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. 47 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 47 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) 951-4881
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 (date)
pursuant to paragraph (b) pursuant to paragraph (b)
XX 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
<PAGE>
CALVERT TAX-FREE RESERVES PROSPECTUS
April 30, 1999
About the Funds
2 Investment objective, strategy, past performance
18 Fees and Expenses
22 Principal Investment Practices and Risks
About Your Investment
32 Portfolio Managers
34 Advisory Fees
36 How to Buy Shares
36 Getting Started
36 Choosing a Share Class
38 Calculation of CDSC/Waiver
39 Distribution and Service Fees
40 Account Application
41 Important - How Shares are Priced
41 When Your Account Will be Credited
42 Other Calvert Group Features
(Exchanges, Minimum Account Balance, etc.)
45 Dividends, Capital Gains and Taxes
46 How to Sell Shares
48 Financial Highlights
57 Exhibit A- Reduced Sales Charges (Class A)
59 Exhibit B- Service Fees and
Other Arrangements with Dealers
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PORTFOLIOS IN THIS PROSPECTUS
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Calvert Tax-Free Reserves Fund (CTFR)
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CTFR Money Market Portfolio
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CTFR Limited-Term Portfolio
CTFR Long-Term Portfolio
These securities have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any State Securities Commission, nor has the
SEC or any State Securities Commission passed on the accuracy or adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
CTFR Money Market
Objective
CTFR Money Market 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 Fund.
Principal investment strategies and related risks
The Fund invests in fixed and floating rate municipal bonds and notes,
variable rate demand notes, tax-exempt commercial paper, and other high
quality, short-term municipal obligations. The Advisor looks for securities
with strong credit quality that are attractively priced. This may include
investments with unusual features or privately placed issues, that are not
widely followed in the fixed income marketplace. All investments must comply
with the SEC money market fund requirements.
Many of the instruments held by the Fund are supported by letters of credit
issued by banks; thus, the Fund has a wide exposure to the banking industry.
The Fund may purchase securities that have not been rated by a rating
agency, so long as the Advisor determines they are of comparable credit
quality.
Unrated and privately placed securities may be less liquid than those that
are rated or have an active trading market.
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The Fund's yield will change in response to market interest rates. In
general, as market rates go up so will the Fund's yield, and vice versa.
Although the Fund tries to keep the value of its shares constant at $1.00
per share, extreme changes in market rates, and or sudden credit
deterioration of a holding could cause the value to decrease. The Fund
limits the amount it invests in any one issuer to try to lessen its exposure.
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An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is still possible to lose money by
investing in the Fund.
CTFR Money Market Performance
The bar chart and table below show the Fund's annual returns and its
long-term performance. The chart shows how the performance has varied from
year to year. The table compares the Fund's returns over time to the Lipper
Tax-Exempt Money Market Funds Index, a composite index of the annual return
of mutual funds that have an investment goal similar to that of the Fund.
The Fund's past performance does not necessarily indicate how the Fund will
perform in the future.
Bar Chart with Year-by-Year Total Return
1989 ____% 1994 ____%
1990 ____% 1995 ____%
1991 ____% 1996 ____%
1992 ____% 1997 ____%
1993 ____% 1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12-31-98)
1 year 5 years 10 years
CTFR Money Market Portfolio ---% ---% ---%
Lipper Tax-Exempt
Money Market Funds Index ---% ---% ---%
For current yield information call 800-368-2745, or visit Calvert Group's
website at www.calvertgroup.com
<PAGE>
CTFR Limited-Term
Objective
CTFR Limited-Term 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 Fund.
Principal investment strategies
While seeking to achieve its objective, the Fund strives to minimize
volatility in the net asset value (NAV) per share. The Advisor intends under
normal circumstances to maintain an average portfolio maturity of three
years or less. The Fund typically invests at least 85% of its net assets in
investment grade debt securities. The Advisor looks for securities with
strong credit quality within their rating category that are attractively
priced. This may include investments with unusual features or privately
placed issues, that are not widely followed in the fixed income marketplace.
Types of investments. The tax-exempt obligations in which the Fund may
invest include, but are not limited to, tax-supported debt (general
obligation bonds and notes of state and local issuers), various types of
revenue debt (transportation, housing utilities, hospital), special tax
obligations, and qualified private activity bonds and other state and local
government authorities, tax and revenue anticipation notes and bond
anticipation notes, municipal leases, certificates of participation in such
investments. The obligations may be structured as variable rate or
adjustable rate obligations and are often supported by a third party letter
of credit.
The Fund may purchase unrated securities, so long as the Advisor determines
they are of comparable credit quality. Unrated securities may be less liquid
than those that are rated.
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PRINCIPAL RISKS
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You could lose money on your investment in the Fund, or the Fund could
underperform, most likely for any of the following reasons:
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The bond market goes down
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The individual bonds in the Fund do not perform as well as expected
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The Advisor's forecast as to interest rates is not correct
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The Advisor's allocation among different sectors of the bond market
does not perform as well as expected
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An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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CTFR Limited-Term Performance
The bar chart and table below show the Fund's annual returns and its
long-term performance. The chart shows how the performance has varied from
year to year. The table compares the Fund's performance over time to that of
the Lehman Municipal Bond Index . This is a widely recognized, unmanaged
index of bond prices. It also shows the Fund's returns compared to the
Lipper Short Municipal Debt Funds Index, a composite index of the annual
return of mutual funds that have an investment goal similar to that of the
Fund. The Fund's past performance does not necessarily indicate how the Fund
will perform in the future.
The bar chart does not reflect any sales charge that you may be required to
pay upon purchase or redemption of the Fund's shares. Any sales charge will
reduce your return. The average total return table shows returns with the
maximum sales charge deducted. No sales charge has been applied to the index
used for comparison in the table.
Bar Chart with Year-by-Year Total Return
(Class A return at NAV)
1989 ____% 1994 ____%
1990 ____% 1995 ____%
1991 ____% 1996 ____%
1992 ____% 1997 ____%
1993 ____% 1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12-31-98)
(with maximum sales charge deducted)
1 year 5 years 10 years
CTFR Limited-Term ____% ____% ____%
Lehman Municipal Bond Index TR ____% ____% ____%
Lipper Short Municipal Debt
Funds Index ____% ____% ____%
<PAGE>
CTFR Long-Term
Objective
CTFR Long-Term 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 Fund.
Principal investment strategies
While seeking to achieve its objective, the Fund strives to provide a
competitive rate of total return. The Fund typically invests at least 65% of
its net assets in investment grade debt securities. The Advisor looks for
securities with strong credit quality within their rating category that are
attractively priced. This may include investments with unusual features or
privately placed issues, that are not widely followed in the fixed income
marketplace. There is no limit on the Fund's average portfolio maturity.
Types of investments. The tax-exempt obligations in which the Fund may
invest include, but are not limited to, tax-supported debt (general
obligation bonds of state and local issuers), various types of revenue debt
(transportation, housing utilities, hospital), special tax obligations, and
qualified private activity bonds and other state and local government
authorities, municipal leases, certificates of participation in such
investments. The obligations may be structured as variable rate or
adjustable rate obligations and are often supported by a third party letter
of credit.
The Fund may purchase unrated securities, so long as the Advisor determines
they are of comparable credit quality. Unrated securities may be less liquid
than those that are rated.
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PRINCIPAL RISKS
You could lose money on your investment in the Fund, or the Fund could
underperform, most likely for any of the following reasons:
The bond market goes down
The individual bonds in the Fund do not perform as well as expected
The Advisor's forecast as to interest rates is not correct
The Advisor's allocation among different sectors of the bond market
does not perform as well as expected
The Fund is non-diversified. Compared to other funds, the Fund may
invest more of its assets in a smaller number of bonds. Gains or losses
on a single bond may have greater impact on the Fund.
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An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
- ------------------------------------------------------------------------------
CTFR Long-Term Performance
The bar chart and table below show the Fund's annual returns and its
long-term performance. The chart shows how the performance of the Class A
shares has varied from year to year. The table compares the Fund's
performance over time to that of the Lehman Municipal Bond Index . This is a
widely recognized, unmanaged index of bond prices. It also shows the Fund's
returns compared to the Lipper General Municipal Debt Funds Index, a
composite index of the annual return of mutual funds that have an investment
goal similar to that of the Fund. The Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
The return for the Fund's other Classes of shares offered by this prospectus
will differ from the Class A returns shown in the bar chart, depending upon
the expenses of that Class. The bar chart does not reflect any sales charge
that you may be required to pay upon purchase or redemption of the Fund's
shares. Any sales charge will reduce your return. The average total return
table shows returns with the maximum sales charge deducted. No sales charge
has been applied to the index used for comparison in the table.
Bar Chart with Year-by-Year Total Return
(Class A return at NAV)
1989 ____% 1994 ____%
1990 ____% 1995 ____%
1991 ____% 1996 ____%
1992 ____% 1997 ____%
1993 ____% 1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12-31-98)
(with maximum sales charge deducted)
1 year 5 years 10 years
CTFR Long-Term: Class A ____% ____% ____%
CTFR Long-Term: Class B N/A N/A N/A
CTFR Long-Term: Class C N/A N/A N/A
Lehman Municipal Bond Index TR ____% ____% ____%
Lipper General Municipal Debt
Funds Index ____% ____% ____%
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. Shareholder fees are paid directly from your account;
annual Fund operating expenses are deducted from Fund assets.
CLASS A Money Mkt. Limited Long
Maximum sales charge (load) None 1.00% 3.75%1
imposed on purchases
(as a percentage of offering price)
Maximum deferred sales charge (load) None None None
(as a percentage of purchase or redemption
proceeds, whichever is lower)
Maximum Account Fee 6 None None
Annual fund operating expenses
Management fees .-- .-- .--
Distribution and service (12b-1) fees None None .--
Other expenses 5 .-- .-- .--
Total annual fund operating expenses .-- .-- .--
Fee waiver and/or expense reimbursement 2 (--) (.--) (.--)
Net Expenses .-- .-- .--
CLASS B Long
Maximum sales charge (load) None
imposed on purchases
(as a percentage of offering price)
Maximum deferred sales charge (load) 4%
(as a percentage of purchase or
redemption proceeds, whichever is lower)
Annual fund operating expenses
Management fees .--
Distribution and service (12b-1) fees 1.00
Other expenses 5 .--
Total annual fund operating expenses .--
Fee waiver and/or expense reimbursement 2 (.--)
Net Expenses .--
<PAGE>
CLASS C Long
Maximum sales charge (load) None
imposed on purchases
(as a percentage of offering price)
Maximum deferred sales charge (load) 1%4
(as a percentage of purchase or
redemption proceeds, whichever is lower)
Annual fund operating expenses
Management fees .--
Distribution and service (12b-1) fees 1.00
Other expenses 5 .--
Total annual fund operating expenses .--
Fee waiver and/or expense reimbursement 2 (.--)
Net Expenses .--
Explanation of Fees and Expenses Table
1 Purchases of Long-Term Class A shares for accounts with $1 million or more
are not subject to front-end sales charges, but may be subject to a 1.0%
contingent deferred sales charge on shares redeemed within 1 year of
purchase. (See "How to Buy Shares - Class A)
2 CAMCO has agreed to waive fees and or reimburse expenses (net of any
expense offset arrangements) for certain of the Funds through December 31,
1999: (list funds/classes as applicable). The contractual expense cap is
shown as "Net Expenses", this is the maximum amount that may be charged to
the Funds for this period.
3 A contingent deferred sales charge is imposed on the proceeds of Class B
shares of Long-Term redeemed within 4 years, subject to certain exceptions.
The charge is 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"
4 A contingent deferred sales charge is imposed on the proceeds of Class C
shares redeemed within one year. The charge is a percentage of net asset
value at the time of purchase or redemption, whichever is less. See
"Calculation of Contingent Deferred Sales Charge"
5 Expenses have been restated to reflect expenses expected to be incurred in
1999.
6 For each account with a balance of less than $1000, the Fund charges a
monthly account maintenance fee of $3.00.
Annual Fund Operating Expenses
Expenses are based on expenses for the Fund's most recent fiscal year,
unless otherwise indicated. Management fees include the administrative fee
paid by the Fund to Calvert Administrative Services Company, an affiliate of
the Advisor, Calvert Asset Management Company, Inc. ("CAMCO").
Rule 12b-1 fees include an asset-based sales charge. Thus, long-term
shareholders in those Funds with such fees 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.
(the "NASD").
Example
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The example assumes that:
You invest $10,000 in the Fund for the time periods indicated;
Your investment has a 5% return each year; and
The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
Number of
Years Investment
is Held
Money Market
1
3
5
10
Limited-Term
1
3
5
10
Class A
Long-term
1
3
5
10
Class B Class B
(with (no
redemp.) redemp.)
Long-term
1
3
5
10
Class C Class C
(with (no
redemp.) redemp.)
Long-term
1
3
5
10
<PAGE>
PRINCIPAL INVESTMENT PRACTICES AND RISKS
The most concise description of each Fund's principal investment strategies
and associated risks is under the risk-return summary for each Fund. The
Funds are also permitted to invest in certain other investments and to use
certain investment techniques that have higher risks associated with them.
On the following pages are brief descriptions of the investments and
techniques, summarized in the risk-return summary along with certain
additional investment techniques and their risks.
For each of the investment practices listed, the table below shows each
Fund's limitations as a percentage of its assets and the principal types of
risk involved. (See the pages following the table for a description of the
types of risks). Numbers in this table show maximum allowable amount only;
for actual usage, consult the Fund's annual/semi-annual reports.
Key to Table
@ Fund currently uses
0 Permitted, but not typically used
(% of assets allowable, if restricted)
- -- Not permitted
xN Allowed up to x% of fund's net assets
xT Allowed up to x% of Fund's total assets
NA Not applicable to this type of fund
Limited Long
- ----------------------------------------------------- ----------- -----------
Conventional Securities:
@ @
Investment grade bonds. Bonds rated BBB/Baa or
higher or comparable unrated bonds. Risks: Interest
Rate, Market , Credit and Information.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Below-investment grade bonds. Bonds rated below @ @
BBB/Baa or comparable unrated bonds, also known as (15N) (35N)
high-yield bonds. They are subject to greater
credit risk than investment grade bonds. Risks:
Credit, Market, Interest Rate, Liquidity and
Information.
Unrated debt securities. Bonds that have not been @ @
rated by a recognized rating agency; the Advisor
has determined the credit quality based on its own
research. Risks: Credit, Market, Interest Rate,
Liquidity and Information.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Illiquid securities. Securities which cannot be
readily sold because there is no active market. 15N 15N
Risks: Liquidity, Market and Transaction.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Unleveraged derivative securities
Asset-backed securities. Securities are issued by a @ @
special purpose entity and are backed by
fixed-income or other interest bearing assets.
Risks: Credit, Interest Rate and Liquidity.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Mortgage-backed securities (typically,
single-family mortgage bonds). Securities are @ @
backed by pools of mortgages, including passthrough
certificates. Risks: Credit, Extension, Prepayment,
Liquidity and Interest Rate.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Leveraged derivative instruments Limited Long
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Options on securities and indices. Contracts giving
the holder the right but not the obligation to NA 5N
purchase or sell a security (or the cash value, in
the case of an option on an index) at a specified
price within a specified time. Any options written
by the Funds must be "covered". Risks: Interest
Rate, Currency, Market, Leverage, Correlation,
Liquidity, Credit and Opportunity.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Futures contract. Agreement to buy or sell a
specific amount of a commodity or financial
instrument at a particular price on a specific NA 5N
future date. Risks: Interest Rate, Currency,
Market, Leverage, Correlation, Liquidity and
Opportunity.
- ----------------------------------------------------- ----------- -----------
- ----------------------------------------------------- ----------- -----------
Structured securities
Inverse floating rate municipal notes and bonds.
These securities tend to be highly sensitive to NA @
interest rate movements. Risks: Credit, Interest
Rate, Market, Leverage, Liquidity and Correlation.
- ----------------------------------------------------- ----------- -----------
<PAGE>
- ----------------------------------------------------- ----------- -----------
Investment Practices:
Temporary Defensive Positions. 0 0
During adverse market, economic or political (20T) (20T)
conditions, the Fund may depart from its principal
investment strategies by increasing its investment
in U.S. government securities and other short-term
interest-bearing securities. During times of any
temporary defensive positions, a Fund may not be
able to achieve its investment objective Risks:
Opportunity.
- ----------------------------------------------------- ----------- -----------
The Funds have additional investment policies and restrictions that are
not principal to their investment strategies (for example, repurchase
agreements, borrowing, pledging, and securities lending, and when-issued
securities.) These policies and restrictions are discussed in the SAI.
Correlation risk
This occurs when a Fund "hedges"- uses one investment to offset the Fund's
position in another. If the two investments do not behave in relation to one
another the way Fund managers expect them to, then unexpected or undesired
results may occur. For example, a hedge may eliminate or reduce gains as
well as offset losses.
Credit risk
The risk that the issuer of a security or the counterparty to an investment
contract may default or become unable to pay its obligations when due.
Extension risk
The risk that an unexpected rise in interest rates will extend the life of a
mortgage-backed security beyond the expected prepayment time, typically
reducing the security's value.
Information risk
The risk that information about a security or issuer or the market might not
be available, complete, accurate or comparable.
Interest rate risk
The risk that changes in interest rates will adversely affect the value of
an investor's securities. When interest rates rise, the value of
fixed-income securities will generally fall. Conversely, a drop in interest
rates will generally cause an increase in the value of fixed-income
securities. Longer-term securities and zero coupon/"stripped" coupon
securities ("strips") are subject to greater interest rate risk.
Leverage risk
The risk that occurs in some securities or techniques which tend to magnify
the effect of small changes in an index or a market. This can result in a
loss that exceeds the amount actually invested.
Liquidity risk
The risk that occurs when investments cannot be readily sold. A Fund may
have to accept a less-than-desirable price to complete the sale of an
illiquid security or may not be able to sell it at all.
Management risk
This risk exists in all mutual funds and means that a Fund's portfolio
management practices might not work to achieve their desired result.
Market risk
The risk that exists in all mutual funds and means the risk that securities
prices in a market, a sector or an industry will fluctuate, and that such
movements might reduce an investment's value.
Opportunity risk
The risk of missing out on an investment opportunity because the assets
needed to take advantage of it are committed to less advantageous
investments or strategies.
Political risk
The risk that may occur with foreign investments, and means that the value
of an investment may be adversely affected by nationalization, taxation,
war, government instability or other economic or political actions or
factors.
Prepayment risk
The risk that unanticipated prepayments may occur, reducing the value of a
mortgage-backed security. The Fund must then reinvest those assets at the
current, market rate which may be lower.
Transaction risk
The risk that a Fund may be delayed or unable to settle a transaction or
that commissions and settlement expenses may be higher than usual.
About Calvert Group
Calvert Asset Management Company, Inc. (4550 Montgomery Avenue, Suite 1000N,
Bethesda, MD 20814) ("CAMCO") is the Funds' investment advisor and provides
day-to-day investment management services to the Funds. It has been managing
mutual funds since 1976. CAMCO is the investment advisor for over 25 mutual
funds, including the first and largest family of socially screened funds. As
of December 31, 1998, CAMCO had $6 billion in assets under management.
CAMCO uses a team approach to its management of the Fund. Since inception,
investment selections for the Fund have been made by a committee of the
Advisor's fixed-income portfolio managers. Reno J. Martini, Senior Vice
President and Chief Investment Officer of CAMCO, heads this team and
oversees the management of all Calvert Funds for CAMCO. Mr. Martini has over
18 years of experience in evaluating and purchasing municipal securities and
has been the head of CAMCO's asset management team since 1985.
Advisory Fees
The following table shows the aggregate annual advisory fee paid to CAMCO by
each Fund for the most recent fiscal year as a percentage of that Fund's
average daily net assets.
Fund Advisory Fee
CTFR Money Market ____ %
CTFR Limited-Term ____ %
CTFR Long Term ____ %
A Word About the Year 2000 (Y2K) and Our Computer Systems
Like other mutual funds, CAMCO and its service providers use computer
systems for all aspects of our business -- processing shareholder and fund
transactions, fund accounting, executing trades, and pricing securities just
to name a few. Many current software programs cannot distinguish between the
year 2000 and the year 1900. This can cause problems with retirement plan
distributions, dividend payment software, transaction software, and numerous
other areas that could impact the Funds. Calvert Group has been reviewing
all of its computer systems for Y2K compliance. Although, at this time,
there can be no assurance that there will be no negative impact on the
Funds, the Advisor, the underwriter, transfer agent and custodian have
advised the Funds that they have been actively working on any necessary
changes to their computer systems to prepare for Y2K and expect that their
systems, and those of their outside service providers, will be adapted in
time for that event. For more information, please visit our website at
www.calvertgroup.com
HOW TO BUY SHARES
Getting Started - Before You Open an Account
You have a few decisions to make before you open an account in a mutual fund.
First, decide which fund or funds best suits your needs and your goals.
Second, decide what kind of account you want to open. Calvert offers
individual, joint, trust, Uniform Gifts/Transfers to Minor Accounts, and
several other types of accounts. Minimum investments are lower for the
retirement plans.
Then decide which class of shares is best for you.
You should make this decision carefully, based on:
the amount you wish to invest;
the length of time you plan to keep the investment; and
the Class expenses.
Choosing a Share Class
CTFR Money Market offers three classes of shares, all of which are sold
without a sales charge. Only CTFR Money Market Class O is offered by this
prospectus. CTFR Limited-Term offers only Class A shares. CTFR Long-Term
offers three different Classes (Class A, B, or C). This chart shows the
difference in the Classes and the general types of investors who may be
interested in each Class:
Class A: Front-End Class B: Deferred Class C: Deferred
Sales Charge Sales Charge for 4 Sales Charge for 1 year
years
For all investors, For investors who For investors who are
particularly those plan to hold the investing for at least
investing a substantial shares at least 4 one year, but less
amount who plan to hold years. The expenses than four years. The
the shares for a long of this class are expenses of this Class
period of time. higher than Class A, are higher than Class
because of the 12b-1 A, because of the
fee. 12b-1 fee.
Sales charge on each No sales charge on No sales charge on
purchase of 3.75% or each purchase, but if each purchase, but if
less, depending on the you sell your shares you sell shares within
amount you invest. within 4 years, you 1 year, then you will
(1.00% for Limited-Term) will pay a deferred pay a deferred sales
sales charge of 4% or charge of 1% at that
less on shares you time.
sell.
Class A shares have an Class B shares have Class C shares have an
annual 12b-1 fee of up an annual 12b-1 fee annual 12b-1 fee of
to 0.35%. (No 12b-1 fee of 1.00%. 1.00%.
for Limited-Term)
Class A shares have Your shares will Class C shares have
lower annual expenses automatically convert higher annual expenses
due to a lower 12b-1 to Class A shares than Class A and there
fee. after 6 years, is no automatic
reducing your future conversion to Class A.
annual expenses.
Purchases of Class A If you are investing If you are investing
Long-Term shares at NAV more than $250,000, more than $100,000,
for accounts with you should consider you should invest in
$1,000,000 or more will investing in Class A Class A.
be subject to a 1.0% or C.
deferred sales charge
for 1 year. (N/A for
Limited-Term)
Class A
If you choose Class A, you will pay a sales charge at the time of each
purchase. This table shows the charges both as a percentage of offering
price and as a percentage of the amount you invest. The term "offering
price" includes the front-end sales charge. If you invest more, the sales
charge will be lower. For example, if you invest more than $50,000 in
Limited-Term, or if your cumulative purchases or the value in your account
is more than $50,000,4 then the sales charge is reduced to .75%.
Limited-Term
Your investment in Sales Charge % % of Amt.
Class A shares of offering price Invested
Less than $50,000 1.00% 1.01%
$50,000 but not less than $100,000 0.75% 0.76%
$100,000 but not less than $250,000 0.50% 0.50%
$250,000 and over None None
Long-Term
Your investment in Sales Charge % % of Amt.
Class A shares of offering price Invested
Less than $50,000 3.75% 3.90%
$50,000 but not less than $100,000 3.00% 3.09%
$100,000 but not less than $250,000 2.25% 2.30%
$250,000 but not less than $500,000 1.75% 1.78%
$500,000 but not less than $1,000,000 1.00% 1.01%
$1,000,000 and over None* None*
4 This is called "Rights of Accumulation." The sales charge is calculated by
taking into account not only the dollar amount of the new purchase of
shares, but also the higher of cost or current value of shares you have
previously purchased in Calvert Group Funds that impose sales charges. This
automatically applies to your account for each new purchase of Class A
shares.
* Purchases of CTFR Long-Term Class A shares at NAV for accounts with
$1,000,000 or more are subject to a one year CDSC of 1.00%. See the
"Calculation of Contingent Deferred Sales Charge and Waiver of Sales
Charges."
The Class A front-end sales charge may be waived for certain purchases or
investors, such as participants in certain group retirement plans or other
qualified groups and clients of registered investment advisers. For details
on these and other purchases that may qualify for a reduced sales charge,
see Exhibit A.
Class B
If you choose Class B, there is no front-end sales charge like Class A, but
if you sell the shares within the first 4 years, you will have to pay a
"contingent deferred" sales charge ("CDSC"). This means that you do not have
to pay the sales charge unless you sell your shares within the first 4 years
after purchase. Keep in mind that the longer you hold the shares, the less
you will have to pay in deferred sales charges.
