracts
providing for the compensation of service providers by compensating
balances;
(9) Invest in companies for the purpose of exercising control;
or invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets, or in connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication of advisory
fees;
(10) Invest more than 25% of its assets in the securities of any
one issuer, except that the Portfolio may invest more than 25% of its
assets in obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. For purposes of this limitation,
the entity which has the ultimate responsibility for the payment of
principal and interest on a particular security will be treated as
its issuer;
(11) Invest more than 25% of its assets in any particular
industry or industries, except that the Portfolio may invest more
than 25% of its assets in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Private activity
bonds, where the payment of principal and interest is the
responsibility of companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total assets in
securities where the payment of principal and interest is the
responsibility of a company or companies with less than three years'
operating history.
PURCHASES AND REDEMPTIONS OF SHARES
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares (see
Prospectus, "How to Sell Your Shares").
Shareholders wishing to use the draft writing service should
complete the signature card enclosed with the Investment Application.
This draft writing service will be subject to the customary rules and
regulations governing checking accounts, and the Portfolio reserves
the right to change or suspend the service. Generally, there is no
charge to you for the maintenance of this service or the clearance of
drafts, but the Portfolio reserves the right to charge a service fee
for drafts returned for uncollected or insufficient funds, and will
charge $25 for stop payments. As a service to shareholders, the Fund
may automatically transfer the dollar amount necessary to cover
drafts you have written on the Fund to your Fund account from any
other of your identically registered accounts in Calvert money market
funds or Calvert Insured Plus. The Fund may charge a fee for this
service.
When a payable through draft is presented for payment, a
sufficient number of full and fractional shares from the
shareholder's account to cover the amount of the draft will be
redeemed at the net asset value next determined. If there are
insufficient shares in the shareholder's account, the draft will be
returned. Drafts presented to the bank for payment which would
require the redemption of shares purchased by check or electronic
funds transfer within the previous 10 business days may not be
honored.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of up to $300,000 may be transferred
electronically at no charge to the investor. Amounts of $1,000 or
more will be transmitted by wire, without charge, to the investor's
account at a domestic commercial bank that is a member of the Federal
Reserve System or to a correspondent bank. A charge of $5 is imposed
on wire transfers of less than $1,000. If the investor's bank is not
a Federal Reserve System member, failure of immediate notification to
that bank by the correspondent bank could result in a delay in
crediting the funds to the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
To change redemption instructions already given,
shareholders must send a written notice to Calvert Group, P.O. Box
419544, Kansas City, MO 64141-6544, with a voided copy of a check for
the bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed
by a commercial bank, savings and loan association, trust company,
member firm of any national securities exchange, or certain credit
unions. Further documentation may be required from corporations,
fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), when trading on the New York Stock Exchange is restricted,
or an emergency exists, as determined by the SEC, or if the
Commission has ordered such a suspension for the protection of
shareholders. Redemption proceeds are normally mailed or wired the
next business day after a proper redemption request has been
received, unless redemptions have been suspended or postponed as
described above.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Portfolio's net investment income are
declared daily and paid monthly. Net investment income consists of
the interest income earned on investments (adjusted for amortization
of original issue discounts or premiums or market premiums), less
estimated expenses. Capital gains, if any, are normally paid once a
year and will be automatically reinvested at net asset value in
additional shares. Dividends and any distributions are automatically
reinvested in additional shares of the Fund, unless you elect to have
the dividends of $10 or more paid in cash (by check or by Calvert
Money Controller). You may also request to have your dividends and
distributions from the Portfolio invested in shares of any other
Calvert Group Fund, at no additional charge. If you elect to have
dividends and/or distributions paid in cash, and the U.S. Postal
Service cannot deliver the check, or if it remains uncashed for six
months, it, as well as future dividends and distributions, will be
reinvested in additional shares.
Purchasers of shares of the Portfolio will begin receiving
dividends upon the date federal funds are received by the Portfolio.
Purchases by bank wire received by 12:30 p.m., Eastern time are
immediately available federal funds; purchases by domestic check may
take one day to convert into federal funds. Shareholders redeeming
shares by telephone, electronic funds transfer, or written request
will receive dividends through the date that the redemption request
is processed; shareholders redeeming shares by draft will receive
dividends up to the date such draft is presented to the Portfolio for
payment.
TAX MATTERS
The Portfolio intends to qualify and has, since inception,
so qualified, as a "regulated investment company" under Subchapter M
of the Internal Revenue Code (the "Code"), as amended. By so
qualifying, the Portfolio will not be subject to federal income tax,
nor to the federal excise tax imposed by the Tax Reform Act of 1986
(the "Act"), to the extent that it distributes its net investment
income and realized capital gains.
The Portfolio's dividends of net investment income
constitute exempt-interest dividends on which shareholders are not
generally subject to federal income tax; in addition, to the extent
that income dividends are derived from earnings attributable to
obligations of California and its political subdivisions, they will
also be exempt from state and local personal income tax in California.
However, under the Act, dividends attributable to interest
on certain private activity bonds must be included in federal
alternative minimum taxable income for the purpose of determining
liability (if any) for individuals and for corporations. The
Portfolio's dividends derived from taxable interest and distributions
of net short-term capital gains, whether taken in cash or reinvested
in additional shares, are taxable to shareholders as ordinary income
and do not qualify for the dividends received deduction for
corporations.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated
investment company which distributes exempt-interest dividends during
the year is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of
facilities financed by private activity bonds should consult their
tax advisors before purchasing shares of the Portfolio. "Substantial
user" is generally defined as including a "non-exempt person" who
regularly uses in trade or business a part of a facility financed
from the proceeds of private activity bonds.
VALUATION OF SHARES
The Portfolio's assets, including commitments to purchase
securities on a when-issued basis, are valued at their amortized cost
which does not take into account unrealized capital gains or losses.
This involves valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price
that would be received upon sale of the instrument. During periods of
declining interest rates, the daily yield on shares of the Portfolio
may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon
market prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Portfolio
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the
Portfolio would receive less investment income. The converse would
apply in a period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits
the Portfolio to value its assets at amortized cost if the Portfolio
maintains a dollar-weighted average maturity of 90 days or less and
only purchases obligations having remaining maturities of one year or
less. Rule 2a-7 requires, as a condition of its use, that the
Portfolio invest only in obligations determined by the Trustees to be
of high quality with minimal credit risks and further requires the
Trustees to establish procedures designed to stabilize, to the extent
reasonably possible, the Portfolio's price per share as computed for
the purpose of sales and redemptions at $1.00. Such procedures
include review of the Portfolio's investment holdings by the
Trustees, at such intervals as they may deem appropriate, to
determine whether the Portfolio's net asset value calculated by using
available market quotations or equivalents deviates from $1.00 per
share based on amortized cost. If such deviation exceeds 0.50%, the
Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions
from capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available
market quotations.
The Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New
York stock exchange (generally, 4:00 p.m. Eastern time), and at such
other times as may be necessary or appropriate. The Portfolio does
not determine net asset value on certain national holidays or other
days on which the New York Stock Exchange is closed: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Net Asset Value and Offering Price Per Share, 12/31/97
$321,001,295/321,125,930 shares $1.00
CALCULATION OF YIELD
From time to time the Portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical earnings
and are not intended to indicate future performance. The "yield" of
the Portfolio refers to the income generated by an investment in the
Portfolio over a particular base period of time. The length and
closing date of the base period will be stated in the advertisement.
If the base period is less than one year, the yield is then
"annualized." That is, the net change, exclusive of capital changes,
in the value of a share during the base period is divided by the net
asset value per share at the beginning of the period, and the result
is multiplied by 365 and divided by the number of days in the base
period. Capital changes excluded from the calculation of yield are:
(1) realized gains and losses from the sale of securities, and (2)
unrealized appreciation and depreciation. The Portfolio's "effective
yield" for a seven-day period is its annualized compounded yield
during the period, calculated according to the following formula:
Effective yield = (base period return + 1)365/7 -1
For the seven-day period ended December 31, 1997, the yield was 3.49%
and its effective yield 3.55%.
The Portfolio also may advertise, from time to time, its
"tax equivalent yield." The tax equivalent yield is the yield an
investor would be required to obtain from taxable investments to
equal the Portfolio's yield, all or a portion of which may be exempt
from federal income taxes. The tax equivalent yield is computed by
taking the portion of the Portfolio's effective yield exempt from
federal income taxes and multiplying the exempt yield by a factor
based upon a stated income tax rate, then adding the portion of the
yield that is not exempt from federal income taxes. The factor which
is used to calculate the tax equivalent yield is the reciprocal of
the difference between 1 and the applicable income tax rates, which
will be stated in the advertisement. For the seven-day period ended
December 31, 1997, the federal tax equivalent yield for an investor
in the 36% income tax bracket was 5.54%, and 5.88% for an investor in
the 39.6% tax bracket.
ADVERTISING
The Fund or its affiliates may provide information such as,
but not limited to, the economy, investment climate, investment
principles, sociological conditions and political ambiance.
Discussion may include hypothetical scenarios or lists of relevant
factors designed to aid the investor in determining whether the Fund
is compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered
for inclusion in the Portfolio, whether held or not.
The Fund or its affiliates may supply comparative
performance data and rankings from independent sources such as
Donoghue's Money Fund Report, Bank Rate Monitor, Money, Forbes,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, Russell 2000/Small Stock
Index, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, The Wall Street Journal, and Schabacker
Investment Management, Inc. Such averages generally do not reflect
any front- or back-end sales charges that may be charged by Funds in
that grouping. The Fund may also cite to any source, whether in print
or on-line, such as Bloomberg, in order to acknowledge origin of
information. The Fund may compare itself or its portfolio holdings to
other investments, whether or not issued or regulated by the
securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates
reserve the right to update performance rankings as new rankings
become available.
Calvert Group is the nation's leading family of socially
responsible mutual funds, both in terms of socially responsible
mutual fund assets under management, and number of socially
responsible mutual fund portfolios offered (source: Social Investment
Forum, November 30, 1997). Calvert Group was also the first to offer
a family of socially responsible mutual fund portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh,
Pennsylvania, a non-profit corporation which provides family planning
services, nutrition, maternal/child health care, and various health
screening services. Mr. Baird is a trustee/director of each of the
investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc., Calvert New World Fund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive,
Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner
in the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
He is also a director of Calvert Variable Series, Inc. DOB: 10/29/35.
Address: 308 East Broad Street, Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a
radiologist with Kaiser Permanente. Prior to that, he was a
radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania.
DOB: 07/23/49. Address: 16 Iliahi Street, Honolulu, Hawaii, 96817.
*CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer
Emeritus of the George Washington University, and has retired from
University Support Services, Inc. of Herndon, Virginia. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 10/13/22.
Address: 1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices
head and neck reconstructive surgery in the Washington, D.C.,
metropolitan area. DOD: 05/23/48. Address: 7536 Pepperell Drive,
Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of
Corporate Finance of Washington, Inc. Formerly, he was a principal of
Gavian De Vaux Associates, an investment banking firm. DOB: 12/08/32.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial
consultant to various organizations. In addition, he is a director of
the Community Bankers Mutual Fund of Denver, Colorado, a director of
Ariel Funds, and the Treasurer and Director of Silby, Guffey, and
Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director
of each of the other investment companies in the Calvert Group of
Funds, except for Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek serves as
President, Chief Executive Officer and Vice Chairman of Calvert
Group, Ltd. and as an officer and director of each of its affiliated
companies. She is a director of Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment companies in the Calvert
Group of Funds. Prior to joining Calvert Group, Ms. Krumsiek served
as Senior Vice President of Alliance Capital LP's Mutual Fund
Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and
CEO of Creative Associates International, Inc., a firm that
specializes in human resources development, information management,
public affairs and private enterprise development. She is also a
director of Acacia Federal Savings Bank. DOB: 12/08/45. Address: 5301
Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert
Variable Series, Inc., and serves as a director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management
Company, Inc., Director and Secretary of Grady, Berwald and Co.,
Inc., and Director and President of Chelsea Securities, Inc. DOB:
10/07/37. Address: Box 93, Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund. Mr. Silby is Executive Chairman of GroupServe, an
internet company focused on community building collaborative tools,
and an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture
Partners ("CSVP"). CSVP is a venture capital firm investing in
socially responsible small companies. He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 07/20/48. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc. Mr. Martini is also a director and President
of Calvert-Sloan Advisers, L.L.C., and a director and officer of
Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Chief Financial Officer of Calvert Group,
Ltd. and its subsidiaries and an officer of each of the other
investment companies in the Calvert Group of Funds. Mr. Wolfsheimer
is Vice President and Treasurer of Calvert-Sloan Advisers, L.L.C.,
and a director of Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary.
Mr. Tartikoff is an officer of each of the investment companies in
the Calvert Group of Funds, and is Senior Vice President, Secretary,
and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company.
DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each
of the other investment companies in the Calvert Group of Funds,
except for Calvert New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender
is Associate General Counsel of Calvert Group, Ltd. and an officer of
each of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is
also an officer of each of the other investment companies in the
Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and
Compliance Officer. Ms. Newton is Associate General Counsel of
Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is
Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. Prior to working at Calvert Group, Ms. Duke was an
Associate in the Investment Management Group of the Business and
Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Trustees and officers of the Fund as a group own less than 1% of the
Fund's outstanding shares. Trustees marked with an *, above, are
"interested persons" of the Fund, under the Investment Company Act of
1940.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in
the Calvert Group of Funds with the exception of Calvert Social
Investment Fund, of which only Messrs. Baird, Guffey and Silby and
Ms. Krumsiek are among the trustees, Calvert Variable Series, Inc.,
of which only Messrs. Blatz, Diehl and Pugh and Ms. Krumsiek are
among the directors, Calvert World Values Fund, Inc., of which only
Messrs. Guffey and Silby and Ms. Krumsiek are among the directors,
and Calvert New World Fund, Inc., of which only Ms. Krumsiek and Mr.
Martini are among the directors.
The Audit Committee of the Board is composed of Messrs.
Baird, Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy
Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and
Silby and Ms. Krumsiek.
During fiscal 1997, trustees of the Fund not affiliated with
the Fund's Advisor were paid $45,564. Trustees of the Fund not
affiliated with the Advisor presently receive an annual fee of
$20,500 for service as a member of the Board of Trustees of the
Calvert Group of Funds, and a fee of $750 to $1500 for each regular
Board or Committee meeting attended; such fees are allocated among
the respective Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the
fees is designed to maintain the parties in the same position as if
the fees were paid on a current basis. Management believes this will
have a negligible effect on the Fund's assets, liabilities, net
assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Trustee Compensation Table
Fiscal Year 1997 Aggregate Compensation Pension or Total
(unaudited Numbers) from Registant Retirement Benefits Compensation
for Service as Trustee Accrued as part of from Registrant
Registrant Expenses* and Fund
Complex paid to
Trustee **
Name of Trustee
Richard L. Baird, Jr. $24,466 $0 $34,450
Frank H. Blatz, Jr. $31,031 $31,031 $46,000
Frederick T. Borts $23,515 $0 $32,500
Charles E. Diehl $29,959 $29,959 $44,500
Douglas E. Feldman $23,462 $0 $32,500
Peter W. Gavian $27,736 $12,668 $38,500
John G. Guffey, Jr. $30,451 $0 $61,615
M. Charito Kruvant $26,145 $0 $36,250
Arthur J. Pugh $32,589 $1,038 $48,250
D. Wayne Silby $25,072 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1997, total deferred
compensation, including dividends and capital appreciation, was
$555,901.79, $545,259.10, $137,436.70 and $187,735.55, for each
trustee, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9)
registered investment companies.
INVESTMENT ADVISOR
The Portfolio's Investment Advisor is Calvert Asset
Management Company, Inc., 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814, a subsidiary of Calvert Group, Ltd., which
is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C. ("Acacia Mutual").
The Advisory Contract between the Portfolio and the Advisor
will remain in effect indefinitely, provided continuance is approved
at least annually by the vote of the holders of a majority of the
outstanding shares of the Portfolio, or by the Trustees of the
Portfolio; and further provided that such continuance is also
approved annually by the vote of a majority of the Trustees of the
Portfolio who are not parties to the Contract or interested persons
of such parties, cast in person at a meeting called for the purpose
of voting on such approval. The Contract may be terminated without
penalty by either party on 60 days' prior written notice; it
automatically terminates in the event of its assignment. Under the
Contract, the Advisor manages the investment and reinvestment of the
Portfolio's assets, subject to the direction and control of the
Portfolio's Board of Trustees. For its services, the Advisor receives
an annual fee of 0.50% of the first $500 million of such Portfolio's
average daily net assets, 0.45% of the next $500 million of such
assets, and 0.40% of all such assets over $1 billion.
The advisory fee is payable monthly. The Advisor reserves
the right (i) to waive all or a part of its fee and (ii) to
compensate, at its expense, broker-dealers in consideration of their
promotional and administrative services.
The Advisor provides the Portfolio with investment advice
and research, pays the salaries and fees of all Trustees and
executive officers of the Portfolio who are principals of the
Advisor, and pays certain Portfolio advertising and promotional
expenses. The Portfolio pays all other administrative and operating
expenses, including: custodial fees; shareholder servicing, dividend
disbursing and transfer agency fees; administrative service fees;
federal and state securities registration fees; insurance premiums;
trade association dues; interest, taxes and other business fees;
legal and audit fees; and brokerage commissions and other costs
associated with the purchase and sale of portfolio securities. The
advisory fees paid to the Advisor under the advisory contract for the
1995, and 1997 fiscal years were $1,426,938, $1,691,140, and
$1,643,147, respectively.
The Advisor may voluntarily reimburse the Portfolio for
expenses. For 1995 there was no reimbursement of expenses; for 1996,
$117,823 in expenses was reimbursed, and, for 1997, $164,315.
ADMINISTRATIVE SERVICES
Calvert Administrative Services Company ("CASC"), a
wholly-owned subsidiary of Calvert Group, Ltd., has been retained by
the Fund to provide certain administrative services necessary to the
conduct of the Fund's affairs. Such services include the preparation
of corporate and regulatory reports and filings, portfolio
accounting, and the daily determination of net investment income and
net asset value per share. Prior to August 1, 1997, CASC received a
fee of $200,000 per year for providing such services, allocated among
Portfolios based on assets. Effective August 1, 1997, the fee
structure changed. Exclusive of the CTFR Money Market Portfolio, the
Fund pays an annual fee of $80,000, allocated between the remaining
Portfolios based on assets. The service fees paid by the Portfolio to
CASC for 1995, 1996, and 1997, were $21,183, $24,770, and $26,655,
respectively.
The Portfolio has entered into a principal underwriting
agreement with Calvert Distributors, Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for
the Portfolio, offering shares on a continuous, "best efforts" basis.
CDI bears all its expenses of providing services pursuant to the
agreement, including payment of any commissions and service fees.
TRANSFER AND SHAREHOLDER SERVICING AGENTS
National Financial Data Services, Inc. ("NFDS"), a
subsidiary of State Street Bank & Trust, has been retained by the
Fund to act as transfer agent and dividend disbursing agent. These
responsibilities include: responding to certain shareholder inquiries
and instructions, crediting and debiting shareholder accounts for
purchases and redemptions of Fund shares and confirming such
transactions, and daily updating of shareholder accounts to reflect
declaration and payment of dividends.
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act
as shareholder servicing agent. Shareholder servicing
responsibilities include responding to shareholder inquiries and
instructions concerning their accounts, entering any telephoned
purchases or redemptions into the NFDS system, maintenance of
broker-dealer data, and preparing and distributing statements to
shareholders regarding their accounts. Calvert Shareholder Services,
Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services,
Inc. receive a fee based on the number of shareholder accounts and
transactions.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent auditors for fiscal year 1998. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, currently serves as custodian of the Portfolio's investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the Portfolio's
cash assets. Neither custodian has any part in deciding the
Portfolio's investment policies or the choice of securities that are
to be purchased or sold for the Portfolio.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and
the choice of brokers and dealers are made by the Fund's Advisor
under the direction and supervision of the Fund's Board of Trustees.
Broker-dealers who execute portfolio transactions on behalf
of the Fund are selected on the basis of their professional
capability and the value and quality of their services. The Advisor
reserves the right to place orders for the purchase or sale of
portfolio securities with broker-dealers who have sold shares of the
Fund or who provide the Fund with statistical, research, or other
information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to
the Advisor, the dollar amount of such information and services is
generally indeterminable, and its availability or receipt does not
serve to materially reduce the Advisor's normal research activities
or expenses. No brokerage commissions have been paid to any officer,
trustee or Advisory Council member of the Fund or any of their
affiliates.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However,
such sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer
be based on the volume of Fund shares sold. The Advisor may
compensate, at its expense, such broker-dealers in consideration of
their promotional and administrative services.
GENERAL INFORMATION
The Portfolio is a series of Calvert Tax-Free Reserves, an
open-end diversified investment management company which was
organized as a Massachusetts business trust on October 20, 1980. The
other series of the Fund include the Money Market Portfolio,
Limited-Term Portfolio, Long-Term Portfolio, and the Vermont
Municipal Portfolio. The Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations
of the Fund. The shareholders of a Massachusetts business trust
might, however, under certain circumstances, be held personally
liable as partners for its obligations. The Declaration of Trust
provides for indemnification and reimbursement of expenses out of
Fund assets for any shareholder held personally liable for
obligations of the Fund. The Declaration of Trust provides that the
Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of the Fund, its shareholders, Trustees, officers,
employees, and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Fund will send its shareholders unaudited semi-annual
and audited annual reports that will include the Fund's net asset
value per share, portfolio securities, income and expenses, and other
financial information.
This Statement of Additional Information does not contain
all the information in the Fund's registration statement. The
registration statement is on file with the Securities and Exchange
Commission and is available to the public.
FINANCIAL STATEMENTS
The audited financial statements in the Portfolio's Annual
Report to Shareholders dated December 31, 1997, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained
free of charge by writing or calling the Portfolio.
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for
various public purposes. Such purposes include the construction of a
wide range of public facilities, the refunding of outstanding
obligations, the obtaining of funds for general operating expenses,
and the lending of funds to other public institutions and facilities.
In addition, certain types of private activity bonds are issued by or
on behalf of public authorities to obtain funds for many types of
local, privately operated facilities. Such debt instruments are
considered municipal obligations if the interest paid on them is
exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private
activity bonds used for the construction, equipment, repair or
improvement of privately operated industrial or commercial facilities
may be exempt from federal income tax, current federal tax law places
substantial limitations on the size of such issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue bonds are payable
from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source, but not from the general taxing
power. Tax-exempt private activity bonds are in most cases revenue
bonds and do not generally carry the pledge of the credit of the
issuing municipality. There are, of course, variations in the
security of municipal obligations, both within a particular
classification and among classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted
so that relative to the stated rate of interest it will return the
quoted rate to the purchaser.
Short-term and limited-term municipal obligations include
Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation
Notes, Construction Loan Notes, and Discount Notes. The maturities of
these instruments at the time of issue generally will range between
three months and one year. Pre-Refunded Bonds with longer nominal
maturities that are due to be retired with the proceeds of an
escrowed subsequent issue at a date within one year and three years
of the time of acquisition are also considered short-term and
limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade
("MIG"). This distinction is in recognition of the differences between
short-term credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best
quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access
to the market for refinancing, or both.
MIG2: Notes bearing this designation are of high quality,
with margins of protection ample although not so large as in the
preceding group.
MIG3: Notes bearing this designation are of favorable
quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for
refinancing, in particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate
quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree
of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. This rating indicates an
extremely strong capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong,
and in the majority of instances they differ from AAA issues only in
small degree. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make long-term risks appear
somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may
be present which make the bond somewhat more susceptible to the
adverse effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories
is regarded as predominantly speculative with respect to capacity to
pay interest and repay principal. There may be some large
uncertainties and major risk exposure to adverse conditions. The
higher the degree of speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is
in arrears.
<PAGE>
Calvert Tax-Free Reserves
Long-Term Portfolio
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data
Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri
64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 5
Purchases and Redemptions of Shares 6
Reduced Sales Charges 6
Dividends and Distributions 7
Tax Matters 7
Valuation of Shares 8
Calculation of Yield and Total Return 8
Advertising 9
Trustees and Officer 9
Investment Advisor 11
Administrative Services 12
IndependentAccountants andCustodians 12
Method of Distribution 12
Portfolio Transactions 12
General Information 13
Financial Statements 14
Appendix 14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1998
CALVERT TAX-FREE RESERVES
LONG-TERM PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder(800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a
prospectus. Investors should read the Statement of Additional
Information in conjunction with the Portfolio's Prospectus dated
April 30, 1998, which may be obtained free of charge by writing the
Portfolio at the above address or calling the Portfolio at the
telephone numbers listed above.
INVESTMENT OBJECTIVE
The Long-Term Tax-Free Portfolio (the "Portfolio") is a
series of Calvert Tax-Free Reserves (the "Fund"). The Portfolio is
designed to provide individual and institutional investors in higher
tax brackets with the highest level of interest income exempt from
federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics of the Portfolio. There is, of course, no assurance
that the Portfolio will be successful in meeting its investment
objective because there are inherent risks in the ownership of any
investment.
Dividends paid by the Portfolio will fluctuate with income
earned on investments and will vary by class of shares. In addition,
the value of each class of the Portfolio's shares will fluctuate to
reflect changes in the market value of the Portfolio's investments.
The Portfolio will attempt, through careful management and
diversification, to reduce these risks and enhance the opportunities
for higher income and greater price stability.
INVESTMENT POLICIES
The Portfolio invests primarily in a diversified portfolio
of municipal obligations whose interest is exempt from federal income
tax. A complete explanation of municipal obligations and municipal
bond and note ratings is set forth in the Appendix.
The credit rating of the Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating
and variable rate demand notes upon the following conditions: the
Portfolio has right of demand, upon notice not to exceed thirty days,
against the issuer to receive payment; the issuer will be able to
make payment upon such demand, either from its own resources or
through an unqualified commitment from a third party; and the rate of
interest payable is calculated to ensure that the market value of
such notes will approximate par value on the adjustment dates. The
remaining maturity of such demand notes is deemed the period
remaining until such time as the Portfolio has the right to dispose
of the notes at a price which approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. A
municipal lease is an obligation of a government or governmental
authority, not subject to voter approval, used to finance capital
projects or equipment acquisitions and payable through periodic
rental payments. The Portfolio may purchase unrated leases. The
Fund's Advisor, under the supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality
of such leases on an ongoing basis, including an assessment of the
likelihood that the lease will not be canceled. Certain municipal
leases may be considered illiquid and subject to the Portfolio's
limit on illiquid securities. The Board of Trustees/Directors has
directed the Advisor to treat a municipal lease as a liquid security
if it satisfies the following conditions: (A) such treatment must be
consistent with the Portfolio's investment restrictions; (B) the
Advisor should be able to conclude that the obligation will maintain
its liquidity throughout the time it is held by the Portfolio, based
on the following factors: (1) whether the lease may be terminated by
the lessee; (2) the potential recovery, if any, from a sale of the
leased property upon termination of the lease; (3) the lessee's
general credit strength (e.g., its debt, administrative, economic and
financial characteristics and prospects); (4) the likelihood that the
lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of nonappropriation"), and (5) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease; (C) the Advisor
should determine whether the obligation can be disposed of within
seven days in the ordinary course of business at approximately the
amount at which the Portfolio has valued it for purposes of
calculating the Portfolio's net asset value, taking into account the
following factors: (1) the frequency of trades and quotes; (2) the
volatility of quotations and trade prices; (3) the number of dealers
willing to purchase or sell the security and the number of potential
purchasers; (4) dealer undertakings to make a market in the security;
(5) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of the transfer); (6) the
rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability
to dispose of the security; and (D) the Advisor should have
reasonable expectations that the municipal lease obligation will
maintain its liquidity throughout the time the instrument is held by
the Portfolio.
Obligations with Puts Attached
The Portfolio has authority to purchase securities at a
price which would result in a yield to maturity lower than that
generally offered by the seller at the time of purchase when it can
acquire at the same time the right to sell the securities back to the
seller at an agreed upon price at any time during a stated period or
on a certain date. Such a right is generally denoted as a "put." The
Portfolio may not acquire obligations subject to puts if immediately
thereafter with respect to 75% of the total amortized cost value of
its short-term assets, the Portfolio would have more than 5% of such
assets invested in securities underlying puts from the same
institution. The Portfolio may, however, invest up to 10% of its
short-term assets in securities underlying unconditional puts from
the same institution. Unconditional puts are readily exercisable in
the event of a default in payment of principal or interest on the
underlying securities.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit of banks with assets of
one billion dollars or more; commercial paper or other corporate
notes of investment grade quality; and any of such items subject to
short-term repurchase agreements.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. To
minimize taxable income, the Portfolio may also hold cash which is
not earning income. It is a fundamental policy of the Portfolio that
during normal market conditions the Portfolio's assets be invested so
that at least 80% of the Portfolio's annual income will be
tax-exempt. While the Portfolio has the authority to invest in
short-term taxable obligations, the Portfolio has not done so since
its inception and, barring unusual market conditions, does not expect
in the future to invest in taxable obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the
securities held in the Portfolio are subject to changes in market
value based upon the public's perception of the creditworthiness of
the issuer and changes in the level of interest rates (which will
generally result in both changing in value in the same way, i.e.,
both experiencing appreciation when interest rates decline and
depreciation when interest rates rise). Therefore, if in order to
achieve higher interest income, the Portfolio remains substantially
fully invested at the same time that it has purchased securities on a
when-issued basis, there will be a greater possibility that the
market value of the Portfolio's assets may vary. No new when-issued
commitments will be made by the Portfolio if more than 50% of the
Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Portfolio will meet its obligations from then available cash flow,
sale of securities or, although it would not normally expect to do
so, from sale of the when-issued securities themselves (which may
have a market value greater or less than the Portfolio's payment
obligation). Sale of securities to meet such obligations carries with
it a greater potential for the realization of capital losses and
capital gains which are not exempt from federal income tax.
Transactions in Futures Contracts
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal bonds or on U.S. Treasury
securities, or options on such futures contracts, for hedging
purposes only. The Portfolio may sell such futures contracts in
anticipation of a decline in the cost of municipal bonds it holds or
may purchase such futures contracts in anticipation of an increase in
the value of municipal bonds the Portfolio intends to acquire. The
Portfolio also is authorized to purchase and sell other financial
futures contracts which in the opinion of the Investment Advisor
provide an appropriate hedge for some or all of the Portfolio's
securities.