Time Since Long-Term
Purchase
- ------------------------------ -----------
- ------------------------------ -----------
CDSC %
- ------------------------------ -----------
- ------------------------------ -----------
1st year 4%
- ------------------------------ -----------
- ------------------------------ -----------
2nd year 3%
- ------------------------------ -----------
- ------------------------------ -----------
3rd year 2%
- ------------------------------ -----------
- ------------------------------ -----------
4th year 1%
- ------------------------------ -----------
- ------------------------------ -----------
5th year None
- ------------------------------ -----------
- ------------------------------ -----------
6th year None
- ------------------------------ -----------
- ------------------------------ -----------
After 6 years None
Calculation of Contingent Deferred Sales Charge and Waiver of Sales Charges
The CDSC will not be charged on shares you received as dividends or from
capital gains distributions or on any capital appreciation (gain in the
value) of shares that are sold.
Shares that are not subject to the CDSC will be redeemed first, followed by
shares you have held the longest. The CDSC is calculated by determining the
share value at both the time of purchase and redemption and then multiplying
whichever value is less by the percentage that applies as shown above. If
you choose to sell only part of your shares, the capital appreciation for
those shares only is included in the calculation, rather than the capital
appreciation for the entire account.
The CDSC on Class B Shares will be waived in the following circumstances:
Redemption upon the death or disability of the shareholder, plan
participant, or beneficiary.1
Minimum required distributions from retirement plan accounts for
shareholders 70 1/2 and older.2
The return of an excess contribution or deferral amounts, pursuant to
sections 408(d)(4) or (5), 401(k)(8), 402(g)(2), or 401(m)(6) of the
Internal Revenue Code.
Involuntary redemptions of accounts under procedures set forth by the
Fund's Board of Trustees/Directors.
A single annual withdrawal under a systematic withdrawal plan of up to
10% per year of the shareholder's account balance.3
Class C
If you choose Class C, there is no front-end sales charge like Class A, but
if you sell the shares within the first year, you will have to pay a 1%
CDSC. Class C may be a good choice for you if you plan to buy shares and
hold them for at least 1 year, but not more than four years.
More on Comparison of Classes
The Example at the beginning of this prospectus compares the expenses of
each class, with and without redemptions. The Example includes both direct
expenses that you pay, such as the sales charges, and indirect expenses that
are paid by each Fund. The indirect expenses include management, shareholder
servicing, and 12b-1 fees. These fees may vary from class to class and can
impact your total return. Consider your investment goals and time period for
investing to help decide which class is best for you.
Distribution and Service Fees
CTFR Long-Term has adopted a plan under Rule 12b-1 of the Investment Company
Act of 1940 that allows the Fund to pay distribution fees for the sale and
distribution of its shares. The distribution plan also pays service fees to
persons (such as your financial professional) for services provided to
shareholders. Because these fees are paid out of a Fund's assets on an
ongoing basis, over time, these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Please see Exhibit B for more service fee information.
1 "Disability" means a total disability as evidenced by a determination by
the federal Social Security Administration.
2 The maximum amount subject to this waiver is based only upon the
shareholder's Calvert Group retirement accounts.
3 This systematic withdrawal plan requires a minimum account balance of
$50,000 to be established.
The table below shows the maximum annual percentage payable under the
distribution plan, and the amount actually paid by each Fund for the most
recent fiscal year. The fees are based on average daily net assets of the
particular Class.
Maximum Payable under Plan/Amount Actually Paid
CTFR Money Market None/None
CTFR Limited-Term None/None
Class A Class B Class C
CTFR Long-Term 0.35%/0.09% 1.00%/---% 1.00%/---%
NEXT STEP - ACCOUNT APPLICATION
Complete and sign an application for each new account. When multiple classes
of shares are offered, please specify which class you wish to purchase. For
more information, contact your broker or our shareholder services department
at 800-368-2748.
Minimum To Open an Account Minimum additional
$2,000 investments -$250
Please make your check payable
to the Fund and mail it to:
New Accounts Subsequent Investments
(include application) (include investment slip)
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas, City MO Kansas City, MO
64141-6544 64141-6739
Certified, or c/o NFDS,
Overnight Mail 330 West 9th St.,
Kansas City, MO 64105-1807
At the Calvert Office Visit the Calvert Office to make
investments by check. See the back
cover page for the address.
IMPORTANT - HOW SHARES ARE PRICED
The price of shares is based on each Fund's net asset value ("NAV"). NAV is
computed by adding the value of a Fund's holdings plus other assets,
subtracting liabilities, and then dividing the result by the number of
shares outstanding. If a Fund has more than one class of shares, the NAV of
each class will be different, 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.
CTFR Money Market is valued according to the "amortized cost" method, which
is intended to stabilize the NAV at $1 per share. If market quotations are
not readily available, securities are valued by a method that the Fund's
Board of Trustees/Directors believes accurately reflects fair value.
The NAV is calculated as of the close of each business day, which coincides
with the closing of the regular session of the New York Stock Exchange
("NYSE") (normally 4 p.m. ET). Each Fund is open for business each day the
NYSE is open. Please note that there are some federal holidays, however,
such as Columbus Day and Veterans' Day, when the NYSE is open and the Fund
is open but purchases cannot be made due to the closure of the banking
system.
WHEN YOUR ACCOUNT WILL BE CREDITED
Your purchase will be processed at the next NAV calculated after your order
is received in good order. All of your purchases must be made in US dollars
and checks must be drawn on US banks. No cash will be accepted. No credit
card or credit loan checks will be accepted. Each Fund reserves the right to
suspend the offering of shares for a period of time or to reject any
specific purchase order. As a convenience, check purchases received at
Calvert's office in Bethesda, Maryland will be sent by overnight delivery to
the Transfer Agent and will be credited the next business day upon receipt.
Any check purchase received without an investment slip may cause delayed
crediting. If your check does not clear your bank, your purchase will be
canceled and you will be charged a $10 fee plus any costs incurred. Check or
electronic funds transfer purchases will be on hold for up to 10 business
days. All purchases will be confirmed and credited to your account in full
and fractional shares (rounded to the nearest 1/1000th of a share).
CTFR Money Market
Your purchase will be credited at the net asset value calculated after your
order is received and accepted. If the Transfer Agent receives your wire
purchase 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. CTFR Money Market may send monthly statements in
lieu of confirmations of purchases and redemptions.
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 by electronic
funds transfer without the time delay of mailing a check or the added
expense of a wire. 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.
Calvert Money Controller transactions returned for insufficient funds will
incur A $25 charge.
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 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 Calvert funds if your
investment goals change. 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 Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss.
You may exchange shares acquired by reinvestment of dividends or
distributions into another Calvert Fund at no additional charge.
Shares may only be exchanged for shares of the same class of another Calvert
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.
Shareholders (and those managing multiple accounts) who make two purchases
and two exchange redemptions of shares of the same Fund during any 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 Fund, and does not apply to trades solely between
money market funds.
Each Fund reserves the right to terminate or modify the exchange privilege
with 60 days' written notice.
COMBINED GENERAL MAILINGS (Householding)
Multiple accounts with the same social security number will receive one
mailing per household of information such as prospectuses and semi-annual
and annual reports. You may request further grouping of accounts to receive
fewer mailings. Separate statements will be generated for each separate
account and will be mailed in one envelope for each combination above.
SPECIAL SERVICES AND CHARGES
Each 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; 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 together with this Prospectus. Certain features may be modified in
these programs. Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.
MINIMUM ACCOUNT BALANCE
Please maintain a balance in each of your accounts of at least $1,000 per
class. If the balance in your CTFR Money Market account falls below the
minimum during a month, a $3.00 monthly fee may be charged to your account.
If the balance in any of your accounts falls below the minimum during a
month, your account may be closed and the proceeds mailed to the address of
record. You will receive 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.
<PAGE>
DIVIDENDS, CAPITAL GAINS AND TAXES
Each Fund pays dividends from its net investment income as shown below. Net
investment income consists of interest income, net short-term capital gains,
if any, and dividends declared and paid on investments, less expenses.
Distributions of net short-term capital gains (treated as dividends for tax
purposes) and net long-term capital gains, if any, are normally paid once a
year; however, the Funds do not anticipate making any such distributions
unless available capital loss carryovers have been used or have expired.
Dividend and distribution payments will vary between classes; dividend
payments are anticipated to be generally higher for Class A shares.
CTFR Money Market Accrued daily, paid monthly
CTFR Limited-Term Paid monthly
CTFR Long-Term Paid monthly
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Fund at NAV (without sales charge), unless you elect to have amounts of $10
or more paid in cash (by check or by Calvert Money Controller). Dividends
and distributions from any Calvert Group Fund may be automatically invested
in an identically registered account in any other Calvert Group Fund at NAV.
If reinvested in the same 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 returns the check as undeliverable, 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 (Not Applicable to CTFR Money Market)
At the time of purchase, the share price of each class may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any income or capital gains from these amounts which are later
distributed to you are fully taxable. On the record date for a distribution,
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 Fund 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 Fund. Dividends attributable to interest on
certain private activity bonds must be included in federal alternative
minimum tax for individuals and for corporations. The Fund may invest in and
derive up to 20% of is income from taxable short-term money market
investments, for liquidity purposes or pending investment of the new assets.
Interest earned from taxable investments will be taxable as ordinary income.
If any taxable income or gains are paid, in January, the Fund will mail you
Form 1099-DIV indicating the federal tax status of dividends and any capital
gain distributions paid to you during the past year. Generally, dividends
and distributions are taxable in the year they are paid. However, any
dividends and distributions paid in January but declared during the prior
three months are taxable in the year declared. Dividends and distributions
are taxable to you regardless of whether they are taken in cash or
reinvested.
CTFR Limited-Term and Long-Term Only:
You may realize a capital gain or loss when you sell or exchange shares.
This capital gain or loss will be short- or long-term, depending on how long
you have owned the shares which were sold. In January, these Funds will mail
you Form 1099-B indicating the total amount of 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
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law
requires us to withhold 31% of your reportable dividends, and possibly 31%
of certain redemptions. In addition, you may be subject to a fine by the
Internal Revenue Service. 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 day your Fund is open
for business, provided the amount requested is not on hold. When you
purchase by check or with Calvert Money Controller (electronic funds
transfer), the purchase will be on hold for up to 10 business days from the
date of receipt. During the hold period, redemptions proceeds will not be
sent until the Transfer Agent is reasonably satisfied that the purchase
payment has been collected. Drafts written on CTFR Money Market during the
hold period will be returned for uncollected funds.
Your shares will be redeemed at the next NAV calculated after your
redemption request is received and accepted (less any applicable CDSC). The
proceeds will normally be sent to you on the next business day, but if
making immediate payment could adversely affect your Fund, it may take up to
seven (7) days to make payment. Calvert Money Controller redemptions
generally will be credited to your bank account on the second business day
after your phone call. The Funds have the right to redeem shares in assets
other than cash for redemption amounts exceeding, in any 90-day period,
$250,000 or 1% of the net asset value of the affected Fund, whichever is
less. When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Securities and Exchange Commission,
redemptions may be suspended or payment dates postponed. Please note that
there are some federal holidays, however, such as Columbus Day and Veterans'
Day, when the NYSE is open and the Fund is open but redemptions cannot be
made due to the closure of the banking system.
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, P.O. 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 you 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.
Draftwriting (CTFR Money Market only)
You may redeem shares in your CTFR Money Market account by writing a draft
for at least $250. If you complete and return the signature card for
Draftwriting, the Fund will mail bank drafts to you, printed with your name
and address. Drafts may not be ordered until your initial purchase has
cleared. Generally, there is no charge to you for this service, but the Fund
will charge a service fee for drafts returned for insufficient funds. 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.
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 redeemed by Systematic Check Redemption will be subject to
the Contingent Deferred Sales Charge.
Corporations and Associations
Your letter of instruction and corporate resolution should be signed by
person(s) authorized to act on the account, accompanied by signature
guarantee(s).
Trusts
Your letter of instruction should be signed by the Trustee(s) (as
Trustee(s)), with a signature guarantee. (If the Trustee's name is not
registered on your account, please provide a copy of the trust document,
certified within the last 60 days.)
Through your Dealer
Your dealer must receive your request before the close of regular trading on
the NYSE to receive that day's NAV. Your dealer will be responsible for
furnishing all necessary documentation to Calvert Group and may charge you
for services provided.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years (or if shorter, the period of the
Fund's operations). Certain information reflects financial results for a
single share, by Fund and Class. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Fund (assuming reinvestment of all dividends and distributions), and does
not reflect any applicable front- or back-end sales charge. This information
has been audited by PricewaterhouseCoopers, LLP whose report, along with a
Fund's financial statements, are included in the Fund's annual report, which
is available upon request.
CTFR Money Market
Financial Highlights
[insert financial highlights for the last five years]
<PAGE>
CTFR Limited-Term
Financial Highlights
[insert financial highlights for the last five years]
CTFR Long-Term
Financial Highlights
[insert financial highlights for the last five years]
<PAGE>
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY) -- (CTFR Limited-Term and CTFR
Long-Term)
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.
Rights of Accumulation can be applied to several accounts
Class A sales charge breakpoints are automatically calculated for each
account based on the higher of cost or current value of shares previously
purchased. This privilege can be applied to a family group or other
qualified group* upon request. Shares could then be purchased at the reduced
sales charge which applies to the entire group; that is, based on the higher
of cost or current value of shares previously purchased and currently held
by all the members of the group.
Letter of Intent
If you (or your group, as described above) plan to purchase $50,000 or more
of Calvert 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 portfolio 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 SAI.
Neither the Funds, nor Calvert Distributors, Inc. ("CDI"), nor any affiliate
thereof will reimburse a plan or participant for any sales charges paid
prior to receipt of such written communication and confirmation by Calvert
Group. Plan administrators should send requests for the waiver of sales
charges based on the above conditions to: Calvert Group Retirement Plans,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
* A "qualified group" is one which:
1. has been in existence for more than six months, and
2. has a purpose other than acquiring shares at a discount, and
3. satisfies uniform criteria which enable CDI and brokers offering
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 brokers
distributing shares, must agree to include sales and other materials related
to the Funds in its publications and mailings to members at reduced or no
cost to CDI or brokers. A pension plan is not a qualified group for rights
of accumulation.
Other Circumstances
There is no sales charge on shares of any Fund 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,
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 automatically invested in another account
with no additional sales charge.
Purchases made at NAV
Except for money market funds, if you make a purchase at NAV, you may
exchange that amount to another Calvert Group Fund at no additional sales
charge.
Reinstatement Privilege
If you redeem 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 Funds reserve the right to modify or
eliminate this privilege.
EXHIBIT B
SERVICE FEES AND ARRANGEMENTS WITH DEALERS
Calvert Distributors, Inc., each Fund's underwriter, pays dealers a
commission, or reallowance (expressed as a percentage of the offering price
for Class A, and a percentage of amount invested for Class B and C) when you
purchase shares of non-money market portfolios. CDI also pays dealers an
ongoing service fee while you own shares of a Fund (expressed as an annual
percentage rate of average daily net assets held in Calvert accounts by that
dealer). The table below shows the amount of payment which differs depending
on the Class.
Maximum Commission/Service Fees
CTFR Money Market None/0.25%
Class A Class B Class C*
CTFR Limited-Term 1.00%/0.15% NA NA
CTFR Long-Term 3.00%/0.25%** 3.00%/0.25% 1.00%/1.00%
*Class C pays dealers a service fee of 0.25% and additional compensation of
0.75% for a total of 1.00%.
**If finder's fee is paid (see below), CTFR Long-Term Service fee begins
13th month after purchase.
Occasionally, CDI may reallow to dealers the full Class A front-end sales
charge. CDI may also pay additional concessions, including non-cash
promotional incentives, such as merchandise or trips, to brokers employing
registered representatives who have sold or are expected to sell a minimum
dollar amount of shares of the Funds and/or shares of other Funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a broker's registered representatives, advertising or equipment,
or to defray the expenses of sales contests. CAMCO, CDI, or their affiliates
may pay certain broker-dealers and/or other persons, for the sale and
distribution of the securities or for services to the Fund. Payments may
include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fees. CDI pays dealers a
finder's fee on CTFR Long-Term Class A shares purchased at NAV in accounts
with $1 million or more. The CTFR Long-Term finder's fee is 1% of the NAV
purchase amount on the first $2 million, .80% on $2 to $3 million, .50% on
$3 to $50 million, .25% on $50 to $100 million, and .15 over $1 million. CDI
also pays dealers a finder's fee on CTFR Limited-Term Class A shares
purchased at NAV in accounts with $250,000 or more. The CTFR Limited-Term
Finder's fee is 0.10% of the NAV purchase amount. 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 12 months of the date of
purchase. All payments will be in compliance with the rules of the National
Association of Securities Dealers, Inc.
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
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS
330 West 9th Street
Kansas City, MO 64105
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
For investors who want more information about the Funds, the following
documents are available free upon request:
Annual/Semi-Annual Reports: Additional information about each Fund's
investments is available in the Fund's Annual and Semi-Annual reports to
shareholders. In each Fund's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI): The SAI for each Fund provides
more detailed information about the Fund and is incorporated into this
prospectus by reference.
You can get free copies of reports and SAIs, request other information and
discuss your questions about the Funds by contacting your broker, or the
Funds at:
Calvert Group
4550 Montgomery Ave, Suite 1000N
Bethesda, Md. 20814
Telephone: 1-800-368-2745
Calvert Group Web-Site
Address: http://www.calvertgroup.com
You can review the Funds' reports and SAIs at the public Reference Room of
the Securities and Exchange Commission. You can get text only copies:
For a fee, by writing to or calling the Public Reference Room of the
Commission, Washington, D.C. 20549-6009, Telephone: 1-800-SEC-0330.
Free from the Commission's Internet website at http://www.sec.gov.
Investment Company Act file: no. 811-3101 (CTFR)
<PAGE>
CALVERT TAX-FREE RESERVES (CTFR)
Money Market Portfolio Institutional Class
PROSPECTUS
April 30, 1999
About the Fund
2 Investment objective, strategy, past performance
18 Fees and Expenses
About Your Investment
32 Calvert Group
34 Advisory Fees
36 How to Buy Shares
41 When Your Account Will be Credited
42 Other Calvert Group Features
(Exchanges, Minimum Account Balance, etc.)
45 Dividends, Capital Gains and Taxes
46 How to Sell Shares
48 Financial Highlights
These securities have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any State Securities Commission, nor has the
SEC or any State Securities Commission passed on the accuracy or adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
CTFR Money Market
Objective
CTFR Money Market 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 Fund.
Principal investment strategies and related risks
The Fund invests in fixed and floating rate municipal bonds and notes,
variable rate demand notes, tax-exempt commercial paper, and other high
quality, short-term municipal obligations. The Advisor looks for securities
with strong credit quality that are attractively priced. This may include
investments with unusual features or privately placed issues, that are not
widely followed in the fixed income marketplace. All investments must comply
with the SEC money market fund requirements.
Many of the instruments held by the Fund are supported by letters of credit
issued by banks; thus, the Fund has a wide exposure to the banking industry.
The Fund may purchase securities that have not been rated by a rating
agency, so long as the Advisor determines they are of comparable credit
quality.
Unrated and privately placed securities may be less liquid than those that
are rated or have an active trading market.
- ------------------------------------------------------------------------------
The Fund's yield will change in response to market interest rates. In
general, as market rates go up so will the Fund's yield, and vice versa.
Although the Fund tries to keep the value of its shares constant at $1.00
per share, extreme changes in market rates, and or sudden credit
deterioration of a holding could cause the value to decrease. The Fund
limits the amount it invests in any one issuer to try to lessen its exposure.
- ------------------------------------------------------------------------------
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is still possible to lose money by
investing in the Fund.
<PAGE>
CTFR Money Market Institutional Class Performance
The bar chart and table below show the Institutional Class' annual returns
and its long-term performance. The chart shows how the performance has
varied from year to year. The table compares its returns over time to the
Lipper Institutional Tax-Exempt Money Market Funds Index, a composite index
of the annual return of mutual funds that have an investment goal similar to
that of the Fund. The Fund's past performance does not necessarily indicate
how the Fund will perform in the future.
Bar Chart with Year-by-Year Total Return
1996 ____%
1997 ____%
1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12-31-98)
1 year 5 years 10 years
CTFR Money Market Institutional ____% ____% ____%
Lipper Institutional Tax-Exempt
Money Market Funds Index ____% ____% ____%
For current yield information call 800-317-2274, or visit Calvert Group's
website at www.calvertgroup.com
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. Shareholder fees are paid directly from your account;
annual Fund operating expenses are deducted from Fund assets.
Money Market
Institutional Class
Maximum sales charge (load) None
imposed on purchases
(as a percentage of offering price)
Maximum deferred sales charge (load) None
(as a percentage of purchase or
redemption proceeds, whichever is lower)
Annual fund operating expenses
Management fees .--
Distribution and service (12b-1) fees None
Other expenses 1 .--
Total annual fund operating expenses .--
Fee waiver and/or expense reimbursement 2 (--)
Net Expenses .--
Explanation of Fees and Expenses Table
1 Expenses have been restated to reflect expenses expected to be incurred in
1999.
2 CAMCO has agreed to waive fees and or reimburse expenses (net of any
expense offset arrangements) for certain of the Funds through December 31,
1999: (list funds/classes as applicable). The contractual expense cap is
shown as "Net Expenses", this is the maximum amount that may be charged to
the Funds for this period.
Annual Fund Operating Expenses
Expenses are based on expenses for the Fund's most recent fiscal year,
unless otherwise indicated. Management fees include the administrative fee
paid by the Fund to Calvert Administrative Services Company, an affiliate of
the Advisor, Calvert Asset Management Company, Inc. ("CAMCO").
Example
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The example assumes that:
You invest $1,000,000 in the Fund for the time periods indicated;
Your investment has a 5% return each year; and
The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
Number of
Years Investment
is Held
CTFR Money Market Institutional Class
1
3
5
10
About Calvert Group
Calvert Asset Management Company, Inc. (4550 Montgomery Avenue, Suite 1000N,
Bethesda, MD 20814) ("CAMCO") is the Funds' investment advisor and provides
day-to-day investment management services to the Funds. It has been managing
mutual funds since 1976. CAMCO is the investment advisor for over 25 mutual
funds. As of December 31, 1998, CAMCO had $6 billion in assets under
management.
Advisory Fees
The aggregate annual advisory fee paid to CAMCO by the Fund for the most
recent fiscal year as a percentage of that Fund's average daily net assets
was 0.1977%.
A Word About the Year 2000 (Y2K) and Our Computer Systems
Like other mutual funds, Calvert and its service providers use computer
systems for all aspects of our business -- processing shareholder and fund
transactions, fund accounting, executing trades, and pricing securities,
just to name a few. Many current software programs cannot distinguish
between the year 2000 and the year 1900. This can cause problems with
retirement plan distributions, dividend payment software, transaction
software, and numerous other areas that could impact the Funds. Calvert has
been reviewing all of its computer systems for Y2K compliance. Although, at
this time, there can be no assurance that there will be no negative impact
on the Funds, the Advisor, the underwriter, transfer agent and custodian
have advised the Funds that they have been actively working on any necessary
changes to their computer systems to prepare for Y2K and expect that their
systems, and those of their outside service providers, will be adapted in
time for that event. For more information, please visit our website at
www.calvertgroup.com
- ------------------------------------------------------------------------------
SHAREHOLDER GUIDE
- ------------------------------------------------------------------------------
HOW TO BUY SHARES
Complete and sign an application for each new account. For more information,
please contact the Calvert Institutional Marketing Group at 800-317-2274.
The minimum initial investment and minimum balance required is $1,000,000.
The minimum for subsequent investments is $25,000. Investments may be made
by wire or by exchange from another Calvert Group account:
ABA#011000028
FBO: CTFR Money Market Instit. Fund 718
Wire Account #9903-765-7
Insert your name and account number here
State Street Bank & Trust Company
Boston, Massachusetts
Important - How Shares are Priced
The price of shares is based on the Fund's net asset value ("NAV"). NAV is
computed by adding the value of the Fund's holdings plus other assets,
subtracting liabilities, and then dividing the result by the number of
shares outstanding.
The Fund is valued according to the "amortized cost" method, which is
intended to stabilize the NAV at $1 per share. If market quotations are not
readily available, securities are valued by a method that the Fund's Board
of Trustees/Directors believes accurately reflects fair value.
The NAV is calculated as of the close of each business day, which coincides
with the closing of the regular session of the New York Stock Exchange
("NYSE") (normally 4 p.m. ET). The Fund is open for business each day the
NYSE is open. Please note that there are some federal holidays, however,
such as Columbus Day and Veterans' Day, when the NYSE is open and the Fund
is open but purchases cannot be made due to the closure of the banking
system.
When Your Account Will Be Credited
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 Fund
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 Fund 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.
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.
TELEPHONE TRANSACTIONS
You may redeem by exchange of shares or by wire 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 offers a wide variety of investment options that includes
common stock funds, tax-exempt and corporate bond funds, and money market
funds. We make it easy for you to purchase shares in other Calvert funds if
your investment goals change. 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.
Before you make an exchange, please note the following:
Each exchange represents the sale of shares of one Fund and the purchase of
shares of another.