Because of low initial margin deposits made upon the opening
of a futures position, futures transactions involve substantial
leverage. As a result, relatively small movements in the price of the
futures contract can result in substantial unrealized gains or
losses. Because the Portfolio will engage in the purchase and sale of
financial futures contracts solely for hedging purposes, however, any
losses incurred in connection therewith should, if the hedging
strategy is successful, be offset in whole or in part by increases in
the value of securities held by the Portfolio or decreases in the
price of securities the Portfolio intends to acquire.
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading
of futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may
be further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of
fluctuation in the price of a futures contract or option thereon
during a single trading day. Once the daily limit has been reached in
the contract, no trades may be entered into at a price beyond the
limit, thus preventing the liquidation of open positions. Prices of
existing contracts have in the past moved the daily limit on a number
of consecutive trading days. The Portfolio will enter into a futures
position only if, in the judgment of the Investment Advisor, there
appears to be an actively traded secondary market for such futures
contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of
these instruments, as well as price movements of the securities held
by the Portfolio within a given time frame. To the extent these
prices remain stable during the period in which a futures or option
contract is held by the Portfolio, or move in a direction opposite to
that anticipated, the Portfolio may realize a loss on the hedging
transaction which is not fully or partially offset by an increase in
the value of the Portfolio's securities. As a result, the Portfolio's
total return for such period may be less than if it had not engaged
in the hedging transaction.
Description of Financial Futures Contracts
Futures Contracts. A futures contract obligates the seller
of a contract to deliver and the purchaser of a contract to take
delivery of the type of financial instrument called for in the
contract or, in some instances, to make a cash settlement, at a
specified future time for a specified price. Although the terms of a
contract call for actual delivery or acceptance of securities, or for
a cash settlement, in most cases the contracts are closed out before
the delivery date without the delivery or acceptance taking place.
The Portfolio intends to close out its futures contracts prior to the
delivery date of such contracts.
The Portfolio may sell futures contracts in anticipation of
a decline in the value of its investments in municipal bonds. The
loss associated with any such decline could be reduced without
employing futures as a hedge by selling long-term securities and
either reinvesting the proceeds in securities with shorter maturities
or by holding assets in cash. This strategy, however, entails
increased transaction costs in the form of brokerage commissions and
dealer spreads and will typically reduce the Portfolio's average
yields as a result of the shortening of maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid
or received. Instead, an amount of cash or securities acceptable to
the Portfolio's futures commission merchant and the relevant contract
market, which varies but is generally about 5% or less of the
contract amount, must be deposited with the broker. This amount is
known as "initial margin," and represents a "good faith" deposit
assuring the performance of both the purchaser and the seller under
the futures contract. Subsequent payments to and from the broker,
known as "variation margin," are required to be made on a daily basis
as the price of the futures contract fluctuates, making the long or
short positions in the futures contract more or less valuable, a
process known as "marking to the market." Prior to the settlement
date of the futures contract, the position may be closed out by
taking an opposite position which will operate to terminate the
position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid to or
released by the broker, and the purchaser realizes a loss or gain. In
addition, a commission is paid on each completed purchase and sale
transaction.
The sale of financial futures contracts provides an
alternative means of hedging the Portfolio against declines in the
value of its investments in municipal bonds. As such values decline,
the value of the Portfolio's position in the futures contracts will
tend to increase, thus offsetting all or a portion of the
depreciation in the market value of the Portfolio's fixed income
investments which are being hedged. While the Portfolio will incur
commission expenses in establishing and closing out futures
positions, commissions on futures transactions may be significantly
lower than transaction costs incurred in the purchase and sale of
fixed income securities. In addition, the ability of the Portfolio to
trade in the standardized contracts available in the futures market
may offer a more effective hedging strategy than a program to reduce
the average maturing of portfolio securities, due to the unique and
varied credit and technical characteristics of the municipal debt
instruments available to the Portfolio. Employing futures as a hedge
may also permit the Portfolio to assume a hedging posture without
reducing the yield on its investments, beyond any amounts required to
engage in futures trading.
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal securities. These instruments
provide for the purchase or sale of a hypothetical portfolio of
municipal bonds at a fixed price in a stated delivery month. Unlike
most other futures contracts, however, a municipal bond index futures
contract does not require actual delivery of securities but results
in a cash settlement based upon the difference in value of the index
between the time the contract was entered into and the time it is
liquidated.
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"),
the contract market on which the futures contracts are traded. As
currently structured, the index is comprised of 40 tax-exempt term
municipal revenue and general obligation bonds. Each bond included in
the index must be rated either A- or higher by Standard & Poor's or A
or higher by Moody's Investors Service and must have a remaining
maturity of 19 years or more. Twice a month new issues satisfying the
eligibility requirements are added to, and an equal number of old
issues will be deleted from, the index. The value of the index is
computed daily according to a formula based upon the price of each
bond in the index, as evaluated by four dealer-to-dealers brokers.
The Portfolio may also purchase and sell futures contracts
on U.S. Treasury bills, notes and bonds for the same types of hedging
purposes. Such futures contracts provide for delivery of the
underlying security at a specified future time for a fixed price, and
the value of the futures contract therefore generally fluctuates with
movements in interest rates.
The municipal bond index futures contract, futures contracts
on U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a
clearing corporation, a nonprofit organization managed by the
exchange membership, which is also responsible for handling daily
accounting of deposits or withdrawals of margin.
The Portfolio may also purchase financial futures contracts
when it is not fully invested in municipal bonds in anticipation of
an increase in the cost of securities the Portfolio intends to
purchase. As such securities are purchased, an equivalent amount of
futures contracts will be closed out. In a substantial majority of
these transactions, the Portfolio will purchase municipal bonds upon
termination of the futures contracts. Due to changing market
conditions and interest rate forecasts, however, a futures position
may be terminated without a corresponding purchase of securities.
Nevertheless, all purchases of futures contracts by the Portfolio
will be subject to certain restrictions, described below.
Options on Futures Contracts. An option on a futures
contract provides the purchaser with the right, but not the
obligation, to enter into a long position in the underlying futures
contract (that is, purchase the futures contract), in the case of a
"call" option, or a short position (sell the futures contract), in the
case of a "put" option, for a fixed price up to a stated expiration
date. The option is purchased for a non-refundable fee, known as the
"premium." Upon exercise of the option, the contract market clearing
house assigns each party to the option an opposite position in the
underlying futures contract. In the event of exercise, therefore, the
parties are subject to all of the risks of futures trading, such as
payment of initial and variation margin. In addition, the seller, or
"writer," of the option is subject to margin requirements on the
option position. Options on futures contracts are traded on the same
contract markets as the underlying futures contracts.
The Portfolio may purchase options on futures contracts for
the same types of hedging purposes described above in connection with
futures contracts. For example, in order to protect against an
anticipated decline in the value of securities it holds, the
Portfolio could purchase put options on futures contracts, instead of
selling the underlying futures contracts. Conversely, in order to
protect against the adverse effects of anticipated increases in the
costs of securities to be acquired, the Portfolio could purchase call
options on futures contracts, instead of purchasing the underlying
futures contracts. The Portfolio generally will sell options on
futures contracts only to close out an existing position.
The Portfolio will not engage in transactions in such
instruments unless and until the Investment Advisor determines that
market conditions and the circumstances of the Portfolio warrant such
trading. To the extent the Portfolio engages in the purchase and sale
of futures contracts or options thereon, it will do so only at a
level which is reflective of the Investment Advisor's view of the
hedging needs of the Portfolio, the liquidity of the market for
futures contracts and the anticipated correlation between movements
in the value of the futures or option contract and the value of
securities held by the Portfolio.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in the Portfolio being deemed to be a "commodity
pool," as defined under such regulations, provided that certain
trading restrictions are adhered to. In particular, CFTC regulations
require that all futures and option positions entered into by the
Portfolio qualify as bona fide hedge transactions, as defined under
CFTC regulations, or, in the case of long positions, that the value
of such positions not exceed an amount of segregated funds determined
by reference to certain cash and securities positions maintained by
the Portfolio and accrued profits on such positions. In addition, the
Portfolio may not purchase or sell any such instruments if,
immediately thereafter, the sum of the amount of initial margin
deposits on the Portfolio's existing futures positions would exceed
5% of the market value of its net assets.
When the Portfolio purchases a futures contract, it will
maintain an amount of cash, cash equivalents (for example, commercial
paper and daily tender adjustable notes) or short-term high-grade
fixed income securities in a segregated account with the Portfolio's
custodian, so that the amount so segregated plus the amount of
initial and variation margin held in the account of its broker equals
the market value of the futures contract, thereby ensuring that the
use of such futures is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the
municipal bond index futures contract may vary from the bonds held by
the Portfolio. In addition, the securities underlying futures
contracts on U.S. Treasury securities will not be the same as
securities held by the Portfolio. As a result, the Portfolio's
ability effectively to hedge all or a portion of the value of its
municipal bonds through the use of futures contracts will depend in
part on the degree to which price movements in the index underlying
the municipal bond index futures contract, or the U.S. Treasury
securities underlying other futures contracts trade, correlate with
price movements of the municipal bonds held by the Portfolio.
For example, where prices of securities in the Portfolio do
not move in the same direction or to the same extent as the values of
the securities or index underlying a futures contract, the trading of
such futures contracts may not effectively hedge the Portfolio's
investments and may result in trading losses. The correlation may be
affected by disparities in the average maturity, ratings,
geographical mix or structure of the Portfolio's investments as
compared to those comprising the index, and general economic or
political factors. In addition, the correlation between movements in
the value of the index underlying a futures contract may be subject
to change over time, as additions to and deletions from the index
alter its structure. In the case of futures contracts on U.S.
Treasury securities and options thereon, the anticipated correlation
of price movements between the U.S. Treasury securities underlying
the futures or options and municipal bonds may be adversely affected
by economic, political, legislative or other developments that have a
disparate impact on the respective markets for such securities. In
the event that the Investment Advisor determines to enter into
transactions in financial futures contracts other than the municipal
bond index futures contract or futures on U.S. Treasury securities,
the risk of imperfect correlation between movements in the prices of
such futures contracts and the prices of municipal bonds held by the
Portfolio may be greater.
The trading of futures contracts on an index also entails
the risk of imperfect correlation between movements in the price of
the futures contract and the value of the underlying index. The
anticipated spread between the prices may be distorted due to
differences in the nature of the markets, such as margin
requirements, liquidity and the participation of speculators in the
futures markets. The risk of imperfect correlation, however,
generally diminishes as the delivery month specified in the futures
contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into
a closing purchase or sale transaction. This requires a secondary
market on the relevant contract market. The Portfolio will enter into
a futures or option position only if there appears to be a liquid
secondary market therefor, although there can be no assurance that
such a liquid secondary market will exist for any particular contract
at any specific time. Thus, it may not be possible to close out a
position once it has been established. Under such circumstances, the
Portfolio could be required to make continuing daily cash payments of
variation margin in the event of adverse price movements. In such
situation, if the Portfolio has insufficient cash, it may be required
to sell portfolio securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do so. In
addition, the Portfolio may be required to perform under the terms of
the futures or option contracts it holds. The inability to close out
futures or options positions also could have an adverse impact on the
Portfolio's ability effectively to hedge its portfolio.
When the Portfolio purchases an option on a futures
contract, its risk is limited to the amount of the premium, plus
related transaction costs, although this entire amount may be lost.
In addition, in order to profit from the purchase of an option on a
futures contract, the Portfolio may be required to exercise the
option and liquidate the underlying futures contract, subject to the
availability of a liquid secondary market. The trading of options on
futures contracts also entails the risk that changes in the value of
the underlying futures contract will not be fully reflected in the
value of the option, although the risk of imperfect correlation
generally tends to diminish as the maturity date of the futures
contract or expiration date of the option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found
to be in violation of these limits and it may impose other sanctions
or restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
Portfolio's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack
of a liquid secondary market for such instruments, transactions in
futures contracts involve risks related to leveraging and the
potential for incorrect forecasts of the direction and extent of
interest rate movements within a given time frame.
INVESTMENT RESTRICTIONS
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of
outstanding shares of the Portfolio. A majority of the shares means
the lesser of (i) 67% of the shares represented at a meeting at which
more than 50% of the outstanding shares are represented or (ii) more
than 50% of the outstanding shares. The Portfolio may not:
(1) Purchase common stocks, preferred stocks,
warrants or other equity securities;
(2) Issue senior securities, borrow money, or
pledge, mortgage, or hypothecate its assets, except
as may be necessary to secure borrowings from banks
for temporary or emergency (not leveraging)
purposes and then in an amount not greater than 10%
of the value of the Portfolio's total assets at the
time of the borrowing. Investment securities will
not be purchased while any borrowings are
outstanding;
(3) Sell securities short, purchase securities
on margin, or write put or call options, except as
permitted in connection with transactions in
futures contracts and options thereon. See
"Transactions in Futures Contracts." The Portfolio
reserves the right to purchase securities with puts
attached. See "Obligations with Puts Attached";
(4) Underwrite the securities of other
issuers, except to the extent that the purchase of
municipal obligations in accordance with the
Portfolio's investment objective and policies,
either directly from the issuer, or from an
underwriter for an issuer, may be deemed an
underwriting;
(5) Purchase securities which are subject to
legal or contractual restrictions on resale, i.e.,
restricted securities, or other securities which
are not readily marketable assets, including
repurchase agreements not terminable within seven
days, with respect to no more than 10% of its total
assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities or
commodity contracts, or oil and gas interests, but
this shall not prevent the Portfolio from investing
in municipal obligations secured by real estate or
interests therein;
(7) Purchase or retain securities of an issuer
if those Trustees of Calvert Tax-Free Reserves,
each of whom owns more than 1/2 of 1% of the
outstanding securities of such issuer, together own
more than 5% of such outstanding securities;
(8 ) Make loans to others, except in accordance
with the Portfolio's investment objective and
policies or pursuant to contracts providing for the
compensation of service providers by compensating
balances;
(9) Invest in companies for the purpose of
exercising control; or invest in securities of
other investment companies, except as they may be
acquired as part of a merger, consolidation or
acquisition of assets, or in connection with a
trustee's/director's deferred compensation plan, as
long as there is no duplication of advisory fees;
(10) Invest more than 25% of its assets in the
securities of any one issuer or of issuers located
within the same state, except that the Portfolio
may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. For
purposes of this limitation, the entity which has
the ultimate responsibility for the payment of
principal and interest on a particular security
will be treated as its issuer;
(11) Invest more than 25% of its assets in any
particular industry or industries, except that the
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Industrial development bonds, where the payment of
principal and interest is the responsibility of
companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its
total assets in securities where the payment of
principal and interest is the responsibility of a
company or companies with less than three years'
operating history.
PURCHASES AND REDEMPTIONS OF SHARES
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the
investor. Amounts of more than $50 and less than $300,000 may be
transferred electronically to the investor. Amounts of $1,000 or more
will be transmitted by wire, to the investor's account at a domestic
commercial bank that is a member of the Federal Reserve System or to
a correspondent bank. A charge of $5 is imposed on wire transfers of
less than $1,000. If the investor's bank is not a Federal Reserve
System member, failure of immediate notification to that bank by the
correspondent bank could result in a delay in crediting the funds to
the investor's bank account.
Telephone redemption requests which would require the
redemption of shares purchased by check or electronic funds transfer
within the previous 10 business days may not be honored. The Fund
reserves the right to modify the telephone redemption privilege.
To change redemption instructions already given,
shareholders must send a written notice to Calvert Group, c/o NFDS,
6th Floor, 1004 Baltimore, Kansas City, MO, 64105, with a voided copy
of a check for the bank wiring instructions to be added. If a voided
check does not accompany the request, then the request must be
signature guaranteed by a commercial bank, savings and loan
association, trust company, member firm of any national securities
exchange, or certain credit unions. Further documentation may be
required from corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), when trading on the New York Stock Exchange is restricted,
or an emergency exists, as determined by the SEC, or if the
Commission has ordered such a suspension for the protection of
shareholders. Redemption proceeds are normally mailed or wired the
next business day after a proper redemption request has been
received, unless redemptions have been suspended or postponed as
described above. Certain Class B and Class C shares may be subject
to a contingent deferred sales charge which is subtracted from the
redemption proceeds (see Prospectus, "Calculation of Contingent
Deferred Sales Charges and Waiver of Sales Charges").
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash
for redemption amounts exceeding, in any 90-day period, $250,000 or
1% of the net asset value of the Portfolio, whichever is less.
REDUCED SALES CHARGES
The Portfolio imposes reduced sales charges for shares in
certain situations in which the Principal Underwriter and the dealers
selling Portfolio shares may expect to realize significant economies
of scale with respect to such sales. Generally, sales costs do not
increase in proportion to the dollar amount of the shares sold; the
per-dollar transaction cost for a sale to an investor of shares
worth, say, $5,000 is generally much higher than the per-dollar cost
for a sale of shares worth $1,000,000. Thus, the applicable sales
charge declines as a percentage of the dollar amount of shares sold
as the dollar amount increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter
of Intent, the Underwriter and selling dealers can expect to realize
the economies of scale applicable to that stated goal amount. Thus
the Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Fund shareholders, enabling the
Fund to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies
of scale when making sales to the members of certain qualified groups
which agree to facilitate distribution of Portfolio shares to their
members. See "Exhibit A - Reduced Sales Charges" in the Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Portfolio declares and pays monthly dividends of its net
income to shareholders of record as of the close of business on each
designated monthly record date. Net investment income consists of the
interest income earned on investments (adjusted for amortization of
original issue discounts or premiums or market premiums), less
estimated expenses. Dividends and distributions paid may differ among
the classes.
Dividends are automatically reinvested at net asset value in
additional shares. Capital gains, if any, are normally paid once a
year and will be automatically reinvested at net asset value in
additional shares, unless you choose otherwise. You may elect to have
their dividends and distributions paid out monthly in cash. You may
also request to have your dividends and distributions from the
Portfolio invested in shares of any other Calvert Group Fund, to be
invested in that Fund or Portfolio without a sales charge. If you
elect to have dividends and/or distributions paid in cash, and the
U.S. Postal Service cannot deliver the check, or if it remains
uncashed for six months, it, as well as future dividends and
distributions, will be reinvested in additional shares.
TAX MATTERS
In 1997, the Portfolio did qualify and in 1998, the
Portfolio intends to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended (the
"Code"). By so qualifying, the Portfolio will not be subject to
federal income tax, nor to the federal excise tax imposed by the Tax
Reform Act of 1986 (the "Act"), to the extent that it distributes its
net investment income and realized capital gains.
The Portfolio's dividends of net investment income
constitute exempt-interest dividends on which shareholders are not
generally subject to federal income tax; however, under the Act,
dividends attributable to interest on certain private activity bonds
must be included in federal alternative minimum taxable income for
the purpose of determining liability (if any) for individuals and for
corporations. The Portfolio's dividends derived from taxable interest
and distributions of net short-term capital gains whether taken in
cash or reinvested in additional shares, are taxable to shareholders
as ordinary income and do not qualify for the dividends received
deduction for corporations.
A shareholder may also be subject to state and local taxes
on dividends and distributions from the Portfolio. The Portfolio will
notify shareholders annually about the federal tax status of
dividends and distributions paid by the Portfolio and the amount of
dividends withheld, if any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated
investment company which distributes exempt-interest dividends during
the year is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of
facilities financed by private activity bonds should consult their
tax advisers before purchasing shares of the Portfolio. "Substantial
user" is generally defined as including a "non-exempt person" who
regularly uses in trade or business a part of a facility financed
from the proceeds of private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Portfolio shares from the tax basis of those shares if the shares are
exchanged for shares of another Calvert Group Fund within 90 days of
purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Portfolio
causes a reduction in the sales charge otherwise payable on the
shares of the Calvert Group Fund acquired in the exchange, and
investors may treat sales charges excluded from the basis of the
original shares as incurred to acquire the new shares.
The Portfolio is required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction
occurring in the Portfolio if: (a) the shareholder's social security
number or other taxpayer identification number ("TIN") is not
provided, or an obviously incorrect TIN is provided; (b) the
shareholder does not certify under penalties of perjury that the TIN
provided is the shareholder's correct TIN and that the shareholder is
not subject to backup withholding under section 3406(a)(1)(C) of the
Code because of underreporting (however, failure to provide
certification as to the application of section 3406(a)(1)(C) will
result only in backup withholding on capital gain dividends, not on
redemptions); or (c) the Fund is notified by the Internal Revenue
Service that the TIN provided by the shareholder is incorrect or that
there has been underreporting of interest or dividends by the
shareholder. Affected shareholders will receive statements at least
annually specifying the amount withheld.
In addition the Portfolio is required to report to the
Internal Revenue Service the following information with respect to
redemption transactions in the Portfolio: (a) the shareholder's name,
address, account number and taxpayer identification number; (b) the
total dollar value of the redemptions; and (c) the Portfolio's
identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt
organizations; individual retirement plans; the U.S., a State, the
District of Columbia, a U.S. possession, a foreign government, an
international organization, or any political subdivision, agency or
instrumentality of any of the foregoing U.S. registered commodities
or securities dealers; real estate investment trusts; registered
investment companies; bank common trust funds; certain charitable
trusts; and foreign central banks of issue. Non-resident aliens also
are generally not subject to either requirement but, along with
certain foreign partnerships and foreign corporations, may instead be
subject to withholding under section 1441 of the Code. Shareholders
claiming exemption from backup withholding and broker reporting
should call or write the Portfolio for further information.
VALUATION OF SHARES
The Portfolio's assets are normally valued utilizing the
average bid dealer market quotation as furnished by an independent
pricing service. Securities and other assets for which market
quotations are not readily available are valued based on the current
market for similar securities or assets, as determined in good faith
by the Portfolio's Advisor under the supervision of the Board of
Trustees. The Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New
York Stock Exchange (generally, 4:00 p.m. Eastern time), and at such
other times as may be necessary or appropriate. The Portfolio does
not determine net asset value on certain national holidays or other
days on which the New York Stock Exchange is closed: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary
of McGraw-Hill. The use of Kenny as a pricing service by the
Portfolio has been approved by the Board of Trustees. Valuations
provided by Kenny are determined without exclusive reliance on quoted
prices and take into consideration appropriate factors such as
institution-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data.
Net Asset Value and Offering Price Per Share
Net asset value per share
($50,965,605/2,950,226 shares) $17.28
Maximum sales charge
(3.75% of offering price) 0.67
Offering price per share $17.95
CALCULATION OF YIELD AND TOTAL RETURN
From time to time, the Portfolio advertises its "total
return." Total return is calculated separately for each class. Total
return is historical in nature and is not intended to indicate future
performance. Total return will be quoted for the most recent one-year
period, five-year period and the period from inception of the
Portfolio's offering of shares. Total return quotations for periods
in excess of one year represent the average annual total return for
the period included in the particular quotation. Total return is a
computation of the Portfolio's dividend yield plus or minus realized
or unrealized capital appreciation or depreciation, less fees and
expenses. All total return quotations reflect the deduction of the
Portfolio's maximum sales charge, except quotations of "return
without maximum load," which do not deduct the sales charge, and
"actual return," which reflect deduction of the sales charge only for
those periods when a sales charge was actually imposed. Thus, in the
formula below, for return without maximum load, P = the entire $1,000
hypothetical initial investment and does not reflect the deduction of
any sales charge; for actual return, P = a hypothetical initial
investment of $1,000 less any sales charge actually imposed at the
beginning of the period for which the performance is being
calculated. Note: "Total Return" as quoted in the Financial
Highlights section of the Fund's Prospectus and Annual Report to
Shareholders, however, per SEC instructions, does not reflect
deduction of the sales charge, and corresponds to "return without
maximum load" as referred to herein. Return without maximum load
should be considered only by investors, such as participants in
certain pension plans, to whom the sales charge does not apply, or
for purposes of comparison only with comparable figures which also do
not reflect sales charges, such as Lipper averages. Total return is
computed according to the following formula:
P(1 +T)n = ERV
where P = a hypothetical initial payment of $1,000; T = average
annual total return; n = number of years and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5, or 10 year periods at the end of such periods
(or portions thereof if applicable).
Returns for the periods indicated are as follows:
With Max. Load W/O Max. Load
One Year 4.38% 8.35%
Five Years 6.11% 6.93%
Ten Years 7.46% 7.87%
The Portfolio also advertises, from time to time, its
"yield" and "tax equivalent yield." As with total return, both yield
figures are historical and are not intended to indicate future
performance. "Yield" quotations for each class refer to the aggregate
imputed yield-to-maturity of each of the Portfolio's investments
based on the market value as of the last day of a given thirty-day or
one-month period, less expenses (net of reimbursement), divided by
the average daily number of outstanding shares entitled to receive
dividends times the maximum offering price on the last day of the
period (so that the effect of the sales charge is included in the
calculation), compounded on a "bond equivalent," or semi-annual,
basis. The Portfolio's yield is computed according to the following
formula:
Yield = 2[(a-b/cd)+1)6 - 1]
where a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that
were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Portfolio's
yield, all or a portion of which may be exempt from federal income
taxes. The tax equivalent yield is computed per class by taking the
portion of the class' yield exempt from regular federal income tax
and multiplying the exempt yield by a factor based upon a stated
income tax rate, then adding the portion of the yield that is not
exempt from regular federal income tax. The factor which is used to
calculate the tax equivalent yield is the reciprocal of the
difference between 1 and the applicable income tax rate, which will
be stated in the advertisement. For the thirty-day period ended
December 31, 1997, the Portfolio yield for shares was 4.17% and its
federal tax equivalent yield was 6.51% for an investor in the 36%
federal income tax bracket, and 6.90% for an investor in the 39.6%
federal income tax bracket.
ADVERTISING
The Fund or its affiliates may provide information such as,
but not limited to, the economy, investment climate, investment
principles, sociological conditions and political ambiance.
Discussion may include hypothetical scenarios or lists of relevant
factors designed to aid the investor in determining whether the Fund
is compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered
for inclusion in the Portfolio, whether held or not.
The Fund or its affiliates may supply comparative
performance data and rankings from independent sources such as
Donoghue's Money Fund Report, Bank Rate Monitor, Money, Forbes,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, Russell 2000/Small Stock
Index, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, The Wall Street Journal, and Schabacker
Investment Management, Inc. Such averages generally do not reflect
any front- or back-end sales charges that may be charged by Funds in
that grouping. The Fund may also cite to any source, whether in print
or on-line, such as Bloomberg, in order to acknowledge origin of
information. The Fund may compare itself or its portfolio holdings to
other investments, whether or not issued or regulated by the
securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates
reserve the right to update performance rankings as new rankings
become available.
Calvert Group is the nation's leading family of socially
responsible mutual funds, both in terms of socially responsible
mutual fund assets under management, and number of socially
responsible mutual fund portfolios offered (source: Social Investment
Forum, November 30, 1997). Calvert Group was also the first to offer
a family of socially responsible mutual fund portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh,
Pennsylvania, a non-profit corporation which provides family planning
services, nutrition, maternal/child health care, and various health
screening services. Mr. Baird is a trustee/director of each of the
investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc., Calvert New World Fund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive,
Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner
in the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
He is also a director of Calvert Variable Series, Inc. DOB: 10/29/35.
Address: 308 East Broad Street, Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a
radiologist with Kaiser Permanente. Prior to that, he was a
radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania.
DOB: 07/23/49. Address: 16 Iliahi Street, Honolulu, Hawaii, 96817.
*CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has
retired from University Support Services, Inc. of Herndon, Virginia.
He is also a Director of Acacia Mutual Life Insurance Company. DOB:
10/13/22. Address: 1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices
head and neck reconstructive surgery in the Washington, D.C.,
metropolitan area. DOD: 05/23/48. Address: 7536 Pepperell Drive,
Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of
Corporate Finance of Washington, Inc. Formerly, he was a principal of
Gavian De Vaux Associates, an investment banking firm. DOB: 12/08/32.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial
consultant to various organizations. In addition, he is a director of
the Community Bankers Mutual Fund of Denver, Colorado, a director of
Ariel Funds, and the Treasurer and Director of Silby, Guffey, and
Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director
of each of the other investment companies in the Calvert Group of
Funds, except for Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek
serves as President, Chief Executive Officer and Vice Chairman of
Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. She is a director of Calvert-Sloan Advisers,
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds. Prior to joining Calvert Group, Ms.
Krumsiek served as Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and
CEO of Creative Associates International, Inc., a firm that
specializes in human resources development, information management,
public affairs and private enterprise development. She is also a
director of Acacia Federal Savings Bank. DOB: 12/08/45. Address: 5301
Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert
Variable Series, Inc., and serves as a director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management
Company, Inc., Director and Secretary of Grady, Berwald and Co.,
Inc., and Director and President of Chelsea Securities, Inc. DOB:
10/07/37. Address: Box 93, Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund. Mr. Silby is Executive Chairman of GroupServe, an
internet company focused on community building collaborative tools,
and an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture
Partners ("CSVP"). CSVP is a venture capital firm investing in
socially responsible small companies. He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 07/20/48. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc. Mr. Martini is also a director and President
of Calvert-Sloan Advisers, L.L.C., and a director and officer of
Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Chief Financial Officer of Calvert Group,
Ltd. and its subsidiaries and an officer of each of the other
investment companies in the Calvert Group of Funds. Mr. Wolfsheimer
is Vice President and Treasurer of Calvert-Sloan Advisers, L.L.C.,
and a director of Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary.
Mr. Tartikoff is an officer of each of the investment companies in
the Calvert Group of Funds, and is Senior Vice President, Secretary,
and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company.
DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each
of the other investment companies in the Calvert Group of Funds,
except for Calvert New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender
is Associate General Counsel of Calvert Group, Ltd. and an officer of
each of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is
also an officer of each of the other investment companies in the
Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and
Compliance Officer. Ms. Newton is Associate General Counsel of
Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is
Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. Prior to working at Calvert Group, Ms. Duke was an
Associate in the Investment Management Group of the Business and
Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in
the Calvert Group of Funds with the exception of Calvert Social
Investment Fund, of which only Messrs. Baird, Guffey and Silby are
among the Trustees, Calvert Variable Series, Inc., of which only
Messrs. Blatz, Diehl and Pugh are among the directors, Calvert World
Values Fund, Inc., of which only Messrs. Guffey and Silby are among
the directors, and Calvert New World Fund, Inc., of which only Mr.