You may exchange shares acquired by reinvestment of dividends or
distributions into another Calvert Fund at no additional charge.
Shares may only be exchanged for shares of the same class of another Calvert
Fund.
The Fund reserves the right to terminate or modify the exchange privilege
with 60 days' written notice.
COMBINED GENERAL MAILINGS (Householding)
Multiple accounts with the same tax identification number will receive one
mailing per household of information such as prospectuses and semi-annual
and annual reports. You may request further grouping of accounts to receive
fewer mailings. Separate statements will be generated for each separate
account and will be mailed in one envelope for each combination above.
SPECIAL SERVICES AND CHARGES
The Fund pays for shareholder services but not for special services that are
required by a few shareholders, such as a request for a historical
transcript of an account . You may be required to pay a fee for these
special services.
If you are purchasing shares through a program of services offered by a
broker/dealer or financial institution, you should read the program
materials together with this Prospectus. Certain features may be modified in
these programs, and the broker/dealer or financial institution may impose
charges for their services.
DIVIDENDS, CAPITAL GAINS AND TAXES
The Fund accrues dividends daily from its net investment income, and pays
the dividends monthly. Net investment income consists of interest income,
net short-term capital gains, if any, and dividends declared and paid on
investments, less expenses. Distributions of net short-term capital gains
(treated as dividends for tax purposes) and net long-term capital gains, if
any, are normally paid once a year; however, the Fund does not anticipate
making any such distributions unless available capital loss carryovers have
been used or have expired.
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Fund at NAV (without sales charge), unless you elect to have amounts of $10
or more paid in cash by wire to a predesignated bank account. Dividends and
distributions from any Calvert Group Fund may be automatically invested in
an identically registered account in any other Calvert Group Fund at NAV. If
reinvested in the same 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 Fund in writing to change your payment options.
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 Fund 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 Fund. Dividends attributable to interest on
certain private activity bonds must be included in federal alternative
minimum tax for individuals and for corporations. The Fund may invest in and
derive up to 20% of its income from taxable short-term money market
investments, for liquidity purposes or pending investment of the new assets.
Interest earned from taxable investments will be taxable as ordinary income.
If any taxable income or gains are paid, in January, the Fund will mail you
Form 1099-DIV indicating the federal tax status of dividends and any capital
gain distributions paid to you during the past year. Generally, dividends
and distributions are taxable in the year they are paid. However, any
dividends and distributions paid in January but declared during the prior
three months are taxable in the year declared. Dividends and distributions
are taxable to you regardless of whether they are taken in cash or
reinvested.
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
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law
requires us to withhold 31% of your reportable dividends, and possibly 31%
of certain redemptions. In addition, you may be subject to a fine by the
Internal Revenue Service. 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 day the Fund is open
for business. Your shares will be redeemed at the next NAV calculated after
your redemption request is received and accepted in good order (see below).
You will receive dividends through the date the request is received and
processed. A telephone order for a redemption must be received by the
Calvert Institutional Marketing Group by 11:00 a.m. Eastern time in order
for the proceeds to be sent to you on the same business day. If making
immediate payment could adversely affect the Fund, it may take up to seven
(7) days to make payment. The Fund 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 Fund, whichever is less. When
the NYSE is closed (or when trading is restricted) for any reason other than
its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Securities and Exchange Commission,
redemptions may be suspended or payment dates postponed. Please note that
there are some federal holidays, however, such as Columbus Day and Veterans'
Day, when the NYSE is open and the Fund is open but redemptions cannot be
made due to the closure of the banking system.
Follow these suggestions to ensure timely processing of your redemption
request:
By Telephone Institutional Marketing Group 800.317.2274
You may redeem shares from your account by telephone and have your money
electronically transferred or wired to a bank you have previously
authorized. To better enable CAMCO to keep the Fund fully invested, Calvert
requests that you notify the Institutional Marketing Group at least 24 hours
in advance for any redemption over $10 million per day. A charge of $5 may
be imposed on wire transfers of less than $50,000.
Written Requests
Calvert Group, P.O. 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 you 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.
Corporations and Associations
Your letter of instruction and corporate resolution should be signed by
person(s) authorized to act on the account, accompanied by signature
guarantee(s).
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information
reflects financial results for a single share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund, assuming reinvestment of all dividends and
distributions. Prior to July 1, 1997, the Fund was not an institutional
fund, but was known as Class MMP. This information has been audited by
PricewaterhouseCoopers, LLP, whose report and the Fund's financial
statements are included in the Fund's annual report, available upon request.
[insert financial highlights here]
<PAGE>
To Open an Account:
800-317-2274
Performance and Prices:
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for Existing Accounts:
800-317-2274
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
330 W. 9th Street
Kansas City, MO 64105
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
Outside Back Cover Page
For investors who want more information about the Funds, the following
documents are available free upon request:
Annual/Semi-Annual Reports: Additional information about each Fund's
investments is available in the Fund's Annual and Semi-Annual reports to
shareholders. In each Fund's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI): The SAI for each Fund provides
more detailed information about the Fund and is incorporated into this
prospectus by reference.
You can get free copies of reports and SAIs, request other information and
discuss your questions about the Funds at:
Calvert Group
Attn: Institutional Marketing Group
4550 Montgomery Ave, Suite 1000N
Bethesda, Md. 20814
Telephone: 1-800-317-2274
Calvert Group Web-Site
Address: http://www.calvertgroup.com
You can review the Funds' reports and SAIs at the public Reference Room of
the Securities and Exchange Commission. You can get text only copies:
For a fee, by writing to or calling the Public Reference Room of the
Commission, Washington, D.C. 20549-6009, Telephone: 1-800-SEC-0330.
Free from the Commission's Internet website at http://www.sec.gov
Investment Company Act file: no. 811-3101 (CTFR)
<PAGE>
CALVERT TAX FREE RESERVES FUND (CTFR)
California Money Market Portfolio
April 30, 1999
About the Funds
2 Investment objective, strategy, past performance
18 Fees and Expenses
22 Principal Investment Practices and Risks
About Your Investment
32 Calvert Group and the Portfolio Management Team
34 Advisory Fees
36 How to Buy Shares
41 Important How Shares are Priced
41 When Your Account Will be Credited
42 Other Calvert Group Features
(Exchanges, Minimum Account Balance, etc.)
45 Dividends, Capital Gains and Taxes
46 How to Sell Shares
48 Financial Highlights
59 Exhibit B Service Fees and
Other Arrangements with Dealers
These securities have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any State Securities Commission, nor has the
SEC or any State Securities Commission passed on the accuracy or adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
CTFR California Money Market
Objective
CTFR California Money Market 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 Fund.
Principal investment strategies and related risks
The Fund invests in fixed and floating rate municipal bonds and notes,
variable rate demand notes, tax exempt commercial paper, and other high
quality, short term municipal obligations. The Advisor looks for securities
with strong credit quality that are attractively priced. This may include
investments with unusual features or privately placed issues, that are not
widely followed in the fixed income marketplace. All investments must comply
with the SEC money market fund requirements.
Under normal market conditions, the Fund will invest at least 80% of its
total assets in municipal obligations whose interest is exempt from federal
and California state income tax. The Fund 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. Dividends paid by the Fund 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.
Because the Fund invests primarily in California municipal obligations, the
economy and political climate in that state have a great impact on the Fund.
The Fund may invest up to 25% of its assets in a single issuer.
Many of the instruments held by the Fund are supported by letters of credit
issued by banks; thus, the Fund has a wide exposure to the banking industry.
The Fund may purchase securities that have not been rated by a rating
agency, so long as the Advisor determines they are of comparable credit
quality.
Unrated and privately placed securities may be less liquid than those that
are rated or have an active trading market.
- ------------------------------------------------------------------------------
The Fund's yield will change in response to market interest rates. In
general, as market rates go up so will the Fund's yield, and vice versa.
Although the Fund tries to keep the value of its shares constant at $1.00
per share, extreme changes in market rates, and or sudden credit
deterioration of a holding could cause the value to decrease. The Fund
limits the amount it invests in any one issuer to try to lessen its exposure.
- ------------------------------------------------------------------------------
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is still possible to lose money by
investing in the Fund.
CTFR California Money Market Performance
The bar chart and table below show the Fund's annual returns and its long
term performance. The chart shows how the performance has varied from year
to year. The table compares the Fund's returns over time to the Lipper
California Tax Exempt Money Market Funds Index, a composite index of the
annual return of mutual funds that have an investment goal similar to that
of the Fund. The Fund's past performance does not necessarily indicate how
the Fund will perform in the future.
Bar Chart with Year by Year Total Return
1989 ____% 1994 ____%
1990 ____% 1995 ____%
1991 ____% 1996 ____%
1992 ____% 1997 ____%
1993 ____% 1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12 31 98)
1 year 5 years 10 years
CTFR California Money Market __% __% __%
Lipper California Tax Exempt
Money Market Funds Index __% __% __%
For current yield information call 800 368 2745, or visit Calvert Group's
web site at www.calvertgroup.com
<PAGE>
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. Shareholder fees are paid directly from your account;
annual Fund operating expenses are deducted from Fund assets.
CTFR California Money Market
Maximum sales charge (load) None
(as a percentage of offering price)
Maximum deferred sales charge (load) None
(as a percentage of purchase or
redemption proceeds, whichever is lower)
Maximum Account Fee 6
Annual fund operating expenses
Management fees __
Distribution and service (12b 1) fees None
Other expenses 5 __
Total annual fund operating expenses __
Fee waiver and/or expense reimbursement 2 (__)
Net Expenses __
Explanation of Fees and Expenses Table
2 CAMCO has agreed to waive fees and or reimburse expenses (net of any
expense offset arrangements) for certain of the Funds through December 31,
1999: (list funds/classes as applicable). The contractual expense cap is
shown as "Net Expenses", this is the maximum amount that may be charged to
the Fund for this period.
5 Expenses have been restated to reflect expenses expected to be incurred in
1999.
6 For each account with a balance of less than $1000, the Fund charges a
monthly account maintenance fee of $3.00.
Annual Fund Operating Expenses
Expenses are based on expenses for the Fund's most recent fiscal year,
unless otherwise indicated. Management fees include the administrative fee
paid by the Fund to Calvert Administrative Services Company, an affiliate of
the Advisor, Calvert Asset Management Company, Inc. ("CAMCO").
Example
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The example assumes that:
You invest $10,000 in the Fund for the time periods indicated;
Your investment has a 5% return each year; and
The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
Number of
Years Investment
is Held
CTFR California Money Market
1 __
3 __
5 __
10 __
Management and Advisory Fees
About Calvert Group
Calvert Asset Management Company, Inc. (4550 Montgomery Avenue, Suite 1000N,
Bethesda, MD 20814) ("CAMCO") is the Funds' investment advisor and provides
day to day investment management services to the Funds. It has been managing
mutual funds since 1976. CAMCO is the investment advisor for over 25 mutual
funds, including the first and largest family of socially screened funds. As
of December 31, 1998, CAMCO had $6 billion in assets under management.
Advisory Fees
The following table shows the aggregate annual advisory fee paid to CAMCO by
the Fund for the most recent fiscal year as a percentage of that Fund's
average daily net assets.
Fund Advisory Fee
CTFR California Money Market ____ %
A Word About the Year 2000 (Y2K) and Our Computer Systems
Like other mutual funds, CAMCO and its service providers use computer
systems for all aspects of our business - processing shareholder and fund
transactions, fund accounting, executing trades, and pricing securities,
just to name a few. Many current software programs cannot distinguish
between the year 2000 and the year 1900. This can cause problems with
retirement plan distributions, dividend payment software, transaction
software, and numerous other areas that could impact the Funds. Calvert
Group has been reviewing all of its computer systems for Y2K compliance.
Although, at this time, there can be no assurance that there will be no
negative impact on the Funds, the Advisor, the underwriter, transfer agent
and custodian have advised the Funds that they have been actively working on
any necessary changes to their computer systems to prepare for Y2K and
expect that their systems, and those of their outside service providers,
will be adapted in time for that event. For more information, please visit
our web site at www.calvertgroup.com
Complete and sign an application for each new account. For more information,
contact your broker or our shareholder services department at 800 368 2748.
Minimum To Open an Account Minimum additional
$2,000 investments $250
Please make your check payable
to the Fund and mail it to:
New Accounts Subsequent Investments
(include application) (include investment slip)
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
Certified, or c/o NFDS,
Overnight Mail 330 West 9th St.,
Kansas City, MO 64105 1807
At the Calvert Office Visit the Calvert Office to make
investments by check.
IMPORTANT HOW SHARES ARE PRICED
The price of shares is based on each Fund's net asset value ("NAV"). NAV is
computed by adding the value of a Fund's holdings plus other assets,
subtracting liabilities, and then dividing the result by the number of
shares outstanding.
CTFR California Money Market is valued according to the "amortized cost"
method, which is intended to stabilize the NAV at $1 per share. If market
quotations are not readily available, securities are valued by a method that
the Fund's Board of Trustees/Directors believes accurately reflects fair
value.
The NAV is calculated as of the close of each business day, which coincides
with the closing of the regular session of the New York Stock Exchange
("NYSE") (normally 4 p.m. ET). Each Fund is open for business each day the
NYSE is open. Please note that there are some federal holidays, however,
such as Columbus Day and Veterans' Day, when the NYSE is open and the Fund
is open but purchases cannot be made due to the closure of the banking
system.
WHEN YOUR ACCOUNT WILL BE CREDITED
All of your purchases must be made in US dollars and checks must be drawn on
US banks. No cash will be accepted. No credit card or credit loan 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. As a
convenience, check purchases received at Calvert's office in Bethesda,
Maryland will be sent by overnight delivery to the Transfer Agent and will
be credited the next business day upon receipt. Any check purchase received
without an investment slip may cause delayed crediting. If your check does
not clear your bank, your purchase will be canceled and you will be charged
a $10 fee plus any costs incurred. Check or electronic funds transfer
purchases will be on hold for up to 10 business days.
Your purchase will be credited at the net asset value calculated after your
order is received and accepted. If the Transfer Agent receives your wire
purchase 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. The Fund may send monthly statements in lieu of
confirmations of purchases and redemptions.
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 by electronic
funds transfer without the time delay of mailing a check or the added
expense of a wire. 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.
Calvert Money Controller transactions returned for insufficient funds will
incur A $25 charge.
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 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 Calvert funds if your
investment goals change. 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 Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss.
You may exchange shares acquired by reinvestment of dividends or
distributions into another Calvert Fund at no additional charge.
Shares may only be exchanged for shares of the same class of another Calvert
Fund.
Each Fund reserves the right to terminate or modify the exchange privilege
with 60 days' written notice.
COMBINED GENERAL MAILINGS (Householding)
Multiple accounts with the same social security number will receive one
mailing per household of information such as prospectuses and semi annual
and annual reports. You may request further grouping of accounts to receive
fewer mailings. Separate statements will be generated for each separate
account and will be mailed in one envelope for each combination above.
SPECIAL SERVICES AND CHARGES
Each 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; 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 together with this Prospectus. Certain features may be modified in
these programs. Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.
MINIMUM ACCOUNT BALANCE
Please maintain a balance in your account of at least $1,000. If the balance
in your account falls below the minimum during a month, a $3.00 monthly fee
may be charged to your account.
DIVIDENDS, CAPITAL GAINS AND TAXES
The Fund pays dividends from its net investment income as shown below. 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 Fund does not anticipate making any such distributions
unless available capital loss carryovers have been used or have expired.
CTFR California Money Market: accrued daily, and paid monthly
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Fund at NAV (without sales charge), unless you elect to have amounts of $10
or more paid in cash (by check or by Calvert Money Controller). Dividends
and distributions from any Calvert Group Fund may be automatically invested
in an identically registered account in any other Calvert Group Fund at NAV.
If reinvested in the same 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 Fund in writing to change your payment options. If
you elect to have dividends and/or distributions paid in cash, and the US
Postal Service returns the check as undeliverable, it, as well as future
dividends and distributions, will be reinvested in additional shares.
Federal Taxes
Dividends derived from interest on municipal obligations constitute exempt
interest dividends, on which you are not subject to federal income tax.
However, dividends which are from taxable interest and any distributions of
short term capital gain are taxable to you as ordinary income. If the Fund
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 Fund. Dividends attributable to interest on certain private
activity bonds must be included in federal alternative minimum tax for
individuals and for corporations. The Fund may invest in and derive up to
20% of is income from taxable short term money market investments, for
liquidity purposes or pending investment of the new assets. Interest earned
from taxable investments will be taxable as ordinary income.
If any taxable income or gains are paid, in January, the Fund will mail you
Form 1099 DIV indicating the federal tax status of dividends and any capital
gain distributions paid to you during the past year. Generally, dividends
and distributions are taxable in the year they are paid. However, any
dividends and distributions paid in January but declared during the prior
three months are taxable in the year declared. Dividends and distributions
are taxable to you regardless of whether they are taken in cash or
reinvested.
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 by the
Internal Revenue Service. 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 day the Fund is open
for business, provided the amount requested is not on hold. When you
purchase by check or with Calvert Money Controller (electronic funds
transfer), the purchase will be on hold for up to 10 business days from the
date of receipt. During the hold period, redemptions proceeds will not be
sent until the Transfer Agent is reasonably satisfied that the purchase
payment has been collected. Drafts written during the hold period will be
returned for uncollected funds. Your shares will be redeemed at the next NAV
calculated after your redemption request is received and accepted. The
proceeds will normally be sent to you on the next business day, but if
making immediate payment could adversely affect your Fund, it may take up to
seven (7) days to make payment. Calvert Money Controller redemptions
generally will be credited to your bank account on the second business day
after your phone call. The Funds have the right to redeem shares in assets
other than cash for redemption amounts exceeding, in any 90 day period,
$250,000 or 1% of the net asset value of the affected Fund, whichever is
less. When the NYSE is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any emergency
circumstances as determined by the Securities and Exchange Commission,
redemptions may be suspended or payment dates postponed. Please note that
there are some federal holidays, however, such as Columbus Day and Veterans'
Day, when the NYSE is open and the Fund is open but redemptions cannot be
made due to the closure of the banking system.
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, P.O. 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 you 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.
Draftwriting
You may redeem shares in your account by writing a draft for at least $250.
If you complete and return the signature card for Draftwriting, the Fund
will mail bank drafts to you, printed with your name and address. Drafts may
not be ordered until your initial purchase has cleared. Generally, there is
no charge to you for this service, but the Fund will charge a service fee
for drafts returned for insufficient funds. 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.
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.
Corporations and Associations
Your letter of instruction and corporate resolution should be signed by
person(s) authorized to act on the account, accompanied by signature
guarantee(s).
Trusts
Your letter of instruction should be signed by the Trustee(s) (as
Trustee(s)), with a signature guarantee. (If the Trustee's name is not
registered on your account, please provide a copy of the trust document,
certified within the last 60 days.)
Through your Dealer
Your dealer must receive your request before the close of regular trading on
the NYSE to receive that day's NAV. Your dealer will be responsible for
furnishing all necessary documentation to Calvert Group and may charge you
for services provided.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years (or if shorter, the period of the
Fund's operations). Certain information reflects financial results for a
single share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP whose report, along with a Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
[Financial Highlights for the last five years will be inserted here]
<PAGE>
EXHIBIT B
SERVICE FEES AND ARRANGEMENTS WITH DEALERS
Calvert Distributors, Inc., the Fund's underwriter, pays dealers an ongoing
service fee of up to 0.20% while you own shares of a Fund (expressed as an
annual percentage rate of average daily net assets held in Calvert accounts
by that dealer).
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
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS
330 West 9th Street
Kansas City, MO 64105
Calvert Group Web Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
For investors who want more information about the Funds, the following
documents are available free upon request:
Annual/Semi Annual Reports: Additional information about the Fund's
investments is available in the Fund's Annual and Semi Annual reports to
shareholders. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
Statement of Additional Information (SAI): The SAI for the Fund provides
more detailed information about the Fund and is incorporated into this
prospectus by reference.
You can get free copies of reports and SAIs, request other information and
discuss your questions about the Funds by contacting your broker, or the
Funds at:
Calvert Group
4550 Montgomery Ave, Suite 1000N
Bethesda, Md. 20814
Telephone: 1 800 368 2745
Calvert Group Web Site
Address: http://www.calvertgroup.com
You can review the Funds' reports and SAIs at the public Reference Room of
the Securities and Exchange Commission. You can get text only copies:
For a fee, by writing to or calling the Public Reference Room of the
Commission, Washington, D.C. 20549 6009, Telephone: 1 800 SEC 0330.
Free from the Commission's Internet web site at http://www.sec.gov.
Investment Company Act file: no. 811-3101 (CTFR)
<PAGE>
Calvert Tax-Free Reserves (CTFR)
VERMONT MUNICIPAL PROSPECTUS
April 30, 1999
About the Funds
2 Investment objective, strategy, past performance
18 Fees and Expenses
22 Principal Investment Practices and Risks
About Your Investment
32 Calvert Group and the Portfolio Management Team
34 Advisory Fees
36 How to Buy Shares
36 Getting Started
36 Choosing a Share Class
38 Calculation of CDSC/Waiver
39 Distribution and Service Fees
40 Account Application
41 Important - How Shares are Priced
41 When Your Account Will be Credited
42 Other Calvert Group Features
(Exchanges, Minimum Account Balance, etc.)
45 Dividends, Capital Gains and Taxes
46 How to Sell Shares
48 Financial Highlights
57 Exhibit A- Reduced Sales Charges (Class A)
59 Exhibit B- Service Fees and
Other Arrangements with Dealers
These securities have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any State Securities Commission, nor has the
SEC or any State Securities Commission passed on the accuracy or adequacy of
this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
CTFR Vermont Municipal
Objective
CTFR Vermont Municipal 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 the quality and
maturity characteristics of the Fund.
Principal investment strategies
While seeking to achieve its objective, the Fund strives to provide a
competitive rate of total return. The Fund typically invests at least 65% of
its net assets in investment grade debt securities. The Advisor looks for
securities with strong credit quality within their rating category that are
attractively priced. This may include investments with unusual features or
privately placed issues, that are not widely followed in the fixed income
marketplace. There is no limit on the Fund's average portfolio maturity or
duration (another measure of the Fund's interest rate sensitivity), although
the average portfolio duration is expected to be between four and nine years.
Types of investments. The tax-exempt obligations in which the Fund may
invest include, but are not limited to, tax-supported debt (general
obligation bonds of state and local issuers), various types of revenue debt
(transportation, housing utilities, hospital), special tax obligations, and
qualified private activity bonds and other state and local government
authorities, municipal leases, certificates of participation in such
investments. The obligations may be structured as variable rate or
adjustable rate obligations and are often supported by a third party letter
of credit.
Under normal market conditions, the Fund will invest at least 65% of its
total assets in municipal obligations whose interest is exempt from federal
and Vermont state income tax. The Fund will also attempt to invest the
remaining 35% 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. Dividends paid by the Fund which are
derived from interest attributable to Vermont municipal obligations will be
exempt from federal and Vermont 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
Vermont state income taxes.
Because the Fund invests primarily in Vermont municipal obligations, the
economy and political climate in that state have a great impact on the Fund.
The Fund may purchase unrated securities, so long as the Advisor determines
they are of comparable credit quality. Unrated securities may be less liquid
than those that are rated.
Principal risks
You could lose money on your investment in the Fund, or the Fund could
underperform, most likely for any of the following reasons:
The bond market goes down
The individual bonds in the Fund do not perform as well as expected
The Advisor's forecast as to interest rates is not correct
The Advisor's allocation among different sectors of the bond market does not
perform as well as expected
The Fund is non-diversified. Compared to other funds, the Fund may invest
more of its assets in a smaller number of bonds. Gains or losses on a single
bond may have greater impact on the Fund.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
CTFR Vermont Municipal Performance
The bar chart and table below show the Fund's annual returns and its
long-term performance. The chart shows how the performance of the Class A
shares has varied from year to year. The table compares the Fund's
performance over time to that of the Lehman Municipal Bond Index . This is a
widely recognized, unmanaged index of bond prices. It also shows the Fund's
returns compared to the Lipper Other States Municipal Debt Funds Index, a
composite index of the annual return of mutual funds that have an investment
goal similar to that of the Fund. The Fund's past performance does not
necessarily indicate how the Fund will perform in the future.
The return for the Fund's other Classes of shares offered by this prospectus
will differ from the Class A returns shown in the bar chart, depending upon
the expenses of that Class. The bar chart does not reflect any sales charge
that you may be required to pay upon purchase or redemption of the Fund's
shares. Any sales charge will reduce your return. The average total return
table shows returns with the maximum sales charge deducted. No sales charge
has been applied to the index used for comparison in the table.
Bar Chart with Year-by-Year Total Return
(Class A return at NAV)
1989 ____% 1994 ____%
1990 ____% 1995 ____%
1991 ____% 1996 ____%
1992 ____% 1997 ____%
1993 ____% 1998 ____%
Best Quarter (of periods shown) Q__'__ ____%
Worst Quarter (of periods shown) Q__'__ ____%
Average Annual Total Returns (as of 12-31-98)
(with maximum sales charge deducted)
1 year 5 years 10 years
CTFR Vermont: Class A ____% ____% ____%
CTFR Vermont: Class B N/A N/A N/A
CTFR Vermont: Class C N/A N/A N/A
Lehman Municipal Bond Index TR ____% ____% ____%
Lipper Other States Municipal Debt
Funds Index ____% ____% ____%
<PAGE>
Fees and expenses
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund. Shareholder fees are paid directly from your account;
annual Fund operating expenses are deducted from Fund assets.
Class A Class B Class C
Maximum sales charge (load) 3.75% None None
imposed on purchases
(as a percentage of offering price)
Maximum deferred sales charge (load) None1 4% 3 1% 4
(as a percentage of purchase or redemption
proceeds, whichever is lower)
Annual fund operating expenses
Management fees .-- .-- .--
Distribution and service (12b-1) fees None 1.00% 1.00%
Other expenses 5 .-- .-- .--
Total annual fund operating expenses .-- .-- .--
Fee waiver and/or expense
reimbursement 2 (.--) .-- .--
Net Expenses .-- .-- .--
Explanation of Fees and Expenses Table
1 Purchases of Class A shares for accounts with $1 million or more are not
subject to front-end sales charges, but may be subject to a 1.0% contingent
deferred sales charge on shares redeemed within 1 year of purchase. (See
"How to Buy Shares - Class A)
2 CAMCO has agreed to waive fees and or reimburse expenses (net of any
expense offset arrangements) for certain of the Funds through December 31,
1999: (list funds/classes as applicable). The contractual expense cap is
shown as "Net Expenses", this is the maximum amount that may be charged to
the Funds for this period.
3 A contingent deferred sales charge is imposed on the proceeds of Class B
shares of the Fund redeemed within 4 years, subject to certain exceptions.
The charge is 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"
4 A contingent deferred sales charge is imposed on the proceeds of Class C
shares redeemed within one year. The charge is a percentage of net asset
value at the time of purchase or redemption, whichever is less. See
"Calculation of Contingent Deferred Sales Charge"
5 Expenses have been restated to reflect expenses expected to be incurred in
1999.
Annual Fund Operating Expenses
Expenses are based on expenses for the Fund's most recent fiscal year,
unless otherwise indicated. Management fees include the administrative fee
paid by the Fund to Calvert Administrative Services Company, an affiliate of
the Advisor, Calvert Asset Management Company, Inc. ("CAMCO").
Rule 12b-1 fees include an asset-based sales charge. Thus, long-term
shareholders in those Funds with such fees 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.
(the "NASD").
<PAGE>
Example
This example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds. The example assumes that:
You invest $10,000 in the Fund for the time periods indicated;
Your investment has a 5% return each year; and
The Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions
your costs would be:
Number of
Years Investment
is Held
Class B Class B Class C Class C
(with (no (with (no
Class A redemp.) redemp.) redemp.) redemp.)
1
3
5
10
<PAGE>
Principal Investment Practices and Risks
The most concise description of each Fund's principal investment strategies
and associated risks is under the risk-return summary for each Fund. The
Funds are also permitted to invest in certain other investments and to use
certain investment techniques that have higher risks associated with them.
On the following pages are brief descriptions of the investments and
techniques, summarized in the risk-return summary along with certain
additional investment techniques and their risks.
For each of the investment practices listed, the table below shows each
Fund's limitations as a percentage of its assets and the principal types of
risk involved. (See the pages following the table for a description of the
types of risks). Numbers in this table show maximum allowable amount only;
for actual usage, consult the Fund's annual/semi-annual reports.
Key to Table
@ Fund currently uses
0 Permitted, but not typically used
(% of assets allowable, if restricted)
- -- Not permitted
xN Allowed up to x% of fund's net assets
xT Allowed up to x% of Fund's total assets
NA Not applicable to this type of fund
Vermont
- -------------------------------------------------------------- -----------
Conventional Securities:
Investment grade bonds. Bonds rated BBB/Baa or higher or @
comparable unrated bonds. Risks: Interest Rate, Market ,
Credit and Information.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Below-investment grade bonds. Bonds rated below BBB/Baa or @
comparable unrated bonds, also known as high-yield bonds. (35N)
They are subject to greater credit risk than investment
grade bonds. Risks: Credit, Market, Interest Rate, Liquidity
and Information.
Unrated debt securities. Bonds that have not been rated by a @
recognized rating agency; the Advisor has determined the
credit quality based on its own research. Risks: Credit,
Market, Interest Rate, Liquidity and Information.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Illiquid securities. Securities which cannot be readily sold
because there is no active market. Risks: Liquidity, Market 15N
and Transaction.
- -------------------------------------------------------------- -----------
<PAGE>
- -------------------------------------------------------------- -----------
Unleveraged derivative securities
Asset-backed securities. Securities are issued by a special @
purpose entity and are backed by fixed-income or other
interest bearing assets. Risks: Credit, Interest Rate and
Liquidity.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Mortgage-backed securities (typically, single-family
mortgage bonds). Securities are backed by pools of @
mortgages, including passthrough certificates. Risks:
Credit, Extension, Prepayment, Liquidity and Interest Rate.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Leveraged derivative instruments
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Options on securities and indices. Contracts giving the 5N
holder the right but not the obligation to purchase or sell
a security (or the cash value, in the case of an option on
an index) at a specified price within a specified time. Any
options written by the Fund must be "covered". Risks:
Interest Rate, Currency, Market, Leverage, Correlation,
Liquidity, Credit and Opportunity.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Futures contract. Agreement to buy or sell a specific amount
of a commodity or financial instrument at a particular price 5N
on a specific future date. Risks: Interest Rate, Currency,
Market, Leverage, Correlation, Liquidity and Opportunity.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Structured securities
Inverse floating rate municipal notes and bonds. These
securities tend to be highly sensitive to interest rate @
movements. Risks: Credit, Interest Rate, Market, Leverage,
Liquidity and Correlation.
- -------------------------------------------------------------- -----------
- -------------------------------------------------------------- -----------
Investment Practices:
Temporary Defensive Positions. 0
During adverse market, economic or political conditions, the (20T)
Fund may depart from its principal investment strategies by
increasing its investment in U.S. government securities and
other short-term interest-bearing securities. During times
of any temporary defensive positions, a Fund may not be able
to achieve its investment objective Risks: Opportunity.
- -------------------------------------------------------------- -----------
The Funds have additional investment policies and restrictions that are not
principal to their investment strategies (for example, repurchase
agreements, borrowing, pledging, and securities lending, and when-issued
securities.) These policies and restrictions are discussed in the SAI.
Correlation risk
This occurs when a Fund "hedges"- uses one investment to offset the Fund's
position in another. If the two investments do not behave in relation to one
another the way Fund managers expect them to, then unexpected or undesired
results may occur. For example, a hedge may eliminate or reduce gains as
well as offset losses.
Credit risk
The risk that the issuer of a security or the counterparty to an investment
contract may default or become unable to pay its obligations when due.
Extension risk
The risk that an unexpected rise in interest rates will extend the life of a
mortgage-backed security beyond the expected prepayment time, typically
reducing the security's value.
Information risk
The risk that information about a security or issuer or the market might not
be available, complete, accurate or comparable.
Interest rate risk
The risk that changes in interest rates will adversely affect the value of
an investor's securities. When interest rates rise, the value of
fixed-income securities will generally fall. Conversely, a drop in interest
rates will generally cause an increase in the value of fixed-income
securities. Longer-term securities and zero coupon/"stripped" coupon
securities ("strips") are subject to greater interest rate risk.
Leverage risk
The risk that occurs in some securities or techniques which tend to magnify
the effect of small changes in an index or a market. This can result in a
loss that exceeds the amount actually invested.
Liquidity risk
The risk that occurs when investments cannot be readily sold. A Fund may
have to accept a less-than-desirable price to complete the sale of an
illiquid security or may not be able to sell it at all.
Management risk
This risk exists in all mutual funds and means that a Fund's portfolio
management practices might not work to achieve their desired result.
Market risk
The risk that exists in all mutual funds and means the risk that securities
prices in a market, a sector or an industry will fluctuate, and that such
movements might reduce an investment's value.
Opportunity risk
The risk of missing out on an investment opportunity because the assets
needed to take advantage of it are committed to less advantageous
investments or strategies.
Political risk
The risk that may occur with foreign investments, and means that the value
of an investment may be adversely affected by nationalization, taxation,
war, government instability or other economic or political actions or
factors.
Prepayment risk
The risk that unanticipated prepayments may occur, reducing the value of a
mortgage-backed security. The Fund must then reinvest those assets at the
current, market rate which may be lower.
Transaction risk
The risk that a Fund may be delayed or unable to settle a transaction or
that commissions and settlement expenses may be higher than usual.
About Calvert Group
Calvert Asset Management Company, Inc. (4550 Montgomery Avenue, Suite 1000N,
Bethesda, MD 20814) ("CAMCO") is the Funds' investment advisor and provides
day-to-day investment management services to the Funds. It has been managing
mutual funds since 1976. CAMCO is the investment advisor for over 25 mutual
funds. As of December 31, 1998, CAMCO had $6 billion in assets under
management.
CAMCO uses a team approach to its management of the Fund. Since inception,
investment selections for the Fund have been 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.
Reno J. Martini, Senior Vice President and Chief Investment Officer of
CAMCO, oversees the management of all Calvert Funds for CAMCO. Mr. Martini
has over 18 years of experience in evaluating and purchasing municipal
securities and has been the head of CAMCO's asset management team since 1985.
Advisory Fees
The following table shows the aggregate annual advisory fee paid to CAMCO by
the Fund for the most recent fiscal year as a percentage of that Fund's
average daily net assets.
Fund Advisory Fee
CTFR Vermont ____ %
A Word About the Year 2000 (Y2K) and Our Computer Systems
Like other mutual funds, CAMCO and its service providers use computer
systems for all aspects of our business -- processing shareholder and fund
transactions, fund accounting, executing trades, and pricing securities just
to name a few. Many current software programs cannot distinguish between the
year 2000 and the year 1900. This can cause problems with retirement plan
distributions, dividend payment software, transaction software, and numerous
other areas that could impact the Funds. Calvert Group has been reviewing
all of its computer systems for Y2K compliance. Although, at this time,
there can be no assurance that there will be no negative impact on the
Funds, the Advisor, the underwriter, transfer agent and custodian have
advised the Funds that they have been actively working on any necessary
changes to their computer systems to prepare for Y2K and expect that their
systems, and those of their outside service providers, will be adapted in
time for that event. For more information, please visit our website at
www.calvertgroup.com.
HOW TO BUY SHARES
Getting Started - Before You Open an Account
You have a few decisions to make before you open an account in a mutual fund.
First, decide which fund or funds best suits your needs and your goals.
Second, decide what kind of account you want to open. Calvert offers
individual, joint, trust, Uniform Gifts/Transfers to Minor Accounts, and
several other types of accounts. Minimum investments are lower for the
retirement plans.
Then decide which class of shares is best for you.
You should make this decision carefully, based on:
the amount you wish to invest;
the length of time you plan to keep the investment; and
the Class expenses.
Choosing a Share Class
CTFR Vermont offers three different Classes (Class A, B, or C). This chart
shows the difference in the Classes and the general types of investors who
may be interested in each Class:
Class A: Front-End Class B: Deferred Class C: Deferred
Sales Charge Sales Charge for 4 Sales Charge for 1 year
years
For all investors, For investors who For investors who are
particularly those plan to hold the investing for at least
investing a substantial shares at least 4 one year, but less
amount who plan to hold years. The expenses than four years. The
the shares for a long of this class are expenses of this Class
period of time. higher than Class A, are higher than Class
because of the 12b-1 A, because of the
fee. 12b-1 fee.
Sales charge on each No sales charge on No sales charge on
purchase of 3.75% or each purchase, but if each purchase, but if
less, depending on the you sell your shares you sell shares within
amount you invest. within 4 years, you 1 year, then you will
will pay a deferred pay a deferred sales
sales charge of 4% or charge of 1% at that
less on shares you time.
sell.
Class B shares have Class C shares have an
an annual 12b-1 fee annual 12b-1 fee of
of 1.00%. 1.00%.
Your shares will Class C shares have
automatically convert higher annual expenses
to Class A shares than Class A and there
after 6 years, is no automatic
reducing your future conversion to Class A.
annual expenses.
Purchases of Class A If you are investing If you are investing
shares at NAV for more than $250,000, more than $100,000,
accounts with you should consider you should invest in
$1,000,000 or more will investing in Class A Class A.
be subject to a 1.0% or C.
deferred sales charge
for 1 year.
Class A
If you choose Class A, you will pay a sales charge at the time of each
purchase. This table shows the charges both as a percentage of offering
price and as a percentage of the amount you invest. The term "offering
price" includes the front-end sales charge. If you invest more, the sales
charge will be lower. For example, if you invest more than $50,000, or if
your cumulative purchases or the value in your account is more than
$50,000,4 then the sales charge is reduced to 3.00%.
Your investment in Sales Charge % % of Amt.
Class A shares of offering price Invested
Less than $50,000 3.75% 3.90%
$50,000 but not less than $100,000 3.00% 3.09%
$100,000 but not less than $250,000 2.25% 2.30%
$250,000 but not less than $500,000 1.75% 1.78%
$500,000 but not less than $1,000,000 1.00% 1.01%
$1,000,000 and over None* None*
4 This is called "Rights of Accumulation." The sales charge is calculated by
taking into account not only the dollar amount of the new purchase of
shares, but also the higher of cost or current value of shares you have
previously purchased in Calvert Group Funds that impose sales charges. This
automatically applies to your account for each new purchase of Class A
shares.
* Purchases of Class A shares at NAV for accounts with $1,000,000 or more
are subject to a one year CDSC of 1.00%. See the "Calculation of Contingent
Deferred Sales Charge and Waiver of Sales Charges."
The Class A front-end sales charge may be waived for certain purchases or
investors, such as participants in certain group retirement plans or other
qualified groups and clients of registered investment advisers. For details
on these and other purchases that may qualify for a reduced sales charge,
see Exhibit A.
Class B
If you choose Class B, there is no front-end sales charge like Class A, but
if you sell the shares within the first 4 years, you will have to pay a
"contingent deferred" sales charge ("CDSC"). This means that you do not have
to pay the sales charge unless you sell your shares within the first 4 years
after purchase. Keep in mind that the longer you hold the shares, the less
you will have to pay in deferred sales charges.
Time Since Purchase Vermont
- ------------------------------ -----------
- ------------------------------ -----------
CDSC %
- ------------------------------ -----------
- ------------------------------ -----------
1st year 4%
- ------------------------------ -----------
- ------------------------------ -----------
2nd year 3%
- ------------------------------ -----------
- ------------------------------ -----------
3rd year 2%
- ------------------------------ -----------
- ------------------------------ -----------
4th year 1%
- ------------------------------ -----------
- ------------------------------ -----------
5th year None
- ------------------------------ -----------
- ------------------------------ -----------
6th year None
- ------------------------------ -----------
- ------------------------------ -----------
After 6 years None
Calculation of Contingent Deferred Sales Charge and Waiver of Sales Charges
The CDSC will not be charged on shares you received as dividends or from
capital gains distributions or on any capital appreciation (gain in the
value) of shares that are sold.
Shares that are not subject to the CDSC will be redeemed first, followed by
shares you have held the longest. The CDSC is calculated by determining the
share value at both the time of purchase and redemption and then multiplying
whichever value is less by the percentage that applies as shown above. If
you choose to sell only part of your shares, the capital appreciation for
those shares only is included in the calculation, rather than the capital
appreciation for the entire account.
The CDSC on Class B Shares will be waived in the following circumstances:
Redemption upon the death or disability of the shareholder, plan
participant, or beneficiary.1
Minimum required distributions from retirement plan accounts for
shareholders 70 1/2 and older.2
The return of an excess contribution or deferral amounts, pursuant to
sections 408(d)(4) or (5), 401(k)(8), 402(g)(2), or 401(m)(6) of the
Internal Revenue Code.
Involuntary redemptions of accounts under procedures set forth by the Fund's
Board of Trustees/Directors.
A single annual withdrawal under a systematic withdrawal plan of up to 10%
per year of the shareholder's account balance.3
Class C
If you choose Class C, there is no front-end sales charge like Class A, but
if you sell the shares within the first year, you will have to pay a 1%
CDSC. Class C may be a good choice for you if you plan to buy shares and
hold them for at least 1 year, but not more than four years.
More on Comparison of Classes
The Example at the beginning of this prospectus compares the expenses of
each class, with and without redemptions. The Example includes both direct
expenses that you pay, such as the sales charges, and indirect expenses that
are paid by each Fund. The indirect expenses include management, shareholder
servicing, and 12b-1 fees. These fees may vary from class to class and can
impact your total return. Consider your investment goals and time period for
investing to help decide which class is best for you.
Distribution and Service Fees (Not Applicable to Class A)
CTFR Vermont has adopted a plan under Rule 12b-1 of the Investment Company
Act of 1940 that allows the Fund to pay distribution fees for the sale and
distribution of its shares. The distribution plan also pays service fees to
persons (such as your financial professional) for services provided to
shareholders. Because these fees are paid out of a Fund's assets on an
ongoing basis, over time, these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Please see Exhibit B for more service fee information.
1 "Disability" means a total disability as evidenced by a determination by
the federal Social Security Administration.
2 The maximum amount subject to this waiver is based only upon the
shareholder's Calvert Group retirement accounts.
3 This systematic withdrawal plan requires a minimum account balance of
$50,000 to be established.
The table below shows the maximum annual percentage payable under the
distribution plan, and the amount actually paid by each Fund for the most
recent fiscal year. The fees are based on average daily net assets of the
particular Class.
Maximum Payable under Plan/Amount Actually Paid
Class B Class C
CTFR Vermont 1.00%/---% 1.00%/---%
Next Step - Account Application
Complete and sign an application for each new account. When multiple classes
of shares are offered, please specify which class you wish to purchase. For
more information, contact your broker or our shareholder services department
at 800-368-2748.
Minimum To Open an Account Minimum additional
$2,000 investments -$250
Please make your check payable
to the Fund and mail it to:
New Accounts Subsequent Investments
(include application) (include investment slip)
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
Certified, or c/o NFDS,
Overnight Mail 330 West 9th St.,
Kansas City, MO 64105-1807
At the Calvert Office Visit the Calvert Office to make
investments by check. See the back
cover page for the address.
Important - How Shares are Priced
The price of shares is based on each Fund's net asset value ("NAV"). NAV is
computed by adding the value of a Fund's holdings plus other assets,
subtracting liabilities, and then dividing the result by the number of
shares outstanding. If a Fund has more than one class of shares, the NAV of
each class will be different, 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.
If market quotations are not readily available, securities are valued by a
method that the Fund's Board of Trustees/Directors believes accurately
reflects fair value.
The NAV is calculated as of the close of each business day, which coincides
with the closing of the regular session of the New York Stock Exchange
("NYSE") (normally 4 p.m. ET). Each Fund is open for business each day the
NYSE is open. Please note that there are some federal holidays, however,
such as Columbus Day and Veterans' Day, when the NYSE is open and the Fund
is open but purchases cannot be made due to the closure of the banking
system.
When Your Account Will Be Credited
Your purchase will be processed at the next NAV calculated after your order
is received in good order. All of your purchases must be made in US dollars
and checks must be drawn on US banks. No cash will be accepted. No credit
card or credit loan checks will be accepted. Each Fund reserves the right to
suspend the offering of shares for a period of time or to reject any
specific purchase order. As a convenience, check purchases received at
Calvert's office in Bethesda, Maryland will be sent by overnight delivery to
the Transfer Agent and will be credited the next business day upon receipt.
Any check purchase received without an investment slip may cause delayed
crediting. If your check does not clear your bank, your purchase will be
canceled and you will be charged a $10 fee plus any costs incurred. Check or
electronic funds transfer purchases will be on hold for up to 10 business
days. All purchases will be confirmed and credited to your account in full
and fractional shares (rounded to the nearest 1/1000th of a share).
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 by electronic
funds transfer without the time delay of mailing a check or the added
expense of a wire. 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.
Calvert Money Controller transactions returned for insufficient funds will
incur a $25 charge.
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 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 Calvert funds if your
investment goals change. 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 Fund and the purchase of
shares of another. Therefore, you could realize a taxable gain or loss.
You may exchange shares acquired by reinvestment of dividends or
distributions into another Calvert Fund at no additional charge.
Shares may only be exchanged for shares of the same class of another Calvert
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.
Shareholders (and those managing multiple accounts) who make two purchases
and two exchange redemptions of shares of the same Fund during any 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 Fund, and does not apply to trades solely between
money market funds.
Each Fund reserves the right to terminate or modify the exchange privilege
with 60 days' written notice.
COMBINED GENERAL MAILINGS (Householding)
Multiple accounts with the same social security number will receive one
mailing per household of information such as prospectuses and semi-annual
and annual reports. You may request further grouping of accounts to receive
fewer mailings. Separate statements will be generated for each separate
account and will be mailed in one envelope for each combination above.
Special Services and Charges
Each Fund pays for shareholder services but not for special services that
are required by a few shareholders, such as a request for a historical
transcript of an account. You may be required to pay a fee for these special
services.
If you are purchasing shares through a program of services offered by a
broker/dealer or financial institution, you should read the program
materials together with this Prospectus. Certain features may be modified in
these programs. Investors may be charged a fee if they effect transactions
in Fund shares through a broker or agent.
MINIMUM ACCOUNT BALANCE
Please maintain a balance in each of your accounts of at least $1,000 per
class. If the balance in any of your accounts falls below the minimum during
a month, your account may be closed and the proceeds mailed to the address
of record. You will receive 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
The Fund pays dividends from its net investment income as shown below. 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 Fund 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.
CTFR Vermont paid monthly
Dividend payment options
Dividends and any distributions are automatically reinvested in the same
Fund at NAV (without sales charge), unless you elect to have amounts of $10
or more paid in cash (by check or by Calvert Money Controller). Dividends
and distributions from any Calvert Group Fund may be automatically invested
in an identically registered account in any other Calvert Group Fund at NAV.
If reinvested in the same 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 Fund in writing to change your payment options. If
you elect to have dividends and/or distributions paid in cash, and the US
Postal Service returns the check as undeliverable, 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 each class may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any income or capital gains from these amounts which are later
distributed to you are fully taxable. On the record date for a distribution,
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 Fund 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 Fund. Dividends attributable to interest on
certain private activity bonds must be included in federal alternative
minimum tax for individuals and for corporations. The Fund may invest in and
derive up to 20% of is income from taxable short-term money market
investments, for liquidity purposes or pending investment of the new assets.
Interest earned from taxable investments will be taxable as ordinary income.
If any taxable income or gains are paid, in January, the Fund will mail you
Form 1099-DIV indicating the federal tax status of dividends and any capital
gain distributions paid to you during the past year. Generally, dividends
and distributions are taxable in the year they are paid. However, any
dividends and distributions paid in January but declared during the prior
three months are taxable in the year declared. Dividends and distributions
are taxable to you regardless of whether they are taken in cash or
reinvested.
You may realize a capital gain or loss when you sell or exchange shares.
This capital gain or loss will be short- or long-term, depending on how long
you have owned the shares which were sold. In January, the Fund will mail
you Form 1099-B indicating the total amount of 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
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 Fund 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
requires us to withhold 31% of your reportable dividends, and possibly 31%
of certain redemptions. In addition, you may be subject to a fine by the
Internal Revenue Service. 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 day the Fund is open
for business, provided the amount requested is not on hold. When you
purchase by check or with Calvert Money Controller (electronic funds
transfer), the purchase will be on hold for up to 10 business days from the
date of receipt. During the hold period, redemptions proceeds will not be
sent until the Transfer Agent is reasonably satisfied that the purchase
payment has been collected. Your shares will be redeemed at the next NAV
calculated after your redemption request is received and accepted (less any
applicable CDSC). The proceeds will normally be sent to you on the next
business day, but if making immediate payment could adversely affect your
Fund, it may take up to seven (7) days to make payment. Calvert Money
Controller redemptions generally will be credited to your bank account on
the second business day after your phone call. The Funds have the right to
redeem shares in assets other than cash for redemption amounts exceeding, in
any 90-day period, $250,000 or 1% of the net asset value of the affected
Fund, whichever is less. When the NYSE is closed (or when trading is
restricted) for any reason other than its customary weekend or holiday
closings, or under any emergency circumstances as determined by the
Securities and Exchange Commission, redemptions may be suspended or payment
dates postponed. Please note that there are some federal holidays, however,
such as Columbus Day and Veterans' Day, when the NYSE is open and the Fund
is open but redemptions cannot be made due to the closure of the banking
system.
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, P.O. 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 you 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.
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 redeemed by Systematic Check Redemption will be subject to
the Contingent Deferred Sales Charge.
Corporations and Associations
Your letter of instruction and corporate resolution should be signed by
person(s) authorized to act on the account, accompanied by signature
guarantee(s).
Trusts
Your letter of instruction should be signed by the Trustee(s) (as
Trustee(s)), with a signature guarantee. (If the Trustee's name is not
registered on your account, please provide a copy of the trust document,
certified within the last 60 days.)