Martini is among the directors. The address of directors/trustees and
officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. Directors/trustees and officers of
the Fund as a group own less than 1% of each Fund's outstanding
shares.
The Audit Committee of the Board is composed of Messrs.
Baird, Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy
Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and
Silby.
During fiscal 1996, trustees of the Fund not affiliated with
the Fund's Advisor were paid $5,402. Trustees of the Fund not
affiliated with the Advisor presently receive an annual fee of
$20,500 for service as a member of the Board of Trustees of the
Calvert Group of Funds, and a fee of $750 to $1500 for each regular
Board or Committee meeting attended; such fees are allocated among
the respective Funds on the basis of net assets.
Trustees of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the
fees is designed to maintain the parties in the same position as if
the fees were paid on a current basis. Management believes this will
have a negligible effect on the Fund's assets, liabilities, net
assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Trustee Compensation Table
Fiscal Year 1997 Aggregate Compensation Pension or Total
(unaudited Numbers) from Registant Retirement Benefits Compensation
for Service as Trustee Accrued as part of from Registrant
Registrant Expenses* and Fund
Complex paid to
Trustee **
Name of Trustee
Richard L. Baird, Jr. $24,466 $0 $34,450
Frank H. Blatz, Jr. $31,031 $31,031 $46,000
Frederick T. Borts $23,515 $0 $32,500
Charles E. Diehl $29,959 $29,959 $44,500
Douglas E. Feldman $23,462 $0 $32,500
Peter W. Gavian $27,736 $12,668 $38,500
John G. Guffey, Jr. $30,451 $0 $61,615
M. Charito Kruvant $26,145 $0 $36,250
Arthur J. Pugh $32,589 $1,038 $48,250
D. Wayne Silby $25,072 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer
a portion of their compensation. As of December 31, 1997,
total deferred compensation, including dividends and capital
appreciation, was $555,901.79, $545,259.10, $137,436.70 and
$187,735.55, for each trustee, respectively.
**As of December 31, 1997. The Fund Complex consists of nine
(9) registered investment companies.
INVESTMENT ADVISOR
The Fund's Investment Advisor is Calvert Asset
Management Company, Inc., 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814, a subsidiary of Calvert
Group, Ltd., which is a subsidiary of Acacia Mutual Life
Insurance Company of Washington, D.C.
The Advisory Contract between the Fund and the
Advisor will remain in effect indefinitely, provided
continuance is approved at least annually by the vote of the
holders of a majority of the outstanding shares of the Fund,
or by the Trustees of the Fund; and further provided that
such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to
the Contract or interested persons of such parties, cast in
person at a meeting called for the purpose of voting on such
approval. The Contract may be terminated without penalty by
either party on 60 days' prior written notice; it
automatically terminates in the event of its assignment.
Under the Contract, the Advisor manages the
investment and reinvestment of the Fund's assets, subject to
the direction and control of the Fund's Board of Trustees.
For its services, the Advisor receives from the Portfolio an
annual fee of 0.60% of the first $500 million of the
Portfolio's average daily net assets, 0.50% of the next $500
million of such assets, and 0.40% of all such assets over $1
billion.
The advisory fee is payable monthly. The Advisor
reserves the right (i) to waive all or a part of its fee and
(ii) to compensate, at its expense, broker-dealers in
consideration of their promotional and administrative
services.
The Advisor provides the Fund with investment
advice and research, pays the salaries and fees of all
Trustees and executive officers of the Fund who are
principals of the Advisor, and pays certain Fund advertising
and promotional expenses. The Fund pays all other
administrative and operating expenses, including: custodial
fees; shareholder servicing; dividend disbursing and
transfer agency fees; administrative service fees; federal
and state securities registration fees; insurance premiums;
trade association dues; interest, taxes and other business
fees; legal and audit fees; and brokerage commissions and
other costs associated with the purchase and sale of
portfolio securities.
The Advisor may voluntarily reimburse the Portfolio
for expenses. The advisory fees paid by the Portfolio to
Calvert Asset Management Company for fiscal years 1995,
1996, and 1997 were $320,128, $322,713, and $307,550,
respectively.
ADMINISTRATIVE SERVICES
Calvert Administrative Services Company ("CASC"), a
wholly-owned subsidiary of Calvert Group, Ltd., has been
retained by the Fund to provide certain administrative
services necessary to the conduct of the Fund's affairs.
Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and
the daily determination of net investment income and net
asset value per share. Prior to August 1, 1997, CASC
received a fee of $200,000 per year for providing such
services, allocated among Portfolios based on assets.
Effective August 1, 1997, the fee structure changed.
Exclusive of the CTFR Money Market Portfolio, the Fund pays
an annual fee of $80,000, allocated between the remaining
Portfolios based on assets. The service fees paid by the
Portfolio to CASC for fiscal years 1995, 1996, and 1997 were
$3,955, $3,934, and $4,158, respectively.
TRANSFER AND SHAREHOLDER SERVICING AGENTS
National Financial Data Services, Inc. ("NFDS"), a
subsidiary of State Street Bank & Trust, has been retained
by the Fund to act as transfer agent and dividend disbursing
agent. These responsibilities include: responding to certain
shareholder inquiries and instructions, crediting and
debiting shareholder accounts for purchases and redemptions
of Fund shares and confirming such transactions, and daily
updating of shareholder accounts to reflect declaration and
payment of dividends.
Calvert Shareholder Services, Inc., a subsidiary of
Calvert Group, Ltd., and Acacia Mutual, has been retained by
the Fund to act as shareholder servicing agent. Shareholder
servicing responsibilities include responding to shareholder
inquiries and instructions concerning their accounts,
entering any telephoned purchases or redemptions into the
NFDS system, maintenance of broker-dealer data, and
preparing and distributing statements to shareholders
regarding their accounts. Calvert Shareholder Services, Inc.
was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder
Services, Inc. receive a fee based on the number of
shareholder accounts and transactions.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the
Board of Trustees to serve as independent accountants for
fiscal year 1998. State Street Bank & Trust Company, N.A.,
225 Franklin Street, Boston, MA 02110, currently serves as
custodian of the Portfolio's investments. First National
Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the
Portfolio's cash assets. Neither custodian has any part in
deciding the Portfolio's investment policies or the choice
of securities that are to be purchased or sold for the
Portfolio.
METHOD OF DISTRIBUTION
The Portfolio has entered into a principal
underwriting agreement with Calvert Distributors, Inc.
("CDI"). Pursuant to the agreement, CDI serves as distributor
and principal underwriter for the Portfolio. CDI bears all
its expenses of providing services pursuant to the
agreement, including payment of any commissions and service
fees. CDI also receives all sales charges imposed on
Portfolio shares and compensates broker-dealer firms for
sales of shares at a maximum commission rate of 3.0%, as
specified in the table of applicable sales charges (see
"Alternative Sales Options" in the Prospectus). For the
fiscal years ended December 31, 1995 and 1996, CDI received
no distribution service fees under the Distribution Plan for
Class A shares, and received sales charges in excess of the
dealer reallowance of $21,611 and $12,538, respectively. For
the 1997 fiscal year, CDI received distribution service fees
of $46,132 for Class A shares, and received sales charges in
excess of the dealer reallowance of $11,019. For Class B
and Class C shares, CDI receives any CDSC paid.
The Portfolio's Distribution Plan was approved by
the Board of Trustees, including the Trustees who are not
"interested persons" of the Fund (as that term is defined in
the Investment Company Act of 1940) and who have no direct
or indirect financial interest in the operation of the Plan
or in any agreements related to the Plan. The selection and
nomination of the Trustees who are not interested persons of
the Fund is committed to the discretion of such
disinterested Trustees. In establishing the Plan, the
Trustees considered various factors including the amount of
the distribution fee. The Trustees determined that there is
a reasonable likelihood that the Plan will benefit the
Portfolio and its shareholders.
The Plan may be terminated by vote of a majority of
the non-interested Trustees who have no direct or indirect
financial interest in the Plan or by vote of a majority of
the outstanding shares of the Portfolio. Any change in the
Plan that would materially increase the distribution cost to
the Portfolio requires approval of the shareholders of the
affected class; otherwise, the Plan may be amended by the
Trustees, including a majority of the non-interested
Trustees as described above.
The Plan will continue in effect indefinitely, if
not sooner terminated in accordance with its terms.
Thereafter, the Plan will continue in effect for successive
one year periods provided that such continuance is annually
approved by (i) the vote of a majority of the Trustees who
are not parties to the Plan or interested persons of any
such party and who have no direct or indirect financial
interest in the Plan, and (ii) the vote of a majority of the
entire Board of Trustees.
Apart from the Plan, the Advisor, at its expense,
may incur costs and pay expenses associated with the
distribution of shares of the Portfolio. The Portfolio paid
no additional distribution expenses during fiscal 1995,
1996, and 1997.
Certain broker-dealers, and/or other persons may
receive compensation from the investment advisor,
underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund.
Such compensation may include additional compensation based
on assets held through that firm beyond the regularly
scheduled rates, and finder's fees payments to firms whose
representatives are responsible for soliciting a new account
where the accountholder does not choose to purchase through
that firm.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis
of their desirability from an investment standpoint.
Investment decisions and the choice of brokers and dealers
are made by the Fund's Advisor under the direction and
supervision of the Fund's Board of Trustees.
For the fiscal years ended December 31, 1996 and
1997, the portfolio turnover was 41% and 41%, respectively.
Broker-dealers who execute portfolio transactions on behalf
of the Fund are selected on the basis of their professional
capability and the value and quality of their services. The
Advisor reserves the right to place orders for the purchase
or sale of portfolio securities with broker-dealers who have
sold shares of the Fund or who provide the Fund with
statistical, research, or other information and services.
Although any statistical research or other information and
services provided by broker-dealers may be useful to the
Advisor, the dollar value of such information and services
is generally indeterminable, and its availability or receipt
does not serve to materially reduce the Advisor's normal
research activities or expenses. During the fiscal years
ended December 31, 1995, 1996, and 1997, no brokerage
commissions were paid by the Portfolio to broker-dealers. No
brokerage commissions were paid to any officer or trustee of
the Fund or any of their affiliates.
GENERAL INFORMATION
The Portfolio is a series of Calvert Tax-Free
Reserves, which was organized as a Massachusetts business
trust on October 20, 1980. The other series of the Fund
include the Money Market Portfolio, Limited-Term Portfolio,
California Money Market Portfolio, and the Vermont Municipal
Portfolio. The Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or
obligations of the Fund. The shareholders of a Massachusetts
business trust might, however, under certain circumstances,
be held personally liable as partners for its obligations.
The Declaration of Trust provides for indemnification and
reimbursement of expenses out of Fund assets for any
shareholder held personally liable for obligations of the
Fund. The Declaration of Trust provides that the Fund shall,
upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. The Declaration of Trust
further provides that the Fund may maintain appropriate
insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Fund, its
shareholders, Trustees, officers, employees, and agents to
cover possible tort and other liabilities. Thus, the risk of
a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which
both inadequate insurance exists and the Fund itself is
unable to meet its obligations.
The Portfolio offers three separate classes of
shares: Class A, Class B, and Class C. Each class
represents interests in the same portfolio of investments
but, as further described in the prospectus, each class is
subject to differing sales charges and expenses, which
differences will result in differing net asset values and
distributions. Upon any liquidation of the Portfolio,
shareholders of each class are entitled to share pro rata in
the net assets belonging to that series available for
distribution.
General costs, expenses, and liabilities of the
Fund attributable to a particular Portfolio are borne by
that Portfolio; costs, expenses, and liabilities not
attributable to a particular Portfolio are allocated between
the Fund's Portfolios on the basis of the respective net
assets of each Portfolio.
The Portfolio will send its shareholders unaudited
semi-annual and audited annual reports that will include the
Portfolio's net asset value per share, portfolio securities,
income and expenses and other financial information.
This Statement of Additional Information does not
contain all the information in the Fund's registration
statement. The registration statement is on file with the
Securities and Exchange Commission and is available to the
public.
FINANCIAL STATEMENTS
The audited financial statements in the Portfolio's
Annual Report to Shareholders dated December 31, 1997, are
expressly incorporated by reference and made a part of this
Statement of Additional Information. A copy of the Annual
Report may be obtained free of charge by writing or calling
the Fund.
Municipal Obligations
Municipal obligations are debt obligations issued
by states, cities, municipalities, and their agencies to
obtain funds for various public purposes. Such purposes
include the construction of a wide range of public
facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the
lending of funds to other public institutions and
facilities. In addition, certain types of private activity
bonds are issued by or on behalf of public authorities to
obtain funds for many types of local, privately operated
facilities. Such debt instruments are considered municipal
obligations if the interest paid on them is exempt from
federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from
private activity bonds used for the construction, equipment,
repair or improvement of privately operated industrial or
commercial facilities may be exempt from federal income tax,
current federal tax law places substantial limitations on
the size of such issues.
Municipal obligations are generally classified as
either "general obligation" or "revenue" bonds. General
obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal
and interest. Revenue bonds are payable from the revenues
derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax
or other specific revenue source but not from the general
taxing power. Tax-exempt private activity bonds are in most
cases revenue bonds and do not generally carry the pledge of
the credit of the issuing municipality. There are, of
course, variations in the security of municipal obligations
both within a particular classification and among
classifications.
Municipal obligations are generally traded on the
basis of a quoted yield to maturity, and the price of the
security is adjusted so that relative to the stated rate of
interest it will return the quoted rate to the purchaser.
Short-term and limited-term municipal obligations
include Tax Anticipation Notes, Revenue Anticipation Notes
Bond Anticipation Notes, Construction Loan Notes, and
Discount Notes. The maturities of these instruments at the
time of issue generally will range between three months and
one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed
subsequent issue at a date within one year and three years
of the time of acquisition are also considered short-term
and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of
state and municipal notes:
Moody's ratings for state and municipal notes and
other short-term obligations are designated Moody's
Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and
long-term risk.
MIG 1: Notes bearing this designation are of the
best quality, enjoying strong protection from established
cash flows of funds for their servicing or from established
and broad-based access to the market for refinancing, or
both.
MIG2: Notes bearing this designation are of high
quality, with margins of protection ample although not so
large as in the preceding group.
MIG3: Notes bearing this designation are of
favorable quality, with all security elements accounted for
but lacking the undeniable strength of the preceding grades.
Market access for refinancing, in particular, is likely to
be less well established.
MIG4: Notes bearing this designation are of
adequate quality, carrying specific risk but having
protection commonly regarded as required of an investment
security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard &
Poor's municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the
smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely
strong capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality
debt obligations. Capacity to pay principal and interest is
very strong, and in the majority of instances they differ
from AAA issues only in small degree. They are rated lower
than the best bonds because margins of protection may not be
as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat
larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate,
but elements may be present which make the bond somewhat
more susceptible to the adverse effects of circumstances and
economic conditions.
Baa/BBB: Medium grade obligations; adequate
capacity to pay principal and interest. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and
interest for bonds in this category than for bonds in the A
category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these
categories is regarded as predominantly speculative with
respect to capacity to pay interest and repay principal.
There may be some large uncertainties and major risk
exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income
bonds.
D: Debt in default; payment of interest and/or
principal is in arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively
marking the Letter of Intent option on my Fund Account
Application Form, I agree to be bound by the terms and
conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for
the Fund and the provisions described below as they may be
amended from time to time by the Fund. Such amendments will
apply automatically to existing Letters of Intent.
I intend to invest in the shares
of:_____________________
(Fund or Portfolio name) during the thirteen (13) month
period from the date of my first purchase pursuant to this
Letter (which cannot be more than ninety (90) days prior to
the date of this Letter or my Fund Account Application Form,
whichever is applicable), an aggregate amount (excluding any
reinvestments of distributions) of at least fifty thousand
dollars ($50,000) which, together with my current holdings
of the Fund (at public offering price on date of this Letter
or my Fund Account Application Form, whichever is
applicable), will equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __
$1,000,000
Subject to the conditions specified below,
including the terms of escrow, to which I hereby agree, each
purchase occurring after the date of this Letter will be
made at the public offering price applicable to a single
transaction of the dollar amount specified above, as
described in the Fund's prospectus. "Fund" in this Letter of
Intent shall refer to the Fund or Portfolio, as the case may
be. No portion of the sales charge imposed on purchases made
prior to the date of this Letter will be refunded.
I am making no commitment to purchase shares, but
if my purchases within thirteen months from the date of my
first purchase do not aggregate the minimum amount specified
above, I will pay the increased amount of sales charges
prescribed in the terms of escrow described below. I
understand that 4.75% of the minimum dollar amount specified
above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held
subject to the terms of escrow described below.
From the initial purchase (or subsequent purchases
if necessary), 4.75% of the dollar amount specified in this
Letter shall be held in escrow in shares of the Fund by the
Fund's transfer agent. For example, if the minimum amount
specified under the Letter is $50,000, the escrow shall be
shares valued in the amount of $2,375 (computed at the
public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed
shares will be credited to my account.
If the total minimum investment specified under the
Letter is completed within a thirteen month period, escrowed
shares will be promptly released to me. However, shares
disposed of prior to completion of the purchase requirement
under the Letter will be deducted from the amount required
to complete the investment commitment.
Upon expiration of this Letter, the total purchases
pursuant to the Letter are less than the amount specified in
the Letter as the intended aggregate purchases, Calvert
Distributors, Inc. ("CDI") will bill me for an amount equal
to the difference between the lower load I paid and the
dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time.
If not paid by the investor within 20 days, CDI will debit
the difference from my account. Full shares, if any,
remaining in escrow after the aforementioned adjustment will
be released and, upon request, remitted to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to
surrender for redemption any or all escrowed shares on the
books of the Fund. This power of attorney is coupled with an
interest.
The commission allowed by CDI to the broker-dealer
named herein shall be at the rate applicable to the minimum
amount of my specified intended purchases.
The Letter may be revised upward by me at any time
during the thirteen-month period, and such a revision will
be treated as a new Letter, except that the thirteen-month
period during which the purchase must be made will remain
unchanged and there will be no retroactive reduction of the
sales charges paid on prior purchases.
In determining the total amount of purchases made
hereunder, shares disposed of prior to termination of this
Letter will be deducted. My broker-dealer shall refer to
this Letter of Intent in placing any future purchase orders
for me while this Letter is in effect.
Dealer Name of Investor(s)
By
Authorized Signer Address
Date Signature of Investor(s)
<PAGE>
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data
Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 2
Purchases and Redemptions of Shares 3
Reduced Sales Charges 4
Dividends and Distributions 4
Tax Matters 4
Valuation of Shares 5
Calculation of Yield and Total Return 6
Advertising 7
Trustees and Officers 8
Investment Advisor 10
Administrative Services 10
Transfer and Shareholder Servicing Agents 11
Independent Accountants and Custodians 11
Method of Distribution 11
Portfolio Transactions 11
General Information 12
Control Persons and Principal Holders of Securities 12
Financial Statements 12
Appendix 13
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1998
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder
Information: (301) 951-4820 Services: (800) 368-2745
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a
prospectus. Investors should read the Statement of Additional
Information in conjunction with the Calvert Tax-Free Reserves
Prospectus, dated April 30, 1998, which may be obtained free of
charge by writing the Fund at the above address or calling the
telephone numbers listed above.
INVESTMENT OBJECTIVE
The Money Market and Limited-Term Portfolios (the
"Portfolios") are series of Calvert Tax-Free Reserves (the "Fund"),
and are designed to provide individual and institutional investors in
higher tax brackets with the highest level of interest income exempt
from federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics prescribed for each Portfolio. The Money Market
Portfolio further seeks to maintain a constant net asset value of
$1.00 per share. There is, of course, no assurance that the
Portfolios will be successful in meeting their investment objectives
or maintaining the Money Market Portfolio's net asset value constant
at $1.00 per share because there are inherent risks in the ownership
of any investment.
Dividends paid by the Portfolios will fluctuate with income
earned on investments. In addition, the dividends and distributions
paid and the value of each share will vary by class of shares; the
value of the Limited-Term Portfolio's shares will fluctuate to
reflect changes in the market value of the Portfolio's investments.
The Portfolios will attempt, through careful management and
diversification, to reduce these risks and enhance the opportunities
for higher income and greater price stability.
INVESTMENT POLICIES
The Money Market Portfolio and Limited-Term Portfolio each
invest primarily in a diversified portfolio of municipal obligations
whose interest is exempt from federal income tax. The Portfolios
differ in their anticipated income yields, quality, length of average
weighted maturity, and capital value volatility. A complete
explanation of municipal obligations and municipal bond and note
ratings is set forth in the Appendix.
The credit rating of each Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating
and variable rate demand notes upon the following conditions: the
Fund has right of demand, upon notice not to exceed thirty days,
against the issuer to receive payment; the issuer will be able to
make payment upon such demand, either from its own resources or
through an unqualified commitment from a third party; and the rate of
interest payable is calculated to ensure that the market value of
such notes will approximate par value on the adjustment dates. The
remaining maturity of such demand notes is deemed the period
remaining until such time as the Fund has the right to dispose of the
notes at a price which approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. A
municipal lease is an obligation of a government or governmental
authority, not subject to voter approval, used to finance capital
projects or equipment acquisitions and payable through periodic
rental payments. The Portfolio may purchase unrated leases. The
Fund's Advisor, under the supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality
of such leases on an ongoing basis, including an assessment of the
likelihood that the lease will not be canceled. Certain municipal
leases may be considered illiquid and subject to the Portfolio's
limit on illiquid securities. The Board of Trustees/Directors has
directed the Advisor to treat a municipal lease as a liquid security
if it satisfies the following conditions: (A) such treatment must be
consistent with the Portfolio's investment restrictions; (B) the
Advisor should be able to conclude that the obligation will maintain
its liquidity throughout the time it is held by the Portfolio, based
on the following factors: (1) whether the lease may be terminated by
the lessee; (2) the potential recovery, if any, from a sale of the
leased property upon termination of the lease; (3) the lessee's
general credit strength (e.g., its debt, administrative, economic and
financial characteristics and prospects); (4) the likelihood that the
lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of nonappropriation"), and (5) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease; (C) the Advisor
should determine whether the obligation can be disposed of within
seven days in the ordinary course of business at approximately the
amount at which the Portfolio has valued it for purposes of
calculating the Portfolio's net asset value, taking into account the
following factors: (1) the frequency of trades and quotes; (2) the
volatility of quotations and trade prices; (3) the number of dealers
willing to purchase or sell the security and the number of potential
purchasers; (4) dealer undertakings to make a market in the security;
(5) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of the transfer); (6) the
rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability
to dispose of the security; and (D) the Advisor should have
reasonable expectations that the municipal lease obligation will
maintain its liquidity throughout the time the instrument is held by
the Portfolio.
Obligations with Puts Attached
The Fund has authority to purchase securities at a price
which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when it can acquire at
the same time the right to sell the securities back to the seller at
an agreed upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a "put." A
Portfolio may not acquire obligations subject to puts if immediately
thereafter, with respect to 75% of the total amortized cost value of
its assets, that Portfolio would have more than 5% of its assets
invested in securities underlying puts from the same institution. A
Portfolio may, however, invest up to 10% of its assets in securities
underlying unconditional puts from the same institution.
Unconditional puts are readily exercisable in the event of a default
in payment of principal or interest on the underlying securities. The
Money Market Portfolio must limit its portfolio investments,
including puts, to instruments of high quality as determined by a
nationally recognized statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit of banks with assets of
one billion dollars or more; commercial paper or other corporate
notes of investment grade quality; and any of such items subject to
short-term repurchase agreements.
The Fund intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. To
minimize taxable income, the Fund may also hold cash which is not
earning income. It is a fundamental policy of the Fund that during
normal market conditions the Fund's assets be invested so that at
least 80% of the Fund's annual income will be tax-exempt.
When-Issued Purchases
Securities purchased on a when-issued basis and the
securities held in the Fund's Portfolios are subject to changes in
market value based upon the public's perception of the
creditworthiness of the issuer and changes in the level of interest
rates (which will generally result in both changing in value in the
same way, i.e., both experiencing appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, if in
order to achieve higher interest income, the Fund remains
substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets may vary. No
new when-issued commitments will be made by a Portfolio if more than
50% of that Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Fund will meet its obligations from then available cash flow, sale of
securities or, although it would not normally expect to do so, from
sale of the when-issued securities themselves (which may have a
market value greater or less than the Fund's payment obligation).
Sale of securities to meet such obligations carries with it a greater
potential for the realization of capital losses and capital gains
which are not exempt from federal income tax.
INVESTMENT RESTRICTIONS
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the
Fund's outstanding shares, including a majority of the shares of each
Portfolio. Shares have equal rights as to voting, except that only
shares of a Portfolio are entitled to vote on matters affecting only
that Portfolio (such as changes in investment objective, policies or
restrictions). A majority of the shares means the lesser of (i) 67%
of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares. Neither Portfolio may:
(1) Purchase common stocks, preferred stocks, warrants, or other
equity securities;
(2) Issue senior securities, borrow money, or pledge, mortgage, or
hypothecate its assets, except as may be necessary to secure
borrowings from banks for temporary or emergency (not leveraging)
purposes and then in an amount not greater than 10% of the value of
the Portfolio's total assets at the time of the borrowing. Investment
securities will not be purchased while any borrowings are outstanding;
(3) Sell securities short, purchase securities on margin, or write
put or call options. The Fund reserves the right to purchase
securities with puts attached. See "Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except to the extent
that the purchase of municipal obligations in accordance with the
Fund's investment objective and policies, either directly from the
issuer, or from an underwriter for an issuer, may be deemed an
underwriting;
(5) Purchase securities which are subject to legal or contractual
restrictions on resale, i.e., restricted securities, or other
securities which are not readily marketable assets, including
repurchase agreements not terminable within seven days, with respect
to no more than 10% of its net assets;
(6) Purchase or sell real estate, real estate investment trust
securities, commodities, or commodity contracts, or oil and gas
interests, but this shall not prevent the Fund from investing in
municipal obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if those trustees of
the Fund, each of whom owns more than 1/2 of 1% of the outstanding
securities of such issuer, together own more than 5% of such
outstanding securities;
(8) Make loans to others, except in accordance with the Fund's
investment objective and policies or pursuant to contracts providing
for the compensation of service providers by compensating balances;
(9) Invest in companies for the purpose of exercising control; or
invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets, or in connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication of advisory
fees;
(10) Invest more than 25% of its assets in the securities of any one
issuer or of issuers located within the same state, except that each
Portfolio may invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For purposes of this limitation, the entity which
has the ultimate responsibility for the payment of principal and
interest on a particular security will be treated as its issuer;
(11) Invest 25% or more of its total assets in any particular
industry or industries, except that either Portfolio may invest more
than 25% of its assets in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Industrial
development bonds, where the payment of principal and interest is the
responsibility of companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total assets in
securities where the payment of principal and interest is the
responsibility of a company or companies with less than three years'
operating history.
PURCHASES AND REDEMPTIONS OF SHARES
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Draft writing is available for the Money Market Portfolio.
Shareholders wishing to use the draft writing service should complete
the signature card enclosed with the Investment Application. This
service will be subject to the customary rules and regulations
governing checking accounts, and the Portfolio reserves the right to
change or suspend the service. Generally, there is no charge to you
for the maintenance of this service or the clearance of drafts, but
the Portfolio reserves the right to charge a service fee for drafts
returned for insufficient funds. As a service to shareholders, the
Portfolio may automatically transfer the dollar amount necessary to
cover drafts you have written on the Portfolio to your account from
any other of your identically registered accounts in Calvert money
market funds or Calvert Insured Plus. The Portfolio may charge a fee
for this service.
Drafts presented to the Custodian for payment which would
require the redemption of shares purchased by check or electronic
funds transfer within the previous 10 business days will not be
honored.
When a payable through draft ("check") is presented for
payment, a sufficient number of full and fractional shares from the
shareholder's account to cover the amount of the draft will be
redeemed at the net asset value next determined. If there are
insufficient shares in the shareholder's account, the draft will be
returned.
To change redemption instructions already given,
shareholders must send a written notice to Calvert Group, c/o NFDS,
6th Floor, 1004 Baltimore, Kansas City, MO 64105, with a voided copy
of a check for the bank wiring instructions to be added. If a voided
check does not accompany the request, then the request must be
signature guaranteed by a commercial bank, savings and loan
association, trust company, member firm of any national securities
exchange, or credit union. Further documentation may be required from
corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), when trading on the New York Stock Exchange is restricted,
or an emergency exists, as determined by the SEC, or if the
Commission has ordered such a suspension for the protection of
shareholders. Redemption proceeds are normally mailed or wired the
next business day after a proper redemption request has been
received, unless redemptions have been suspended or postponed as
described above.
Redemption proceeds are normally paid in cash. However, the Portfolio
has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of
the net asset value of the Portfolio, whichever is less.
REDUCED SALES CHARGES
The Limited-Term Portfolio imposes reduced sales charges for
shares in certain situations in which the Principal Underwriter
(which offers the Portfolio's shares continuously and on a "best
efforts" basis) and the dealers selling Limited-Term Portfolio shares
may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to
the dollar amount of the shares sold; the per-dollar transaction cost
for a sale to an investor of shares worth, say, $5,000 is generally
much higher than the per-dollar cost for a sale of shares worth
$1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter
of Intent, the Underwriter and selling dealers can expect to realize
the economies of scale applicable to that stated goal amount. Thus
the Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Portfolio shareholders, enabling
the Portfolio to afford existing shareholders the Right of
Accumulation. The Underwriter and selling dealers can also expect to
realize economies of scale when making sales to the members of
certain qualified groups which agree to facilitate distribution of
Portfolio shares to their members. See "Exhibit A - Reduced Sales
Charges" in the Limited-Term Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Money Market Portfolio declares daily and pays monthly
dividends of its daily net income to shareholders of record as of the
close of business each business day, thus allowing daily compounding
of dividends. The Limited-Term Portfolio declares and pays monthly
dividends of its net income to shareholders of record as of the close
of business on each designated monthly record date. Dividends and
distributions paid by the Limited-Term Portfolio may differ among the
classes. Net investment income consists of the interest income earned
on investments (adjusted for amortization of original issue discounts
or premiums or market premiums), less estimated expenses. Capital
gains, if any, are normally paid once a year and will be
automatically reinvested at net asset value in additional shares.
Dividends and any distributions are automatically reinvested in
additional shares of the Fund, unless you elect to have the dividends
of $10 or more paid in cash (by check or by Calvert Money
Controller). You may also request to have your dividends and
distributions from the Portfolio invested in shares of any other
Calvert Group Fund, subject to the applicable sales charge for that
Fund or Portfolio. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot
deliver the check, or if it remains uncashed for six months, it, as
well as future dividends and distributions, will be reinvested in
additional shares.
Purchasers of shares of the Money Market Portfolio will
begin receiving dividends upon the date federal funds are received by
the Fund. Shareholders redeeming shares by telephone electronic funds
transfer or written request will receive dividends through the date
that the redemption request is received; Money Market Portfolio
shareholders redeeming shares by draft will receive dividends up to
the date such draft is presented to the Portfolio for payment.
TAX MATTERS
In 1997, the Portfolios did qualify and in 1998, the
Portfolios intend to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code as amended (the
"Code"). By so qualifying, the Fund will not be subject to federal
income tax, nor to the federal excise tax imposed by the Tax Reform
Act of 1986 (the "Act"), to the extent that it distributes its net
investment income and realized capital gains.
The Portfolio's dividends of net investment income
constitute exempt-interest dividends on which shareholders are not
generally subject to federal income tax; however under the Act,
dividends attributable to interest on certain private activity bonds
must be included in federal alternative minimum taxable income for
the purpose of determining liability (if any) for individuals and for
corporations. Each Portfolio's dividends derived from taxable
interest and distributions of net short-term capital gains, whether
taken in cash or reinvested in additional shares, are taxable to
shareholders as ordinary income and do not qualify for the dividends
received deduction for corporations.
A shareholder may also be subject to state and local taxes
on dividends and distributions from the Fund. The Fund will notify
shareholders annually about the federal tax status of dividends and
distributions paid by the Fund and the amount of dividends withheld,
if any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated
investment company which distributes exempt-interest dividends during
the year is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of
facilities financed by private activity bonds should consult their
tax advisors before purchasing shares of the Fund. "Substantial user"
is generally defined as including a "non-exempt person" who regularly
uses in trade or business a part of a facility financed from the
proceeds of private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Limited-Term Portfolio shares from the tax basis of those shares if
the shares are exchanged for shares of another Calvert Group Fund
within 90 days of purchase. This requirement applies only to the
extent that the payment of the original sales charge on the shares of
the Portfolio causes a reduction in the sales charge otherwise
payable on the shares of the Calvert Group Fund acquired in the
exchange, and investors may treat sales charges excluded from the
basis of the original sales as incurred to acquire the new shares.
The Fund is required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction
occurring in the Limited-Term Portfolio if: (a) the shareholder's
social security number or other taxpayer identification number
("TIN") is not provided or an obviously incorrect TIN is provided; (b)
the shareholder does not certify under penalties of perjury that the
TIN provided is the shareholder's correct TIN and that the
shareholder is not subject to backup withholding under section
3406(a)(1)(C) of the Code because of underreporting (however, failure
to provide certification as to the application of section
3406(a)(1)(C) will result only in backup withholding on capital gain
dividends, not on redemptions); or (c) the Fund is notified by the
Internal Revenue Service that the TIN provided by the shareholder is
incorrect or that there has been underreporting of interest or
dividends by the shareholder. Affected shareholders will receive
statements at least annually specifying the amount withheld.
In addition, the Limited-Term Portfolio is required to
report to the Internal Revenue Service the following information with
respect to redemption transactions in the Portfolio: (a) the
shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Portfolio's identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt
organizations; individual retirement plans; the U.S., a State, the
District of Columbia, a U.S. possession, a foreign government, an
international organization, or any political subdivision, agency, or
instrumentality of any of the foregoing; U.S. registered commodities
or securities dealers; real estate investment trusts; registered
investment companies; bank common trust funds; certain charitable
trusts; and foreign central banks of issue. Non-resident aliens also
are generally not subject to either requirement but, along with
certain foreign partnerships and foreign corporations, may instead be
subject to withholding under section 1441 of the Code. Shareholders
claiming exemption from backup withholding and broker reporting
should call or write the Fund for further information.
VALUATION OF SHARES
Money Market Portfolio
The Money Market Portfolio's assets, including commitments
to purchase securities on a when-issued basis, are normally valued at
their amortized cost, which does not take into account unrealized
capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or
lower than the price that would be received upon sale of the
instrument. During periods of declining interest rates, the daily
yield on shares of the Money Market Portfolio may tend to be higher
than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Money Market Portfolio
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the
Portfolio would receive less investment income. The converse would
apply in a period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits
the Fund to value the assets of the Money Market Portfolio at
amortized cost if the Money Market Portfolio maintains a
dollar-weighted average maturity of 90 days or less and only
purchases obligations having remaining maturities of one year or
less. Rule 2a-7 requires, as a condition of its use, that the Money
Market Portfolio invest only in obligations determined by the
Trustees to be of high quality with minimal credit risks and further
requires the Trustees to establish procedures designed to stabilize,
to the extent reasonably possible, the Portfolio's price per share as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Portfolio's investment holdings by
the Trustees, at such intervals as they may deem appropriate, to
determine whether the Portfolio's net asset value calculated by using
available market quotations or equivalents deviates from $1.00 per
share based on amortized cost. If such deviation exceeds 0.50%, the
Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions
from capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available
market quotations.
Limited-Term Portfolio
The Limited-Term Portfolio's assets are valued, utilizing
the average bid dealer market quotation as furnished by an
independent pricing service. Securities and other assets for which
market quotations are not readily available are valued based on the
current market for similar securities or assets, as determined in
good faith by the Fund's Advisor under the supervision of the Board
of Trustees.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary
of McGraw-Hill. The use of Kenny as a pricing service by the
Portfolio has been approved by the Board of Trustees. Valuations
provided by Kenny are determined without exclusive reliance on quoted
prices and take into consideration appropriate factors such as
institution-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data.
Each Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New
York Stock Exchange (generally, 4:00 p.m. Eastern time), and at such
other times as may be necessary or appropriate. The Portfolios do not
determine net asset value on certain national holidays or other days
on which the New York Stock Exchange is closed: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Net Asset Value and Offering Price Per Share, 12/31/97
Money Market Portfolio
Class O ($1,405,291,715/1,405,404,125 shares) $1.00
Institutional Class ($51,081,396/51,084,219 shares) $1.00
Limited-Term Portfolio
Net asset value per share
($490,179,704/45,808,410) $10.70
Maximum sales charge
(1.00% of offering price) 0.22
Offering price per share $10.92
CALCULATION OF YIELD AND TOTAL RETURN
Money Market Portfolio
From time to time the Money Market Portfolio advertises its
"yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future
performance. Yield is calculated separately by class. The "yield" of
the Money Market Portfolio refers to the income generated by an
investment in the Portfolio over a particular base period of time.
The length and closing date of the base period will be stated in the
advertisement. If the base period is less than one year, the yield is
then "annualized." That is, the net change, exclusive of capital
changes, in the value of a share during the base period is divided by
the net asset value per share at the beginning of the period, and the
result is multiplied by 365 and divided by the number of days in the
base period. Capital changes excluded from the calculation of yield
are: (1) realized gains and losses from the sale of securities, and
(2) unrealized appreciation and depreciation. The Money Market
Portfolio's "effective yield" for a seven-day period is its
annualized compounded yield during the period calculated according to
the following formula:
Effective yield = (base period return + 1)365/7 - 1
For the seven-day period ended December 31, 1997, the Money Market
Portfolio's yield for Class O shares was 3.66% and its effective
yield was 3.72%. For the seven-day period ended December 31, 1997,
the Money Market Portfolio's yield for the Institutional Class of
shares was 3.94% and its effective yield was 4.02%.
The Money Market Portfolio also may advertise, from time to
time, its "tax equivalent yield." The tax equivalent yield is the
yield an investor would be required to obtain from taxable
investments to equal the Portfolio's yield, all or a portion of which
may be exempt from federal income taxes. The tax equivalent yield is
computed by taking the portion of the Portfolio's effective yield
exempt from regular federal income tax and multiplying the exempt
yield by a factor based upon a stated income tax rate, then adding
the portion of the yield that is not exempt from regular federal
income tax. The factor which is used to calculate the tax equivalent
yield is the reciprocal of the difference between 1 and the
applicable income tax rate, which will be stated in the
advertisement. For the seven-day period ended December 31, 1997, the
Money Market Portfolio's Class O tax equivalent yield, for an
investor in the 36% federal income tax bracket was 5.82% and, for the
39.6% federal income tax bracket, 6.16%. For the seven-day period
ended December 31, 1997, the Money Market Portfolio Institutional
Class' tax equivalent yield, for an investor in the 36% federal
income tax bracket was 6.28% and, for the 39.6% federal income tax
bracket, 6.66%.
Limited-Term Portfolio
From time to time, the Limited-Term Portfolio advertises its
"total return." Total return is calculated separately for each class.
Total return is historical in nature and is not intended to indicate
future performance. Total return will be quoted for the most recent
one-year period, five-year period, and period from inception of the
Portfolio's offering of shares. Total return quotations for periods
in excess of one year represent the average annual total return for
the period included in the particular quotation. Total return is a
computation of the Portfolio's dividend yield, plus or minus realized
or unrealized capital appreciation or depreciation, less fees and
expenses. All total return quotations reflect the deduction of the
Portfolio's maximum sales charge, except quotations of "return
without maximum load" which do not deduct the sales charge and
"actual return," which reflect deduction of the sales charge only for
those periods when a sales charge was actually imposed. Thus, in the
formula below, for return without maximum load, P = the entire $1,000
hypothetical initial investment and does not reflect the deduction of
any sales charge; for actual return, P = a hypothetical initial
payment of $1,000. Note: "Total Return" as quoted in the Financial
Highlights section of the Fund's Prospectus and Annual Report to
Shareholders, per SEC instructions, does not reflect deduction of the
sales charge, and corresponds to "return without maximum load" as
referred to herein. Return without maximum load should be considered
only by investors, such as participants in certain pension plans, to
whom the sales charge does not apply, or for purposes of comparison
only with comparable figures which also do not reflect sales charges,
such as Lipper averages. Total return is computed according to the
following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return;
n = number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10
year periods at the end of such periods (or portions thereof, if
applicable).
Returns for the periods indicated are as follows:
With Max. Load W/O Max. Load
One Year 3.01% 4.07%
Five Years 3.73% 3.94%
Ten Years 5.04% 5.15%
The Limited-Term Portfolio also advertises, from time to
time, its "yield" and "tax equivalent yield." As with total return,
both yield figures are historical and are not intended to indicate
future performance.
Unlike the yield quotations for the Money Market Portfolio,
"yield" quotations for the Limited-Term Portfolio refer to the
aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price
on the last day of the period (so that the effect of the sales charge
is included in the calculation), compounded on a "bond equivalent,"
or semi-annual, basis. The Limited-Term Portfolio's yield is computed
according to the following formula:
Yield = 2[(a-b/cd)+1)6 - 1]
where a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that
were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period. Using this
calculation, the Limited-Term Portfolio's yield for the month ended
December 31, 1997 was 3.54%.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Limited-Term
Portfolio's yield, all or a portion of which may be exempt from
federal income taxes. The tax equivalent yield is computed for each
class by taking the portion of the yield exempt from regular federal
income tax and multiplying the exempt yield by a factor based upon a
stated income tax rate, then adding the portion of the yield that is
not exempt from regular federal income tax. The factor which is used
to calculate the tax equivalent yield is the reciprocal of the
difference between 1 and the applicable income tax rate, which will
be stated in the advertisement. For the thirty-day period ended
December 31, 1997, the Portfolio's tax equivalent yield was 5.53% for
an investor in the 36% federal income tax bracket, and 5.86% for an
investor in the 39.6% federal income tax bracket.
ADVERTISING
The Fund or its affiliates may provide information such as,
but not limited to, the economy, investment climate, investment
principles, sociological conditions and political ambiance.
Discussion may include hypothetical scenarios or lists of relevant
factors designed to aid the investor in determining whether the Fund
is compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered
for inclusion in the Portfolio, whether held or not.
The Fund or its affiliates may supply comparative
performance data and rankings from independent sources such as
Donoghue's Money Fund Report, Bank Rate Monitor, Money, Forbes,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, Russell 2000/Small Stock
Index, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, The Wall Street Journal, and Schabacker
Investment Management, Inc. Such averages generally do not reflect
any front- or back-end sales charges that may be charged by Funds in
that grouping. The Fund may also cite to any source, whether in print
or on-line, such as Bloomberg, in order to acknowledge origin of
information. The Fund may compare itself or its portfolio holdings to
other investments, whether or not issued or regulated by the
securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates
reserve the right to update performance rankings as new rankings
become available.
Calvert Group is the nation's leading family of socially
responsible mutual funds, both in terms of socially responsible
mutual fund assets under management, and number of socially
responsible mutual fund portfolios offered (source: Social Investment
Forum, November 30, 1997). Calvert Group was also the first to offer
a family of socially responsible mutual fund portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh,
Pennsylvania, a non-profit corporation which provides family planning
services, nutrition, maternal/child health care, and various health
screening services. Mr. Baird is a trustee/director of each of the
investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc., Calvert New World Fund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive,
Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner
in the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
He is also a director of Calvert Variable Series, Inc. DOB: 10/29/35.
Address: 308 East Broad Street, Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a
radiologist with Kaiser Permanente. Prior to that, he was a
radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania.
DOB: 07/23/49. Address: 16 Iliahi Street, Honolulu, Hawaii, 96817.
*CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer
Emeritus of the George Washington University, and has retired from
University Support Services, Inc. of Herndon, Virginia. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 10/13/22.
Address: 1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices
head and neck reconstructive surgery in the Washington, D.C.,
metropolitan area. DOD: 05/23/48. Address: 7536 Pepperell Drive,
Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of
Corporate Finance of Washington, Inc. Formerly, he was a principal of
Gavian De Vaux Associates, an investment banking firm. DOB: 12/08/32.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial
consultant to various organizations. In addition, he is a director of
the Community Bankers Mutual Fund of Denver, Colorado, a director of
Ariel Funds, and the Treasurer and Director of Silby, Guffey, and
Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director
of each of the other investment companies in the Calvert Group of
Funds, except for Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek serves as
President, Chief Executive Officer and Vice Chairman of Calvert
Group, Ltd. and as an officer and director of each of its affiliated
companies. She is a director of Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment companies in the Calvert
Group of Funds. Prior to joining Calvert Group, Ms. Krumsiek served
as Senior Vice President of Alliance Capital LP's Mutual Fund
Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and
CEO of Creative Associates International, Inc., a firm that
specializes in human resources development, information management,
public affairs and private enterprise development. She is also a
director of Acacia Federal Savings Bank. DOB: 12/08/45. Address: 5301
Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert
Variable Series, Inc., and serves as a director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management
Company, Inc., Director and Secretary of Grady, Berwald and Co.,
Inc., and Director and President of Chelsea Securities, Inc. DOB:
10/07/37. Address: Box 93, Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund. Mr. Silby is Executive Chairman of GroupServe, an
internet company focused on community building collaborative tools,
and an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture
Partners ("CSVP"). CSVP is a venture capital firm investing in
socially responsible small companies. He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 07/20/48. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc. Mr. Martini is also a director and President
of Calvert-Sloan Advisers, L.L.C., and a director and officer of
Calvert New World Fund, Inc. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Chief Financial Officer of Calvert Group,
Ltd. and its subsidiaries and an officer of each of the other
investment companies in the Calvert Group of Funds. Mr. Wolfsheimer
is Vice President and Treasurer of Calvert-Sloan Advisers, L.L.C.,
and a director of Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary.
Mr. Tartikoff is an officer of each of the investment companies in
the Calvert Group of Funds, and is Senior Vice President, Secretary,
and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company.
DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each
of the other investment companies in the Calvert Group of Funds,
except for Calvert New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender
is Associate General Counsel of Calvert Group, Ltd. and an officer of
each of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is
also an officer of each of the other investment companies in the
Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and
Compliance Officer. Ms. Newton is Associate General Counsel of
Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is
Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. Prior to working at Calvert Group, Ms. Duke was an
Associate in the Investment Management Group of the Business and
Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Trustees and officers of the Fund as a group own less than 1% of the
Fund's outstanding shares. Trustees marked with an *, above, are
"interested persons" of the Fund, under the Investment Company Act of
1940.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in
the Calvert Group of Funds with the exception of Calvert Social
Investment Fund, of which only Messrs. Baird, Guffey and Silby and
Ms. Krumsiek are among the trustees, Calvert Variable Series, Inc.,
of which only Messrs. Blatz, Diehl and Pugh and Ms. Krumsiek are
among the directors, Calvert World Values Fund, Inc., of which only
Messrs. Guffey and Silby and Ms. Krumsiek are among the directors,
and Calvert New World Fund, Inc., of which only Ms. Krumsiek and Mr.
Martini are among the directors.
The Audit Committee of the Board is composed of Messrs.
Baird, Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy
Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and
Silby and Ms. Krumsiek.
During 1997, Trustees of the Fund not affiliated with the
Fund's Advisor were paid $210,221 and $72,792 by the Money Market and
Limited-Term Portfolios, respectively. Trustees of the Fund not
affiliated with the Advisor currently receive an annual fee of
$20,500 for service as a member of the Board of Trustees of the
Calvert Group of Funds plus a fee of $750 to $1500 for each Board and
Committee meeting attended; such fees are allocated among the Funds
on the basis of their net assets.
Trustees of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the
fees is designed to maintain the parties in the same position as if
the fees were paid on a current basis. Management believes this will
have a negligible effect on the Fund's assets, liabilities, net
assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Trustee Compensation Table
Fiscal Year 1997 Aggregate Compensation Pension or Total
(unaudited Numbers) from Registant Retirement Benefits Compensation
for Service as Trustee Accrued as part of from Registrant
Registrant Expenses* and Fund
Complex paid to
Trustee **
Richard L. Baird, Jr. $24,466 $0 $34,450
Frank H. Blatz, Jr. $31,031 $31,031 $46,000
Frederick T. Borts $23,515 $0 $32,500
Charles E. Diehl $29,959 $29,959 $44,500
Douglas E. Feldman $23,462 $0 $32,500
Peter W. Gavian $27,736 $12,668 $38,500
John G. Guffey, Jr. $30,451 $0 $61,615
M. Charito Kruvant $26,145 $0 $36,250
Arthur J. Pugh $32,589 $1,038 $48,250
D. Wayne Silby $25,072 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1997, total deferred
compensation, including dividends and capital appreciation, was
$555,901.79, $545,259.10, $137,436.70 and $187,735.55, for each
trustee, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9)
registered investment companies.
INVESTMENT ADVISOR
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814, a subsidiary of Calvert Group, Ltd., which is a
subsidiary of Acacia Mutual Life Insurance Company of Washington,
D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at
least annually by the vote of the holders of a majority of the
outstanding shares of the Fund, or by the Trustees of the Fund; and
further provided that such continuance is also approved annually by
the vote of a majority of the Trustees of the Fund who are not
parties to the Contract or interested persons of such parties, cast
in person at a meeting called for the purpose of voting on such
approval. The Contract may be terminated without penalty by either
party on 60 days' prior written notice; it automatically terminates
in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and
control of the Fund's Board of Trustees. For its services, the
Advisor receives an annual fee of:
i) with respect to the Money Market Portfolio, prior to
August 1, 1997, the fees were 0.50% of the first $500 million of such
Portfolio's average daily net assets, 0.45% of the next $500 million
of such assets, and 0.40% of all such assets over $1 billion.
Effective August 1, 1997, the fees changed to 0.25% of the first $500
million of such Portfolio's average daily net assets, 0.20% of the
next $500 million of such assets, and 0.15% of all such assets over
$1 billion; and
ii) with respect to the Limited-Term Portfolio, 0.60% of the
first $500 million of the Portfolio's average daily net assets, 0.50%
of the next $500 million of such assets, and 0.40% of all such assets
over $1 billion.
The advisory fee is payable monthly. The Advisor reserves
the right (i) to waive all or a part of its fee and (ii) to
compensate, at its expense, broker-dealers in consideration of their
promotional and administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays
certain Fund advertising and promotional expenses. The Fund pays all
other administrative and operating expenses, including: custodial
fees; shareholder servicing, dividend disbursing and transfer agency
fees; administrative service fees; federal and state securities
registration fees; insurance premiums; trade association dues;
interest, taxes and other business fees; legal and audit fees; and
brokerage commissions and other costs associated with the purchase
and sale of portfolio securities.
The Advisor may voluntarily reimburse the Money Market and
Limited-Term Portfolios for expenses. The advisory fees paid by the
Money Market Portfolio to Calvert Asset Management Company were
$7,481,925, $7,776,716, and $5,409,090, for years 1995, 1996, and
1997, respectively. The advisory fees paid by the Limited-Term
Portfolio to Calvert Asset Management Company were $3,149,849,
$3,110,764, and $3,164,772, for years 1995, 1996, and 1997,
respectively.
ADMINISTRATIVE SERVICES
Calvert Administrative Services Company ("CASC"), a
wholly-owned subsidiary of Calvert Group, Ltd., has been retained by
the Fund to provide certain administrative services necessary to the
conduct of the Fund's affairs. Such services include the preparation
of corporate and regulatory reports and filings, portfolio
accounting, and the daily determination of net investment income and
net asset value per share. Prior to August 1, 1997, CASC received a
fee of $200,000 per year for providing such services, allocated among
Portfolios based on assets. Effective August 1, 1997, the Money
Market Class O and Institutional Class pay annual rates of 0.26% and
0.05%, respectively, based on average daily net assets. Limited-Term
and other portfolios of CTFR pay an annual fee of $80,000, allocated
among the portfolios based on average daily net assets. The service
fees paid by the Money Market Portfolio to Calvert Administrative
Services Company were $124,836 and $128,255, for years 1995 and 1996,
respectively. The 1997 administrative services fees paid by CTFR
Money Market were $1,682,754 and $24,010 for Class O and the
Institutional Class, respectively. The service fees paid by the
Limited-Term Portfolio to CASC were $39,445, $38,242, and $43,210,
for years 1995, 1996, and 1997, respectively.
TRANSFER AND SHAREHOLDER SERVICING AGENTS
National Financial Data Services, Inc. ("NFDS"), a
subsidiary of State Street Bank & Trust, has been retained by the
Fund to act as transfer agent and dividend disbursing agent. These
responsibilities include: responding to certain shareholder inquiries
and instructions, crediting and debiting shareholder accounts for
purchases and redemptions of Fund shares and confirming such
transactions, and daily updating of shareholder accounts to reflect
declaration and payment of dividends.
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act
as shareholder servicing agent. Shareholder servicing
responsibilities include responding to shareholder inquiries and
instructions concerning their accounts, entering any telephoned
purchases or redemptions into the NFDS system, maintenance of
broker-dealer data, and preparing and distributing statements to
shareholders regarding their accounts. Calvert Shareholder Services,
Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services,
Inc. receive a fee based on the number of shareholder accounts and
shareholder transactions, per Portfolio.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1998.
State Street Bank & Trust Company, N.A., 225 Franklin Street, Boston,
MA 02110, currently serves as custodian of the Portfolio's
investments. First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland 21203 also serves as custodian of certain
of the Portfolio's cash assets. Neither custodian has any part in
deciding the Portfolio's investment policies or the choice of
securities that are to be purchased or sold for the Portfolio.
METHOD OF DISTRIBUTION
The Portfolios have entered into a principal underwriting
agreement with Calvert Distributors Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for
the Portfolios. CDI bears all its expenses of providing services
pursuant to the agreement, including payment of any commissions and
service fees. Prior to the termination of Class C shares for the
Limited Term Portfolio, CDI was entitled to receive a service fee and
a distribution fee, payable monthly pursuant to the Limited-Term
Portfolio's Distribution Plan, of 0.25%, respectively, of the
Portfolio's average daily net assets. CDI also receives all sales
charges imposed on Limited-Term Portfolio Class A shares and
compensates broker-dealer firms for sales of shares at a maximum
commission rate of 1.50%, as specified in the table of applicable
sales charges (see "Alternative Sales Options" in the Prospectus).
For the fiscal years ended December 31, 1995, 1996, and 1997, CDI
received sales charges in excess of the dealer reallowance of
$10,900, $0, and $0, respectively. CDI paid $48,520 and $101,072 in
addition to commissions charged on sales of Limited-Term Portfolio
during fiscal years 1996 and 1997, respectively.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and
the choice of brokers and dealers are made by the Fund's Advisor
under the direction and supervision of the Fund's Board of Trustees.
For the fiscal years ended December 31, 1996 and 1997, the
portfolio turnover rates of the Limited-Term Portfolio were 45% and
52%, respectively. Broker-dealers who execute portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. The Advisor
reserves the right to place orders for the purchase or sale of
portfolio securities with broker-dealers who have sold shares of the
Fund or who provide the Fund with statistical, research, or other
information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to
the Advisor, the dollar value of such information and services is
generally indeterminable, and its availability or receipt does not
serve to materially reduce the Advisor's normal research activities
or expenses. In fiscal years 1995, 1996, and 1997, no commissions
were paid to any officer, trustee or Advisory Council member of the
Fund or any of their affiliates. For the Limited-Term Portfolio,
1995, 1996 and 1997 aggregate brokerage commissions paid to
broker-dealers were $0, $48,520, and $0, respectively.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However,
such sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer
be based on the volume of Fund shares sold. The Advisor may
compensate, at its expense, such broker-dealers in consideration of
their promotional and administrative services.
GENERAL INFORMATION
The Fund was organized as a Massachusetts business trust on
October 20, 1980. The other series of the Fund include the Long-Term
Portfolio, California Money Market Portfolio, and the Vermont
Municipal Portfolio. The Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations
of the Fund. The shareholders of a Massachusetts business trust
might, however, under certain circumstances, be held personally
liable as partners for its obligations. The Declaration of Trust
provides for indemnification and reimbursement of expenses out of
Fund assets for any shareholder held personally liable for
obligations of the Fund. The Declaration of Trust provides that the
Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of the Fund, its shareholders, Trustees, officers,
employees, and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such
series as declared by the Board. The Money Market Portfolio offers
Class O (offered in the Calvert Tax-Free Reserves Money Market
Prospectus) and the Institutional Class (offered in a separate
prospectus). The two classes represent interests in the same
portfolio of investments and are identical in all respects, except:
(a) the classes may have different transfer agency fees; (b) postage
and delivery, printing and stationery expenses will be separately
allocated; and (c) the classes will have different dividend rates due
solely to the effects of (a) and (b) above. Each class represents
interests in the same portfolio of investments. Upon any liquidation
of the Funds, shareholders of each class are entitled to share pro
rata in the net assets belonging to that series available for
distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolios will send their shareholders unaudited
semi-annual and audited annual reports that will include the
Portfolios' net asset value per share, portfolio securities, income
and expenses, and other financial information.
This Statement of Additional Information does not contain
all the information in the Fund's registration statement. The
registration statement is on file with the Securities and Exchange
Commission and is available to the public.
FINANCIAL STATEMENTS
The audited financial statements in the Portfolios' Annual
Report to Shareholders dated December 31, 1997, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained
free of charge by writing or calling the Portfolios.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998, the following shareholders owned of
record 5% or more of the Institutional Class of CTFR Money Market:
Name and Address % of Ownership
Altera Corporation 11.29%
c/o Jeanne Akimoff
101 Innovation Drive
San Jose, California 95134
Caran Associates 5.71%
c/o Akman Group, Ltd.
5530 Wisconsin Avenue
Suite 1115
Chevy Chase, Maryland 20815
Pennsylvania Power & Light 8.83%
Attn: Dale M. Kleppinger TW-14
2 N. Ninth Street
Allentown, Pennsylvania 18101
Publix Super Markets 13.24%
Attn: Sandy Parkinson - Treasury Dept.
PO Box 407
Lakeland, Florida 33802
Reliable Stores, Inc. 16.40%
6301 Steven's Forest Road
Columbia, Maryland 21046
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for
various public purposes. Such purposes include the construction of a
wide range of public facilities, the refunding of outstanding
obligations, the obtaining of funds for general operating expenses,
and the lending of funds to other public institutions and facilities.
In addition, certain types of industrial development bonds are issued
by or on behalf of public authorities to obtain funds for many types
of local, privately operated facilities. Such debt instruments are
considered municipal obligations if the interest paid on them is
exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private
activity bonds used for the construction, equipment, repair or
improvement of privately operated industrial or commercial facilities
may be exempt from federal income tax, current federal tax law places
substantial limitations on the size of such issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue'' bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue bonds are payable
from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source, but not from the general taxing
power. Tax-exempt industrial development bonds are in most cases
revenue bonds and do not generally carry the pledge of the credit of
the issuing municipality. There are, of course, variations in the
security of municipal obligations, both within a particular
classification and among classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted
so that relative to the stated rate of interest it will return the
quoted rate to the purchaser.
Short-term and limited-term municipal obligations include
Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation
Notes, Construction Loan Notes, and Discount Notes. The maturities of
these instruments at the time of issue generally will range between
three months and one year. Pre-Refunded Bonds with longer nominal
maturities that are due to be retired with the proceeds of an
escrowed subsequent issue at a date within one year and three years
of the time of acquisition are also considered short-term and
limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade
("MIG"). This distinction is in recognition of the differences between
short-term credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best
quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access
to the market for refinancing, or both.
MIG2: Notes bearing this designation are of high quality,
with margins of protection ample although not so large as in the
preceding group.
MIG3: Notes bearing this designation are of favorable
quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for
refinancing, in particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate
quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree
of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. This rating indicates an
extremely strong capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong,
and in the majority of instances they differ from AAA issues only in
small degree. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make long-term risks appear
somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may
be present which make the bond somewhat more susceptible to the
adverse effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories
is regarded as predominantly speculative with respect to capacity to
pay interest and repay principal. There may be some large
uncertainties and major risk exposure to adverse conditions. The
higher the degree of speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is
in arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking
the Letter of Intent option on my Fund Account Application Form, I
agree to be bound by the terms and conditions applicable to Letters
of Intent appearing in the Prospectus and the Statement of Additional
Information for the Fund and the provisions described below as they
may be amended from time to time by the Fund. Such amendments will
apply automatically to existing Letters of Intent.