Through your Dealer
Your dealer must receive your request before the close of regular trading on
the NYSE to receive that day's NAV. Your dealer will be responsible for
furnishing all necessary documentation to Calvert Group and may charge you
for services provided.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years (or if shorter, the period of the
Fund's operations). Certain information reflects financial results for a
single share, by Fund and Class. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in a
Fund (assuming reinvestment of all dividends and distributions), and does
not reflect any applicable front- or back-end sales charge. This information
has been audited by PricewaterhouseCoopers LLP whose report, along with a
Fund's financial statements, are included in the Fund's annual report, which
is available upon request.
Financial Highlights
[insert financial highlights for the last five years here]
<PAGE>
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase plans
available. You must notify the Fund at the time of purchase to take
advantage of the reduced sales charge.
Rights of Accumulation can be applied to several accounts
Class A sales charge breakpoints are automatically calculated for each
account based on the higher of cost or current value of shares previously
purchased. This privilege can be applied to a family group or other
qualified group* upon request. Shares could then be purchased at the reduced
sales charge which applies to the entire group; that is, based on the higher
of cost or current value of shares previously purchased and currently held
by all the members of the group.
Letter of Intent
If you (or your group, as described above) plan to purchase $50,000 or more
of Calvert 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 portfolio 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 SAI.
Neither the Funds, nor Calvert Distributors, Inc. ("CDI"), nor any affiliate
thereof will reimburse a plan or participant for any sales charges paid
prior to receipt of such written communication and confirmation by Calvert
Group. Plan administrators should send requests for the waiver of sales
charges based on the above conditions to: Calvert Group Retirement Plans,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
* A "qualified group" is one which:
has been in existence for more than six months, and
has a purpose other than acquiring shares at a discount, and
satisfies uniform criteria which enable CDI and brokers offering 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 brokers
distributing shares, must agree to include sales and other materials related
to the Funds in its publications and mailings to members at reduced or no
cost to CDI or brokers. A pension plan is not a qualified group for rights
of accumulation.
Other Circumstances
There is no sales charge on shares of any Fund 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,
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.
Purchases made at NAV
Except for money market funds, if you make a purchase at NAV, you may
exchange that amount to another Calvert Group Fund at no additional sales
charge.
Reinstatement Privilege
If you redeem 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 Funds reserve the right to modify or
eliminate this privilege.
EXHIBIT B
Service Fees and Arrangements with Dealers
Calvert Distributors, Inc., the Fund's underwriter, pays dealers a
commission, or reallowance (expressed as a percentage of the offering price
for Class A, and a percentage of amount invested for Class B and C) when you
purchase shares of non-money market portfolios. CDI also pays dealers an
ongoing service fee while you own shares of a Fund (expressed as an annual
percentage rate of average daily net assets held in Calvert accounts by that
dealer). The table below shows the amount of payment which differs depending
on the Class.
Maximum Commission/Service Fees
Class A Class B Class C*
CTFR Vermont 3.00%/0.15% 3.00%/0.25% 1.00%/1.00%
*Class C pays dealers a service fee of 0.25% and additional compensation of
0.75% for a total of 1.00%.
Occasionally, CDI may reallow to dealers the full Class A front-end sales
charge. CDI may also pay additional concessions, including non-cash
promotional incentives, such as merchandise or trips, to brokers employing
registered representatives who have sold or are expected to sell a minimum
dollar amount of shares of the Funds and/or shares of other Funds
underwritten by CDI. CDI may make expense reimbursements for special
training of a broker's registered representatives, advertising or equipment,
or to defray the expenses of sales contests. CAMCO, CDI, or their affiliates
may pay certain broker-dealers and/or other persons, for the sale and
distribution of the securities or for services to the Fund. Payments may
include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finder's fees. CDI pays dealers a
finder's fee on CTFR Vermont Class A shares purchased at NAV in accounts
with $1 million or more. The CTFR Vermont finder's fee is 1% of the NAV
purchase amount on the first $2 million, .80% on $2 to $3 million, .50% on
$3 to $50 million, .25% on $50 to $100 million, and .15 over $1 million. All
payments will be in compliance with the rules of the National Association of
Securities Dealers, Inc.
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
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified or
Overnight Mail:
Calvert Group
c/o NFDS
330 West 9th Street
Kansas City, MO 64105
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
For investors who want more information about the Funds, the following
documents are available free upon request:
Annual/Semi-Annual Reports: Additional information about each Fund's
investments is available in the Fund's Annual and Semi-Annual reports to
shareholders. In each Fund's annual report, you will find a discussion of
the market conditions and investment strategies that significantly affected
the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI): The SAI for each Fund provides
more detailed information about the Fund and is incorporated into this
prospectus by reference.
You can get free copies of reports and SAIs, request other information and
discuss your questions about the Funds by contacting your broker, or the
Funds at:
Calvert Group
4550 Montgomery Ave, Suite 1000N
Bethesda, Md. 20814
Telephone: 1-800-368-2745
Calvert Group Web-Site
Address: http://www.calvertgroup.com
You can review the Funds' reports and SAIs at the public Reference Room of
the Securities and Exchange Commission. You can get text only copies:
For a fee, by writing to or calling the Public Reference Room of the
Commission, Washington, D.C. 20549-6009, Telephone: 1-800-SEC-0330.
Free from the Commission's Internet website at http://www.sec.gov.
Investment Company Act file: no. 811-3101 (CTFR)
<PAGE>
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Statement of Additional Information
April 30, 1999
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
National Financial Data Services, Inc.
330 W. 9th Street
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
250 West Pratt Street
Baltimore, Maryland 21201
TABLE OF CONTENTS
Investment Policies 2
Investment Restrictions 4
Purchases and Redemptions of Shares 5
Dividends and Distributions 5
Tax Matters 5
Valuation of Shares 6
Calculation of Yield and Total Return 7
Advertising 8
Trustees and Officers 9
Investment Advisor 11
Administrative Services 12
Transfer and Shareholder Servicing Agents 12
Independent Accountants and Custodians 12
Method of Distribution 12
Portfolio Transactions 13
General Information 14
Control Persons and Principal Holders of Securities 14
Appendix 14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1999
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
- ------------------------------------------------------------------------------
New Account Information
(800) 368-2748
(301) 951-4820
Shareholder Services
(800) 368-2745
Broker Services
(800) 368-2746
(301) 951-4850
TDD for the Hearing- Impaired
(800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the separate Calvert Tax-Free Reserves Prospectuses, dated April 30,
1999 for Class O, I, and T, which may be obtained free of charge by writing
the Fund at the above address or calling the telephone numbers listed above.
The audited financial statements in the Portfolios' Annual Report
to Shareholders dated December 31, 1998, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A
copy of the Annual Report may be obtained free of charge by writing or
calling the Portfolios.
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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 Obligations and Demand Notes
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.
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.
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. 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 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." 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.
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.
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.
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. When issued securities do not earn income until they have in fact been
isued.
When the Portfolio purchases a when-issued security, 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 when-issued
purchase, thereby ensuring the transaction is unleveraged.
Non-Investment Grade Debt Securities
Non-investment grade debt securities are lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's, known as "junk bonds." These securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. (See Appendix for a description of the ratings.) These
securities involve greater risk of default or price declines due to changes
in the issuer's creditworthiness than investment-grade debt securities.
Because the market for lower-rated securities may be thinner and less active
than for higher-rated securities, there may be market price volatility for
these securities and limited liquidity in the resale market. Market prices
for these securities may decline significantly in periods of general
economic difficulty or rising interest rates.
The quality limitation set forth in the Fund's investment policy is
determined immediately after the Fund's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
When purchasing non-investment grade debt securities, rated or
unrated, the Advisors prepare their own careful credit analysis to attempt
to identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
Fundamental Investment Restrictions
The Portfolios have adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of
the holders of a majority of the outstanding shares of the Portfolios.
(1) Each Portfolio may not make any investment
inconsistent with its classification as a diversified
investment company under the 1940 Act.
(2) Each Portfolio may not concentrate its investments in
the securities of issuers primarily engaged in any
particular industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured
thereby), or domestic bank money market instruments.
(3) Each Portfolio may not issue senior securities or
borrow money, except from banks for temporary or emergency
purposes and then only in an amount up to 33 1/3% of the
value of the affected Portfolio's total assets or as
permitted by law and except by engaging in reverse
repurchase agreements, where allowed. In order to secure
any permitted borrowings and reverse repurchase agreements
under this section, each Portfolio may pledge, mortgage or
hypothecate its assets.
(4) Each Portfolio may not underwrite the securities of
other issuers, except as allowed by law or to the extent
that the purchase of municipal obligations in accordance
with a Portfolio's investment objective and policies,
either directly from the issuer, or from an underwriter
for an issuer, may be deemed an underwriting.
(5) Each Portfolio may not invest directly in commodities
or real estate, although a Portfolio may invest in
securities which are secured by real estate or real estate
mortgages and securities of issuers which invest or deal
in commodities, commodity futures, real estate or real
estate mortgages.
(6) Each Portfolio may not make loans, other than through
the purchase of money market instruments and repurchase
agreements or by the purchase of bonds, debentures or
other debt securities, or as permitted by law. The
purchase of all or a portion of an issue of publicly or
privately distributed debt obligations in accordance with
each Portfolio's investment objective, policies and
restrictions, shall not constitute the making of a loan.
Nonfundamental Investment Restrictions
The Board of Trustees has adopted the following nonfundamental
investment restrictions. A nonfundamental investment restriction can be
changed by the Board at any time without a shareholder vote.
(1) Each Portfolio may not purchase common stocks, preferred
stocks, warrants, or other equity securities.
(2) Each Portfolio does not intend to make any purchases of
securities if borrowing exceeds 5% of the affected Portfolio's
total assets.
(3) Each Portfolio may not sell securities short, purchase
securities on margin, or write or purchase put or call options.
The Funds reserve the right to purchase securities with puts
attached or with demand features.
(4) The Portfolio may not invest more than 35% of net assets in
non-investment grade debt securities. The Portfolio does not
intend to purchase more than 15% of non-investment grade debt
securities.
(5) The Limited-Term Portfolio may not invest more than 15% of net
assets in non-investment grade debt securities and the Portfolio
does not intend to purchase more than 5% of non-investment grade
securities.
(6) The Limited-Term Portfolio should maintain an average maturity
of one year or less.
- ------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------
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 each
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 returns the check as undeliverable, 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
- ------------------------------------------------------------------------------
The Funds intend to continue to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code ("Code"). If for
any reason the Fund should fail to qualify, it would be taxed as a
corporation at the Fund level, rather than passing through its income and
gains to shareholders.
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 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.
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VALUATION OF SHARES
- ------------------------------------------------------------------------------
Money Market Portfolio
The Money Market Portfolio's assets, 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.
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, 12/31/98
Money Market Portfolio
Class O ($______/_____ shares) $1.00
Institutional Class ($______/_____ shares) $1.00
Class T not available on 12/31/98
Limited-Term Portfolio
Net asset value per share
($______/_____ shares) $__.__
Maximum sales charge
(1.00% of offering price) __.__
Offering price per share $__.__
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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, 1998, the Money Market
Portfolio's yield for Class O shares was _.__% and its effective yield was
_.__%. For the seven-day period ended December 31, 1998, the Money Market
Portfolio's yield for the Institutional Class of shares was _.__% and its
effective yield was _.__%. Class T was not available on December 31, 1998;
therefore, no yield is presented.
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, 1998, the Money Market Portfolio's Class
O tax equivalent yield, for an investor in the 36% federal income tax
bracket was _.__% and, for the 39.6% federal income tax bracket, _.__%. For
the seven-day period ended December 31, 1998, the Money Market Portfolio
Institutional Class' tax equivalent yield, for an investor in the 36%
federal income tax bracket was _.__% and, for the 39.6% federal income tax
bracket, _.__%. Class T was not available on December 31, 1998.
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 _.__% _.__%
Five Years _.__% _.__%
Ten Years _.__% _.__%
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, 1998 was _.__%.
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,
1998, the Portfolio's tax equivalent yield was _.__% for an investor in the
36% federal income tax bracket, and _.__% for an investor in the 39.6%
federal income tax bracket.
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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, December 31, 1998).
Calvert Group was also the first to offer a family of socially responsible
mutual fund portfolios.
- ------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- ------------------------------------------------------------------------------
The Fund's Board of Trustees supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a
non-profit corporation which provides family planning services, nutrition,
maternal/child health care, and various health screening services. Mr. Baird
is a trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc., Calvert New World
Fund, Inc. and Calvert World Values Fund, Inc. DOB: 05/09/48. Address: 211
Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the
law firm of Snevily, Ely, Williams & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with
Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem Medical
Imaging in Allentown, Pennsylvania. DOB: 07/23/49. Address: 16 Iliahi
Street, Honolulu, Hawaii, 96817.
CHARLES E. DIEHL, Trustee. Mr. Diehl is a self-employed consultant
and is Vice President and Treasurer Emeritus of the George Washington
University. He has retired from University Support Services, Inc. of
Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life
Insurance Company, and is currently a Director of Servus Financial
Corporation. DOB: 10/13/22. Address: 1658 Quail Hollow Court, McLean,
Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman is managing partner
of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A
graduate of Harvard Medical School, he is Associate Professor of
Otolaryngology, Head and Neck Surgery at Georgetown University and George
Washington University Medical School, and past Chairman of the Department of
Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He
is included in The Best Doctors in America. DOB: 05/23/48. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. He is also a Chartered Financial
Analyst and an accredited senior business appraiser. DOB: 12/08/32. Address:
3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert
Social Investment Foundation, organizing director of the Community Capital
Bank in Brooklyn, New York, and a financial consultant to various
organizations. In addition, he is a director of the Community Bankers Mutual
Fund of Denver, Colorado, a director of Ariel Funds, and the Treasurer and
Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey
is a trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund, Inc.
Mr. Guffey has been advised that the Securities and Exchange
Commission ("SEC") has entered an order against him relating to his former
service as a director of Community Bankers Mutual Fund, Inc. This fund is
not connected with any Calvert Fund or the Calvert Group and ceased
operations in September, 1994. Mr. Guffey consented to the entry of the
order without admitting or denying the findings in the order. The order
contains findings (1) that the Community Bankers Mutual Fund's prospectus
and statement of additional information were materially false and misleading
because they misstated or failed to state material facts concerning the
pricing of fund shares and the percentage of illiquid securities in the
fund's portfolio and that Mr. Guffey, as a member of the fund's board,
should have known of these misstatements and therefore violated the
Securities Act of 1933; (2) that the price of the fund's shares sold to the
public was not based on the current net asset value of the shares, in
violation of the Investment Company Act of 1940 (the "Investment Company
Act"); and (3) that the board of the fund, including Mr. Guffey, violated
the Investment Company Act by directing the filing of a materially false
registration statement. The order directed Mr. Guffey to cease and desist
from committing or causing future violations and to pay a civil penalty of
$5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve
as a Trustee or Director of mutual funds. DOB: 05/15/48. Address: 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. Ms. Krumsiek is
the President of each of the investment companies, except for Calvert Social
Investment Fund, of which she is the Senior Vice President. Prior to joining
Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund
Distributors, Inc. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings
Bank. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C.
20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director
and Secretary of Grady, Berwald and Co., Inc., and Director and President of
Chelsea Securities, Inc. He is the Senior Vice President of First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert
Cash Reserves, and The Calvert Fund. DOB: 10/07/37. Address: Box 93,
Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of
each of the investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of Group Serve, Inc., an internet company focused on
community building collaborative tools, and an officer, director and
shareholder of Silby, Guffey & Company, Inc., which serves as general
partner of Calvert Social Venture Partners ("CSVP"). CSVP is a venture
capital firm investing in socially responsible small companies. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 07/20/48. Address:
1715 18th Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a director
and Senior Vice President of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers, L.L.C.,
and a director and officer of Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior
Vice President and Chief Financial Officer of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in the
Calvert Group of Funds. Mr. Wolfsheimer is Vice President and Treasurer of
Calvert-Sloan Advisers, L.L.C., and a director of Calvert Distributors, Inc.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also
Vice President and Secretary of Calvert-Sloan Advisers, L.L.C., a director
of Calvert Distributors, Inc., and is an officer of Acacia National Life
Insurance Company. DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of the
other investment companies in the Calvert Group of Funds, except for Calvert
New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert Group of Funds. DOB:
10/21/56.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds and Secretary and
provides counsel to the Calvert Social Investment Foundation. Prior to
working at Calvert Group, Ms. Duke was an Associate in the Investment
Management Group of the Business and Finance Department at Drinker Biddle &
Reath. DOB: 09/07/68.
The address of 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, Ms. Krumsiek and Kruvant 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 1998, Trustees of the Fund not affiliated with the Fund's
Advisor were paid $_______ and $________ 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.
Trustee Compensation Table
Fiscal Year 1998 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Trustee of Registrant Trustee**
Expenses*
Name of Trustee
Richard L. Baird, Jr. $_____ $0 $_____
Frank H. Blatz, Jr. $_____ $0 $_____
Frederick T. Borts $_____ $0 $_____
Charles E. Diehl $_____ $_____ $_____
Douglas E. Feldman $_____ $0 $_____
Peter W. Gavian $_____ $_____ $_____
John G. Guffey, Jr. $_____ $0 $_____
M. Charito Kruvant $_____ $_____ $_____
Arthur J. Pugh $_____ $_____ $_____
D. Wayne Silby $_____ $0 $_____
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of
their compensation. As of December 31, 1998, total deferred compensation,
including dividends and capital appreciation, was $_________,$_________,
$_________ and $_________, for each trustee, respectively.
**As of December 31, 1998. The Fund Complex consists of nine (9) registered
investment companies.
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INVESTMENT ADVISOR
- ------------------------------------------------------------------------------
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, a
subsidiary of Calvert Group, Ltd., which is a controlled subsidiary of
Ameritas-Acacia Mutual Holding Company.
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 $7,776,716,
$5,409,090, and $_________ for years 1996, 1997, and 1998, respectively. The
advisory fees paid by the Limited-Term Portfolio to Calvert Asset Management
Company were $3,110,764, $3,164,772, and $__________ for years 1996, 1997,
and 1998, respectively.
For Portfolios with multiple classes, investment advisory fees are
allocated as a Portfolio-level expense based on net assets.
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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. 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, Institutional Class, and
Class T pay annual rates of 0.26%, 0.05%, and ___% 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 administrative service fees paid by the Money Market
Portfolio to Calvert Administrative Services Company were $128,255 for
fiscal year 1996. 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 1998 administrative services fees paid by CTFR Money
Market were $1,682,754 and $24,010 for Class O and the Institutional Class,
respectively. Class T was not available during fiscal year 1998. The
administrative service fees paid by the Limited-Term Portfolio to CASC were
$38,242, $43,210, and $_________, for years 1996, 1997, and 1998,
respectively.
Administrative service fees are allocated as a class-level expense,
again based on net assets.
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
PricewaterhouseCoopers LLP has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1999. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, 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. Under
the terms of the agreement, CDI is entitled to receive a service fee and
distribution fee from the Money Market Portfolio, paid through the
Distribution Plan of Class T.
Pursuant to Rule 12b-1 under the 1940 Act, Class T of the Money
Market Portfolio has adopted a Distribution Plan (the "Plan") which permits
it to pay certain expenses associated with the distribution and servicing of
its shares. Such expenses may not exceed, on an annual basis, 0.25% of the
average daily net assets of Class T.
The 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 1940 Act) 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 is committed to the discretion of such disinterested
Trustees. In establishing the Plan, the Trustees considered various factors
including the amount of the distribution expenses. The Trustees determined
that there is a reasonable likelihood that the Plan will benefit Class T 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 affected
class or Portfolio. Any change in the Plan that would materially increase
the cost to the affected Class of Portfolio requires approval of the
shareholders of that 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 for successive one-year terms
provided that such continuance is specifically approved by (i) the vote of a
majority of the Trustees who are not parties to the 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 and CDI, at their own expense, may
incur costs and pay expenses associated with the distribution of shares of
the Money Market Portfolio.
CTFR Limited-Term
Class A Shares are offered at net asset value plus a front-end sales charge
as follows:
As a % of As a % of Allowed to
Amount of offering net amount Brokers as a %
Investment price invested of offering 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 receives any front-end sales charge. A portion of the front-end
sales charge may be reallowed to dealers. The aggregate amount of sales
charges (gross underwriting commissions) and the net amount retained by CDI
(i.e., not reallowed to dealers) for the last 3 fiscal years are:
1996
Gross Net
$_____ $_____
1997
Gross Net
$_____ $_____
1998
Gross Net
$_____ $_____
Fund Trustees and certain other affiliated persons of the Fund are
exempt from the sales charge since the distribution costs are minimal to
persons already familiar with the Fund. Other groups are exempt due to
economies of scale in distribution. See Exhibit A to the Prospectus.
- ------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- ------------------------------------------------------------------------------
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. The Fund's Advisor make
investment decisions and the choice of brokers and dealers 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 execution capability and trading
expertise considering, among other factors, the overall reasonableness of
the brokerage commissions, current market conditions, size and timing of the
order, difficulty of execution, per share price, etc.
For the last three fiscal years, total brokerage commissions paid
are as follows:
1996 1997 1998
CTFR Limited-Term $___ $___ $____
The Fund did not pay any brokerage commissions to affiliated
persons during the last three fiscal years.
While the Fund's Advisor and Subadvisor(s) select brokers primarily
on the basis of best execution, in some cases they may direct transactions
to brokers based on the quality and amount of the research and
research-related services which the brokers provide to them. These services
are of the type described in Section 28(e) of the Securities Exchange Act of
1934 and may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Other such
services are designed primarily to assist the Advisor in monitoring the
investment activities of the Subadvisor(s) of the Fund. Such services
include portfolio attribution systems, return-based style analysis, and
trade-execution analysis.
If, in the judgment of the Advisor or Subadvisor(s), the Fund or
other accounts managed by them will be benefited by supplemental research
services, they are authorized to pay brokerage commissions to a broker
furnishing such services which are in excess of commissions which another
broker may have charged for effecting the same transaction. These research
services include advice, either directly or through publications or
writings, as to the value of securities, the advisability of investing in,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities; furnishing of analyses and reports
concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; providing portfolio
performance evaluation and technical market analyses; and providing other
services relevant to the investment decision making process. It is the
policy of the Advisor that such research services will be used for the
benefit of the Fund as well as other Calvert Group funds and managed
accounts.
For the fiscal year ended December 31, 1998, the Fund, through its
Advisor, directed brokerage for research services in the following amounts:
Related
Portfolio Amount of Transactions Commissions
CTFR Limited-Term $___ $___
The Portfolio turnover rates for the last two fiscal years are as
follows:
1997 1998
CTFR Limited-Term ____% ___%
- ------------------------------------------------------------------------------
GENERAL INFORMATION
- ------------------------------------------------------------------------------
The Fund is an open-end, investment management investment company,
organized as a Massachusetts business trust on October 20, 1980. The Money
Market and Limited-Term Portfolios are diversified. 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), the Institutional
Class (offered in a separate prospectus), and Class T, also known as The
Advisors Group Tax-Free Reserve Fund (offered in a separate prospectus).
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 Fund, shareholders of each class are entitled to share pro rata in
the net assets belonging to that series available for distribution.
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 you own, except that
matters affecting classes differently, such as Distribution Plans, will be
voted on separately by the affected class(es).
- ------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ------------------------------------------------------------------------------
As of January 15, 1999, the following shareholders owned of record
5% or more of the Class or Portfolio shown:
Name and Address % of Ownership
(insert info) __.__%
- ------------------------------------------------------------------------------
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)
By
Authorized Signer
Address
Signature of Investor(s)
Date
Signature of Investor(s)
Date
<PAGE>
Calvert Tax-Free Reserves
Long-Term Portfolio
Statement of Additional Information
April 30, 1999
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
National Financial Data Services, Inc.
330 W. 9th Street
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
250 West Pratt Street
Baltimore, Maryland 21201
TABLE OF CONTENTS
Investment Policies 2
Investment Restrictions 7
Purchases and Redemptions of Shares 7
Dividends and Distributions 7
Valuation of Shares 8
Calculation of Yield and Total Return 9
Advertising 10
Trustees and Officers 10
Investment Advisor 12
Administrative Services 13
Transfer and shareholder Servicing Agents 13
Independent Accountants and Custodians 13
Method of Distribution 14
Portfolio Transactions 15
General Information 15
Control Persons and Principal Holders of Securities 16
Appendix 16
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1999
CALVERT TAX-FREE RESERVES
Long-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
- ------------------------------------------------------------------------------
New Account Information
(800) 368-2748
(301) 951-4820
Shareholder Services
(800) 368-2745
Broker Services
(800) 368-2746
(301) 951-4850
TDD for the Hearing- Impaired
(800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Portfolio's Prospectuses, dated April 30, 1999, which may be
obtained free of charge by writing the Fund at the above address or calling
the telephone numbers listed above.
The audited financial statements in the Portfolio's Annual Report
to Shareholders dated December 31, 1998, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A
copy of the Annual Report may be obtained free of charge by writing or
calling the Portfolio.
- ------------------------------------------------------------------------------
INVESTMENT POLICIES
- ------------------------------------------------------------------------------
The Portfolio invests primarily in a 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 Obligations and Demand Notes
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 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.
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.
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. 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 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." 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.
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.
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.
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. When issued securities do not earn income until they have in fact been
issued.
When the Portfolio purchases a when-issued security, 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 when-issued
purchase, thereby ensuring the transaction is unleveraged.
Non-Investment Grade Debt Securities
Non-investment grade debt securities are lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's, known as "junk bonds." These securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. (See Appendix for a description of the ratings.) These
securities involve greater risk of default or price declines due to changes
in the issuer's creditworthiness than investment-grade debt securities.
Because the market for lower-rated securities may be thinner and less active
than for higher-rated securities, there may be market price volatility for
these securities and limited liquidity in the resale market. Market prices
for these securities may decline significantly in periods of general
economic difficulty or rising interest rates.
The quality limitation set forth in the Fund's investment policy is
determined immediately after the Fund's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
When purchasing non-investment grade debt securities, rated or
unrated, the Advisors prepare their own careful credit analysis to attempt
to identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
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.
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 the transaction.
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.
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INVESTMENT RESTRICTIONS
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Fundamental Investment Restrictions
The Portfolio has adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of
the holders of a majority of the outstanding shares of the Portfolio.
(1) The Portfolio may not make any investment inconsistent
with its classification as a nondiversified investment
company under the 1940 Act.
(2) The Portfolio may not concentrate its investments in
the securities of issuers primarily engaged in any
particular industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured
thereby), or domestic bank money market instruments.
(3) The Portfolio may not issue senior securities or
borrow money, except from banks for temporary or emergency
purposes and then only in an amount up to 33 1/3% of the
value of its total assets or as permitted by law and
except by engaging in reverse repurchase agreements, where
allowed. In order to secure any permitted borrowings and
reverse repurchase agreements under this section, the
Portfolio may pledge, mortgage or hypothecate its assets.
(4) The Portfolio may not underwrite the securities of
other issuers, except as allowed by law or to the extent
that the purchase of municipal obligations in accordance
with its investment objective and policies, either
directly from the issuer, or from an underwriter for an
issuer, may be deemed an underwriting.
(5) The Portfolio may not invest directly in commodities
or real estate, although it may invest in securities which
are secured by real estate or real estate mortgages and
securities of issuers which invest or deal in commodities,
commodity futures, real estate or real estate mortgages.
(6) The Portfolio may not make loans, other than through
the purchase of money market instruments and repurchase
agreements or by the purchase of bonds, debentures or
other debt securities, or as permitted by law. The
purchase of all or a portion of an issue of publicly or
privately distributed debt obligations in accordance with
its investment objective, policies and restrictions, shall
not constitute the making of a loan.
Nonfundamental Investment Restrictions
The Board of Trustees has adopted the following nonfundamental
investment restrictions. A nonfundamental investment restriction can be
changed by the Board at any time without a shareholder vote.
(1) The Portfolio may not purchase common stocks, preferred stocks,
warrants, or other equity securities.
(2) The Portfolio does not intend to make any purchases of
securities if borrowing exceeds 5% of its total assets.
(3) The Portfolio may not 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. The Portfolio reserves the right to purchase
securities with puts attached or with demand features.
(4) The Portfolio may not invest more than 35% of net assets in
non-investment grade debt securities. The Portfolio does not
intend to purchase more than 15% of non-investment grade debt
securities.
(5) The Portfolio may not purchase illiquid securities if more than
10% of the value of the Portfolio's net assets would be invested in
such securities.
(6) Though nondiversified, the Portfolio does not intend to
purchase more than 15% of assets in any one issuer.
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PURCHASES AND REDEMPTIONS OF SHARES
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Share certificates will not be issued unless requested in writing
by the investor. No charge will be made for share certificate requests. No
certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the investor
without charge. Amounts of more than $50 and less than $300,000 may be
transferred electronically at no charge to the investor. Amounts of $1,000
or more will be transmitted by wire, without charge, to the investor's
account at a domestic commercial bank that is a member of the Federal
Reserve System or to a correspondent bank. A charge of $5 is imposed on wire
transfers of less than $1,000. If the investor's bank is not a Federal
Reserve System member, failure of immediate notification to that bank by the
correspondent bank could result in a delay in crediting the funds to the
investor's bank account.
Telephone redemption requests which would require the redemption of
shares purchased by check or electronic funds transfer within the previous
10 business days may not be honored. The Fund reserves the right to modify
the telephone redemption privilege.
To change redemption instructions already given, shareholders must
send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004 Baltimore,
Kansas City, MO, 64105, with a voided copy of a check for the bank wiring
instructions to be added. If a voided check does not accompany the request,
then the request must be signature guaranteed by a commercial bank, savings
and loan association, trust company, member firm of any national securities
exchange, or certain credit unions. Further documentation may be required
from corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading on the New
York Stock Exchange is restricted, or an emergency exists, as determined by
the SEC, or if the Commission has ordered such a suspension for the
protection of shareholders. Redemption proceeds are normally mailed or wired
the next business day after a proper redemption request has been received,
unless redemptions have been suspended or postponed as described above.
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of the
net asset value of the Portfolio, whichever is less.
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DIVIDENDS AND DISTRIBUTIONS
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The Funds intend to continue to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code. If for any reason
the Fund should fail to qualify, it would be taxed as a corporation at the
Fund level, rather than passing through its income and gains to shareholders.
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.
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.
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VALUATION OF SHARES
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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
($ --------------/ ----------- shares) $__.__
Maximum sales charge
(3.75% of offering price) __.__
Offering price per share $__.__
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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 __.__% __.__%
Five Years __.__% __.__%
Ten Years __.__% __.__%
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, 1998, the
Portfolio yield for shares was _____% and its federal tax equivalent yield
was ____% for an investor in the 36% federal income tax bracket, and
_______% for an investor in the 39.6% federal income tax bracket.
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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, December 31, 1998).
Calvert Group was also the first to offer a family of socially responsible
mutual fund portfolios.
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TRUSTEES AND OFFICERS
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The Fund's Board of Trustees supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a
non-profit corporation which provides family planning services, nutrition,
maternal/child health care, and various health screening services. Mr. Baird
is a trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc., Calvert New World
Fund, Inc. and Calvert World Values Fund, Inc. DOB: 05/09/48. Address: 211
Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the
law firm of Snevily, Ely, Williams & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with
Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem Medical
Imaging in Allentown, Pennsylvania. DOB: 07/23/49. Address: 16 Iliahi
Street, Honolulu, Hawaii, 96817.
CHARLES E. DIEHL, Trustee. Mr. Diehl is a self-employed consultant
and is Vice President and Treasurer Emeritus of the George Washington
University. He has retired from University Support Services, Inc. of
Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life
Insurance Company, and is currently a Director of Servus Financial
Corporation. DOB: 10/13/22. Address: 1658 Quail Hollow Court, McLean,
Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman is managing partner
of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A
graduate of Harvard Medical School, he is Associate Professor of
Otolaryngology, Head and Neck Surgery at Georgetown University and George
Washington University Medical School, and past Chairman of the Department of
Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He
is included in The Best Doctors in America. DOB: 05/23/48. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. He is also a Chartered Financial
Analyst and an accredited senior business appraiser. DOB: 12/08/32. Address:
3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert
Social Investment Foundation, organizing director of the Community Capital
Bank in Brooklyn, New York, and a financial consultant to various
organizations. In addition, he is a director of the Community Bankers Mutual
Fund of Denver, Colorado, a director of Ariel Funds, and the Treasurer and
Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey
is a trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund, Inc.
Mr. Guffey has been advised that the Securities and Exchange
Commission ("SEC") has entered an order against him relating to his former
service as a director of Community Bankers Mutual Fund, Inc. This fund is
not connected with any Calvert Fund or the Calvert Group and ceased
operations in September, 1994. Mr. Guffey consented to the entry of the
order without admitting or denying the findings in the order. The order
contains findings (1) that the Community Bankers Mutual Fund's prospectus
and statement of additional information were materially false and misleading
because they misstated or failed to state material facts concerning the
pricing of fund shares and the percentage of illiquid securities in the
fund's portfolio and that Mr. Guffey, as a member of the fund's board,
should have known of these misstatements and therefore violated the
Securities Act of 1933; (2) that the price of the fund's shares sold to the
public was not based on the current net asset value of the shares, in
violation of the Investment Company Act of 1940 (the "Investment Company
Act"); and (3) that the board of the fund, including Mr. Guffey, violated
the Investment Company Act by directing the filing of a materially false
registration statement. The order directed Mr. Guffey to cease and desist
from committing or causing future violations and to pay a civil penalty of
$5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve
as a Trustee or Director of mutual funds. DOB: 05/15/48. Address: 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. Ms. Krumsiek is
the President of each of the investment companies, except for Calvert Social
Investment Fund, of which she is the Senior Vice President. Prior to joining
Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund
Distributors, Inc. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings
Bank. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C.
20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director
and Secretary of Grady, Berwald and Co., Inc., and Director and President of
Chelsea Securities, Inc. He is the Senior Vice President of First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert
Cash Reserves, and The Calvert Fund. DOB: 10/07/37. Address: Box 93,
Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of
each of the investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of Group Serve, Inc., an internet company focused on
community building collaborative tools, and an officer, director and
shareholder of Silby, Guffey & Company, Inc., which serves as general
partner of Calvert Social Venture Partners ("CSVP"). CSVP is a venture
capital firm investing in socially responsible small companies. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 07/20/48. Address:
1715 18th Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a director
and Senior Vice President of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers, L.L.C.,
and a director and officer of Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior
Vice President and Chief Financial Officer of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in the
Calvert Group of Funds. Mr. Wolfsheimer is Vice President and Treasurer of
Calvert-Sloan Advisers, L.L.C., and a director of Calvert Distributors, Inc.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also
Vice President and Secretary of Calvert-Sloan Advisers, L.L.C., a director
of Calvert Distributors, Inc., and is an officer of Acacia National Life
Insurance Company. DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of the
other investment companies in the Calvert Group of Funds, except for Calvert
New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert Group of Funds. DOB:
10/21/56.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds and Secretary and
provides counsel to the Calvert Social Investment Foundation. Prior to
working at Calvert Group, Ms. Duke was an Associate in the Investment
Management Group of the Business and Finance Department at Drinker Biddle &
Reath. DOB: 09/07/68.
The address of 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, Ms. Krumsiek and Kruvant 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 1998, Trustees of the Fund not affiliated with the Fund's
Advisor were paid $_______ and $________ by the Long-Term Portfolio.
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.
Trustee Compensation Table
Fiscal Year 1998 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Trustee of Registrant Trustee**
Expenses*
Name of Trustee
Richard L. Baird, Jr. $_____ $0 $_____
Frank H. Blatz, Jr. $_____ $0 $_____
Frederick T. Borts $_____ $0 $_____
Charles E. Diehl $_____ $_____ $_____
Douglas E. Feldman $_____ $0 $_____
Peter W. Gavian $_____ $_____ $_____
John G. Guffey, Jr. $_____ $0 $_____
M. Charito Kruvant $_____ $_____ $_____
Arthur J. Pugh $_____ $_____ $_____
D. Wayne Silby $_____ $0 $_____
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of
their compensation. As of December 31, 1998, total deferred compensation,
including dividends and capital appreciation, was $_________,$_________,
$_________ and $_________, for each trustee, respectively.
**As of December 31, 1998. The Fund Complex consists of nine (9) registered
investment companies.
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INVESTMENT ADVISOR
- ------------------------------------------------------------------------------
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, a
subsidiary of Calvert Group, Ltd., which is a controlled subsidiary of
Ameritas-Acacia Mutual Holding Company.
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 1996, 1997, and 1998 were $322,713, $307,550, and $_____,
respectively.
For Portfolios with multiple classes, investment advisory fees are
allocated as a Portfolio-level expense based on net assets.
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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. 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 administrative service
fees paid by the Portfolio to CASC for fiscal years 1996, 1997, and 1998
were $3,934, $4,158, and $_______, respectively.
Administrative service fees are allocated as a class-level expense,
again based on net assets.
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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.
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INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- ------------------------------------------------------------------------------
PricewaterhouseCoopers LLP has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1999. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, 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.
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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. For Class B and Class C shares,
CDI receives any CDSC paid.
CTFR Long-Term
Class A Shares are offered at net asset value plus a front-end sales charge
as follows:
As a % of As a % of Allowed to
Amount of offering net amount Brokers as a %
Investment price invested of offering 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 receives any front-end sales charge. A portion of the front-end
sales charge may be reallowed to dealers. The aggregate amount of sales
charges (gross underwriting commissions) and the net amount retained by CDI
(i.e., not reallowed to dealers) for the last 3 fiscal years are:
1996
Gross Net
$_____ $_____
1997
Gross Net
$_____ $_____
1998
Gross Net
$_____ $_____
Fund Trustees and certain other affiliated persons of the Fund are
exempt from the sales charge since the distribution costs are minimal to
persons already familiar with the Fund. Other groups are exempt due to
economies of scale in distribution. See Exhibit A to the Prospectus.
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.
CDI, makes a continuous offering of the Fund's securities on a
"best efforts" basis. Under the terms of the agreement, CDI is entitled to
receive, pursuant to the Distribution Plans, a distribution fee and a
service fee from the Fund based on the average daily net assets of each
Portfolio's respective Classes. These fees are paid pursuant to the Fund's
Distribution Plan. The Distribution Plan Expenses (includes both
distribution fees and services fees) paid by each fund (all classes) to CDI
for the fiscal year ended December 31, 1998, is as follows:
Distribution Plan Expenses
CTFR Long Term $______
Of the distribution expenses paid by Class A Shares in fiscal year
1998, $________ was used to compensate dealers for their share distribution
promotional services. $_________ was used for the printing and mailing of
prospectuses and sales materials to investors (other than current
shareholders), and the remainder partially financed advertising.
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PORTFOLIO TRANSACTIONS
- ------------------------------------------------------------------------------
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. The Fund's Advisor makes
investment decisions and the choice of brokers and dealers 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 execution capability and trading
expertise considering, among other factors, the overall reasonableness of
the brokerage commissions, current market conditions, size and timing of the
order, difficulty of execution, per share price, etc.
For the last three fiscal years, total brokerage commissions paid
are as follows:
1996 1997 1998
CTFR Long-Term $___ $___ $___
The Fund did not pay any brokerage commissions to affiliated
persons during the last three fiscal years.
While the Fund's Advisor select brokers primarily on the basis of
best execution, in some cases they may direct transactions to brokers based
on the quality and amount of the research and research-related services
which the brokers provide to them. These services are of the type described
in Section 28(e) of the Securities Exchange Act of 1934 and may include
analyses of the business or prospects of a company, industry or economic
sector, or statistical and pricing services. If, in the judgment of the
Advisor, the Fund or other accounts managed by them will be benefited by
supplemental research services, they are authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or
through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software used in
security analyses; providing portfolio performance evaluation and technical
market analyses; and providing other services relevant to the investment
decision making process. It is the policy of the Advisor that such research
services will be used for the benefit of the Fund as well as other Calvert
Group funds and managed accounts.
For the fiscal year ended December 31, 1998, the Fund, through its
Advisor, directed brokerage for research services in the following amounts:
Related
Portfolio Amount of Transactions Commissions
CTFR Long-Term $___ $___
The Portfolio turnover rates for the last two fiscal years are as
follows:
1997 1998
CTFR Long-Term ____% ___%
- ------------------------------------------------------------------------------
GENERAL INFORMATION
- ------------------------------------------------------------------------------
The Portfolio is an open-end, non-diversified investment management
investment company. It 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 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), the Institutional
Class (offered in a separate prospectus), and Class T, also known as The
Advisors Group Tax-Free Reserve Fund (offered in a separate prospectus).
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 Fund, shareholders of each class are entitled to share pro rata in
the net assets belonging to that series available for distribution.
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 you own, except that
matters affecting classes differently, such as Distribution Plans, will be
voted on separately by the affected class(es).
- ------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ------------------------------------------------------------------------------
As of _____, 1999, the following shareholders owned of record 5% or
more of the class of the Fund shown:
Name and Address % of Ownership
[insert info]
- ------------------------------------------------------------------------------
APPENDIX
- ------------------------------------------------------------------------------
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range of
public facilities, the refunding of outstanding obligations, the obtaining
of funds for general operating expenses, and the lending of funds to other
public institutions and facilities. In addition, certain types of private
activity bonds are issued by or on behalf of public authorities to obtain
funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on
them is exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private activity
bonds used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities may be exempt from
federal income tax, current federal tax law places substantial limitations
on the size of such issues.
Municipal obligations are generally classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise tax or other specific revenue source but
not from the general taxing power. Tax-exempt private activity bonds are in
most cases revenue bonds and do not generally carry the pledge of the credit
of the issuing municipality. There are, of course, variations in the
security of municipal obligations both within a particular classification
and among classifications.
Municipal obligations are generally traded on the basis of a quoted
yield to maturity, and the price of the security is adjusted so that
relative to the stated rate of interest it will return the quoted rate to
the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three months
and one year. Pre-Refunded Bonds with longer nominal maturities that are due
to be retired with the proceeds of an escrowed subsequent issue at a date
within one year and three years of the time of acquisition are also
considered short-term and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This
distinction is in recognition of the differences between short-term credit
risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable strength of
the preceding grades. Market access for refinancing, in particular, is
likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required
of an investment security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's municipal
bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to
pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in small degree.
They are rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to be
bound by the terms and conditions applicable to Letters of Intent appearing
in the Prospectus and the Statement of Additional Information for the Fund
and the provisions described below as they may be amended from time to time
by the Fund. Such amendments will apply automatically to existing Letters of
Intent.
I intend to invest in the shares of:_______________ Fund or
Portfolio name) during the thirteen (13) month period from the date of my
first purchase pursuant to this Letter (which cannot be more than ninety
(90) days prior to the date of this Letter or my Fund Account Application
Form, whichever is applicable), an aggregate amount (excluding any
reinvestments of distributions) of at least fifty thousand dollars ($50,000)
which, together with my current holdings of the Fund (at public offering
price on date of this Letter or my Fund Account Application Form, whichever
is applicable), will equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. "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
Signature of Investor(s)
Date
Signature of Investor(s)
Date
<PAGE>
Calvert Tax-Free Reserves
California Money Market Portfolio
Statement of Additional Information
April 30, 1999
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
National Financial Data Services, Inc.
330 W. 9th Street
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
250 West Pratt Street
Baltimore, Maryland 21201
TABLE OF CONTENTS
Investment Policies 2
Investment Restrictions 4
Purchases and Redemptions of Shares 5
Dividends and Distributions 5
Tax Matters 6
Valuation of Shares 6
Calculation of Yield and Total Return 6
Advertising 7
Trustees and Officers 7
Investment Advisor 9
Administrative Services 10
Transfer and Shareholder Servicing Agents 10
Independent Accountants and Custodians 10
Method of Distribution
Portfolio Transactions 11
General Information 11
Control Persons and Principal Holders of Securities 11
Appendix 11
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1999
CALVERT TAX-FREE RESERVES
California Money Market Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
- ------------------------------------------------------------------------------
New Account Information
(800) 368-2748
(301) 951-4820
Shareholder Services
(800) 368-2745
Broker Services
(800) 368-2746
(301) 951-4850
TDD for the Hearing- Impaired
(800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Portfolio's Prospectuses, dated April 30, 1999, which may be
obtained free of charge by writing the Fund at the above address or calling
the telephone numbers listed above.
The audited financial statements in the Portfolio's Annual Report
to Shareholders dated December 31, 1998, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A
copy of the Annual Report may be obtained free of charge by writing or
calling the Portfolio.
- ------------------------------------------------------------------------------
INVESTMENT POLICIES
- ------------------------------------------------------------------------------
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.
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 OBLIGATIONS AND Demand Notes
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 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.
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.
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. 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 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." 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.
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.
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.
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. When issued securities do not earn income until they have in fact been
issued.
When the Portfolio purchases a when-issued security, 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 when-issued
purchase, thereby ensuring the transaction is unleveraged.
- ------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
Fundamental Investment Restrictions
The Portfolio has adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of
the holders of a majority of the outstanding shares of the Portfolio.
(1) The Portfolio may not make any investment inconsistent
with its classification as a diversified investment
company under the 1940 Act.
(2) The Portfolio may not concentrate its investments in
the securities of issuers primarily engaged in any
particular industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured
thereby), or domestic bank money market instruments.
(3) The Portfolio may not issue senior securities or
borrow money, except from banks for temporary or emergency
purposes and then only in an amount up to 33 1/3% of the
value of its total assets or as permitted by law and
except by engaging in reverse repurchase agreements, where
allowed. In order to secure any permitted borrowings and
reverse repurchase agreements under this section, the
Portfolio may pledge, mortgage or hypothecate its assets.
(4) The Portfolio may not underwrite the securities of
other issuers, except as allowed by law or to the extent
that the purchase of municipal obligations in accordance
with its investment objective and policies, either
directly from the issuer, or from an underwriter for an
issuer, may be deemed an underwriting.
(5) The Portfolio may not invest directly in commodities
or real estate, although it may invest in securities which
are secured by real estate or real estate mortgages and
securities of issuers which invest or deal in commodities,
commodity futures, real estate or real estate mortgages.
(6) The Portfolio may not make loans, other than through
the purchase of money market instruments and repurchase
agreements or by the purchase of bonds, debentures or
other debt securities, or as permitted by law. The
purchase of all or a portion of an issue of publicly or
privately distributed debt obligations in accordance with
its investment objective, policies and restrictions, shall
not constitute the making of a loan.
Nonfundamental Investment Restrictions
The Board of Trustees has adopted the following nonfundamental
investment restrictions. A nonfundamental investment restriction can be
changed by the Board at any time without a shareholder vote.
(1) The Portfolio may not purchase common stocks, preferred stocks,
warrants, or other equity securities.
(2) The Portfolio does not intend to make any purchases of
securities if borrowing exceeds 5% of its total assets.
(3) The Portfolio may not sell securities short, purchase
securities on margin, or write put or call options. The
Portfolio reserves the right to purchase securities with puts
attached or with demand features.
(4) The Portfolio may not write or purchase put or call options.
- ------------------------------------------------------------------------------
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.
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.
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TAX MATTERS
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The Fund intends to continue to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code ("Code"). If for
any reason the Fund should fail to qualify, it would be taxed as a
corporation at the Fund level, rather than passing through its income and
gains to shareholders.
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.
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VALUATION OF SHARES
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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, 12/31/98
$________/_________ shares $1.00
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CALCULATION OF YIELD
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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, 1998, the yield was _____% and
its effective yield _____%.
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, 1998, the federal tax equivalent yield for an investor in the
36% income tax bracket was ___%, and ___% for an investor in the 39.6% tax
bracket.
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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, December 31, 1998).
Calvert Group was also the first to offer a family of socially responsible
mutual fund portfolios.
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TRUSTEES AND OFFICERS
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The Fund's Board of Trustees supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a
non-profit corporation which provides family planning services, nutrition,
maternal/child health care, and various health screening services. Mr. Baird
is a trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc., Calvert New World
Fund, Inc. and Calvert World Values Fund, Inc. DOB: 05/09/48. Address: 211
Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the
law firm of Snevily, Ely, Williams & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with
Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem Medical
Imaging in Allentown, Pennsylvania. DOB: 07/23/49. Address: 16 Iliahi
Street, Honolulu, Hawaii, 96817.
CHARLES E. DIEHL, Trustee. Mr. Diehl is a self-employed consultant
and is Vice President and Treasurer Emeritus of the George Washington
University. He has retired from University Support Services, Inc. of
Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life
Insurance Company, and is currently a Director of Servus Financial
Corporation. DOB: 10/13/22. Address: 1658 Quail Hollow Court, McLean,
Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman is managing partner
of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A
graduate of Harvard Medical School, he is Associate Professor of
Otolaryngology, Head and Neck Surgery at Georgetown University and George
Washington University Medical School, and past Chairman of the Department of
Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He
is included in The Best Doctors in America. DOB: 05/23/48. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. He is also a Chartered Financial
Analyst and an accredited senior business appraiser. DOB: 12/08/32. Address:
3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert
Social Investment Foundation, organizing director of the Community Capital
Bank in Brooklyn, New York, and a financial consultant to various
organizations. In addition, he is a director of the Community Bankers Mutual
Fund of Denver, Colorado, a director of Ariel Funds, and the Treasurer and
Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey
is a trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund, Inc.
Mr. Guffey has been advised that the Securities and Exchange
Commission ("SEC") has entered an order against him relating to his former
service as a director of Community Bankers Mutual Fund, Inc. This fund is
not connected with any Calvert Fund or the Calvert Group and ceased
operations in September, 1994. Mr. Guffey consented to the entry of the
order without admitting or denying the findings in the order. The order
contains findings (1) that the Community Bankers Mutual Fund's prospectus
and statement of additional information were materially false and misleading
because they misstated or failed to state material facts concerning the
pricing of fund shares and the percentage of illiquid securities in the
fund's portfolio and that Mr. Guffey, as a member of the fund's board,
should have known of these misstatements and therefore violated the
Securities Act of 1933; (2) that the price of the fund's shares sold to the
public was not based on the current net asset value of the shares, in
violation of the Investment Company Act of 1940 (the "Investment Company
Act"); and (3) that the board of the fund, including Mr. Guffey, violated
the Investment Company Act by directing the filing of a materially false
registration statement. The order directed Mr. Guffey to cease and desist
from committing or causing future violations and to pay a civil penalty of
$5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve
as a Trustee or Director of mutual funds. DOB: 05/15/48. Address: 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. Ms. Krumsiek is
the President of each of the investment companies, except for Calvert Social
Investment Fund, of which she is the Senior Vice President. Prior to joining
Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund
Distributors, Inc. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings
Bank. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C.