I intend to invest in the shares of:_____________________
(Fund or Portfolio name) during the thirteen (13) month period from
the date of my first purchase pursuant to this Letter (which cannot
be more than ninety (90) days prior to the date of this Letter or my
Fund Account Application Form, whichever is applicable), an aggregate
amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current
holdings of the Fund (at public offering price on date of this Letter
or my Fund Account Application Form, whichever is applicable), will
equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the
terms of escrow, to which I hereby agree, each purchase occurring
after the date of this Letter will be made at the public offering
price applicable to a single transaction of the dollar amount
specified above, as described in the Fund's prospectus. "Fund" in
this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be. No portion of the sales charge imposed on purchases made
prior to the date of this Letter will be refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase
do not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares
(computed to the nearest full share). These shares will be held
subject to the terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall
be held in escrow in shares of the Fund by the Fund's transfer agent.
For example, if the minimum amount specified under the Letter is
$50,000, the escrow shall be shares valued in the amount of $2,375
(computed at the public offering price adjusted for a $50,000
purchase). All dividends and any capital gains distribution on the
escrowed shares will be credited to my account.
If the total minimum investment specified under the Letter
is completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to
completion of the purchase requirement under the Letter will be
deducted from the amount required to complete the investment
commitment.
Upon expiration of this Letter, the total purchases pursuant
to the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load
I paid and the dollar amount of sales charges which I would have paid
if the total amount purchased had been made at a single time. If not
paid by the investor within 20 days, CDI will debit the difference
from my account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request,
remitted to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by CDI to the broker-dealer named
herein shall be at the rate applicable to the minimum amount of my
specified intended purchases.
The Letter may be revised upward by me at any time during
the thirteen-month period, and such a revision will be treated as a
new Letter, except that the thirteen-month period during which the
purchase must be made will remain unchanged and there will be no
retroactive reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be
deducted. My broker-dealer shall refer to this Letter of Intent in
placing any future purchase orders for me while this Letter is in
effect.
Dealer Name of Investor(s)
<PAGE>
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data
Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 2
Purchases and Redemptions of Shares 3
Reduced Sales Charges 4
Dividends and Distributions 4
Tax Matters 4
Valuation of Shares 5
Calculation of Yield and Total Return 6
Advertising 7
Trustees and Officers 8
Investment Advisor 10
Administrative Services 10
Transfer and Shareholder Servicing Agents 11
Independent Accountants and Custodians 11
Method of Distribution 11
Portfolio Transactions 11
General Information 12
Control Persons and Principal Holders of Securities 12
Financial Statements 12
Appendix 13
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1998
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account (800) 368-2748 Shareholder
Information: (301) 951-4820 Services: (800) 368-2745
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 Impaired: (800) 541-1524
This Statement of Additional Information is not a
prospectus. Investors should read the Statement of Additional
Information in conjunction with the Calvert Tax-Free Reserves
Prospectus, dated April 30, 1998, which may be obtained free of
charge by writing the Fund at the above address or calling the
telephone numbers listed above.
INVESTMENT OBJECTIVE
The Money Market and Limited-Term Portfolios (the
"Portfolios") are series of Calvert Tax-Free Reserves (the "Fund"),
and are designed to provide individual and institutional investors in
higher tax brackets with the highest level of interest income exempt
from federal income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics prescribed for each Portfolio. The Money Market
Portfolio further seeks to maintain a constant net asset value of
$1.00 per share. There is, of course, no assurance that the
Portfolios will be successful in meeting their investment objectives
or maintaining the Money Market Portfolio's net asset value constant
at $1.00 per share because there are inherent risks in the ownership
of any investment.
Dividends paid by the Portfolios will fluctuate with income
earned on investments. In addition, the dividends and distributions
paid and the value of each share will vary by class of shares; the
value of the Limited-Term Portfolio's shares will fluctuate to
reflect changes in the market value of the Portfolio's investments.
The Portfolios will attempt, through careful management and
diversification, to reduce these risks and enhance the opportunities
for higher income and greater price stability.
INVESTMENT POLICIES
The Money Market Portfolio and Limited-Term Portfolio each
invest primarily in a diversified portfolio of municipal obligations
whose interest is exempt from federal income tax. The Portfolios
differ in their anticipated income yields, quality, length of average
weighted maturity, and capital value volatility. A complete
explanation of municipal obligations and municipal bond and note
ratings is set forth in the Appendix.
The credit rating of each Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating
and variable rate demand notes upon the following conditions: the
Fund has right of demand, upon notice not to exceed thirty days,
against the issuer to receive payment; the issuer will be able to
make payment upon such demand, either from its own resources or
through an unqualified commitment from a third party; and the rate of
interest payable is calculated to ensure that the market value of
such notes will approximate par value on the adjustment dates. The
remaining maturity of such demand notes is deemed the period
remaining until such time as the Fund has the right to dispose of the
notes at a price which approximates par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured
instruments where the underlying security is a municipal lease. A
municipal lease is an obligation of a government or governmental
authority, not subject to voter approval, used to finance capital
projects or equipment acquisitions and payable through periodic
rental payments. The Portfolio may purchase unrated leases. The
Fund's Advisor, under the supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality
of such leases on an ongoing basis, including an assessment of the
likelihood that the lease will not be canceled. Certain municipal
leases may be considered illiquid and subject to the Portfolio's
limit on illiquid securities. The Board of Trustees/Directors has
directed the Advisor to treat a municipal lease as a liquid security
if it satisfies the following conditions: (A) such treatment must be
consistent with the Portfolio's investment restrictions; (B) the
Advisor should be able to conclude that the obligation will maintain
its liquidity throughout the time it is held by the Portfolio, based
on the following factors: (1) whether the lease may be terminated by
the lessee; (2) the potential recovery, if any, from a sale of the
leased property upon termination of the lease; (3) the lessee's
general credit strength (e.g., its debt, administrative, economic and
financial characteristics and prospects); (4) the likelihood that the
lessee will discontinue appropriating funding for the leased property
because the property is no longer deemed essential to its operations
(e.g., the potential for an "event of nonappropriation"), and (5) any
credit enhancement or legal recourse provided upon an event of
nonappropriation or other termination of the lease; (C) the Advisor
should determine whether the obligation can be disposed of within
seven days in the ordinary course of business at approximately the
amount at which the Portfolio has valued it for purposes of
calculating the Portfolio's net asset value, taking into account the
following factors: (1) the frequency of trades and quotes; (2) the
volatility of quotations and trade prices; (3) the number of dealers
willing to purchase or sell the security and the number of potential
purchasers; (4) dealer undertakings to make a market in the security;
(5) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of the transfer); (6) the
rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability
to dispose of the security; and (D) the Advisor should have
reasonable expectations that the municipal lease obligation will
maintain its liquidity throughout the time the instrument is held by
the Portfolio.
Obligations with Puts Attached
The Fund has authority to purchase securities at a price
which would result in a yield to maturity lower than that generally
offered by the seller at the time of purchase when it can acquire at
the same time the right to sell the securities back to the seller at
an agreed upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a "put." A
Portfolio may not acquire obligations subject to puts if immediately
thereafter, with respect to 75% of the total amortized cost value of
its assets, that Portfolio would have more than 5% of its assets
invested in securities underlying puts from the same institution. A
Portfolio may, however, invest up to 10% of its assets in securities
underlying unconditional puts from the same institution.
Unconditional puts are readily exercisable in the event of a default
in payment of principal or interest on the underlying securities. The
Money Market Portfolio must limit its portfolio investments,
including puts, to instruments of high quality as determined by a
nationally recognized statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and
instrumentalities; certificates of deposit of banks with assets of
one billion dollars or more; commercial paper or other corporate
notes of investment grade quality; and any of such items subject to
short-term repurchase agreements.
The Fund intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. To
minimize taxable income, the Fund may also hold cash which is not
earning income. It is a fundamental policy of the Fund that during
normal market conditions the Fund's assets be invested so that at
least 80% of the Fund's annual income will be tax-exempt.
When-Issued Purchases
Securities purchased on a when-issued basis and the
securities held in the Fund's Portfolios are subject to changes in
market value based upon the public's perception of the
creditworthiness of the issuer and changes in the level of interest
rates (which will generally result in both changing in value in the
same way, i.e., both experiencing appreciation when interest rates
decline and depreciation when interest rates rise). Therefore, if in
order to achieve higher interest income, the Fund remains
substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets may vary. No
new when-issued commitments will be made by a Portfolio if more than
50% of that Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the
Fund will meet its obligations from then available cash flow, sale of
securities or, although it would not normally expect to do so, from
sale of the when-issued securities themselves (which may have a
market value greater or less than the Fund's payment obligation).
Sale of securities to meet such obligations carries with it a greater
potential for the realization of capital losses and capital gains
which are not exempt from federal income tax.
INVESTMENT RESTRICTIONS
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the
Fund's outstanding shares, including a majority of the shares of each
Portfolio. Shares have equal rights as to voting, except that only
shares of a Portfolio are entitled to vote on matters affecting only
that Portfolio (such as changes in investment objective, policies or
restrictions). A majority of the shares means the lesser of (i) 67%
of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares. Neither Portfolio may:
(1) Purchase common stocks, preferred stocks, warrants, or other
equity securities;
(2) Issue senior securities, borrow money, or pledge, mortgage, or
hypothecate its assets, except as may be necessary to secure
borrowings from banks for temporary or emergency (not leveraging)
purposes and then in an amount not greater than 10% of the value of
the Portfolio's total assets at the time of the borrowing. Investment
securities will not be purchased while any borrowings are outstanding;
(3) Sell securities short, purchase securities on margin, or write
put or call options. The Fund reserves the right to purchase
securities with puts attached. See "Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except to the extent
that the purchase of municipal obligations in accordance with the
Fund's investment objective and policies, either directly from the
issuer, or from an underwriter for an issuer, may be deemed an
underwriting;
(5) Purchase securities which are subject to legal or contractual
restrictions on resale, i.e., restricted securities, or other
securities which are not readily marketable assets, including
repurchase agreements not terminable within seven days, with respect
to no more than 10% of its net assets;
(6) Purchase or sell real estate, real estate investment trust
securities, commodities, or commodity contracts, or oil and gas
interests, but this shall not prevent the Fund from investing in
municipal obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if those trustees of
the Fund, each of whom owns more than 1/2 of 1% of the outstanding
securities of such issuer, together own more than 5% of such
outstanding securities;
(8) Make loans to others, except in accordance with the Fund's
investment objective and policies or pursuant to contracts providing
for the compensation of service providers by compensating balances;
(9) Invest in companies for the purpose of exercising control; or
invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of
assets, or in connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication of advisory
fees;
(10) Invest more than 25% of its assets in the securities of any one
issuer or of issuers located within the same state, except that each
Portfolio may invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. For purposes of this limitation, the entity which
has the ultimate responsibility for the payment of principal and
interest on a particular security will be treated as its issuer;
(11) Invest 25% or more of its total assets in any particular
industry or industries, except that either Portfolio may invest more
than 25% of its assets in obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. Industrial
development bonds, where the payment of principal and interest is the
responsibility of companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total assets in
securities where the payment of principal and interest is the
responsibility of a company or companies with less than three years'
operating history.
PURCHASES AND REDEMPTIONS OF SHARES
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Draft writing is available for the Money Market Portfolio.
Shareholders wishing to use the draft writing service should complete
the signature card enclosed with the Investment Application. This
service will be subject to the customary rules and regulations
governing checking accounts, and the Portfolio reserves the right to
change or suspend the service. Generally, there is no charge to you
for the maintenance of this service or the clearance of drafts, but
the Portfolio reserves the right to charge a service fee for drafts
returned for insufficient funds. As a service to shareholders, the
Portfolio may automatically transfer the dollar amount necessary to
cover drafts you have written on the Portfolio to your account from
any other of your identically registered accounts in Calvert money
market funds or Calvert Insured Plus. The Portfolio may charge a fee
for this service.
Drafts presented to the Custodian for payment which would
require the redemption of shares purchased by check or electronic
funds transfer within the previous 10 business days will not be
honored.
When a payable through draft ("check") is presented for
payment, a sufficient number of full and fractional shares from the
shareholder's account to cover the amount of the draft will be
redeemed at the net asset value next determined. If there are
insufficient shares in the shareholder's account, the draft will be
returned.
To change redemption instructions already given,
shareholders must send a written notice to Calvert Group, c/o NFDS,
6th Floor, 1004 Baltimore, Kansas City, MO 64105, with a voided copy
of a check for the bank wiring instructions to be added. If a voided
check does not accompany the request, then the request must be
signature guaranteed by a commercial bank, savings and loan
association, trust company, member firm of any national securities
exchange, or credit union. Further documentation may be required from
corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of
payment postponed for any period during which the New York Stock
Exchange is closed (other than customary weekend and holiday
closings), when trading on the New York Stock Exchange is restricted,
or an emergency exists, as determined by the SEC, or if the
Commission has ordered such a suspension for the protection of
shareholders. Redemption proceeds are normally mailed or wired the
next business day after a proper redemption request has been
received, unless redemptions have been suspended or postponed as
described above.
Redemption proceeds are normally paid in cash. However, the Portfolio
has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of
the net asset value of the Portfolio, whichever is less.
REDUCED SALES CHARGES
The Limited-Term Portfolio imposes reduced sales charges for
shares in certain situations in which the Principal Underwriter
(which offers the Portfolio's shares continuously and on a "best
efforts" basis) and the dealers selling Limited-Term Portfolio shares
may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to
the dollar amount of the shares sold; the per-dollar transaction cost
for a sale to an investor of shares worth, say, $5,000 is generally
much higher than the per-dollar cost for a sale of shares worth
$1,000,000. Thus, the applicable sales charge declines as a
percentage of the dollar amount of shares sold as the dollar amount
increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter
of Intent, the Underwriter and selling dealers can expect to realize
the economies of scale applicable to that stated goal amount. Thus
the Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Portfolio shareholders, enabling
the Portfolio to afford existing shareholders the Right of
Accumulation. The Underwriter and selling dealers can also expect to
realize economies of scale when making sales to the members of
certain qualified groups which agree to facilitate distribution of
Portfolio shares to their members. See "Exhibit A - Reduced Sales
Charges" in the Limited-Term Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Money Market Portfolio declares daily and pays monthly
dividends of its daily net income to shareholders of record as of the
close of business each business day, thus allowing daily compounding
of dividends. The Limited-Term Portfolio declares and pays monthly
dividends of its net income to shareholders of record as of the close
of business on each designated monthly record date. Dividends and
distributions paid by the Limited-Term Portfolio may differ among the
classes. Net investment income consists of the interest income earned
on investments (adjusted for amortization of original issue discounts
or premiums or market premiums), less estimated expenses. Capital
gains, if any, are normally paid once a year and will be
automatically reinvested at net asset value in additional shares.
Dividends and any distributions are automatically reinvested in
additional shares of the Fund, unless you elect to have the dividends
of $10 or more paid in cash (by check or by Calvert Money
Controller). You may also request to have your dividends and
distributions from the Portfolio invested in shares of any other
Calvert Group Fund, subject to the applicable sales charge for that
Fund or Portfolio. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot
deliver the check, or if it remains uncashed for six months, it, as
well as future dividends and distributions, will be reinvested in
additional shares.
Purchasers of shares of the Money Market Portfolio will
begin receiving dividends upon the date federal funds are received by
the Fund. Shareholders redeeming shares by telephone electronic funds
transfer or written request will receive dividends through the date
that the redemption request is received; Money Market Portfolio
shareholders redeeming shares by draft will receive dividends up to
the date such draft is presented to the Portfolio for payment.
TAX MATTERS
In 1997, the Portfolios did qualify and in 1998, the
Portfolios intend to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code as amended (the
"Code"). By so qualifying, the Fund will not be subject to federal
income tax, nor to the federal excise tax imposed by the Tax Reform
Act of 1986 (the "Act"), to the extent that it distributes its net
investment income and realized capital gains.
The Portfolio's dividends of net investment income
constitute exempt-interest dividends on which shareholders are not
generally subject to federal income tax; however under the Act,
dividends attributable to interest on certain private activity bonds
must be included in federal alternative minimum taxable income for
the purpose of determining liability (if any) for individuals and for
corporations. Each Portfolio's dividends derived from taxable
interest and distributions of net short-term capital gains, whether
taken in cash or reinvested in additional shares, are taxable to
shareholders as ordinary income and do not qualify for the dividends
received deduction for corporations.
A shareholder may also be subject to state and local taxes
on dividends and distributions from the Fund. The Fund will notify
shareholders annually about the federal tax status of dividends and
distributions paid by the Fund and the amount of dividends withheld,
if any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated
investment company which distributes exempt-interest dividends during
the year is not deductible. Furthermore, entities or persons who are
"substantial users" (or persons related to "substantial users") of
facilities financed by private activity bonds should consult their
tax advisors before purchasing shares of the Fund. "Substantial user"
is generally defined as including a "non-exempt person" who regularly
uses in trade or business a part of a facility financed from the
proceeds of private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Limited-Term Portfolio shares from the tax basis of those shares if
the shares are exchanged for shares of another Calvert Group Fund
within 90 days of purchase. This requirement applies only to the
extent that the payment of the original sales charge on the shares of
the Portfolio causes a reduction in the sales charge otherwise
payable on the shares of the Calvert Group Fund acquired in the
exchange, and investors may treat sales charges excluded from the
basis of the original sales as incurred to acquire the new shares.
The Fund is required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction
occurring in the Limited-Term Portfolio if: (a) the shareholder's
social security number or other taxpayer identification number
("TIN") is not provided or an obviously incorrect TIN is provided; (b)
the shareholder does not certify under penalties of perjury that the
TIN provided is the shareholder's correct TIN and that the
shareholder is not subject to backup withholding under section
3406(a)(1)(C) of the Code because of underreporting (however, failure
to provide certification as to the application of section
3406(a)(1)(C) will result only in backup withholding on capital gain
dividends, not on redemptions); or (c) the Fund is notified by the
Internal Revenue Service that the TIN provided by the shareholder is
incorrect or that there has been underreporting of interest or
dividends by the shareholder. Affected shareholders will receive
statements at least annually specifying the amount withheld.
In addition, the Limited-Term Portfolio is required to
report to the Internal Revenue Service the following information with
respect to redemption transactions in the Portfolio: (a) the
shareholder's name, address, account number and taxpayer
identification number; (b) the total dollar value of the redemptions;
and (c) the Portfolio's identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt
organizations; individual retirement plans; the U.S., a State, the
District of Columbia, a U.S. possession, a foreign government, an
international organization, or any political subdivision, agency, or
instrumentality of any of the foregoing; U.S. registered commodities
or securities dealers; real estate investment trusts; registered
investment companies; bank common trust funds; certain charitable
trusts; and foreign central banks of issue. Non-resident aliens also
are generally not subject to either requirement but, along with
certain foreign partnerships and foreign corporations, may instead be
subject to withholding under section 1441 of the Code. Shareholders
claiming exemption from backup withholding and broker reporting
should call or write the Fund for further information.
VALUATION OF SHARES
Money Market Portfolio
The Money Market Portfolio's assets, including commitments
to purchase securities on a when-issued basis, are normally valued at
their amortized cost, which does not take into account unrealized
capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this
method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or
lower than the price that would be received upon sale of the
instrument. During periods of declining interest rates, the daily
yield on shares of the Money Market Portfolio may tend to be higher
than a like computation made by a fund with identical investments
utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Money Market Portfolio
resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the
Portfolio would receive less investment income. The converse would
apply in a period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits
the Fund to value the assets of the Money Market Portfolio at
amortized cost if the Money Market Portfolio maintains a
dollar-weighted average maturity of 90 days or less and only
purchases obligations having remaining maturities of one year or
less. Rule 2a-7 requires, as a condition of its use, that the Money
Market Portfolio invest only in obligations determined by the
Trustees to be of high quality with minimal credit risks and further
requires the Trustees to establish procedures designed to stabilize,
to the extent reasonably possible, the Portfolio's price per share as
computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the Portfolio's investment holdings by
the Trustees, at such intervals as they may deem appropriate, to
determine whether the Portfolio's net asset value calculated by using
available market quotations or equivalents deviates from $1.00 per
share based on amortized cost. If such deviation exceeds 0.50%, the
Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation
exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions
from capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available
market quotations.
Limited-Term Portfolio
The Limited-Term Portfolio's assets are valued, utilizing
the average bid dealer market quotation as furnished by an
independent pricing service. Securities and other assets for which
market quotations are not readily available are valued based on the
current market for similar securities or assets, as determined in
good faith by the Fund's Advisor under the supervision of the Board
of Trustees.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary
of McGraw-Hill. The use of Kenny as a pricing service by the
Portfolio has been approved by the Board of Trustees. Valuations
provided by Kenny are determined without exclusive reliance on quoted
prices and take into consideration appropriate factors such as
institution-size trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading
characteristics, and other market data.
Each Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New
York Stock Exchange (generally, 4:00 p.m. Eastern time), and at such
other times as may be necessary or appropriate. The Portfolios do not
determine net asset value on certain national holidays or other days
on which the New York Stock Exchange is closed: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Net Asset Value and Offering Price Per Share, 12/31/97
Money Market Portfolio
Class O ($1,405,291,715/1,405,404,125 shares) $1.00
Institutional Class ($51,081,396/51,084,219 shares) $1.00
Limited-Term Portfolio
Net asset value per share
($490,179,704/45,808,410) $10.70
Maximum sales charge
(1.00% of offering price) 0.22
Offering price per share $10.92
CALCULATION OF YIELD AND TOTAL RETURN
Money Market Portfolio
From time to time the Money Market Portfolio advertises its
"yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future
performance. Yield is calculated separately by class. The "yield" of
the Money Market Portfolio refers to the income generated by an
investment in the Portfolio over a particular base period of time.
The length and closing date of the base period will be stated in the
advertisement. If the base period is less than one year, the yield is
then "annualized." That is, the net change, exclusive of capital
changes, in the value of a share during the base period is divided by
the net asset value per share at the beginning of the period, and the
result is multiplied by 365 and divided by the number of days in the
base period. Capital changes excluded from the calculation of yield
are: (1) realized gains and losses from the sale of securities, and
(2) unrealized appreciation and depreciation. The Money Market
Portfolio's "effective yield" for a seven-day period is its
annualized compounded yield during the period calculated according to
the following formula:
Effective yield = (base period return + 1)365/7 - 1
For the seven-day period ended December 31, 1997, the Money Market
Portfolio's yield for Class O shares was 3.66% and its effective
yield was 3.72%. For the seven-day period ended December 31, 1997,
the Money Market Portfolio's yield for the Institutional Class of
shares was 3.94% and its effective yield was 4.02%.
The Money Market Portfolio also may advertise, from time to
time, its "tax equivalent yield." The tax equivalent yield is the
yield an investor would be required to obtain from taxable
investments to equal the Portfolio's yield, all or a portion of which
may be exempt from federal income taxes. The tax equivalent yield is
computed by taking the portion of the Portfolio's effective yield
exempt from regular federal income tax and multiplying the exempt
yield by a factor based upon a stated income tax rate, then adding
the portion of the yield that is not exempt from regular federal
income tax. The factor which is used to calculate the tax equivalent
yield is the reciprocal of the difference between 1 and the
applicable income tax rate, which will be stated in the
advertisement. For the seven-day period ended December 31, 1997, the
Money Market Portfolio's Class O tax equivalent yield, for an
investor in the 36% federal income tax bracket was 5.82% and, for the
39.6% federal income tax bracket, 6.16%. For the seven-day period
ended December 31, 1997, the Money Market Portfolio Institutional
Class' tax equivalent yield, for an investor in the 36% federal
income tax bracket was 6.28% and, for the 39.6% federal income tax
bracket, 6.66%.
Limited-Term Portfolio
From time to time, the Limited-Term Portfolio advertises its
"total return." Total return is calculated separately for each class.
Total return is historical in nature and is not intended to indicate
future performance. Total return will be quoted for the most recent
one-year period, five-year period, and period from inception of the
Portfolio's offering of shares. Total return quotations for periods
in excess of one year represent the average annual total return for
the period included in the particular quotation. Total return is a
computation of the Portfolio's dividend yield, plus or minus realized
or unrealized capital appreciation or depreciation, less fees and
expenses. All total return quotations reflect the deduction of the
Portfolio's maximum sales charge, except quotations of "return
without maximum load" which do not deduct the sales charge and
"actual return," which reflect deduction of the sales charge only for
those periods when a sales charge was actually imposed. Thus, in the
formula below, for return without maximum load, P = the entire $1,000
hypothetical initial investment and does not reflect the deduction of
any sales charge; for actual return, P = a hypothetical initial
payment of $1,000. Note: "Total Return" as quoted in the Financial
Highlights section of the Fund's Prospectus and Annual Report to
Shareholders, per SEC instructions, does not reflect deduction of the
sales charge, and corresponds to "return without maximum load" as
referred to herein. Return without maximum load should be considered
only by investors, such as participants in certain pension plans, to
whom the sales charge does not apply, or for purposes of comparison
only with comparable figures which also do not reflect sales charges,
such as Lipper averages. Total return is computed according to the
following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return;
n = number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10
year periods at the end of such periods (or portions thereof, if
applicable).
Returns for the periods indicated are as follows:
With Max. Load W/O Max. Load
One Year 3.01% 4.07%
Five Years 3.73% 3.94%
Ten Years 5.04% 5.15%
The Limited-Term Portfolio also advertises, from time to
time, its "yield" and "tax equivalent yield." As with total return,
both yield figures are historical and are not intended to indicate
future performance.
Unlike the yield quotations for the Money Market Portfolio,
"yield" quotations for the Limited-Term Portfolio refer to the
aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price
on the last day of the period (so that the effect of the sales charge
is included in the calculation), compounded on a "bond equivalent,"
or semi-annual, basis. The Limited-Term Portfolio's yield is computed
according to the following formula:
Yield = 2[(a-b/cd)+1)6 - 1]
where a = dividends and interest earned during the period; b =
expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that
were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period. Using this
calculation, the Limited-Term Portfolio's yield for the month ended
December 31, 1997 was 3.54%.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Limited-Term
Portfolio's yield, all or a portion of which may be exempt from
federal income taxes. The tax equivalent yield is computed for each
class by taking the portion of the yield exempt from regular federal
income tax and multiplying the exempt yield by a factor based upon a
stated income tax rate, then adding the portion of the yield that is
not exempt from regular federal income tax. The factor which is used
to calculate the tax equivalent yield is the reciprocal of the
difference between 1 and the applicable income tax rate, which will
be stated in the advertisement. For the thirty-day period ended
December 31, 1997, the Portfolio's tax equivalent yield was 5.53% for
an investor in the 36% federal income tax bracket, and 5.86% for an
investor in the 39.6% federal income tax bracket.
ADVERTISING
The Fund or its affiliates may provide information such as,
but not limited to, the economy, investment climate, investment
principles, sociological conditions and political ambiance.
Discussion may include hypothetical scenarios or lists of relevant
factors designed to aid the investor in determining whether the Fund
is compatible with the investor's goals. The Fund may list portfolio
holdings or give examples or securities that may have been considered
for inclusion in the Portfolio, whether held or not.
The Fund or its affiliates may supply comparative
performance data and rankings from independent sources such as
Donoghue's Money Fund Report, Bank Rate Monitor, Money, Forbes,
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service, Russell 2000/Small Stock
Index, Mutual Fund Values Morningstar Ratings, Mutual Fund
Forecaster, Barron's, The Wall Street Journal, and Schabacker
Investment Management, Inc. Such averages generally do not reflect
any front- or back-end sales charges that may be charged by Funds in
that grouping. The Fund may also cite to any source, whether in print
or on-line, such as Bloomberg, in order to acknowledge origin of
information. The Fund may compare itself or its portfolio holdings to
other investments, whether or not issued or regulated by the
securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates
reserve the right to update performance rankings as new rankings
become available.
Calvert Group is the nation's leading family of socially
responsible mutual funds, both in terms of socially responsible
mutual fund assets under management, and number of socially
responsible mutual fund portfolios offered (source: Social Investment
Forum, November 30, 1997). Calvert Group was also the first to offer
a family of socially responsible mutual fund portfolios.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh,
Pennsylvania, a non-profit corporation which provides family planning
services, nutrition, maternal/child health care, and various health
screening services. Mr. Baird is a trustee/director of each of the
investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc., Calvert New World Fund and Calvert
World Values Fund. DOB: 05/09/48. Address: 211 Overlook Drive,
Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner
in the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
He is also a director of Calvert Variable Series, Inc. DOB: 10/29/35.
Address: 308 East Broad Street, Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a
radiologist with Kaiser Permanente. Prior to that, he was a
radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania.
DOB: 07/23/49. Address: 16 Iliahi Street, Honolulu, Hawaii, 96817.
*CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer
Emeritus of the George Washington University, and has retired from
University Support Services, Inc. of Herndon, Virginia. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 10/13/22.
Address: 1658 Quail Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices
head and neck reconstructive surgery in the Washington, D.C.,
metropolitan area. DOD: 05/23/48. Address: 7536 Pepperell Drive,
Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of
Corporate Finance of Washington, Inc. Formerly, he was a principal of
Gavian De Vaux Associates, an investment banking firm. DOB: 12/08/32.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial
consultant to various organizations. In addition, he is a director of
the Community Bankers Mutual Fund of Denver, Colorado, a director of
Ariel Funds, and the Treasurer and Director of Silby, Guffey, and
Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director
of each of the other investment companies in the Calvert Group of
Funds, except for Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek serves as
President, Chief Executive Officer and Vice Chairman of Calvert
Group, Ltd. and as an officer and director of each of its affiliated
companies. She is a director of Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment companies in the Calvert
Group of Funds. Prior to joining Calvert Group, Ms. Krumsiek served
as Senior Vice President of Alliance Capital LP's Mutual Fund
Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and
CEO of Creative Associates International, Inc., a firm that
specializes in human resources development, information management,
public affairs and private enterprise development. She is also a
director of Acacia Federal Savings Bank. DOB: 12/08/45. Address: 5301
Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert
Variable Series, Inc., and serves as a director of Acacia Federal
Savings Bank. DOB: 09/24/37. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management
Company, Inc., Director and Secretary of Grady, Berwald and Co.,
Inc., and Director and President of Chelsea Securities, Inc. DOB:
10/07/37. Address: Box 93, Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund. Mr. Silby is Executive Chairman of GroupServe, an
internet company focused on community building collaborative tools,
and an officer, director and shareholder of Silby, Guffey & Company,
Inc., which serves as general partner of Calvert Social Venture
Partners ("CSVP"). CSVP is a venture capital firm investing in
socially responsible small companies. He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 07/20/48. Address: 1715 18th
Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset
Management Company, Inc. Mr. Martini is also a director and President
of Calvert-Sloan Advisers, L.L.C., and a director and officer of
Calvert New World Fund, Inc. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Chief Financial Officer of Calvert Group,
Ltd. and its subsidiaries and an officer of each of the other
investment companies in the Calvert Group of Funds. Mr. Wolfsheimer
is Vice President and Treasurer of Calvert-Sloan Advisers, L.L.C.,
and a director of Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary.
Mr. Tartikoff is an officer of each of the investment companies in
the Calvert Group of Funds, and is Senior Vice President, Secretary,
and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company.
DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each
of the other investment companies in the Calvert Group of Funds,
except for Calvert New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender
is Associate General Counsel of Calvert Group, Ltd. and an officer of
each of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is
also an officer of each of the other investment companies in the
Calvert Group of Funds. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and
Compliance Officer. Ms. Newton is Associate General Counsel of
Calvert Group and an officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds. DOB:
12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is
Assistant Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies in the Calvert
Group of Funds. Prior to working at Calvert Group, Ms. Duke was an
Associate in the Investment Management Group of the Business and
Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
Trustees and officers of the Fund as a group own less than 1% of the
Fund's outstanding shares. Trustees marked with an *, above, are
"interested persons" of the Fund, under the Investment Company Act of
1940.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in
the Calvert Group of Funds with the exception of Calvert Social
Investment Fund, of which only Messrs. Baird, Guffey and Silby and
Ms. Krumsiek are among the trustees, Calvert Variable Series, Inc.,
of which only Messrs. Blatz, Diehl and Pugh and Ms. Krumsiek are
among the directors, Calvert World Values Fund, Inc., of which only
Messrs. Guffey and Silby and Ms. Krumsiek are among the directors,
and Calvert New World Fund, Inc., of which only Ms. Krumsiek and Mr.
Martini are among the directors.
The Audit Committee of the Board is composed of Messrs.
Baird, Blatz, Feldman, Guffey and Pugh. The Board's Investment Policy
Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and
Silby and Ms. Krumsiek.
During 1997, Trustees of the Fund not affiliated with the
Fund's Advisor were paid $210,221 and $72,792 by the Money Market and
Limited-Term Portfolios, respectively. Trustees of the Fund not
affiliated with the Advisor currently receive an annual fee of
$20,500 for service as a member of the Board of Trustees of the
Calvert Group of Funds plus a fee of $750 to $1500 for each Board and
Committee meeting attended; such fees are allocated among the Funds
on the basis of their net assets.
Trustees of the Fund not affiliated with the Fund's Advisor
may elect to defer receipt of all or a percentage of their fees and
invest them in any fund in the Calvert Family of Funds through the
Trustees Deferred Compensation Plan (shown as "Pension or Retirement
Benefits Accrued as part of Fund Expenses," below). Deferral of the
fees is designed to maintain the parties in the same position as if
the fees were paid on a current basis. Management believes this will
have a negligible effect on the Fund's assets, liabilities, net
assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Trustee Compensation Table
Fiscal Year 1997 Aggregate Compensation Pension or Total
(unaudited Numbers) from Registant Retirement Benefits Compensation
for Service as Trustee Accrued as part of from Registrant
Registrant Expenses* and Fund
Complex paid to
Trustee **
Name of Trustee
Richard L. Baird, Jr. $24,466 $0 $34,450
Frank H. Blatz, Jr. $31,031 $31,031 $46,000
Frederick T. Borts $23,515 $0 $32,500
Charles E. Diehl $29,959 $29,959 $44,500
Douglas E. Feldman $23,462 $0 $32,500
Peter W. Gavian $27,736 $12,668 $38,500
John G. Guffey, Jr. $30,451 $0 $61,615
M. Charito Kruvant $26,145 $0 $36,250
Arthur J. Pugh $32,589 $1,038 $48,250
D. Wayne Silby $25,072 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1997, total deferred
compensation, including dividends and capital appreciation, was
$555,901.79, $545,259.10, $137,436.70 and $187,735.55, for each
trustee, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9)
registered investment companies.
INVESTMENT ADVISOR
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814, a subsidiary of Calvert Group, Ltd., which is a
subsidiary of Acacia Mutual Life Insurance Company of Washington,
D.C. ("Acacia Mutual").
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at
least annually by the vote of the holders of a majority of the
outstanding shares of the Fund, or by the Trustees of the Fund; and
further provided that such continuance is also approved annually by
the vote of a majority of the Trustees of the Fund who are not
parties to the Contract or interested persons of such parties, cast
in person at a meeting called for the purpose of voting on such
approval. The Contract may be terminated without penalty by either
party on 60 days' prior written notice; it automatically terminates
in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and
control of the Fund's Board of Trustees. For its services, the
Advisor receives an annual fee of:
i) with respect to the Money Market Portfolio, prior to
August 1, 1997, the fees were 0.50% of the first $500 million of such
Portfolio's average daily net assets, 0.45% of the next $500 million
of such assets, and 0.40% of all such assets over $1 billion.
Effective August 1, 1997, the fees changed to 0.25% of the first $500
million of such Portfolio's average daily net assets, 0.20% of the
next $500 million of such assets, and 0.15% of all such assets over
$1 billion; and
ii) with respect to the Limited-Term Portfolio, 0.60% of the
first $500 million of the Portfolio's average daily net assets, 0.50%
of the next $500 million of such assets, and 0.40% of all such assets
over $1 billion.
The advisory fee is payable monthly. The Advisor reserves
the right (i) to waive all or a part of its fee and (ii) to
compensate, at its expense, broker-dealers in consideration of their
promotional and administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays
certain Fund advertising and promotional expenses. The Fund pays all
other administrative and operating expenses, including: custodial
fees; shareholder servicing, dividend disbursing and transfer agency
fees; administrative service fees; federal and state securities
registration fees; insurance premiums; trade association dues;
interest, taxes and other business fees; legal and audit fees; and
brokerage commissions and other costs associated with the purchase
and sale of portfolio securities.
The Advisor may voluntarily reimburse the Money Market and
Limited-Term Portfolios for expenses. The advisory fees paid by the
Money Market Portfolio to Calvert Asset Management Company were
$7,481,925, $7,776,716, and $5,409,090, for years 1995, 1996, and
1997, respectively. The advisory fees paid by the Limited-Term
Portfolio to Calvert Asset Management Company were $3,149,849,
$3,110,764, and $3,164,772, for years 1995, 1996, and 1997,
respectively.
ADMINISTRATIVE SERVICES
Calvert Administrative Services Company ("CASC"), a
wholly-owned subsidiary of Calvert Group, Ltd., has been retained by
the Fund to provide certain administrative services necessary to the
conduct of the Fund's affairs. Such services include the preparation
of corporate and regulatory reports and filings, portfolio
accounting, and the daily determination of net investment income and
net asset value per share. Prior to August 1, 1997, CASC received a
fee of $200,000 per year for providing such services, allocated among
Portfolios based on assets. Effective August 1, 1997, the Money
Market Class O and Institutional Class pay annual rates of 0.26% and
0.05%, respectively, based on average daily net assets. Limited-Term
and other portfolios of CTFR pay an annual fee of $80,000, allocated
among the portfolios based on average daily net assets. The service
fees paid by the Money Market Portfolio to Calvert Administrative
Services Company were $124,836 and $128,255, for years 1995 and 1996,
respectively. The 1997 administrative services fees paid by CTFR
Money Market were $1,682,754 and $24,010 for Class O and the
Institutional Class, respectively. The service fees paid by the
Limited-Term Portfolio to CASC were $39,445, $38,242, and $43,210,
for years 1995, 1996, and 1997, respectively.
TRANSFER AND SHAREHOLDER SERVICING AGENTS
National Financial Data Services, Inc. ("NFDS"), a
subsidiary of State Street Bank & Trust, has been retained by the
Fund to act as transfer agent and dividend disbursing agent. These
responsibilities include: responding to certain shareholder inquiries
and instructions, crediting and debiting shareholder accounts for
purchases and redemptions of Fund shares and confirming such
transactions, and daily updating of shareholder accounts to reflect
declaration and payment of dividends.
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act
as shareholder servicing agent. Shareholder servicing
responsibilities include responding to shareholder inquiries and
instructions concerning their accounts, entering any telephoned
purchases or redemptions into the NFDS system, maintenance of
broker-dealer data, and preparing and distributing statements to
shareholders regarding their accounts. Calvert Shareholder Services,
Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services,
Inc. receive a fee based on the number of shareholder accounts and
shareholder transactions, per Portfolio.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1998.
State Street Bank & Trust Company, N.A., 225 Franklin Street, Boston,
MA 02110, currently serves as custodian of the Portfolio's
investments. First National Bank of Maryland, 25 South Charles
Street, Baltimore, Maryland 21203 also serves as custodian of certain
of the Portfolio's cash assets. Neither custodian has any part in
deciding the Portfolio's investment policies or the choice of
securities that are to be purchased or sold for the Portfolio.
METHOD OF DISTRIBUTION
The Portfolios have entered into a principal underwriting
agreement with Calvert Distributors Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for
the Portfolios. CDI bears all its expenses of providing services
pursuant to the agreement, including payment of any commissions and
service fees. Prior to the termination of Class C shares for the
Limited Term Portfolio, CDI was entitled to receive a service fee and
a distribution fee, payable monthly pursuant to the Limited-Term
Portfolio's Distribution Plan, of 0.25%, respectively, of the
Portfolio's average daily net assets. CDI also receives all sales
charges imposed on Limited-Term Portfolio Class A shares and
compensates broker-dealer firms for sales of shares at a maximum
commission rate of 1.50%, as specified in the table of applicable
sales charges (see "Alternative Sales Options" in the Prospectus).
For the fiscal years ended December 31, 1995, 1996, and 1997, CDI
received sales charges in excess of the dealer reallowance of
$10,900, $0, and $0, respectively. CDI paid $48,520 and $101,072 in
addition to commissions charged on sales of Limited-Term Portfolio
during fiscal years 1996 and 1997, respectively.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and
the choice of brokers and dealers are made by the Fund's Advisor
under the direction and supervision of the Fund's Board of Trustees.
For the fiscal years ended December 31, 1996 and 1997, the
portfolio turnover rates of the Limited-Term Portfolio were 45% and
52%, respectively. Broker-dealers who execute portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. The Advisor
reserves the right to place orders for the purchase or sale of
portfolio securities with broker-dealers who have sold shares of the
Fund or who provide the Fund with statistical, research, or other
information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to
the Advisor, the dollar value of such information and services is
generally indeterminable, and its availability or receipt does not
serve to materially reduce the Advisor's normal research activities
or expenses. In fiscal years 1995, 1996, and 1997, no commissions
were paid to any officer, trustee or Advisory Council member of the
Fund or any of their affiliates. For the Limited-Term Portfolio,
1995, 1996 and 1997 aggregate brokerage commissions paid to
broker-dealers were $0, $48,520, and $0, respectively.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However,
such sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer
be based on the volume of Fund shares sold. The Advisor may
compensate, at its expense, such broker-dealers in consideration of
their promotional and administrative services.
GENERAL INFORMATION
The Fund was organized as a Massachusetts business trust on
October 20, 1980. The other series of the Fund include the Long-Term
Portfolio, California Money Market Portfolio, and the Vermont
Municipal Portfolio. The Fund's Declaration of Trust contains an
express disclaimer of shareholder liability for acts or obligations
of the Fund. The shareholders of a Massachusetts business trust
might, however, under certain circumstances, be held personally
liable as partners for its obligations. The Declaration of Trust
provides for indemnification and reimbursement of expenses out of
Fund assets for any shareholder held personally liable for
obligations of the Fund. The Declaration of Trust provides that the
Fund shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of the Fund, its shareholders, Trustees, officers,
employees, and agents to cover possible tort and other liabilities.
Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such
series as declared by the Board. The Money Market Portfolio offers
Class O (offered in the Calvert Tax-Free Reserves Money Market
Prospectus) and the Institutional Class (offered in a separate
prospectus). The two classes represent interests in the same
portfolio of investments and are identical in all respects, except:
(a) the classes may have different transfer agency fees; (b) postage
and delivery, printing and stationery expenses will be separately
allocated; and (c) the classes will have different dividend rates due
solely to the effects of (a) and (b) above. Each class represents
interests in the same portfolio of investments. Upon any liquidation
of the Funds, shareholders of each class are entitled to share pro
rata in the net assets belonging to that series available for
distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolios will send their shareholders unaudited
semi-annual and audited annual reports that will include the
Portfolios' net asset value per share, portfolio securities, income
and expenses, and other financial information.
This Statement of Additional Information does not contain
all the information in the Fund's registration statement. The
registration statement is on file with the Securities and Exchange
Commission and is available to the public.
FINANCIAL STATEMENTS
The audited financial statements in the Portfolios' Annual
Report to Shareholders dated December 31, 1997, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained
free of charge by writing or calling the Portfolios.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998, the following shareholders owned of
record 5% or more of the Institutional Class of CTFR Money Market:
Name and Address % of Ownership
Altera Corporation 11.29%
c/o Jeanne Akimoff
101 Innovation Drive
San Jose, California 95134
Caran Associates 5.71%
c/o Akman Group, Ltd.
5530 Wisconsin Avenue
Suite 1115
Chevy Chase, Maryland 20815
Pennsylvania Power & Light 8.83%
Attn: Dale M. Kleppinger TW-14
2 N. Ninth Street
Allentown, Pennsylvania 18101
Publix Super Markets 13.24%
Attn: Sandy Parkinson - Treasury Dept.
PO Box 407
Lakeland, Florida 33802
Reliable Stores, Inc. 16.40%
6301 Steven's Forest Road
Columbia, Maryland 21046
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for
various public purposes. Such purposes include the construction of a
wide range of public facilities, the refunding of outstanding
obligations, the obtaining of funds for general operating expenses,
and the lending of funds to other public institutions and facilities.
In addition, certain types of industrial development bonds are issued
by or on behalf of public authorities to obtain funds for many types
of local, privately operated facilities. Such debt instruments are
considered municipal obligations if the interest paid on them is
exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private
activity bonds used for the construction, equipment, repair or
improvement of privately operated industrial or commercial facilities
may be exempt from federal income tax, current federal tax law places
substantial limitations on the size of such issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue'' bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power
for the payment of principal and interest. Revenue bonds are payable
from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise
tax or other specific revenue source, but not from the general taxing
power. Tax-exempt industrial development bonds are in most cases
revenue bonds and do not generally carry the pledge of the credit of
the issuing municipality. There are, of course, variations in the
security of municipal obligations, both within a particular
classification and among classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted
so that relative to the stated rate of interest it will return the
quoted rate to the purchaser.
Short-term and limited-term municipal obligations include
Tax Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation
Notes, Construction Loan Notes, and Discount Notes. The maturities of
these instruments at the time of issue generally will range between
three months and one year. Pre-Refunded Bonds with longer nominal
maturities that are due to be retired with the proceeds of an
escrowed subsequent issue at a date within one year and three years
of the time of acquisition are also considered short-term and
limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade
("MIG"). This distinction is in recognition of the differences between
short-term credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best
quality, enjoying strong protection from established cash flows of
funds for their servicing or from established and broad-based access
to the market for refinancing, or both.
MIG2: Notes bearing this designation are of high quality,
with margins of protection ample although not so large as in the
preceding group.
MIG3: Notes bearing this designation are of favorable
quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades. Market access for
refinancing, in particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate
quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree
of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. This rating indicates an
extremely strong capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong,
and in the majority of instances they differ from AAA issues only in
small degree. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make long-term risks appear
somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may
be present which make the bond somewhat more susceptible to the
adverse effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in
the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories
is regarded as predominantly speculative with respect to capacity to
pay interest and repay principal. There may be some large
uncertainties and major risk exposure to adverse conditions. The
higher the degree of speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is
in arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking
the Letter of Intent option on my Fund Account Application Form, I
agree to be bound by the terms and conditions applicable to Letters
of Intent appearing in the Prospectus and the Statement of Additional
Information for the Fund and the provisions described below as they
may be amended from time to time by the Fund. Such amendments will
apply automatically to existing Letters of Intent.
I intend to invest in the shares of:_____________________
(Fund or Portfolio name) during the thirteen (13) month period from
the date of my first purchase pursuant to this Letter (which cannot
be more than ninety (90) days prior to the date of this Letter or my
Fund Account Application Form, whichever is applicable), an aggregate
amount (excluding any reinvestments of distributions) of at least
fifty thousand dollars ($50,000) which, together with my current
holdings of the Fund (at public offering price on date of this Letter
or my Fund Account Application Form, whichever is applicable), will
equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the
terms of escrow, to which I hereby agree, each purchase occurring
after the date of this Letter will be made at the public offering
price applicable to a single transaction of the dollar amount
specified above, as described in the Fund's prospectus. "Fund" in
this Letter of Intent shall refer to the Fund or Portfolio, as the
case may be. No portion of the sales charge imposed on purchases made
prior to the date of this Letter will be refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase
do not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares
(computed to the nearest full share). These shares will be held
subject to the terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall
be held in escrow in shares of the Fund by the Fund's transfer agent.
For example, if the minimum amount specified under the Letter is
$50,000, the escrow shall be shares valued in the amount of $2,375
(computed at the public offering price adjusted for a $50,000
purchase). All dividends and any capital gains distribution on the
escrowed shares will be credited to my account.
If the total minimum investment specified under the Letter
is completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to
completion of the purchase requirement under the Letter will be
deducted from the amount required to complete the investment
commitment.
Upon expiration of this Letter, the total purchases pursuant
to the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load
I paid and the dollar amount of sales charges which I would have paid
if the total amount purchased had been made at a single time. If not
paid by the investor within 20 days, CDI will debit the difference
from my account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request,
remitted to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by CDI to the broker-dealer named
herein shall be at the rate applicable to the minimum amount of my
specified intended purchases.
The Letter may be revised upward by me at any time during
the thirteen-month period, and such a revision will be treated as a
new Letter, except that the thirteen-month period during which the
purchase must be made will remain unchanged and there will be no
retroactive reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be
deducted. My broker-dealer shall refer to this Letter of Intent in
placing any future purchase orders for me while this Letter is in
effect.
Dealer Name of Investor(s)
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements
Registrant's audited Annual Report to Shareholders,
dated December 31, 1997, and filed March 9, 1998.
Schedules II-VII, inclusive, for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission, are omitted because
they are not required under the related instructions,
or they are inapplicable, or the required information
is presented in the financial statements or notes
thereto.
(b) Exhibits:
1. Declaration of Trust (incorporated by reference to
Registrant's Initial Registration Statement,
October 20, 1980).
2. By-Laws (incorporated by reference to Registrant's
Initial Registration Statement, October 20,
1980).
4. Specimen Stock Certificate for the Vermont Municipal
Portfolio (incorporated by reference to
Registrant's Post-Effective Amendment No. 29,
August 30, 1991); for the Limited-Term
Portfolio, Long-Term Portfolio, and all other
Portfolios (except Vermont Municipal),
(incorporated by reference to Registrant's
Post-Effective Amendment No. 32, January 29,
1993).
5. Advisory Contract (incorporated by reference to
Registrant's Post-Effective Amendment No. 29,
August 30, 1991).
6. Underwriting Agreement, filed herewith.
7. Trustees' Deferred Compensation Agreement (incorporated
by reference to Registrant's Post-Effective
Amendment No. 30, January 31, 1992).
8. Custodial Contract (with respect to all Portfolios
except Vermont Municipal Portfolio,
(incorporated by reference to Registrant's
Post-Effective Amendment No. 34, November 30,
1993); with respect to Vermont Municipal
Portfolio, (incorporated by reference to
Registrant's Post-Effective Amendment No. 31,
April 30, 1992).
9.a. Transfer Agency Contract and Shareholder Servicing
Contract, filed herewith.
9.b. Administrative Services Agreement
(incorporated by reference to Registrant's
Post-Effective Amendment No. 15, January 30,
1989).
10. Opinion and Consent of Counsel as to Legality
of Shares Being Registered.
11. Consent of Independent Auditors to Use of
Report.
15. Plan of Distribution for the Class A Shares of
the Long-Term Portfolio, (incorporated by
reference to Registrant's Post-Effective
Amendment No. 5, September 13, 1983; with
respect to Class A Shares of the Vermont
Municipal Portfolio, the Plan of Distribution
was terminated, and the termination was
ratified by the Fund Trustees on November 6,
1991; for the Class B and C shares of the
Limited-Term, Long-Term, and Vermont
Portfolios, filed herewith.
16. Schedule for Computation of Performance
Quotation (with respect to the Money Market,
Limited-Term and Long-Term Portfolios,
incorporated by reference to Registrant's
Post-Effective Amendment No. 14, filed March
1, 1988; with respect to the Calvert Cash
Reserves Tax-Free Portfolio, incorporated by
reference to Registrant's Post-Effective
Amendment No. 15, filed January 30, 1989; with
respect to the California Money Market
Portfolio, incorporated by reference to
Registrant's Post-Effective Amendment No. 22,
filed October 29, 1990; with respect to the
New Jersey Money Market Portfolio and Vermont
Municipal Portfolio, incorporated by reference
to Registrant's Post-Effective Amendment No.
29, August 30, 1991).
17. Multiple-class Plan pursuant to Investment
Company Act of 1940 Rule 18f-3, filed herewith.
Exhibits 3 and 12 through 14 are omitted because they are
inapplicable.
Item 25. Persons Controlled By or Under Common Control With Registrant
Not applicable.
Item 26. Number of Holders of Securities
As of March 31, 1998, there were 45,030 holders of record of
Registrant's Class O shares of beneficial interest for Calvert Tax-Free
Reserves Money Market Portfolio.
As of March 31, 1998, there were 38 holders of record of
Registrant's Institutional Class Shares of beneficial interest for the Calvert
Tax-Free Reserves Money Market Portfolio.
As of March 31, 1998, there were 9,165 holders of record of
Registrant's shares of beneficial interest for Calvert Tax-Free Reserves
Limited-Term Portfolio.
As of March 31, 1998, there were 1,393 holders of record of
Registrant's shares of beneficial interest for Calvert Tax-Free Reserves
Long-Term Portfolio.
As of March 31, 1998, there were 10,155 holders of record of
Registrant's shares of beneficial interest for Calvert Tax-Free Reserves
California Portfolio.
As of March 31, 1998, there were 1,142 holders of record of
Registrant's shares of beneficial interest for Calvert Tax-Free Reserves
Vermont Municipal Portfolio.
Item 27. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit
1 of this Registration Statement, provides, in summary, that officers,
trustees, employees, and agents shall be indemnified by Registrant
against liabilities and expenses incurred by such persons in connection
with actions, suits, or proceedings arising out of their offices or
duties of employment, except that no indemnification can be made to such
a person if he has been adjudged liable of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his duties. In the
absence of such an adjudication, the determination of eligibility for
indemnification shall be made by independent counsel in a written
opinion or by the vote of a majority of a quorum of trustees who are
neither "interested persons" of Registrant, as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, nor parties to
the proceeding.
Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance on behalf of any officer,
trustee, employee or agent against any liabilities arising from such
status. In this regard, Registrant maintains a Directors & Officers
(Partners) Liability Insurance Policy with Chubb Group of Insurance
Companies, 15 Mountain View Road, Warren, New Jersey 07061, providing
Registrant with $5 million in directors and officers liability coverage,
plus $3 million in excess directors and officers liability coverage for
the independent trustees/directors only. Registrant also maintains a $9
million Investment Company Blanket Bond issued by ICI Mutual Insurance
Company, P.O. Box 730, Burlington, Vermont, 05402, and an additional $5
million in excess of $9 million blanket bond with Chubb Group of
Insurance Companies, 15 Mountain View Road, Warren, New Jersey 07061.
Item 28. Business and Other Connections of Investment Adviser
Name of Company, Principal
Name Business and Address Capacity
Barbara J. Krumsiek Calvert Variable Series, Inc. Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Alliance Capital Mgmt. L.P. Sr. Vice President
Mutual Fund Division Director
1345 Avenue of the Americas
New York, NY 10105
--------------
Ronald M. Wolfsheimer First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Reno J. Martini Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and Director
Insurance Companies
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Director
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Corporation Officer
Real Estate Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Officer
Tax Return and
Preparation Services Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management, Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co. Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Susan Walker Bender Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Katherine Stoner Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Lisa Crossley Newton Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Ivy Wafford Duke Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Daniel K. Hayes Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Annette Krakovitz Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
John Nichols Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
David Leach Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Matthew D. Gelfand Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Strategic Investment Management Officer
Investment Advisor
1001 19th Street North
Arlington, Virginia 20009
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites
shares of First Variable Rate Fund for Government Income, Calvert
Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash Reserves,
Calvert Municipal Fund, Inc., Calvert World Values Fund, Inc.,
Calvert New World Fund, Inc., and Calvert Variable Series, Inc.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Barbara J. Krumsiek Director and President President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Chief Financial Officer
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Craig Cloyed Senior Vice President None
Karen Becker Vice President, Operations None
Steve Cohen Vice President None
Geoffrey Ashton Regional Vice President None
Martin Brown Regional Vice President None
Janet Haley Regional Vice President None
Ben Ogbogu Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary Assistant Secretary
Lisa Crossley Newton Assistant Secretary Assistant Secretary
and Compliance Officer
Ivy Wafford Duke Assistant Secretary Assistant Secretary
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Assistant Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a) Not Applicable
b) Not Applicable
c) The Registrant undertakes to furnish to each person to whom
a Prospectus is delivered, a copy of the Registrant's latest
Annual Report to Shareholders, upon request and without
charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Bethesda, and
State of Maryland, on the 30th day of April, 1998.
CALVERT TAX-FREE RESERVES
By:
_________________**_________________
Barbara J. Krumsiek
President and Trustee
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title Date
__________**____________ President and 4/30/98
Barbara J. Krumsiek Trustee (Principal Executive Officer)
__________**____________ Principal Accounting 4/30/98
Ronald M. Wolfsheimer Officer
__________**____________ Trustee 4/30/98
Richard L. Baird, Jr.
__________**____________ Trustee 4/30/98
Frank H. Blatz, Jr., Esq.
__________**____________ Trustee 4/30/98
Frederick T. Borts, M.D.
__________**____________ Trustee 4/30/98
Charles E. Diehl
__________**____________ Trustee 4/30/98
Douglas E. Feldman
__________**____________ Trustee 4/30/98
Peter W. Gavian
__________**____________ Trustee 4/30/98
John G. Guffey, Jr.
__________**____________ Trustee 4/30/98
M. Charito Kruvant
__________**____________ Trustee 4/30/98
Arthur J. Pugh
__________**____________ Trustee 4/30/98
David R. Rochat
__________**____________ Trustee 4/30/98
D. Wayne Silby
**By Katherine Stoner as Attorney-in-fact, pursuant to Power of Attorney Forms
on file.
Exhibit 10
April 30, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Calvert Tax-Free Reserves
File numbers 2-69565 and 811-3101
Ladies and Gentlemen:
As counsel to Calvert Group, Ltd., it is my opinion that the
securities being registered by this Post-Effective Amendment No. 45 will
be legally issued, fully paid and non-assessable when sold. My opinion
is based on an examination of documents related to Calvert Tax-Free
Reserves (the "Trust"), including its Declaration of Trust, its By-Laws,
other original or photostatic copies of Trust records, certificates of
public officials, documents, papers, statutes, and authorities as I
deemed necessary to form the basis of this opinion.
I therefore consent to filing this opinion of counsel with the
Securities and Exchange Commission as an Exhibit to the Trust's
Post-Effective Amendment No. 45 to its Registration Statement.
Sincerely,
/s/
Katherine Stoner
Associate General Counsel
Exhibit 23A
Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Calvert Group
Calvert Municipal Intermediate Funds
We consent to the incorporation by reference in Post-Effective Amendment No.
14 to the Registration Statement of Calvert Tax Free Reserves Fund:(comprised of
the Money Market, Limited-Term, Long-Term, Vermont, and California Money Market
Portfolios) on Form N-1A (File Numbers 2-69565 and 811-3101) of our reports
dated February 6, 1998, on our audit of the financial statements and financial
highlights of the Funds, which report is included in the Annual Report to
Shareholders for the year ended December 31, 1997, which is incorporated by
reference in the Registration Statement. We also consent to the reference to
our Firm under the caption "Independent Accountants and Custodians" in the
Statement of Additional Information.
COOPERS & LYBRAND, L.L.P.
/Coopers & Lybrand, L.L.P./
Baltimore, Maryland
April 23, 1998
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Barbara Krumsiek
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Richard L. Baird, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Douglas E. Feldman
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Frank H. Blatz, Jr. Charles E. Diehl
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Peter W. Gavian
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
M. Charito Kruvant John G. Guffey, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix M. Charito Kruvant
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Charles E. Diehl Arthur J. Pugh
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Katherine Stoner David R. Rochat
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and
lawful attorneys, with full power to each of them, to sign for me and in my
name in the appropriate capacities, all registration statements and amendments
filed by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining registration
or exemptions from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix D. Wayne Silby
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned officer of Calvert Social Investment Fund, Calvert
World Values Fund, Acacia Capital Corporation, Calvert New World Fund, First
Variable Rate Fund, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund and Calvert Municipal Fund (each, respectively, the "Fund"),
hereby constitute William M. Tartikoff, Susan Walker Bender, Katherine Stoner,
Lisa Crossley, and Ivy Wafford Duke my true and lawful attorneys, with full
power to each of them, to sign for me and in my name in the appropriate
capacities, all registration statements and amendments filed by the Fund with
any federal or state agency, and to do all such things in my name and behalf
necessary for registering and maintaining registration or exemptions from
registration of the Fund with any government agency in any jurisdiction,
domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Funds,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, and all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in connection
with any transaction approved by the Board of Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Funds, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
December 16, 1997
Date /Signature/
William M. Tartikoff Ronald M. Wolfsheimer
Witness Name of Officer
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of February 25, 1998
by and between EACH CALVERT FUND LISTED IN THE SCHEDULE OF FUNDS
ATTACHED HERETO AS SCHEDULE I (each a "Fund" and together the
"Funds"), as such schedule may, from time to time be amended, and
CALVERT DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
WHEREAS, each Fund is registered as an open-end investment
company under the Investment Company Act of 1940 (the "1940 Act") and
has registered its shares, including shares of its series portfolios
(the "Series"), for sale to the public under the Securities Act of
1933 (the "1933 Act") and various state securities laws;
WHEREAS, each Fund wishes to retain the Distributor as the
principal underwriter in connection with the offer and sale of shares
of the Series (the "Shares") and to furnish certain other services to
the Series as specified in this Agreement;
WHEREAS, this contract has been approved by the
Trustees/Directors of each Fund in anticipation of the Distributor's
transfer of its rights to receive the Class B Distribution Fees ( as
defined in the Distribution Plan for Class B and C Shares (the
"Distribution Plan")) and/or Class B contingent deferred sales
charges to a financing party in order to raise funds to cover
distribution expenditures; and
WHEREAS, the Distributor is willing to act as principal
underwriter and to furnish such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1. Each Fund hereby appoints the Distributor as
principal underwriter in connection with the offer and sale of its
Shares. The Distributor shall, as agent for each Fund, subject to
applicable federal and state law and the Declaration of Trust or
Articles of Incorporation, and By-laws of the applicable Fund and in
accordance with the representations in the applicable Fund's
Registration Statement and Prospectus, as such documents may be
amended from time to time: (a) promote the Series; (b) enter into
appropriate dealer agreements with other registered broker-dealers to
further distribution of the Shares; (c) solicit orders for the
purchase of the Shares subject to such terms and conditions as the
applicable Fund may specify; (d) transmit promptly orders and
payments for the purchase of Shares and orders for redemption of
Shares to the applicable Fund's transfer agent; and (e) provide
services agreed upon by the applicable Fund to Series shareholders;
provided, however, that the Distributor may sell no Shares pursuant
to this Agreement until the Distributor is notified that a Fund's
Registration Statement under the 1933 Act, authorizing the sale of
such Shares through the Distributor, has become effective. The
Distributor shall comply with all applicable federal and state laws
and offer the Shares on an agency or "best efforts" basis under which
a Fund shall only issue such Shares as are actually sold.