20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director
and Secretary of Grady, Berwald and Co., Inc., and Director and President of
Chelsea Securities, Inc. He is the Senior Vice President of First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert
Cash Reserves, and The Calvert Fund. DOB: 10/07/37. Address: Box 93,
Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of
each of the investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of Group Serve, Inc., an internet company focused on
community building collaborative tools, and an officer, director and
shareholder of Silby, Guffey & Company, Inc., which serves as general
partner of Calvert Social Venture Partners ("CSVP"). CSVP is a venture
capital firm investing in socially responsible small companies. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 07/20/48. Address:
1715 18th Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a director
and Senior Vice President of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers, L.L.C.,
and a director and officer of Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior
Vice President and Chief Financial Officer of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in the
Calvert Group of Funds. Mr. Wolfsheimer is Vice President and Treasurer of
Calvert-Sloan Advisers, L.L.C., and a director of Calvert Distributors, Inc.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also
Vice President and Secretary of Calvert-Sloan Advisers, L.L.C., a director
of Calvert Distributors, Inc., and is an officer of Acacia National Life
Insurance Company. DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of the
other investment companies in the Calvert Group of Funds, except for Calvert
New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert Group of Funds. DOB:
10/21/56.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds and Secretary and
provides counsel to the Calvert Social Investment Foundation. Prior to
working at Calvert Group, Ms. Duke was an Associate in the Investment
Management Group of the Business and Finance Department at Drinker Biddle &
Reath. DOB: 09/07/68.
The address of 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, Ms. Krumsiek and Kruvant 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 1998, Trustees of the Fund not affiliated with the Fund's
Advisor were paid $_______ by the Portfolio. 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.
Trustee Compensation Table
Fiscal Year 1998 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Trustee of Registrant Trustee**
Expenses*
Name of Trustee
Richard L. Baird, Jr. $_____ $0 $_____
Frank H. Blatz, Jr. $_____ $0 $_____
Frederick T. Borts $_____ $0 $_____
Charles E. Diehl $_____ $_____ $_____
Douglas E. Feldman $_____ $0 $_____
Peter W. Gavian $_____ $_____ $_____
John G. Guffey, Jr. $_____ $0 $_____
M. Charito Kruvant $_____ $_____ $_____
Arthur J. Pugh $_____ $_____ $_____
D. Wayne Silby $_____ $0 $_____
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of
their compensation. As of December 31, 1998, total deferred compensation,
including dividends and capital appreciation, was $_________, $_________,
$_________ and $_________, for each trustee, respectively.
**As of December 31, 1998. The Fund Complex consists of nine (9) registered
investment companies.
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INVESTMENT ADVISOR
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The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, a
subsidiary of Calvert Group, Ltd., which is a controlled subsidiary of
Ameritas-Acacia Mutual Holding Company.
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 1996,
1997, and 1998 fiscal years were $1,691,140, $1,643,147, and $_____,
respectively.
The Advisor may voluntarily reimburse the Portfolio for expenses.
For 1996, $117,823 in expenses was reimbursed, for 1997, $164,315, and for
1998, $_____.
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ADMINISTRATIVE SERVICES
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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. 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 administrative service
fees paid by the Portfolio to CASC for 1996, 1997, and 1998, were $24,770,
$26,655, and $______, respectively.
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TRANSFER AND SHAREHOLDER SERVICING AGENTS
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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.
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INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- ------------------------------------------------------------------------------
PricewaterhouseCoopers LLP has been selected by the Board of
Trustees to serve as independent auditors for fiscal year 1999. 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.
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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, 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.
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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.
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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.
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 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 you own.
- ------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ------------------------------------------------------------------------------
As of ______ 1999, the following shareholders owned of record 5% or
more of the Portfolio as shown:
Name and Address % of Ownership
[insert info]
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APPENDIX
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Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range of
public facilities, the refunding of outstanding obligations, the obtaining
of funds for general operating expenses, and the lending of funds to other
public institutions and facilities. In addition, certain types of private
activity bonds are issued by or on behalf of public authorities to obtain
funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on
them is exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private activity
bonds used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities may be exempt from
federal income tax, current federal tax law places substantial limitations
on the size of such issues.
Municipal obligations are generally classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise tax or other specific revenue source, but
not from the general taxing power. Tax-exempt private activity bonds are in
most cases revenue bonds and do not generally carry the pledge of the credit
of the issuing municipality. There are, of course, variations in the
security of municipal obligations, both within a particular classification
and among classifications.
Municipal obligations are generally traded on the basis of a quoted
yield to maturity, and the price of the security is adjusted so that
relative to the stated rate of interest it will return the quoted rate to
the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three months
and one year. Pre-Refunded Bonds with longer nominal maturities that are due
to be retired with the proceeds of an escrowed subsequent issue at a date
within one year and three years of the time of acquisition are also
considered short-term and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This
distinction is in recognition of the differences between short-term credit
risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable strength of
the preceding grades. Market access for refinancing, in particular, is
likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required
of an investment security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's municipal
bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to
pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in small degree.
They are rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
Calvert Tax-Free Reserves
Vermont Municipal Portfolio
Statement of Additional Information
April 30, 1999
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
National Financial Data Services, Inc.
330 W. 9th Street
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers
250 West Pratt Street
Baltimore, Maryland 21201
TABLE OF CONTENTS
Investment Policies 2
Investment Restrictions 7
Purchases and Redemptions of Shares 8
Dividends and Distributions 8
Tax Matters 9
Valuation of Shares 9
Calculation of Yield and Total Return 10
Advertising 11
Trustees and Officers 12
Investment Advisor 14
Administrative Services 15
Transfer and shareholder Servicing Agents 15
Independent Accountants and Custodians 15
Method of Distribution 15
Portfolio Transactions 16
General Information 17
Control Persons and Principal Holders of Securities 17
Appendix 17
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1999
CALVERT TAX-FREE RESERVES
Vermont Municipal Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
- ------------------------------------------------------------------------------
New Account Information
(800) 368-2748
(301) 951-4820
Shareholder Services
(800) 368-2745
Broker Services
(800) 368-2746
(301) 951-4850
TDD for the Hearing- Impaired
(800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
with the Portfolio's Prospectuses, dated April 30, 1999, which may be
obtained free of charge by writing the Fund at the above address or calling
the telephone numbers listed above.
The audited financial statements in the Portfolio's Annual Report
to Shareholders dated December 31, 1998, are expressly incorporated by
reference and made a part of this Statement of Additional Information. A
copy of the Annual Report may be obtained free of charge by writing or
calling the Portfolio.
- ------------------------------------------------------------------------------
INVESTMENT POLICIES
- ------------------------------------------------------------------------------
The Portfolio invests primarily in a nondiversified portfolio of
municipal obligations of the state of Vermont and its political subdivisions
("Vermont Municipal Obligations"). Under normal market conditions, the
Portfolio attempts to invest at least 65% of the value of its assets in
Vermont Municipal Obligations. The Portfolio will also attempt to invest the
remaining 35% of its total assets in these obligations, but may invest it in
municipal obligations of other states, territories, and possessions of the
United States, the District of Columbia, and their respective authorities,
agencies, instrumentalities, and political subdivisions. Dividends you
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.
Since the Portfolio is nondiversified, it may invest its assets in
fewer issuers than if it were diversified. As a result, the Portfolio's
performance may be more directly impacted by changes in conditions affecting
those issuers than it would be if the Portfolio were investing in a greater
number of issuers. A complete explanation of municipal obligations and
municipal bond and note ratings is set forth in the Appendix.
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 Obligations and Demand Notes
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 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.
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.
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. 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 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." Unconditional puts are readily exercisable in
the event of a default in payment of principal or interest on the underlying
securities.
Temporary Investments
From time to time for liquidity purposes or pending the investment
of the proceeds of the sale of Portfolio shares, the Portfolio may invest in
and derive up to 20% of its income from taxable short-term obligations of
the U.S. Government, its agencies and instrumentalities. Interest earned
from such taxable investments will be taxable to investors as ordinary
income unless the investors are otherwise exempt from taxation.
The Portfolio intends to minimize taxable income through
investment, when possible, in short-term tax-exempt securities. To minimize
taxable income, the Portfolio may also hold cash which is not earning income.
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.
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.
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. When issued securities do not earn income until they have in fact been
issued.
When the Portfolio purchases a when-issued security, 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 when-issued
purchase, thereby ensuring the transaction is unleveraged.
Non-Investment Grade Debt Securities
Non-investment grade debt securities are lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's, known as "junk bonds." These securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. (See Appendix for a description of the ratings.) These
securities involve greater risk of default or price declines due to changes
in the issuer's creditworthiness than investment-grade debt securities.
Because the market for lower-rated securities may be thinner and less active
than for higher-rated securities, there may be market price volatility for
these securities and limited liquidity in the resale market. Market prices
for these securities may decline significantly in periods of general
economic difficulty or rising interest rates.
The quality limitation set forth in the Fund's investment policy is
determined immediately after the Fund's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment policy.
When purchasing non-investment grade debt securities, rated or
unrated, the Advisors prepare their own careful credit analysis to attempt
to identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
Transactions in Futures Contracts
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal bonds or on U.S. Treasury securities, or
options on such futures contracts, for hedging purposes only. The Portfolio
may sell such futures contracts in anticipation of a decline in the cost of
municipal bonds it holds or may purchase such futures contracts in
anticipation of an increase in the value of municipal bonds the Portfolio
intends to acquire. The Portfolio also is authorized to purchase and sell
other financial futures contracts which in the opinion of the Investment
Advisor provide an appropriate hedge for some or all of the Portfolio's
securities.
Because of low initial margin deposits made upon the opening of a
futures position, futures transactions involve substantial leverage. As a
result, relatively small movements in the price of the futures contract can
result in substantial unrealized gains or losses. Because the Portfolio will
engage in the purchase and sale of financial futures contracts solely for
hedging purposes, however, any losses incurred in connection therewith
should, if the hedging strategy is successful, be offset in whole or in part
by increases in the value of securities held by the Portfolio or decreases
in the price of securities the Portfolio intends to acquire.
Municipal bond index futures contracts commenced trading in June
1985, and it is possible that trading in such futures contracts will be less
liquid than that in other futures contracts. The trading of futures
contracts and options thereon is subject to certain market risks, such as
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention or other disruptions of normal trading activity,
which could at times make it difficult or impossible to liquidate existing
positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits" established
by contract markets, which limit the amount of fluctuation in the price of a
futures contract or option thereon during a single trading day. Once the
daily limit has been reached in the contract, no trades may be entered into
at a price beyond the limit, thus preventing the liquidation of open
positions. Prices of existing contracts have in the past moved the daily
limit on a number of consecutive trading days. The Portfolio will enter into
a futures position only if, in the judgment of the Investment Advisor, there
appears to be an actively traded secondary market for such futures contracts.
The successful use of transactions in futures contracts and options
thereon depends on the ability of the Investment Advisor to correctly
forecast the direction and extent of price movements of these instruments,
as well as price movements of the securities held by the Portfolio within a
given time frame. To the extent these prices remain stable during the period
in which a futures or option contract is held by the Portfolio, or move in a
direction opposite to that anticipated, the Portfolio may realize a loss on
the hedging transaction which is not fully or partially offset by an
increase in the value of the Portfolio's securities. As a result, the
Portfolio's total return for such period may be less than if it had not
engaged in the hedging transaction.
Description of Financial Futures Contracts
Futures Contracts. A futures contract obligates the seller of a
contract to deliver and the purchaser of a contract to take delivery of the
type of financial instrument called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual delivery
or acceptance of securities, or for a cash settlement, in most cases the
contracts are closed out before the delivery date without the delivery or
acceptance taking place. The Portfolio intends to close out its futures
contracts prior to the delivery date of such contracts.
The Portfolio may sell futures contracts in anticipation of a
decline in the value of its investments in municipal bonds. The loss
associated with any such decline could be reduced without employing futures
as a hedge by selling long-term securities and either reinvesting the
proceeds in securities with shorter maturities or by holding assets in cash.
This strategy, however, entails increased transaction costs in the form of
brokerage commissions and dealer spreads and will typically reduce the
Portfolio's average yields as a result of the shortening of maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to the
Portfolio's futures commission merchant and the relevant contract market,
which varies but is generally about 5% or less of the contract amount, must
be deposited with the broker. This amount is known as "initial margin," and
represents a "good faith" deposit assuring the performance of both the
purchaser and the seller under the futures contract. Subsequent payments to
and from the broker, known as "variation margin," are required to be made on
a daily basis as the price of the futures contract fluctuates, making the
long or short positions in the futures contract more or less valuable, a
process known as "marking to the market." Prior to the settlement date of
the futures contract, the position may be closed out by taking an opposite
position which will operate to terminate the position in the futures
contract. A final determination of variation margin is then made, additional
cash is required to be paid to or released by the broker, and the purchaser
realizes a loss or gain. In addition, a commission is paid on each completed
purchase and sale transaction.
The sale of financial futures contracts provides an alternative
means of hedging the Portfolio against declines in the value of its
investments in municipal bonds. As such values decline, the value of the
Portfolio's position in the futures contracts will tend to increase, thus
offsetting all or a portion of the depreciation in the market value of the
Portfolio's fixed income investments which are being hedged. While the
Portfolio will incur commission expenses in establishing and closing out
futures positions, commissions on futures transactions may be significantly
lower than transaction costs incurred in the purchase and sale of fixed
income securities. In addition, the ability of the Portfolio to trade in the
standardized contracts available in the futures market may offer a more
effective hedging strategy than a program to reduce the average maturing of
portfolio securities, due to the unique and varied credit and technical
characteristics of the municipal debt instruments available to the
Portfolio. Employing futures as a hedge may also permit the Portfolio to
assume a hedging posture without reducing the yield on its investments,
beyond any amounts required to engage in futures trading.
The Portfolio may engage in the purchase and sale of futures
contracts on an index of municipal securities. These instruments provide for
the purchase or sale of a hypothetical portfolio of municipal bonds at a
fixed price in a stated delivery month. Unlike most other futures contracts,
however, a municipal bond index futures contract does not require actual
delivery of securities but results in a cash settlement based upon the
difference in value of the index between the time the contract was entered
into and the time it is liquidated.
The municipal bond index underlying the futures contracts traded by
the Portfolio is The Bond Buyer Municipal Bond Index, developed by The Bond
Buyer and the Chicago Board of Trade ("CBT"), the contract market on which
the futures contracts are traded. As currently structured, the index is
comprised of 40 tax-exempt term municipal revenue and general obligation
bonds. Each bond included in the index must be rated either A- or higher by
Standard & Poor's or A or higher by Moody's Investors Service and must have
a remaining maturity of 19 years or more. Twice a month new issues
satisfying the eligibility requirements are added to, and an equal number of
old issues will be deleted from, the index. The value of the index is
computed daily according to a formula based upon the price of each bond in
the index, as evaluated by four dealer-to-dealers brokers.
The Portfolio may also purchase and sell futures contracts on U.S.
Treasury bills, notes and bonds for the same types of hedging purposes. Such
futures contracts provide for delivery of the underlying security at a
specified future time for a fixed price, and the value of the futures
contract therefore generally fluctuates with movements in interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are traded on
the CBT, which, like other contract markets, assures the performance of the
parties to each futures contract through a clearing corporation, a nonprofit
organization managed by the exchange membership, which is also responsible
for handling daily accounting of deposits or withdrawals of margin.
The Portfolio may also purchase financial futures contracts when it
is not fully invested in municipal bonds in anticipation of an increase in
the cost of securities the Portfolio intends to purchase. As such securities
are purchased, an equivalent amount of futures contracts will be closed out.
In a substantial majority of these transactions, the Portfolio will purchase
municipal bonds upon termination of the futures contracts. Due to changing
market conditions and interest rate forecasts, however, a futures position
may be terminated without a corresponding purchase of securities.
Nevertheless, all purchases of futures contracts by the Portfolio will be
subject to certain restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter into
a long position in the underlying futures contract (that is, purchase the
futures contract), in the case of a "call" option, or a short position (sell
the futures contract), in the case of a "put" option, for a fixed price up
to a stated expiration date. The option is purchased for a non-refundable
fee, known as the "premium." Upon exercise of the option, the contract
market clearing house assigns each party to the option an opposite position
in the underlying futures contract. In the event of exercise, therefore, the
parties are subject to all of the risks of futures trading, such as payment
of initial and variation margin. In addition, the seller, or "writer," of
the option is subject to margin requirements on the option position. Options
on futures contracts are traded on the same contract markets as the
underlying futures contracts.
The Portfolio may purchase options on futures contracts for the
same types of hedging purposes described above in connection with futures
contracts. For example, in order to protect against an anticipated decline
in the value of securities it holds, the Portfolio could purchase put
options on futures contracts, instead of selling the underlying futures
contracts. Conversely, in order to protect against the adverse effects of
anticipated increases in the costs of securities to be acquired, the
Portfolio could purchase call options on futures contracts, instead of
purchasing the underlying futures contracts. The Portfolio generally will
sell options on futures contracts only to close out an existing position.
The Portfolio will not engage in transactions in such instruments
unless and until the Investment Advisor determines that market conditions
and the circumstances of the Portfolio warrant such trading. To the extent
the Portfolio engages in the purchase and sale of futures contracts or
options thereon, it will do so only at a level which is reflective of the
Investment Advisor's view of the hedging needs of the Portfolio, the
liquidity of the market for futures contracts and the anticipated
correlation between movements in the value of the futures or option contract
and the value of securities held by the Portfolio.
Restrictions on the Use of Futures Contracts and Options on Futures
Contracts. Under regulations of the Commodity Futures Trading Commission
("CFTC"), the futures trading activities described herein will not result in
the Portfolio being deemed to be a "commodity pool," as defined under such
regulations, provided that certain trading restrictions are adhered to. In
particular, CFTC regulations require that all futures and option positions
entered into by the Portfolio qualify as bona fide hedge transactions, as
defined under CFTC regulations, or, in the case of long positions, that the
value of such positions not exceed an amount of segregated funds determined
by reference to certain cash and securities positions maintained by the
Portfolio and accrued profits on such positions. In addition, the Portfolio
may not purchase or sell any such instruments if, immediately thereafter,
the sum of the amount of initial margin deposits on the Portfolio's existing
futures positions would exceed 5% of the market value of its net assets.
When the Portfolio purchases a futures contract, it will maintain
an amount of cash, cash equivalents (for example, commercial paper and daily
tender adjustable notes) or short-term high-grade fixed income securities in
a segregated account with the Portfolio's custodian, so that the amount so
segregated plus the amount of initial and variation margin held in the
account of its broker equals the market value of the futures contract,
thereby ensuring that the use of such futures is unleveraged.
Risk Factors in Transactions in Futures Contracts. The particular
municipal bonds comprising the index underlying the municipal bond index
futures contract may vary from the bonds held by the Portfolio. In addition,
the securities underlying futures contracts on U.S. Treasury securities will
not be the same as securities held by the Portfolio. As a result, the
Portfolio's ability effectively to hedge all or a portion of the value of
its municipal bonds through the use of futures contracts will depend in part
on the degree to which price movements in the index underlying the municipal
bond index futures contract, or the U.S. Treasury securities underlying
other futures contracts trade, correlate with price movements of the
municipal bonds held by the Portfolio.
For example, where prices of securities in the Portfolio do not
move in the same direction or to the same extent as the values of the
securities or index underlying a futures contract, the trading of such
futures contracts may not effectively hedge the Portfolio's investments and
may result in trading losses. The correlation may be affected by disparities
in the average maturity, ratings, geographical mix or structure of the
Portfolio's investments as compared to those comprising the index, and
general economic or political factors. In addition, the correlation between
movements in the value of the index underlying a futures contract may be
subject to change over time, as additions to and deletions from the index
alter its structure. In the case of futures contracts on U.S. Treasury
securities and options thereon, the anticipated correlation of price
movements between the U.S. Treasury securities underlying the futures or
options and municipal bonds may be adversely affected by economic,
political, legislative or other developments that have a disparate impact on
the respective markets for such securities. In the event that the Investment
Advisor determines to enter into transactions in financial futures contracts
other than the municipal bond index futures contract or futures on U.S.
Treasury securities, the risk of imperfect correlation between movements in
the prices of such futures contracts and the prices of municipal bonds held
by the Portfolio may be greater.
The trading of futures contracts on an index also entails the risk
of imperfect correlation between movements in the price of the futures
contract and the value of the underlying index. The anticipated spread
between the prices may be distorted due to differences in the nature of the
markets, such as margin requirements, liquidity and the participation of
speculators in the futures markets. The risk of imperfect correlation,
however, generally diminishes as the delivery month specified in the futures
contract approaches.
Prior to exercise or expiration, a position in futures contracts or
options thereon may be terminated only by entering into a closing purchase
or sale transaction. This requires a secondary market to the relevant
contract market. The Portfolio will enter into a futures or option position
only if there appears to be a liquid secondary market therefor, although
there can be no assurance that such a liquid secondary market will exist for
any particular contract at any specific time. Thus, it may not be possible
to close out a position once it has been established. Under such
circumstances, the Portfolio could be required to make continuing daily cash
payments of variation margin in the event of adverse price movements. In
such situation, if the Portfolio has insufficient cash, it may be required
to sell portfolio securities to meet daily variation margin requirements at
a time when it may be disadvantageous to do so. In addition, the Portfolio
may be required to perform under the terms of the futures or option
contracts it holds. The inability to close out futures or options positions
also could have an adverse impact on the Portfolio's ability effectively to
hedge its portfolio.
When the Portfolio purchases an option on a futures contract, its
risk is limited to the amount of the premium, plus related transaction
costs, although this entire amount may be lost. In addition, in order to
profit from the purchase of an option on a futures contract, the Portfolio
may be required to exercise the option and liquidate the underlying futures
contract, subject to the availability of a liquid secondary market. The
trading of options on futures contracts also entails the risk that changes
in the value of the underlying futures contract will not be fully reflected
in the value of the option, although the risk of imperfect correlation
generally tends to diminish as the maturity date of the futures contract or
expiration date of the option approaches.
"Trading Limits" or "Position Limits" may also be imposed on the
maximum number of contracts which any person may hold at a given time. A
contract market may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
The Investment Advisor does not believe that trading limits will have any
adverse impact on the strategies for hedging the Portfolio's investments.
Further, the trading of futures contracts is subject to the risk of
the insolvency of a brokerage firm or clearing corporation, which could make
it difficult or impossible to liquidate existing positions or to recover
excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate movements
within a given time frame.
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INVESTMENT RESTRICTIONS
- ------------------------------------------------------------------------------
Fundamental Investment Restrictions
The Portfolio has adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of
the holders of a majority of the outstanding shares of the Portfolio.
(1) The Portfolio may not make any investment inconsistent
with its classification as a nondiversified investment
company under the 1940 Act.
(2) The Portfolio may not concentrate its investments in
the securities of issuers primarily engaged in any
particular industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements secured
thereby), or domestic bank money market instruments.
(3) The Portfolio may not issue senior securities or
borrow money, except from banks for temporary or emergency
purposes and then only in an amount up to 33 1/3% of the
value of its total assets or as permitted by law and
except by engaging in reverse repurchase agreements, where
allowed. In order to secure any permitted borrowings and
reverse repurchase agreements under this section, the
Portfolio may pledge, mortgage or hypothecate its assets.
(4) The Portfolio may not underwrite the securities of
other issuers, except as allowed by law or to the extent
that the purchase of municipal obligations in accordance
with its investment objective and policies, either
directly from the issuer, or from an underwriter for an
issuer, may be deemed an underwriting.
(5) The Portfolio may not invest directly in commodities
or real estate, although it may invest in securities which
are secured by real estate or real estate mortgages and
securities of issuers which invest or deal in commodities,
commodity futures, real estate or real estate mortgages.
(6) The Portfolio may not make loans, other than through
the purchase of money market instruments and repurchase
agreements or by the purchase of bonds, debentures or
other debt securities, or as permitted by law. The
purchase of all or a portion of an issue of publicly or
privately distributed debt obligations in accordance with
its investment objective, policies and restrictions, shall
not constitute the making of a loan.
Nonfundamental Investment Restrictions
The Board of Trustees has adopted the following nonfundamental
investment restrictions. A nonfundamental investment restriction can be
changed by the Board at any time without a shareholder vote.
(1) The Portfolio may not purchase common stocks, preferred stocks,
warrants, or other equity securities.
(2) The Portfolio does not intend to make any purchases of
securities if borrowing exceeds 5% of its total assets.
(3) The Portfolio may not 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. The Portfolio reserves the right to purchase
securities with puts attached or with demand features.
(4) The Portfolio may not write or purchase put or call options.
(5) The Portfolio may not purchase illiquid securities if more than
10% of the value of the Portfolio's net assets would be invested in
such securities.
(6) Though nondiversified, the Portfolio does not intend to
purchase more than 15% of assets in any one issuer.
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PURCHASES AND REDEMPTIONS OF SHARES
- ------------------------------------------------------------------------------
Share certificates will not be issued unless requested in writing
by the investor. No charge will be made for share certificate requests. No
certificates will be issued for fractional shares.