2. The public offering price of the Shares shall be
the net asset value ("NAV") per share (as determined by the
applicable Fund) of the outstanding Shares of the Series, plus the
applicable sales charge, if any, as set forth in the Fund's then
current Prospectus. Each Fund shall furnish the Distributor with a
statement of each computation of NAV and of the details entering into
such computation.
3. Compensation.
a. Distribution Fee.
i. Class A. In consideration of the Distributor's services
as distributor for the Class A Shares of a Fund, each Fund may pay to
the Distributor the Distribution Fee as set forth in Schedule II to
this Agreement that is payable pursuant to the Fund's Distribution
Plan.
ii. Class B. In consideration of the Distributor's services
as distributor for the Class B Shares of a Fund, each Fund shall pay
to the Distributor (or its designee or transferee) the Distributor's
Allocable Portion of the Distribution Fee; (as set forth in Schedule
II to this Agreement) that is payable pursuant to the Fund's
Distribution Plan in respect of the Class B Shares of a Fund. For
purposes of this Agreement, the Distributor's "Allocable Portion" of
the Distribution Fee shall be 100% of such Distribution Fee unless or
until the Fund uses a principal underwriter other than the
Distributor and thereafter the Allocable Portion shall be the portion
of the Distribution Fee attributable to (i) Class B Shares of a Fund
sold by the Distributor ("Commission Shares"), (ii) Class B Shares of
the Fund issued in connection with the exchange of Commission Shares
of another Fund, and (iii) Class B Shares of the Fund issued in
connection with the reinvestment of dividends and capital gains.
The Distributor's Allocable Portion of the Distribution Fee
and the contingent deferred sales charges arising in respect of Class
B Shares taken into account in computing the Distributor's Allocable
Portion shall be limited under Rule 2830 of the Conduct Rules or
other applicable regulations of the NASD as if the Class B Shares
taken into account in computing the Distributor's Allocable Portion
themselves constituted a separate class of shares of a Fund.
The services rendered by the Distributor for which the
Distributor is entitled to receive the Distributor's Allocable
Portion of the Distribution Fee shall be deemed to have been
completed at the time of the initial purchase of the Commission
Shares (whether of the Fund or another Fund in the Calvert Group of
Funds) taken into account in computing the Distributor's Allocable
Portion. Notwithstanding anything to the contrary in this Agreement,
the Distributor shall be paid its Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B Shares of a Fund, or any
termination of this Agreement other than in connection with a
Complete Termination (as defined in the Distribution Plan) of the
Class B Distribution Plan as in effect on the date of this Agreement.
Except as provided in the preceding sentence, a Fund's obligation to
pay the Distribution Fee to the Distributor shall be absolute and
unconditional and shall not be subject to any dispute, offset,
counterclaim or defense whatsoever, (it being understood that nothing
in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against the Distributor
and to enforce such claims against any assets (other than its rights
to be paid its Allocable Portion of the Distribution Fee and to be
paid the contingent deferred sales charges) of the Distributor.
iii. Class C. In consideration of the Distributor's services
as distributor for the Class C Shares of a Fund, each Fund shall pay
to the Distributor the Distribution Fee as set forth in Schedule II
to this Agreement that is payable pursuant to the Fund's Distribution
Plan.
b. Service Fee. As additional compensation, for Class
A, Class B and Class C Shares of each Series, applicable Funds shall
pay the Distributor a service fee (as that term is defined by the
National Association of Securities Dealers, Inc. ("NASD")) as set
forth in Schedule III to this Agreement that is payable pursuant to
the Fund's Distribution Plan.
c. Front-end Sales Charges. As additional compensation
for the services performed and the expenses assumed by the
Distributor under this Agreement, the Distributor may, in conformity
with the terms and conditions set forth in the then current
Prospectus of each Fund, impose and retain for its own account the
amount of the front-end sales charge, if any, and may reallow a
portion of any front-end sales charge to other broker-dealers, all in
accordance with NASD rules.
d. Contingent Deferred Sales Charge. Each Fund will
pay to the Distributor (or its designee or transferee) in addition to
the fees set forth in Section 3 hereof any contingent deferred sales
charge imposed on redemptions of that Fund's Class B and Class C
Shares upon the terms and conditions set forth in the then current
Prospectus of that Fund. Notwithstanding anything to the contrary in
this Agreement, the Distributor shall be paid such contingent
deferred sales charges in respect of Class B Shares taken into
account in computing the Distributor's Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B shares of a Fund or any
termination of this Agreement other than in connection with a
Complete Termination of the Class B Distribution Plan as in effect on
the date of this Agreement. Except as provided in the preceding
sentence, a Fund's obligation to remit such contingent deferred sales
charges to the Distributor shall not be subject to any dispute,
offset, counterclaim or defense whatsoever, it being understood that
nothing in this sentence shall be deemed a waiver by a Fund of its
right separately to pursue any claims it may have against the
Distributor and to enforce such claims against any assets (other than
the Distributor's right to be paid its Allocable Portion of the
Distribution Fee and to be paid the contingent deferred sales
charges) of the Distributor. No Fund will waive any contingent
deferred sales charge except under the circumstances set forth in the
Fund's current Prospectus without the consent of the Distributor (or,
if rights to payment have been transferred, the transferee), which
consent shall not be unreasonably withheld.
4. Payments to Distributor's Transferees. The
Distributor may transfer the right to payments hereunder (but not its
obligations hereunder) in order to raise funds to cover distribution
expenditures, and any such transfer shall be effective upon written
notice from the Distributor to the Fund. In connection with the
foregoing, the Fund is authorized to pay all or a part of the
Distribution Fee and/or contingent deferred sales charges in respect
of Class B Shares directly to such transferee as directed by the
Distributor.
5. Changes in Computation of Fee, etc. As long as the
Class B Distribution Plan is in effect, a Fund shall not change the
manner in which the Class B Distribution Fee is computed (except as
may be required by a change in applicable law or a change in
accounting policy adopted by the Investment Companies Committee of
the AICPA and approved by FASB that results in a determination by a
Fund's independent accountants that any of the sales charges in
respect of such Fund, which are not contingent deferred sales charges
and which are not yet due and payable, must be accounted for by such
Fund as a liability in accordance with GAAP).
6. As used in this Agreement, the term "Registration
Statement" shall mean the registration statement most recently filed
by a Fund with the Securities and Exchange Commission and effective
under the 1933 Act, as such Registration Statement is amended by any
amendments thereto at the time in effect, and the term "Prospectus"
shall mean the form of prospectus filed by a Fund as part of the
Registration Statement.
7. The Distributor shall print and distribute to
prospective investors Prospectuses, and may print and distribute such
other sales literature, reports, forms, and advertisements in
connection with the sale of the Shares as comply with the applicable
provisions of federal and state law. In connection with such sales
and offers of sale, the Distributor shall give only such information
and make only such statements or representations, and require
broker-dealers with whom it enters into dealer agreements to give
only such information and make only such statements or
representations, as are contained in the Prospectus or in information
furnished in writing to the Distributor by a Fund. The Funds shall
not be responsible in any way for any other information, statements
or representations given or made by the Distributor, other
broker-dealers, or the representatives or agents of the Distributor
or such broker-dealers. Except as specifically permitted under the
Distribution Plan under Rule 12b-1 under the 1940 Act, as provided in
paragraph 3 of this Agreement, the Funds shall bear none of the
expenses of the Distributor in connection with its offer and sale of
the Shares.
8. Each Fund agrees at its own expense to register the
Shares with the Securities and Exchange Commission, state and other
regulatory bodies, and to prepare and file from time to time such
Prospectuses, amendments, reports and other documents as may be
necessary to maintain the Registration Statement. Each Fund shall
bear all expenses related to preparing and typesetting its
Prospectus(es) and other materials required by law and such other
expenses, including printing and mailing expenses related to the
Fund's communications with persons who are shareholders of such Fund.
9. Each Fund agrees to indemnify, defend and hold the
Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Distributor, its officers
or directors, or any such controlling person may incur, under the
1933 Act or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in its
Registration Statement or Prospectus or arising out of or based upon
any alleged omission to state a material fact required to be stated
in either thereof or necessary to make the statements in either
thereof not misleading, provided that in no event shall anything
contained in this Agreement be construed so as to protect the
Distributor against any liability to a Fund or its shareholders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of
its duties, or by reason of its reckless disregard of its obligations
and duties under this Agreement.
10. The Distributor agrees to indemnify, defend and
hold each Fund, their several officers and directors, and any person
who controls a Fund within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which a Fund, its officers or
directors, or any such controlling person may incur, under the 1933
Act or under common law or otherwise, arising out of or based upon
any alleged untrue statement or a material fact contained in
information furnished in writing by the Distributor to the Funds for
use in the Registration Statement or Prospectus(es) or arising out of
or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the
Registration Statement or Prospectus(es) or necessary to make such
information not misleading.
11. Each Fund reserves the right at any time to
withdraw all offerings of the Shares by written notice to the
Distributor at its principal office.
12. The Distributor is an independent contractor and
shall be agent for a Fund only in respect to the offer, sale and
redemption of that Fund's Shares.
13. The services of the Distributor to a Fund under
this Agreement are not to be deemed exclusive, and the Distributor
shall be free to render similar services or other services to others
so long as its services hereunder are not impaired thereby.
14. The Distributor acknowledges that it has received
notice of and accepts the limitations upon the liability of any Fund
organized as a business trust set forth in such Fund's Declaration of
Trust. The Distributor agrees that the obligations of such Funds
hereunder in any case shall be limited to such Funds and to their
assets and that the Distributor shall not seek satisfaction of any
such obligation from the shareholders of such a Fund nor from any
Trustee, officer, employee or agent of such Fund.
15. The Funds shall not use the name of the Distributor
in any Prospectus, sales literature or other material relating to the
Funds in any manner not approved prior thereto by the Distributor;
provided, however, that the Distributor shall approve all uses of its
name which merely refer in accurate terms to its appointment
hereunder or which are required by the Securities and Exchange
Commission or a State Securities Commission; and, provided further,
that in no event shall such approval be unreasonably withheld. The
Distributor shall not use the name of any Fund in any material
relating to the Distributor in any manner not approved prior thereto
by the Fund; provided, however that the Funds shall approve all uses
of their names which merely refer in accurate terms to the
appointment of the Distributor hereunder or which are required by the
Securities and Exchange Commission or a State Securities Commission;
and, provided further, that in no event shall such approval be
unreasonably withheld.
16. The Distributor shall prepare written reports for
the Board of Trustees/Directors of each Fund on a quarterly basis
showing information concerning services provided and expenses
incurred which are related to this Agreement and such other
information as from time to time shall be reasonably requested by a
Fund's Board of Trustees/Directors.
17. As used in this Agreement, the terms "assignment,"
"interested person," and "majority of the outstanding voting
securities" shall have the meaning given to them by Section 2(a) of
the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order;
provided, however that, in order to obtain financing, the Distributor
may assign to a lending institution the payments due to the
Distributor under this Agreement without it constituting an
assignment of the Agreement.
18. Subject to the provisions of sections 19 and 20
below, this Agreement will remain in effect for two years from the
date of is execution and from year to year thereafter, provided that
the Distributor does not notify a Fund in writing at least sixty (60)
days prior to the expiration date in any year that it does not wish
continuance of the Agreement as to such Fund for an additional year.
19. Termination. As to any particular Fund (or Series
thereof), this Agreement shall automatically terminate in the event
of its assignment and may be terminated at any time without the
payment of any penalty by a Fund or by the Distributor on sixty (60)
days' written notice to the other party. A Fund may effect such
termination by a vote of (i) a majority of the Board of
Trustees/Directors of the Fund, (ii) a majority of the
Trustees/Directors who are not interested persons of the Fund, who
are not parties to this Agreement or interested persons of such
parties, and who have no direct or indirect financial interest in the
operation of the Distribution Plan, in this Agreement or in any
agreement related to such Fund's Distribution Plan (the "Rule 12b-1
Trustees/Directors"), or (iii) a majority of the outstanding voting
securities of the relevant Series.
20. This Agreement shall be submitted for renewal to
the Board of Trustees/Directors of each Fund at least annually and
shall continue in effect only so long as specifically approved at
least annually (i) by a majority vote of the Fund's Board of
Trustees/Directors, and (ii) by the vote of the majority of the Rule
12b-1 Trustees/Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written by their
officers thereunto duly authorized.
Attest: EACH FUND LISTED IN THE
ATTACHED SCHEDULE I
By: /s/ Edwidge Saint-Felix By: /s/ William M.Tartikoff
Vice President
Attest: CALVERT DISTRIBUTORS, INC.
By: /s/ Edwidge Saint-Felix By: /s/ Ronald M. Wolfsheimer
Senior Vice President
<PAGE>
SCHEDULE I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
<PAGE>
SCHEDULE II
Fees are expressed as a percentage of average annual daily net
assets, and are payable monthly.
Distribution Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund N/A 0.75 0.75 N/A
Calvert Income Fund 0.25 0.75 0.75 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.10 0.75 0.75 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.75 0.75 N/A
Calvert Municipal Fund
National Intermediate Fund N/A 0.75 N/A N/A
California Intermediate Fund N/A 0.75 N/A N/A
Maryland Intermediate Fund N/A 0.75 N/A N/A
Virginia Intermediate Fund N/A 0.75 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.10 0.75 0.75 N/A
Equity Portfolio 0.10 0.75 0.75 N/A
Bond Portfolio 0.10 0.75 0.75 N/A
Managed Index Portfolio N/A 0.75 0.75 N/A
Money Market Portfolio N/A N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.10 0.75 0.75 N/A
International Equity Fund 0.10 0.75 0.75 N/A
Calvert New World Fund
Calvert New Africa Fund N/A 0.75 0.75 N/A
First Variable Rate Fund
Calvert First Gov't
Money Mkt N/A 0.75 N/A N/A
*Distributor reserves the right to waive all or a portion of the
distribution fee from time to time.
DATED: February 1998
<PAGE>
SCHEDULE III
Fees are expressed as a percentage of average annual daily net assets
and are payable monthly.
Service Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund 0.25 0.25 0.25 N/A
Calvert Income Fund 0.25 0.25 0.25 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.25 0.25 0.25 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.25 0.25 N/A
Calvert Municipal Fund
National Intermediate Fund 0.25 0.25 N/A N/A
California Intermediate Fund 0.25 0.25 N/A N/A
Maryland Intermediate Fund 0.25 0.25 N/A N/A
Virginia Intermediate Fund 0.25 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.25** 0.25 0.25 N/A
Equity Portfolio 0.25 0.25 0.25 N/A
Bond Portfolio 0.25 0.25 0.25 N/A
Managed Index Portfolio 0.25 0.25 0.25 N/A
Money Market Portfolio 0.25 N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.25 0.25 0.25 N/A
International Equity Fund 0.25 0.25 0.25 N/A
Calvert New World Fund
Calvert New Africa Fund 0.25 0.25 0.25 N/A
First Variable Rate Fund
Calvert First Gov't Money Mkt N/A 0.25 N/A N/A
DATED: February 1998
- -------
* Distributor reserves the right to waive all or a portion of the
service fees from time to time. For money market portfolios, Class A
shall refer to Class O, or if the portfolio does not have multiple
classes, then to the portfolio itself.
** Distributor charges the service fee only on assets in excess of $30
million.
<PAGE>
-3-
THE CALVERT GROUP OF FUNDS
CLASS B and CLASS C DISTRIBUTION PLAN
As approved by the Boards in November 1993
Amended and restated February 1998 Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
This Distribution Plan applies to Class B and Class C in each portfolio of the
Calvert Funds listed in Schedule A (each a "Fund" and together, the "Funds")
and to any future class for which this Distribution Plan has been approved in
accordance with paragraph 2(a) below. For purposes of this Distribution Plan
each series portfolio of a Fund is referred to herein as a "Series" and
together, as the "Series".
As permitted by Rule 12b-1 under the Investment Company Act of 1940 and in
accordance with the terms and conditions of this Plan, as hereinafter set
forth, a Fund may incur certain expenditures to promote itself and further the
distribution of its shares.
1. Payment of Fee
(a) As compensation for certain services performed and expenses assumed
by each Fund's distributor and principal underwriter ("Distributor") each Fund
may pay the Distributor a distribution fee (the "Distribution Fee"). The
Distribution Fee is intended to compensate the Distributor for its marketing
efforts, which include, but are not limited to the following costs:
commissions and other payments advanced to sales personnel and third parties
and related interest costs as permitted by the rules of the National
Association of Securities Dealers, Inc. ("NASD"), printing and mailing
prospectuses, sales literature and other relevant material to other than
current shareholders, advertising and public relations, telemarketing,
marketing-related overhead expenses and other distribution costs. Such
Distribution Fee is in addition to any NASD service fee that may be paid
hereunder and as described at Section 3(b) of the Distribution Agreement
between the respective Funds and the Distributor, or any front-end or deferred
sales charges the Distributor receives from a Fund with respect to sales or
redemption of Fund shares. Total fees paid pursuant to this Plan, including
the Distribution Fee described above, and the NASD service fee, shall not
exceed the rate set forth in the attached Schedule B to this Plan. All
agreements with any person relating to the implementation of this Plan shall
be in writing, and such agreements shall be subject to termination, without
penalty, pursuant to the provisions of paragraph 2(c) of this Plan.
(b) A Fund will pay each person which has acted as principal underwriter
of its Class B shares its Allocable Portion (as such term is defined in the
Distribution Agreement pursuant to which such person acts or acted as
principal underwriter of the Class B Shares (the "Applicable Distribution
Agreement")) of the Distribution Fee in respect of Class B Shares of the
Fund. Such person shall be paid its Allocable Portion of such Distribution
Fees notwithstanding such person's termination as Distributor of the Class B
Shares of the Fund, such payments to be changed or terminated only: (i) as
required by a change in applicable law or a change in accounting policy
adopted by the Investment Companies Committee of the AICPA and approved by
FASB that results in a determination by the Fund's independent accountants
that any asset based sales charges (as that term is defined by the NASD) in
respect of such Fund, and which are not yet due and payable, must be accounted
for by such Fund as a liability in accordance with GAAP, each after the
effective date of this restated Distribution Plan; (ii) if in the sole
discretion of the Board of Trustees/Directors, after due consideration of the
relevant factors considered when adopting and/or amending this Distribution
Plan including the transactions contemplated in that certain Purchase and Sale
Agreement entered into between a Fund's Distributor and the commission
financing entity, the Board of Trustees/Directors determines, subject to its
fiduciary duty, that this Distribution Plan and the payments thereunder must
be changed or terminated, notwithstanding the effect this action might have on
the Fund's ability to offer and sell Class B shares; or (iii) in connection
with a Complete Termination of this Distribution Plan, it being understood
that for this purpose a Complete Termination of this Distribution Plan occurs
only if, as to a Fund or Series, this Distribution Plan is terminated and the
Fund has not adopted any other distribution plan with respect to its Class B
or other substantially similar class of shares. The services rendered by a
Distributor for which that Distributor is entitled to receive its Allocable
Portion of the Distribution Fee shall be deemed to have been completed at the
time of the initial purchase of the Commission Shares (as defined in the
Distribution Agreement) taken into account in computing that Distributor's
Allocable Portion of the Distribution Fee.
The obligation of a Fund to pay the Distribution Fee shall terminate upon the
termination of this Distribution Plan as to such Fund in accordance with the
terms hereof. Except as provided in the preceding paragraph, a Fund's
obligation to pay the Distribution Fee to a Distributor of the Class B Shares
of the Fund shall be absolute and unconditional and shall not be subject to
any dispute, offset, counterclaim or defense whatsoever (it being understood
that nothing in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against such Distributor and
enforce such claims against any assets (other than its right to be paid its
Allocable Portion of the Distribution Fee and to be paid the contingent
deferred sales charges) of such Distributor).
The right of a Distributor to receive the Distribution Fee, but not the
relevant Distribution Agreement or that Distributor's obligations thereunder,
may be transferred by that Distributor in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any
such transfer shall be effective upon written notice from that Distributor to
the Fund. In connection with the foregoing, each Fund is authorized to pay
all or part of the Distribution Fee directly to such transferee as directed by
that Distributor.
(c) Nothing in this Distribution Plan shall operate or be construed to
limit the extent to which the Fund's Investment Advisor or any other person,
other than the Fund, at its expense apart from the Distribution Plan, may
incur costs and pay expenses associated with the distribution of Fund shares.
2. Effective Date and Term
(a) This Distribution Plan shall become effective as to any Class of any
Series upon approval by majority votes of (i) the Board of the Fund and the
members thereof who are not interested persons within the meaning of Section
2(a)(19) of the Investment Company Act of 1940 and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements related to the Distribution Plan ("Qualified Trustees/Directors"),
cast in person at a meeting called for the purpose of voting on this
Distribution Plan, and (ii) the outstanding voting securities of the Fund.
(b) This Distribution Plan shall remain in effect for one year from its
adoption date and may continue in effect thereafter if this Distribution Plan
is approved at least annually by a majority vote of the Board of the Fund,
including a majority of the Qualified Trustees/Directors, cast in person at a
meeting called for the purpose of voting on the Distribution Plan.
(c) Subject to paragraph 1(b) above, this Distribution Plan may be
terminated at any time without payment of any penalty by a majority vote of
the Qualified Trustees/Directors or by vote of a majority of the outstanding
voting securities of the Fund, or, with respect to the termination of this
Distribution Plan as to a particular Class of a Portfolio, by a vote of a
majority of the outstanding voting securities of that Class.
(d) The provisions of this Distribution Plan are severable for
each Series or Class, and whenever action is to be taken with respect to this
Distribution Plan, that action must be taken separately for each Series or
Class affected by the matter.
3. Reports
The person authorized to direct the disposition of monies paid or payable by
the Fund pursuant to the Distribution Plan shall provide, on at least a
quarterly basis, a written report to each Fund's Board of the amounts expended
pursuant to this Distribution Plan or any related agreements and the purposes
for which such expenditures were made.
4. Selection of Disinterested Trustees/Directors
While this Distribution Plan is in effect, the selection and nomination of
those Trustees/Directors who are not interested persons of a Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940 shall be
committed to the discretion of the Trustees/Directors then in office who are
not interested persons of the Fund.
5. Effect of Plan
This Distribution Plan shall not obligate the Fund or any other party to enter
into an agreement with any particular person.
6. Amendment
This Distribution Plan may not be amended to increase materially the amount
authorized in paragraph 1 hereof to be spent by a Fund for distribution
without approval by a vote of the majority of the outstanding shares of such
Fund, except that if the amendment relates only to a particular Class of a
Fund, such approval need only be by a vote of the majority of the outstanding
shares of that Class. All material amendments to this Distribution Plan must
be approved by a majority vote of the Board of the Fund, and of the Qualified
Trustees/Directors, cast in person at a meeting called for the purpose of
voting thereon.
SCHEDULE A
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
SCHEDULE B
The total fees paid by the respective Class of each Series
of a Fund pursuant to this Distribution Plan shall not exceed the
rate, as a percentage of that Class' average annual net assets, set
forth below:
Fund/Series Class B Class C
Distribution Service Distribution Service
Fee Fee Fee Fee
The Calvert Fund
Calvert New Vision
Small Cap Fund 0.75 0.25 0.75 0.25
Calvert Income Fund 0.75 0.25 0.75 0.25
Calvert Tax-Free Reserves
Long-Term 0.75 0.25 0.75 0.25
Vermont Municipal 0.75 0.25 0.75 0.25
Calvert Municipal Fund
National 0.75 0.25 N/A N/A
California 0.75 0.25 N/A N/A
Maryland 0.75 0.25 N/A N/A
Virginia 0.75 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth 0.75 0.25 0.75 0.25
Equity 0.75 0.25 0.75 0.25
Bond 0.75 0.25 0.75 0.25
Managed Index 0.75 0.25 0.75 0.25
Calvert World Values Fund
International Equity 0.75 0.25 0.75 0.25
Capital Accumulation 0.75 0.25 0.75 0.25
Calvert World Values Fund
Calvert New Africa 0.75 0.25 0.75 0.25
First Variable Rate Fund
Calvert First Gov.
Money Market 0.75 0.25 N/A N/A
Restated Feb. 1998
<PAGE>
THE CALVERT GROUP OF FUNDS
Rule 18f-3 Multiple Class Plan
Approved by the Boards in January 1996
Amended and restated February 1998 Pursuant to Rule 18f-3
Under the Investment Company Act of 1940
Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), requires that an investment company
desiring to offer multiple classes of shares pursuant to the Rule
adopt a plan setting forth the differences among the classes with
respect to shareholder services, distribution arrangements, expense
allocations and any related conversion features or exchange
privileges. Any material amendment to the plan must be approved by
the investment company's Board of Trustees/Directors, including a
majority of the disinterested Board members, who must find that the
plan is in the best interests of each class individually and the
investment company as a whole.
This Rule 18f-3 Multiple Class Plan ("Plan") shall apply to
those funds in the Calvert Group of Funds listed in Exhibit I (each a
"Fund" and collectively, "Funds") and to any future fund for which
this Plan has been approved in accordance with the above paragraph.
The provisions of this Plan are severable for each Fund or
Series thereof ("Series") or Class, and whenever action is to be
taken with respect to this Plan, that action must be taken separately
for each Fund, Series or Class affected by the matter.
1. Class Designation. A Fund may offer shares
designated Class A, Class B, Class C , Class I, and for certain money
market portfolios, Class O.
2. Differences in Availability. Class A, Class B,
Class C, and Class O shares shall each be available through the same
distribution channels, except that (a) Class B shares may not be
available through some dealers and are not available for purchases of
$500,000 or more, (b) Class B shares of Calvert First Government
Money Market Fund are available only through exchange from Class B or
Class C shares of another Calvert Fund, and (c) Class C shares may
not be available through some dealers and are not available for
purchases of $1 million or more. Class I shares are generally
available only directly from Calvert Group and not through dealers,
and each Class I shareholder must maintain a $1 million minimum
account balance.
3. Differences in Services. The services offered to
shareholders of each Class shall be substantially the same, except
that the Rights of Accumulation, Letters of Intent and Reinvestment
Privileges shall be available only to holders of Class A shares.
Class I purchases and redemptions may only be made by bank wire.
4. Differences in Distribution Arrangements. Class A
shares shall be offered with a front-end sales charge, as such term
is defined in Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc. The amount of the sales
charge on Class A shares is set forth at Exhibit II. Class A shares
shall be subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act. The amount of the Distribution Plan
expenses for Class A shares, as set forth at Exhibit II, are used to
pay the Fund's principal underwriter for distributing and or
providing services to the Fund's Class A shares. This amount includes
a service fee at the annual rate of .25 of 1% of the value of the
average daily net assets of Class A.
Class B shares shall be offered with a contingent deferred
sales charge ("CDSC") and no front-end sales charge. The amount of
the CDSC on Class B shares is set forth at Exhibit II. Class B shares
shall be subject to a Distribution Plan adopted pursuant to Rule
12b-1 under the 1940 Act. The amount of the Distribution Plan
expenses for Class B shares, as set forth at Exhibit II, are used to
pay each Fund's principal underwriter for distributing and or
providing services to the Fund's Class B shares. This amount includes
a service fee at the annual rate of .25 of 1% of the value of the
average daily net assets of Class B.
Class C shares shall not be subject to a front-end sales
charge, but shall be subject to a 1.00% CDSC if the shares are
redeemed within one year of purchase. Class C shares shall be subject
to a Distribution Plan adopted pursuant to Rule 12b-1 under the 1940
Act. The amount of the Distribution Plan expenses for Class C shares
are set forth at Exhibit II. The Class C Distribution Plan pays each
applicable Fund's principal underwriter for distributing and or
providing services to such Fund's Class C shares. This amount
includes a service fee at the annual rate of .25 of 1% of the value
of the average daily net assets of Class C.
Class I and Class O shares shall be subject to neither a
front-end sales charge, nor a CDSC, nor are they subject to a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act.
5. Expense Allocation. The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a)
Distribution Plan fees; (b) transfer agent fees; (c) administrative
service fees; (d) printing and postage expenses payable by a Fund
relating to preparing and distributing materials, such as proxies,
reports and prospectuses to current shareholders of a specific class;
(e) class specific state notification fees; (f) class specific
litigation or other legal expenses; (g) certain class specific
reimbursement from the Advisor; and (h) certain class specific
contract services (e.g., proxy solicitation).
6. Conversion Features. Class B shares shall be
subject to an automatic conversion feature into Class A shares after
they have been held for that number of years set forth in Exhibit II.
Class A, Class C ,Class I, and Class O are not subject to automatic
conversion.
7. Exchange Privileges. Class A shares shall be
exchangeable only for: (a) Class A shares of other funds managed or
administered by the Calvert Group; (b) shares of funds managed or
administered by the Calvert Group which do not have separate share
classes; and (c) shares of certain other funds specified from time to
time.
Class B shares shall be exchangeable only for: (a) Class B
shares of other funds managed or administered by the Calvert Group;
(b) Class A shares of other funds managed or administered by the
Calvert Group, if the front-end load on the Class A shares is paid at
the time of the exchange; and (c) shares of certain other funds
specified from time to time.
Class C shares shall be exchangeable only for: (a) Class C
shares of other funds managed or administered by the Calvert Group
and Class B shares of Calvert First Government Money Market Fund; (b)
Class A shares of other funds managed or administered by the Calvert
Group, if the front-end load on the Class A shares is paid at the
time of the exchange; and (c) shares of certain other funds specified
from time to time.
Class I shares shall be exchangeable only for: (a) Class I
shares of other funds managed or administered by the Calvert Group;
(b) Class A shares of other funds managed or administered by the
Calvert Group, if the front-end load on the Class A shares is paid at
the time of the exchange; and (c) shares of certain other funds
specified from time to time.
<PAGE>
Exhibit I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
<PAGE>
Exhibit II
Calvert Social Investment Fund (CSIF)
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
CSIF Managed Growth 4.75% 0.35% 1.00%
CSIF Equity 4.75% 0.35% 1.00%
CSIF Managed Index 4.75% 0.25% 1.00%
CSIF Bond 3.75% 0.35% 1.00%
Class B
Managed Growth,
Equity, and Maximum
Contingent Deferred Sales Charge Managed Index Bond 12b-1 Fee
Shares held less than one year after purchase 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6yrs.
<PAGE>
Exhibit II
Calvert Tax-Free Reserves (CTFR)
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
CTFR Long-Term 3.75% 0.35% 1.00%
CTFR Vermont 3.75% N/A 1.00%
Class B
Long-Term and Maximum
Contingent Deferred Sales Charge Vermont 12b-1 Fee
Shares held less than one year after purchase 4% 1.00%
More than one year but less than two 3%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 6yrs.
<PAGE>
Exhibit II
Calvert Municipal Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
National Intermediate 2.75% 0.25% N/A
California Intermediate 2.75% 0.25% N/A
Maryland Intermediate 2.75% 0.25% N/A
Virginia Intermediate 2.75% 0.25% N/A
Class B Maximum
Contingent Deferred Sales Charge CMF 12b-1 Fee
Shares held less than one year after purchase 3% 1.00%
More than one year but less than two 2%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 4 yrs.
<PAGE>
Exhibit II
The Calvert Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
New Vision Small Cap 4.75% 0.25% 1.00%
Calvert Income Fund 3.75% 0.50% 1.00%
Class B Maximum
Contingent Deferred Sales Charge New Vision Income 12b-1 Fee
Shares held less than one year 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6yrs.
<PAGE>
Exhibit II
Calvert World Values Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
International Equity 4.75% 0.35% 1.00%
Capital Accumulation 4.75% 0.35% 1.00%
Class B
Maximum
Contingent Deferred Sales Charge CWVF 12b-1 Fee
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
February 1998
Lgl Shr/Agreements/New UW/Rule 18f-3 Plan
<PAGE>
Exhibit II
Calvert New World Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
Calvert New Africa 4.75% 0.25% 1.00%
Class B Maximum
Contingent Deferred Sales Charge New Africa 12b-1 Fee
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
<PAGE>
Exhibit II
First Variable Rate Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
First Gov. Money Market N/A N/A N/A
Class B Maximum
Contingent Deferred Sales Charge 12b-1 Fee
CDSC of original Class B Fund purchased is applied upon
redemption from Class B of First Government Money Market 1.00%
Conversion period of original Class B Fund purchased is applied.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Duties of the Bank 1
2. Fees and Expenses 3
3. Wire Transfer Operating Guidelines 4
4. Data Access and Proprietary Information 5
5. Indemnification 6
6. Standard of Care 8
7. Covenants of the Transfer Agent and the Bank 8
8. Representations and Warranties of the Bank 9
9. Representations and Warranties of the Transfer Agent 9
10. Termination of Agreement 10
11. Assignment 10
12. Amendment 10
13. Massachusetts Law to Apply 10
14. Force Majeure 11
15. Consequential Damages 11
16. Limitation of Shareholder Liability 11
17. Merger of Agreement 11
18. Survival 11
19. Severability 11
20. Counterparts 12
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of August, 1996, by and
between, Calvert Shareholder Services, Inc. a corporation, having its
principal office and place of business at 4550 Montgomery Ave. Suite
1000N, Bethesda, Maryland, 20814 (the "Transfer Agent"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the
investment companies (including each series thereof) listed on Schedule
A (the "Fund(s)"), each an open-end management investment company
registered under the Investment Company Act of 1940, as amended, as
transfer agent, dividend disbursing agent and shareholder servicing
agent in connection with certain activities, and the Transfer Agent has
accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency
and Service Agreement with each of the Funds (including each series
thereof) listed on Schedule A pursuant to which the Transfer Agent is
responsible for certain transfer agency and dividend disbursing
functions for each Fund's authorized and issued shares of common stock
or shares of beneficial interest as the case may be ("Shares") and each
Fund's shareholders ("Shareholders") and the Transfer Agent is
authorized to subcontract for the performance of its obligations and
duties thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as its
sub-transfer agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein
contained, the parties hereto agree as follows:
1. Duties of the Bank
1.1 Subject to the terms and conditions set forth in this
Agreement, the Bank shall act as the Transfer Agent's sub-transfer
agent for Shares in connection with any accumulation plan, open
account, dividend reinvestment plan, retirement plan or similar plan
provided to Shareholders and set out in each Fund's currently effective
prospectus and statement of additional information ("Prospectus"),
including without limitation any periodic investment plan or periodic
withdrawal program. As used herein the term '"Shares" means the
authorized and issued shares of common stock, or shares of beneficial
interest, as the case may be, for each Fund listed in Schedule A. In
accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank shall provide the
services listed in this Section 1.
(a) The Bank shall:
(i) receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation thereof to the Custodian of
each Fund authorized pursuant to the Articles of
Incorporation or organization of each Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares in
the appropriate Shareholder account;
(iii) receive for acceptance redemption requests
and redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) in respect to the transactions in items (i),
(ii) and (iii) above, the Bank shall execute
transactions directly with broker-dealers authorized
by each Fund;
(v) at the appropriate time as and when it
receives monies paid to it by the Custodian with
respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(vii) prepare and transmit payments for dividends
and distributions declared by each Fund;
(viii) issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of indemnification
satisfactory to the Bank and protecting the Bank and
each Fund, and the Bank at its option, may issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without
such indemnity;
(ix) maintain records of account for and advise
the Transfer Agent and its Shareholders as to the
foregoing; and
(x) Record the issuance of Shares of each Fund
and maintain pursuant to Rule 17Ad-10(e) of the
Securities Exchange Act of 1934 as amended (the
"Exchange Act of 1934") a record of the total number
of Shares of each Fund which are authorized, based
upon data provided to it by each Fund or the Transfer
Agent, and issued and outstanding. The Bank shall
also provide each Fund on a regular basis with the
total number of Shares which are authorized and
issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of
each Fund or the Transfer Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare
meeting, proxy, and mailing lists, withhold taxes on
US resident and non-resident alien accounts, prepare
and file US Treasury Department reports required with
respect to interest, dividends and distributions by
federal authorities for all Shareholders, prepare
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in
Shareholder account information.
(b) For blue sky reporting the Bank shall provide a
system that will enable each Fund or the Transfer Agent to
monitor the total number of Shares sold in each State, and
each Fund or the Transfer Agent shall:
(i) identify to the Bank in writing those
transactions and assets to be treated as exempt from
blue sky reporting for each State; and
(ii) verify the establishment of transactions for
each State on the System prior to the activity for
each State, the responsibility of the Bank for each
Fund's blue sky state registration status is solely
limited to the initial establishment of transactions
subject to blue sky compliance by the Fund or the
Transfer Agent and the reporting of such transactions
to the Fund as provided above.
1.3 Per the attached service responsibility schedule procedures as
to who shall provide certain of these services in Section 1 may be
established from time to time by agreement between the Transfer Agent
and the Bank. The Bank may at times perform only a portion of these
services and the Transfer Agent may perform these services on each
Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the
Transfer Agent (i.e., escheat services) that may be agreed upon in
writing between the Bank and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement,
the Transfer Agent agrees to pay the Bank an annual maintenance fee for
each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time
subject to mutual written agreement between the Transfer Agent and the
Bank.
2.2 In addition to the fee paid under Section 2.1 above, the
Transfer Agent agrees to reimburse the Bank for out-of-pocket expenses,
including, but not limited to confirmation production, postage, forms,
telephone, microfilm, microfiche, tabulating proxies, records storage,
or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by
the Bank at the request or with the consent of the Transfer Agent, will
be reimbursed by the Transfer Agent.
2.3 The Transfer Agent agrees to pay all fees and reimbursable
expenses within fifteen days following the receipt of the respective
billing notice. Postage for mailing of dividends, proxies, Fund reports
and other mailings to all shareholder accounts shall be advanced to the
Bank by the Transfer Agent at least seven (7) days prior to the mailing
date of such materials.
3. Wire Transfer Operating Guidelines/Articles 4A of the Uniform
Commercial Code
3.1 The Bank is authorized to promptly debit the appropriate
Transfer Agent account(s) upon the receipt of a payment order in
compliance with the selected security procedure (the "Security
Procedure") chosen for funds transfer and in the amount of money that
the Bank has been instructed to transfer. The Bank shall execute
payment orders in compliance with the Security Procedure and with the
Transfer Agent's instructions on the execution date provided that such
payment order is received by the customary deadline for processing such
a request, unless the payment order specifies a later time. All payment
orders and communications received after this time frame will be deemed
to have been received the next business day.
3.2 The Transfer Agent acknowledges that the Security Procedure it
has designated on the Transfer Agent Selection Form was selected by the
Transfer Agent from security procedures offered by the Bank. The
Transfer Agent shall restrict access to confidential information
relating to the Security Procedure to authorized persons as
communicated to the Bank in writing. The Transfer Agent must notify the
Bank immediately if it has reason to believe unauthorized persons may
have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the
authenticity of all such instructions according to the Security
Procedure.
3.3 The Bank shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
3.4 When a Transfer Agent initiates or receives Automated Clearing
House ("ACH") credit and debit entries pursuant to these guidelines and
the rules of the National Automated Clearing House Association and the
New England Clearing House Association, the Bank will act as an
Originating Depository Financial Institution and/or receiving
Depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Bank with respect to an ACH credit
entry are provisional until the Bank receives final settlement for such
entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive
a refund of the amount credited to the Transfer Agent in connection
with such entry, and the party making payment to the Transfer Agent via
such entry shall not be deemed to have paid the amount of the entry.
3.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected
balance in the account to be charged at the time of the Bank's receipt
of such payment order, or (b) if the Bank, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
3.6 The Bank shall use reasonable efforts to act on all authorized
requests to cancel or amend payment orders received if requests are
received in a timely manner affording the Bank reasonable opportunity
to act. However, the Bank assumes no liability if the request for
amendment or cancellation cannot be satisfied.
3.7 The Bank shall assume no responsibility for failure to detect
any erroneous payment order provided that the Bank complies with the
payment order instructions as received and the Bank complies with the
Security Procedure. The Security Procedure is established for the
purpose of authenticating payment orders only and not for the detection
of errors in payment orders.
3.8 The Bank shall assume no responsibility for lost interest with
respect to the retransfer Agentable amount of any unauthorized payment
order unless the Bank is notified of the unauthorized payment order
within thirty (30) days of notification by the Bank of the acceptance
of such payment order. In no event (including failure to execute a
payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such
damages.
3.9 Confirmation of Bank's execution of payment orders shall
ordinarily be provided within 24 hours notice of which may be delivered
through the Bank's proprietary information systems, or by facsimile or
call-back. Client must report any objections to the execution of an
order within 30 days.
4. Data Access and Proprietary Information
The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and
other information furnished to the Transfer Agent by the Bank are
provided solely in connection with the services rendered under this
Agreement and constitute copyrighted trade secrets or proprietary
information of substantial value to the Bank. Such databases, programs,
formats, designs, techniques and other information are collectively
referred to below as "Proprietary Information". The Transfer Agent
agrees that it shall treat all Proprietary Information as proprietary
to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as
expressly permitted hereunder. The Transfer Agent agrees for itself and
its employees and Agents:
(a) to use such programs and databases (i) solely on the
Transfer Agent's computers, or (ii) solely from equipment at
the locations agreed to between the Transfer Agent and the
Bank and (iii) in accordance with the Bank's applicable user
documentation;
(b) to refrain from copying or duplicating in any way
(other than in the normal course of performing processing on
the Transfer Agent's computers) any part of any Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any
programs, data or other information not owned by the Transfer
Agent, and if such access is accidentally obtained, to respect
and safeguard the same Proprietary Information;
(d) to refrain from causing or allowing proprietary
information transmitted from the Bank's computer to the
Transfer Agent's terminal to be retransmitted to any other
computer terminal or other device except as expressly
permitted by the Bank, such permission not to be unreasonably
withheld;
(e) that the Transfer Agent shall have access only to
those authorized transactions as agreed to between the
Transfer Agent and the Bank; and
(f) to honor reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law and under
applicable statutes.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 4.
5. Indemnification
5.1 Except as provided in Section 6, herein, the Bank shall not be
responsible for, and the Transfer Agent shall indemnify and hold the
Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of
or attributable to:
(a) all actions of the Bank or its agent or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct;
(b) the Transfer Agent's lack of good faith, negligence
or willful misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are given to the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Transfer Agent or any other person or firm on
behalf of the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or
its agents or subcontractors of any instructions or requests
of the Transfer Agent; and
(e) the offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities laws or regulations of any state that such
Shares be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such Shares
in such state.
5.2 At any time the Bank may apply to any officer of the Transfer
Agent for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed
by the Bank under this Agreement, and the Bank and its Agents or
subcontractors shall not be liable and shall be indemnified by the
Transfer Agent for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on
behalf of the Transfer Agent, reasonably believed by the Batik as being
in good order and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents
provided the Bank or its Agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from
the Transfer Agent. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Transfer Agent, and the proper
countersignature of the Transfer Agent or any former transfer agent or
former registrar, or of a co-transfer agent or co-registrar.
5.3 In order that the indemnification provisions contained in this
Section 5 shall apply, upon the assertion of a claim for which the
Transfer Agent may be required to indemnify the Bank, the Bank shall
promptly notify the Transfer Agent of such assertion, and shall keep
the Transfer Agent advised with respect to all developments concerning
such claim. The Transfer Agent shall have the option to participate
with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no
case confess any claim or make any compromise in any case in which the
Transfer Agent may be required to indemnify the Bank except with the
Transfer Agent's prior written consent.
6. Standard of Care
6.1 The Bank shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
6.2 The Bank shall work with the Transfer Agent to ensure that a
Fund is made whole by the responsible party for any material losses or
damages resulting from errors, material unreconciled items,
carelessness, negligence, bad faith, or willful misconduct by the Bank
or its agents or subcontractors, or that of their employees. Neither
the Bank, its agents or subcontractors, nor the Transfer Agent may
waive full liability for losses or damages based on the above.
6.3 Errors identified as caused by the sub-transfer agent will not
be charged to the Funds in the monthly billing.
7. Covenants of the Transfer Agent and the Bank
7.1 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Transfer Agent for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
7.2 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Bank agrees that all
such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of the
Transfer Agent and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered
promptly to the Transfer Agent on and in accordance with its request.
7.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not
be voluntarily disclosed to any other person, except as may be required
by law.
7.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to
notify the Transfer Agent and to secure instructions from an authorized
officer of the Transfer Agent as to such inspection. The Bank reserves
the right, however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable for
the failure to exhibit the Shareholder records to such person.
8. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
(b) it is duly qualified to carry on its business in The
Commonwealth of Massachusetts;
(c) it is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform this Agreement;
(d) all requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement;
(e) it has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement; and
(f) it is registered as a transfer agent undo Section
17A(c)(2) of the Exchange Act.
9. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a corporation duly organized and existing and
in good standing under the laws of the State of Delaware;
(b) it is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and
perform this Agreement;
(c) all corporate proceedings required by said Articles
of Incorporation and By-Laws have been taken to authorize it
to enter into and perform this Agreement.
(d) it is registered as a transfer agent under Section
17A(c)(2) of the Exchange Act.
10. Termination of Agreement
10.1 This Agreement shall continue for a period of five years (the
"Initial Term") and be renewed or terminated as stated below.
10.2 This Agreement shall terminate upon the termination of the
Transfer Agency Agreement between the Funds and the Transfer Agent.
10.3 This Agreement may be terminated or renewed after the Initial
Term by either party upon ninety (90) days written notice to the other.
10.4 Should the Transfer Agent exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be borne by the Transfer Agent. Additionally,
the Bank reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the
average of three (3) months' fees.
11. Assignment
11.1 Except as provided in Section 11.3 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
11.3 The Bank will, without further consent on the part of the
Transfer Agent, subcontract for the performance hereof with National
Financial Data Services, Inc., a subsidiary of BFDS duly registered as
a transfer agent pursuant to Section 17A(c)(2) provided, however, that
the Bank shall be as fully responsible to the Transfer Agent for the
acts and omissions of any subcontractor as it is for its own acts and
omissions.
12. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
14. Force Majeure
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act
hereunder.
16. Limitations of Shareholder Liability
Each party hereby expressly acknowledges that recourse against the
Funds shall be subject to those limitations provided by governing law
and the Declaration of Trust or Articles of Incorporation of the Funds,
as applicable, and agrees that obligations assumed by the Funds
pursuant to the Transfer Agency Agreement shall be limited in all cases
to the Funds and their respective assets. Each party shall not seek
satisfaction from the Shareholders or any individual Shareholder of the
Funds, nor shall any party seek satisfaction of any obligations from
the Directors\Trustees or any individual Director\Trustee of the Funds.
17. Merger of Agreement
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
18. Survival
All provisions regarding indemnification, warranty, liability, and
limits thereon, and confidentiality and/or protection of proprietary
rights and trade secrets shall survive the termination of this
Agreement.
19. Severability
If any provision or provisions of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or
impaired.
20. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day first written above.
CALVERT SHAREHOLDER SERVICES, INC.
BY: /s/ Karen Becker
TITLE: Vice President
ATTEST: Katherine Stoner
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
TITLE: Executive Vice President
ATTEST: Francine Hayes
<PAGE>
AMENDMENT TO SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
General Background:
Calvert Shareholder Services, Inc. ("CSSI"), and State Street Bank and
Trust Company ("State Street") entered into a sub-transfer agency and
service agreement ("Agreement") dated August 15, 1996.
For accounting reasons, CSSI desires to amend the Agreement by
assigning the contract for the transfer agent functions (except for
shareholder servicing) to each Calvert Group Fund. CSSI will continue
to be responsible for the shareholder servicing and for any
responsibilities currently shown as Transfer Agent responsibilities in
Fund Service Responsibilities attachment to the Agreement.
The Agreement must be assigned to the Calvert Group Funds for
accounting purposes.
CSSI and State Street must each consent to this assignment.
Changes caused by this assignment:
The current subtransfer agent, National Financial Data Services, Inc.
("NFDS"), will bill each Calvert Group Fund, rather than CSSI, and each
Calvert Group Fund shall pay State Street or its billing agent, NFDS,
all fees and expenses incurred under the Agreement on behalf of each
respective Calvert Group Fund.
NFDS will be shown in each Calvert Group Fund prospectus and statement
of additional information as the Transfer Agent, while CSSI will be
shown as the shareholder servicing agent.
State Street (NFDS) will continue to perform those functions shown in
the Agreement as Bank responsibilities.
CSSI will continue to perform the Transfer Agent responsibilities, as
shown in the Fund Service Responsibilities attachment to the Agreement.
The Assignment:
This Amendment, dated as of the first day of January, 1998, by and
among CSSI and State Street:
Now, Therefore, CSSI and State Street each hereby agree that the
Agreement will be between each Calvert Group Fund and State Street, and
each hereby agrees that the Agreement is so assigned.
In Witness Whereof, CSSI and State Street have caused this Amendment to
be executed by their duly authorized officers, effective as of January
1, 1998.
Calvert Shareholder Services, Inc. State
Street Bank and Trust Company
By: /s/ By: /s/
Name: Karen Becker Name: Ronald E. Logue
Title: Vice President, Operations Title: Executive Vice President
Date: February 18, 1998 Date: February 20, 1998
Acacia Capital Corporation
First Variable Rate Fund
Calvert Tax-Free Reserves
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund By: /s/
Calvert Municipal Fund, Inc. Name: William M. Tartikoff
Calvert World Values Fund, Inc. Title: Senior Vice President and Secretary
Calvert New World Fund, Inc. Date: February 18, 1998
<PAGE>
SERVICING AGREEMENT
This Agency Agreement, effective January 1, 1998, by and
between Calvert Shareholder Services, Inc., a Delaware corporation
having its principal place of business in Bethesda, Maryland
("CSS"), and registered investment companies sponsored by Calvert
Group, Ltd. and its subsidiaries and set forth on Schedule A
("Calvert Group Funds" or "Funds"). The Funds have entered into a
transfer agency and service agreement with the State Street Bank and
Trust of Boston, Massachusetts ("State Street") ("State Street
Agreement").
1. Appointments. The Funds hereby appoints CSS as
servicing agent, agent and shareholder servicing agent for the
Funds, and CSS hereby accepts such appointment and agrees to perform
those duties in accordance with the terms and conditions set forth
in this Agreement.
2. Documentation. The Funds will furnish CSS with all
documents, certificates, contracts, forms, and opinions which CSS,
in its discretion, deems necessary or appropriate in connection with
the proper performance of its duties under this Agreement.
3. Services to be Performed. CSS will be responsible
for telephone servicing functions, system interface with State
Street and oversight of State Street's administering and performing
their duties pursuant to the State Street Agreement. The details of
the operating standards and procedures to be followed will be
determined from time to time by agreement between CSS and the Funds.
4. Recordkeeping and Other Information. CSS will,
commencing on the effective date of this Agreement, to the extent
necessary create and maintain all necessary shareholder accounting
records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules thereunder, as amended from time to time.
All such records will be the property of the Fund and will be
available for inspection and use by such Fund.
5. Audit, Inspection and Visitation. CSS will make
available during regular business hours all records and other data
created and maintained pursuant to this Agreement for reasonable
audit and inspection by the SEC, a Fund or any person retained by a
Fund.
6. Compensation. The Funds will compensate CSS on a
monthly basis for the services performed pursuant to this Agreement,
at the rate of compensation set forth in Schedule A. Out of pocket
expenses incurred by CSS and not included in Schedule A will be
reimbursed to CSS by the Fund, as appropriate; such expenses may
include, but are not limited to, special forms and postage for
mailing the forms. These charges will be payable in full upon
receipt of a billing invoice. In lieu of reimbursing CSS for these
expenses, any Fund may, in its discretion, directly pay the expenses.
7. Use of Names. No Fund will not use the name of CSS
in any prospectus, sales literature or other material relating to
the Fund in any manner without prior approval by CSS; provided,
however, that CSS will approve all uses of its name that merely
refer in accurate terms to its appointment under this Agreement or
that are required by the SEC or a State Securities Commission; and,
provided, further, that in no event will approval be unreasonably
withheld.
8. Security. CSS represents and warrants that, to the
best of its knowledge, the various procedures and systems that CSS
proposes to implement with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause (including
provision for twenty-four hour a day restricted access) the Fund's,
records and other data and CSS's records, data, equipment,
facilities and other property used in the performance of its
obligations under this Agreement are adequate and that it will
implement them in the manner proposed and make such changes from
time to time as in its judgment are required for the secure
performance of obligations under this Agreement.
9. Limitation of Liability. Each Fund will indemnify
and hold CSS harmless against any losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit brought
by any person (including a shareholder naming such Fund as a party)
other than such Fund not resulting from CSS's bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
negligence arising out of, or in connection with, CSS's performance
of its obligations under this Agreement.
To the extent CSS has not acted with bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
gross negligence, each Fund will also indemnify and hold CSS
harmless against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit resulting from the negligence
of such Fund, or CSS's acting upon any instructions reasonably
believed by it to have been executed or communicated by any person
duly authorized by such Fund, or as a result of CSS's acting in
reliance upon advice reasonably believed by CSS to have been given
by counsel for the Fund, or as a result of CSS's acting in reliance
upon any instrument reasonably believed by it to have been genuine
and signed, countersigned or executed by the proper person.
CSS's liability for any and all claims of any kind,
including negligence, for any loss or damage arising out of,
connected with, or resulting from this Agreement, or from the
performance or breach thereof, or from the design, development,
lease, repair, maintenance, operation or use of data processing
systems and the maintenance of a Funds' shareholder account records
as provided for by this Agreement will in the aggregate not exceed
the total of CSS's compensation hereunder for the six months
immediately preceding the discovery of the circumstances giving rise
to such liability.
In no event will CSS be liable for indirect, special, or
consequential damages (even if CSS has been advised of the
possibility of such damages) arising from the obligations assumed
hereunder and the services provided for by this Agreement, including
but not limited to lost profits, loss of use of the shareholder
accounting system, cost of capital, cost of substitute facilities,
programs or services, downtime costs, or claims of shareholders for
such damage.
10. Limitation of Liability of the Fund. CSS
acknowledges that it accepts the limitations upon the liability of
the Funds. CSS agrees that each Fund's obligations under this
Agreement in any case will be limited to such Fund and to its assets
and that CSS will not seek satisfaction of any obligation from the
shareholders of the Fund nor from any director, trustee, officer,
employee or agent of such Fund.
11. Force Majeure. CSS will not be liable for delays or
errors occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military authority,
national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot, or failure of communication or
power supply. In the event of equipment breakdowns beyond its
control, CSS will take reasonable steps to minimize service
interruptions but will have no liability with respect thereto.
12. Amendments. CSS and each Fund will regularly
consult with each other regarding CSS's performance of its
obligations under this Agreement. Any change in a Fund's
registration statements under the Securities Act of 1933, as
amended, or the 1940 Act or in the forms relating to any plan,
program or service offered by the current prospectus which would
require a change in CSS's obligations under this Agreement will be
subject to CSS's approval, which will not be unreasonably withheld.
Neither this Agreement nor any of its provisions may be changed,
waived, discharged, or terminated orally, but only by written
instrument which will make specific reference to this Agreement and
which will be signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
13. Termination. This Agreement will continue in effect
until January 1, 1999, and thereafter as the parties may mutually
agree; provided, however, that this Agreement may be terminated at
any time by either party upon at least sixty days' prior written
notice to the other party; and provided further that this Agreement
may be terminated immediately at any time for cause either by any
Fund or CSS in the event that such cause remains unremedied for no
less than ninety days after receipt of written specification of such
cause. Any such termination will not affect the rights and
obligations of the parties under Paragraphs 9 and 10 hereof. In the
event that a Fund designates a successor to any of CSS's obligations
hereunder, CSS will, at the expense and direction of such Fund,
transfer to such successor all relevant books, records and other
data of such Fund established or maintained by CSS under this
Agreement.
15. Miscellaneous. Each party agrees to perform such
further acts and execute such further documents as are necessary to
effectuate the purposes of this Agreement. This Agreement will be
construed and enforced in accordance with and governed by the laws
of the State of Maryland. The captions in this Agreement are
included for convenience only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
CALVERT GROUP FUNDS
By:/s/ William M. Tartikoff
CALVERT SHAREHOLDER SERVICES, INC.
By:/s/ Ronald M. Wolfsheimer
<PAGE>
SERVICING AGREEMENT
SCHEDULE A
For its services under this Servicing Agreement, Calvert
Shareholder Services, Inc., is entitled to receive from the Calvert
Funds (Except Acacia Capital Corporation) fees as set forth below:
Annual
Transaction
Fund and Portfolio Account Fee* Fee
FIRST VARIABLE RATE FUND
First Variable Rate Fund (d/b/a Calvert First $11.59 $.84
Government Money Market)
Calvert Florida Municipal Intermediate Fund 2.23 .26
CALVERT TAX-FREE RESERVES
Money Market 13.35 .97
Limited-Term 3.37 .42
Long-Term 2.67 .31
California Money Market 12.74 .93
Vermont Municipal 3.40 .39
CALVERT MUNICIPAL FUND, INC
California Intermediate 3.48 .40
National Intermediate 3.31 .38
Maryland Intermediate 4.64 .53
Michigan Intermediate 3.88 .44
New York Intermediate 4.23 .48
Virginia Intermediate 3.35 .38
Arizona Intermediate 2.10 .24
Pennsylvania Intermediate 2.82 .32
THE CALVERT FUND
Income 4.22 .48
New Vision Small Cap 5.90 .67
CALVERT SOCIAL INVESTMENT FUND
Money Market 11.92 .87
Bond 4.85 .55
Managed Growth 4.63 .72
Equity 5.24 .60
CALVERT WORLD VALUES FUND, INC.
International Equity 5.36 .61
Capital Accumulation 6.26 .72
CALVERT NEW WORLD FUND
New Africa Fund 3.91 .45
* Account fees are charged monthly based on the highest number of
non-zero balance accounts outstanding during the month.
Acacia Capital Corporation fee is as follows:
.03% (three basis points) on the first $500 million of average
net assets and .02% (two basis points) over $500 million of average
net assets, minus the fees paid by Acacia Capital Corporation to
State Street Bank and Trust pursuant to the State Street Agreement
(except for out of pocket expenses).
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000319676
<NAME> CALVERT TAX FREE RESERVES
<SERIES>
<NUMBER> 444
<NAME> MONEY MARKET PORTFOLIO, CLASS O
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 1462638
<INVESTMENTS-AT-VALUE> 1462638
<RECEIVABLES> 24459
<ASSETS-OTHER> 72
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1487169
<PAYABLE-FOR-SECURITIES> 29586
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1146
<TOTAL-LIABILITIES> 30732
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1405292
<SHARES-COMMON-STOCK> 1405404
<SHARES-COMMON-PRIOR> 1550724
<ACCUMULATED-NII-CURRENT> 60
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1405352
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 60127
<OTHER-INCOME> 0
<EXPENSES-NET> 9775
<NET-INVESTMENT-INCOME> 50352
<REALIZED-GAINS-CURRENT> 24
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 50376
<EQUALIZATION> 0
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