Amounts redeemed by check redemption may be mailed to the investor
without charge. Amounts of more than $50 and less than $300,000 may be
transferred electronically at no charge to the investor. Amounts of $1,000
or more will be transmitted by wire, without charge, to the investor's
account at a domestic commercial bank that is a member of the Federal
Reserve System or to a correspondent bank. A charge of $5 is imposed on wire
transfers of less than $1,000. If the investor's bank is not a Federal
Reserve System member, failure of immediate notification to that bank by the
correspondent bank could result in a delay in crediting the funds to the
investor's bank account.
Telephone redemption requests which would require the redemption of
shares purchased by check or electronic funds transfer within the previous
10 business days may not be honored. The Fund reserves the right to modify
the telephone redemption privilege.
To change redemption instructions already given, shareholders must
send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004 Baltimore,
Kansas City, MO 64105, with a voided copy of a check for the bank wiring
instructions to be added. If a voided check does not accompany the request,
then the request must be signature guaranteed by a commercial bank, savings
and loan association, trust company, member firm of any national securities
exchange, or certain credit unions. Further documentation may be required
from corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is closed
(other than customary weekend and holiday closings), when trading on the New
York Stock Exchange is restricted, or an emergency exists, as determined by
the SEC, or if the Commission has ordered such a suspension for the
protection of shareholders. Redemption proceeds are normally mailed or wired
the next business day after a proper redemption request has been received,
unless redemptions have been suspended or postponed as described above.
Redemption proceeds are normally paid in cash. However, the
Portfolio has the right to redeem shares in assets other than cash for
redemption amounts exceeding, in any 90-day period, $250,000 or 1% of the
net asset value of the Portfolio, whichever is less.
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DIVIDENDS AND DISTRIBUTIONS
- ------------------------------------------------------------------------------
The Funds intend to continue to qualify as regulated investment
companies under Subchapter M of the Internal Revenue Code. If for any reason
the Fund should fail to qualify, it would be taxed as a corporation at the
Fund level, rather than passing through its income and gains to shareholders.
The Portfolio declares and pays monthly dividends of its net income
to shareholders of record as of the close of business on each designated
monthly record date. Net investment income consists of the interest income
earned on investments (adjusted for amortization of original issue discounts
or premiums or market premiums), less estimated expenses. Dividends and
distributions paid may differ among the classes.
Dividends are automatically reinvested at net asset value in
additional shares. Shareholders may elect to have their dividends and
distributions paid out monthly in cash. Capital gains, if any, are normally
paid once a year and will be automatically reinvested at net asset value in
additional shares, unless you choose otherwise. You may elect to have your
dividends and distributions paid out monthly in cash. You may also request
to have your dividends and distributions from the Portfolio invested in
shares of any other Calvert Group Fund, to be invested in that Fund or
Portfolio without a sales charge. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot deliver the
check, or if it remains uncashed for six months, it, as well as future
dividends and distributions, will be reinvested in additional shares.
The Portfolio's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally subject to
federal or Vermont state income tax; however, under the Code, dividends
attributable to interest on certain private activity bonds must be included
in federal alternative minimum taxable income for the purpose of determining
liability (if any) for individuals and for corporations. The Portfolio's
dividends derived from taxable interest and distributions of net short-term
capital gains whether taken in cash or reinvested in additional shares, are
taxable to shareholders as ordinary income and do not qualify for the
dividends received deduction for corporations.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is not
deductible. Furthermore, entities or persons who are "substantial users" (or
persons related to "substantial users") of facilities financed by private
activity bonds should consult their tax advisers before purchasing shares of
the Portfolio. "Substantial user" is generally defined as including a
"non-exempt person" who regularly uses in trade or business a part of a
facility financed from the proceeds of private activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of Portfolio
shares from the tax basis of those shares if the shares are exchanged for
shares of another Calvert Group Fund within 90 days of purchase. This
requirement applies only to the extent that the payment of the original
sales charge on the shares of the Portfolio causes a reduction in the sales
charge otherwise payable on the shares of the Calvert Group Fund acquired in
the exchange, and investors may treat sales charges excluded from the basis
of the original shares as incurred to acquire the new shares.
The Portfolio is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Portfolio if: (a) the shareholder's social security number or other taxpayer
identification number ("TIN") is not provided, or an obviously incorrect TIN
is provided; (b) the shareholder does not certify under penalties of perjury
that the TIN provided is the shareholder's correct TIN and that the
shareholder is not subject to backup withholding under section 3406(a)(1)(C)
of the Code because of underreporting (however, failure to provide
certification as to the application of section 3406(a)(1)(C) will result
only in backup withholding on capital gain dividends, not on redemptions);
or (c) the Fund is notified by the Internal Revenue Service that the TIN
provided by the shareholder is incorrect or that there has been
underreporting of interest or dividends by the shareholder. Affected
shareholders will receive statements at least annually specifying the amount
withheld.
In addition, the Portfolio is required to report to the Internal
Revenue Service the following information with respect to redemption
transactions in the Portfolio: (a) the shareholder's name, address, account
number and taxpayer identification number; (b) the total dollar value of the
redemptions; and (c) the Portfolio's identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders include:
corporations; financial institutions; tax-exempt organizations; individual
retirement plans; the U.S., a State, the District of Columbia, a U.S.
possession, a foreign government, an international organization, or any
political subdivision, agency or instrumentality of any of the foregoing
U.S. registered commodities or securities dealers; real estate investment
trusts; registered investment companies; bank common trust funds; certain
charitable trusts; and foreign central banks of issue. Non-resident aliens
also are generally not subject to either requirement but, along with certain
foreign partnerships and foreign corporations, may instead be subject to
withholding under section 1441 of the Code. Shareholders claiming exemption
from backup withholding and broker reporting should call or write the
Portfolio for further information.
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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
($___________/_________ shares) $--.--
Maximum sales charge
(3.75% of offering price) --.--
Offering price per share $--.--
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CALCULATION OF YIELD AND TOTAL RETURN
- ------------------------------------------------------------------------------
From time to time, the Portfolio advertises its "total return."
Total return is calculated separately for each class. Total return is
historical in nature and is not intended to indicate future performance.
Total return will be quoted for the most recent one-year period and the
period from inception of the Portfolio's offering of shares. Total return
quotations for periods in excess of one year represent the average annual
total return for the period included in the particular quotation. Total
return is a computation of the Portfolio's dividend yield plus or minus
realized or unrealized capital appreciation or depreciation, less fees and
expenses. All total return quotations reflect the deduction of the
Portfolio's maximum sales charge for shares, except quotations of "return
without maximum load," which do not deduct the sales charge. Thus, in the
formula below, for return without maximum load, P = the entire $1,000
hypothetical initial investment and does not reflect the deduction of any
sales charge. Note: "Total Return" as quoted in the Financial Highlights
section of the Fund's Prospectus and Annual Report to Shareholders, however,
per SEC instructions, does not reflect deduction of the sales charge, and
corresponds to "return without maximum load" as referred to herein. Return
without maximum load should be considered only by investors, such as
participants in certain pension plans, to whom the sales charge does not
apply, or for purposes of comparison only with comparable figures which also
do not reflect sales charges, such as Lipper averages. Total return is
computed according to the following formula:
P(1 +T)n = ERV
where P = a hypothetical initial payment of $1,000 (less the maximum sales
charge imposed during the period); T = average annual total return; n =
number of years and ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the 1, 5, or 10 year periods at the
end of such periods (or portions thereof if applicable).
Returns for the periods indicated are as follows:
Periods Ended
- ------------------------------------------------------------------------------
December 31, 1998 with Max Load w/o Max Load
One Year --% --%
Five Years --% --%
From Inception --% --%
(April 1, 1991)
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. Using this calculation, the Portfolio's yield for the month
ended December 31, 1998 was _____%.
The tax equivalent yield is the yield an investor would be required
to obtain from taxable investments to equal the Portfolio's yield, all or a
portion of which may be exempt from federal income taxes. The tax equivalent
yield is computed per class by taking the portion of the yield exempt from
federal income tax and multiplying the exempt yield by a factor based upon a
stated income tax rate, then adding the portion of the yield that is not
exempt from federal income taxes. The factor which is used to calculate the
tax equivalent yield is the reciprocal of the difference between 1 and the
applicable income tax rates, which will be stated in the advertisement.
For the thirty-day period ended December 31, 1998, the Portfolio
yield was ____% and its federal tax equivalent yield was ____% for an
investor in the 36% federal income tax bracket, and _____% for an investor
in the 39.6% federal income tax bracket.
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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, December 31, 1998).
Calvert Group was also the first to offer a family of socially responsible
mutual fund portfolios.
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TRUSTEES AND OFFICERS
- ------------------------------------------------------------------------------
The Fund's Board of Trustees supervises the Fund's activities and
reviews its contracts with companies that provide it with services.
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice
President for the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a
non-profit corporation which provides family planning services, nutrition,
maternal/child health care, and various health screening services. Mr. Baird
is a trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Calvert Variable Series, Inc., Calvert New World
Fund, Inc. and Calvert World Values Fund, Inc. DOB: 05/09/48. Address: 211
Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in the
law firm of Snevily, Ely, Williams & Blatz. He was formerly a partner with
Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
Westfield, New Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist with
Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem Medical
Imaging in Allentown, Pennsylvania. DOB: 07/23/49. Address: 16 Iliahi
Street, Honolulu, Hawaii, 96817.
CHARLES E. DIEHL, Trustee. Mr. Diehl is a self-employed consultant
and is Vice President and Treasurer Emeritus of the George Washington
University. He has retired from University Support Services, Inc. of
Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life
Insurance Company, and is currently a Director of Servus Financial
Corporation. DOB: 10/13/22. Address: 1658 Quail Hollow Court, McLean,
Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman is managing partner
of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A
graduate of Harvard Medical School, he is Associate Professor of
Otolaryngology, Head and Neck Surgery at Georgetown University and George
Washington University Medical School, and past Chairman of the Department of
Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He
is included in The Best Doctors in America. DOB: 05/23/48. Address: 7536
Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. He is also a Chartered Financial
Analyst and an accredited senior business appraiser. DOB: 12/08/32. Address:
3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the Calvert
Social Investment Foundation, organizing director of the Community Capital
Bank in Brooklyn, New York, and a financial consultant to various
organizations. In addition, he is a director of the Community Bankers Mutual
Fund of Denver, Colorado, a director of Ariel Funds, and the Treasurer and
Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey
is a trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert
New World Fund, Inc.
Mr. Guffey has been advised that the Securities and Exchange
Commission ("SEC") has entered an order against him relating to his former
service as a director of Community Bankers Mutual Fund, Inc. This fund is
not connected with any Calvert Fund or the Calvert Group and ceased
operations in September, 1994. Mr. Guffey consented to the entry of the
order without admitting or denying the findings in the order. The order
contains findings (1) that the Community Bankers Mutual Fund's prospectus
and statement of additional information were materially false and misleading
because they misstated or failed to state material facts concerning the
pricing of fund shares and the percentage of illiquid securities in the
fund's portfolio and that Mr. Guffey, as a member of the fund's board,
should have known of these misstatements and therefore violated the
Securities Act of 1933; (2) that the price of the fund's shares sold to the
public was not based on the current net asset value of the shares, in
violation of the Investment Company Act of 1940 (the "Investment Company
Act"); and (3) that the board of the fund, including Mr. Guffey, violated
the Investment Company Act by directing the filing of a materially false
registration statement. The order directed Mr. Guffey to cease and desist
from committing or causing future violations and to pay a civil penalty of
$5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve
as a Trustee or Director of mutual funds. DOB: 05/15/48. Address: 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. Ms. Krumsiek is
the President of each of the investment companies, except for Calvert Social
Investment Fund, of which she is the Senior Vice President. Prior to joining
Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund
Distributors, Inc. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings
Bank. DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C.
20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*DAVID R. ROCHAT, Senior Vice President and Trustee. Mr. Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director
and Secretary of Grady, Berwald and Co., Inc., and Director and President of
Chelsea Securities, Inc. He is the Senior Vice President of First Variable
Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert
Cash Reserves, and The Calvert Fund. DOB: 10/07/37. Address: Box 93,
Chelsea, Vermont 05038.
*D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of
each of the investment companies in the Calvert Group of Funds, except for
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of Group Serve, Inc., an internet company focused on
community building collaborative tools, and an officer, director and
shareholder of Silby, Guffey & Company, Inc., which serves as general
partner of Calvert Social Venture Partners ("CSVP"). CSVP is a venture
capital firm investing in socially responsible small companies. He is also a
Director of Acacia Mutual Life Insurance Company. DOB: 07/20/48. Address:
1715 18th Street, N.W., Washington, D.C. 20009.
RENO J. MARTINI, Senior Vice President. Mr. Martini is a director
and Senior Vice President of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and President of Calvert-Sloan Advisers, L.L.C.,
and a director and officer of Calvert New World Fund. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior
Vice President and Chief Financial Officer of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in the
Calvert Group of Funds. Mr. Wolfsheimer is Vice President and Treasurer of
Calvert-Sloan Advisers, L.L.C., and a director of Calvert Distributors, Inc.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is also
Vice President and Secretary of Calvert-Sloan Advisers, L.L.C., a director
of Calvert Distributors, Inc., and is an officer of Acacia National Life
Insurance Company. DOB: 08/12/47.
DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of the
other investment companies in the Calvert Group of Funds, except for Calvert
New World Fund, Inc. DOB: 09/09/50.
SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd. and an officer of each of
its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of Funds.
DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is
Associate General Counsel of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of
each of the other investment companies in the Calvert Group of Funds. DOB:
10/21/56.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Associate
General Counsel of Calvert Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an officer of each of the
other investment companies in the Calvert Group of Funds and Secretary and
provides counsel to the Calvert Social Investment Foundation. Prior to
working at Calvert Group, Ms. Duke was an Associate in the Investment
Management Group of the Business and Finance Department at Drinker Biddle &
Reath. DOB: 09/07/68.
The address of 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, Ms. Krumsiek and Kruvant 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 1998, Trustees of the Fund not affiliated with the Fund's
Advisor were paid $_______ and $________ by the Vermont Municipal Portfolio.
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.
Trustee Compensation Table
Fiscal Year 1998 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Trustee of Registrant Trustee**
Expenses*
Name of Trustee
Richard L. Baird, Jr. $_____ $0 $_____
Frank H. Blatz, Jr. $_____ $0 $_____
Frederick T. Borts $_____ $0 $_____
Charles E. Diehl $_____ $_____ $_____
Douglas E. Feldman $_____ $0 $_____
Peter W. Gavian $_____ $_____ $_____
John G. Guffey, Jr. $_____ $0 $_____
M. Charito Kruvant $_____ $_____ $_____
Arthur J. Pugh $_____ $_____ $_____
D. Wayne Silby $_____ $0 $_____
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of
their compensation. As of December 31, 1998, total deferred compensation,
including dividends and capital appreciation, was $_________,$_________,
$_________ and $_________, for each trustee, respectively.
**As of December 31, 1998. The Fund Complex consists of nine (9) registered
investment companies.
- ------------------------------------------------------------------------------
INVESTMENT ADVISOR
- ------------------------------------------------------------------------------
The Fund's Investment Advisor is Calvert Asset Management Company,
Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, a
subsidiary of Calvert Group, Ltd., which is a controlled subsidiary of
Ameritas-Acacia Mutual Holding Company.
The Advisory Contract between the Fund and the Advisor will remain
in effect indefinitely, provided continuance is approved at least annually
by the vote of the holders of a majority of the outstanding shares of the
Fund, or by the Trustees of the Fund; and further provided that such
continuance is also approved annually by the vote of a majority of the
Trustees of the Fund who are not parties to the Contract or interested
persons of such parties, cast in person at a meeting called for the purpose
of voting on such approval. The Contract may be terminated without penalty
by either party on 60 days' prior written notice; it automatically
terminates in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control of
the Fund's Board of Trustees. For its services, the Advisor receives from
the Portfolio an annual fee of 0.60% of the first $500 million of the
Portfolio's average daily net assets, 0.50% of the next $500 million of such
assets, and 0.40% of all such assets over $1 billion.
The advisory fee is payable monthly. The Advisor reserves the right
(i) to waive all or a part of its fee and (ii) to compensate, at its
expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Fund with investment advice and research,
pays the salaries and fees of all Trustees and executive officers of the
Fund who are principals of the Advisor, and pays certain Fund advertising
and promotional expenses. The Fund pays all other administrative and
operating expenses, including: custodial fees; shareholder servicing;
dividend disbursing and transfer agency fees; administrative service fees;
federal and state securities registration fees; insurance premiums; trade
association dues; interest, taxes and other business fees; legal and audit
fees; and brokerage commissions and other costs associated with the purchase
and sale of portfolio securities. The gross advisory fees paid to the
Advisor under the advisory contract for the 1996, 1997, and 1998 fiscal
years were $340,885, $296,024, and $__________, respectively.
The Advisor may voluntarily reimburse the Portfolio for expenses.
For the 1996, 1997, and 1998 fiscal years, the reimbursement was $18,498,
$0, and $______, respectively.
For Portfolios with multiple classes, investment advisory fees are
allocated as a Portfolio-level expense based on net assets.
- ------------------------------------------------------------------------------
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. 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 administrative service
fees paid by the Portfolio to CASC for fiscal years 1996, 1997, and 1998
were $4,156, $4,004, and $________, respectively.
Administrative service fees are allocated as a class-level expense,
again based on net assets.
- ------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- ------------------------------------------------------------------------------
PricewaterhouseCoopers LLP has been selected by the Board of
Trustees to serve as independent accountants of the Fund for fiscal year
1998. State Bank and Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, acts as custodian of the Portfolio's investments. First National Bank
of Maryland, 25 South Charles Street, Baltimore, Maryland 21203 also serves
as custodian of certain of the Fund's cash assets. Neither custodian has any
part in deciding the Portfolio's investment policies or the choice of
securities that are to be purchased or sold by the Portfolio.
- ------------------------------------------------------------------------------
METHOD OF DISTRIBUTION
- ------------------------------------------------------------------------------
The Portfolio has entered into a principal underwriting agreement
with Calvert Distributors, Inc. ("CDI"). 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. For Class B and Class C shares,
CDI receives any CDSC paid.
CTFR Vermont Municipal
Class A Shares are offered at net asset value plus a front-end sales charge
as follows:
As a % of As a % of Allowed to
Amount of offering net amount Brokers as a %
Investment price invested of offering 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 receives any front-end sales charge. A portion of the front-end
sales charge may be reallowed to dealers. The aggregate amount of sales
charges (gross underwriting commissions) and the net amount retained by CDI
(i.e., not reallowed to dealers) for the last 3 fiscal years are:
1996
Gross Net
$_____ $_____
1997
Gross Net
$_____ $_____
1998
Gross Net
$_____ $_____
Fund Trustees and certain other affiliated persons of the Fund are
exempt from the sales charge since the distribution costs are minimal to
persons already familiar with the Fund. Other groups are exempt due to
economies of scale in distribution. See Exhibit A to the Prospectus.
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.
CDI, makes a continuous offering of the Fund's securities on a
"best efforts" basis. Under the terms of the agreement, CDI is entitled to
receive, pursuant to the Distribution Plans, a distribution fee and a
service fee from the Fund based on the average daily net assets of each
Portfolio's respective Classes. These fees are paid pursuant to the Fund's
Distribution Plan. The Distribution Plan Expenses (includes both
distribution fees and services fees) paid by each fund (all classes) to CDI
for the fiscal year ended December 31, 1998, is as follows:
Distribution Plan Expenses
CTFR Vermont Municipal $______
Of the distribution expenses paid by Class A Shares in fiscal year
1998, $________ was used to compensate dealers for their share distribution
promotional services. $_________ was used for the printing and mailing of
prospectuses and sales materials to investors (other than current
shareholders), and the remainder partially financed advertising.
- ------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS
- ------------------------------------------------------------------------------
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. The Fund's Advisor makes
investment decisions and the choice of brokers and dealers 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 execution capability and trading
expertise considering, among other factors, the overall reasonableness of
the brokerage commissions, current market conditions, size and timing of the
order, difficulty of execution, per share price, etc.
For the last three fiscal years, total brokerage commissions paid
are as follows:
1996 1997 1998
CTFR Vermont Municipal $___ $___ $___
The Fund did not pay any brokerage commissions to affiliated
persons during the last three fiscal years.
While the Fund's Advisor select brokers primarily on the basis of
best execution, in some cases they may direct transactions to brokers based
on the quality and amount of the research and research-related services
which the brokers provide to them. These services are of the type described
in Section 28(e) of the Securities Exchange Act of 1934 and may include
analyses of the business or prospects of a company, industry or economic
sector, or statistical and pricing services. If, in the judgment of the
Advisor, the Fund or other accounts managed by them will be benefited by
supplemental research services, they are authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or
through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software used in
security analyses; providing portfolio performance evaluation and technical
market analyses; and providing other services relevant to the investment
decision making process. It is the policy of the Advisor that such research
services will be used for the benefit of the Fund as well as other Calvert
Group funds and managed accounts.
For the fiscal year ended December 31, 1998, the Fund, through its
Advisor, directed brokerage for research services in the following amounts:
Related
Portfolio Amount of Transactions Commissions
CTFR Vermont Muni. $___ $___
The Portfolio turnover rates for the last two fiscal years are as
follows:
1997 1998
CTFR Vermont Muni. ____% ___%
- ------------------------------------------------------------------------------
GENERAL INFORMATION
- ------------------------------------------------------------------------------
The Portfolio is a series of Calvert Tax-Free Reserves (the "Fund")
which was organized as a Massachusetts business trust on October 20, 1980.
The other series of the Fund include the Money Market Portfolio,
Limited-Term Portfolio, Long-Term Portfolio, and the California Money Market
Portfolio. The Fund's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Fund. The shareholders
of a Massachusetts business trust might, however, under certain
circumstances, be held personally liable as partners for its obligations.
The Declaration of Trust provides for indemnification and reimbursement of
expenses out of Fund assets for any shareholder held personally liable for
obligations of the Fund. The Declaration of Trust provides that the Fund
shall, upon request, assume the defense of any claim made against any
shareholder for any act or obligation of the Fund and satisfy any judgment
thereon. The Declaration of Trust further provides that the Fund may
maintain appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Fund, its shareholders,
Trustees, officers, employees, and agents to cover possible tort and other
liabilities. Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance exists and the Fund itself is unable to meet its
obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such series as
declared by the Board. The Money Market Portfolio offers Class O (offered in
the Calvert Tax-Free Reserves Money Market Prospectus), the Institutional
Class (offered in a separate prospectus), and Class T, also known as The
Advisors Group Tax-Free Reserve Fund (offered in a separate prospectus).
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 Fund, shareholders of each class are entitled to share pro rata in
the net assets belonging to that series available for distribution.
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 you own, except that
matters affecting classes differently, such as Distribution Plans, will be
voted on separately by the affected class(es).
- ------------------------------------------------------------------------------
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ------------------------------------------------------------------------------
As of ______, 1999, the following shareholders owned of record 5%
or more of the class of the Fund shown:
Name and Address % of Ownership
[insert info]
- ------------------------------------------------------------------------------
APPENDIX
- ------------------------------------------------------------------------------
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range of
public facilities, the refunding of outstanding obligations, the obtaining
of funds for general operating expenses, and the lending of funds to other
public institutions and facilities. In addition, certain types of private
activity bonds are issued by or on behalf of public authorities to obtain
funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on
them is exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private activity
bonds used for the construction, equipment, repair or improvement of
privately operated industrial or commercial facilities may be exempt from
federal income tax, current federal tax law places substantial limitations
on the size of such issues.
Municipal obligations are generally classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise tax or other specific revenue source but
not from the general taxing power. Tax-exempt private activity bonds are in
most cases revenue bonds and do not generally carry the pledge of the credit
of the issuing municipality. There are, of course, variations in the
security of municipal obligations both within a particular classification
and among classifications.
Municipal obligations are generally traded on the basis of a quoted
yield to maturity, and the price of the security is adjusted so that
relative to the stated rate of interest it will return the quoted rate to
the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three months
and one year. Pre-Refunded Bonds with longer nominal maturities that are due
to be retired with the proceeds of an escrowed subsequent issue at a date
within one year and three years of the time of acquisition are also
considered short-term and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This
distinction is in recognition of the differences between short-term credit
risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable strength of
the preceding grades. Market access for refinancing, in particular, is
likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required
of an investment security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's municipal
bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to
pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and in
the majority of instances they differ from AAA issues only in small degree.
They are rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
<PAGE>
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to be
bound by the terms and conditions applicable to Letters of Intent appearing
in the Prospectus and the Statement of Additional Information for the Fund
and the provisions described below as they may be amended from time to time
by the Fund. Such amendments will apply automatically to existing Letters of
Intent.
I intend to invest in the shares of:________________ (Fund or
Portfolio name) during the thirteen (13) month period from the date of my
first purchase pursuant to this Letter (which cannot be more than ninety
(90) days prior to the date of this Letter or my Fund Account Application
Form, whichever is applicable), an aggregate amount (excluding any
reinvestments of distributions) of at least fifty thousand dollars ($50,000)
which, together with my current holdings of the Fund (at public offering
price on date of this Letter or my Fund Account Application Form, whichever
is applicable), will equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. "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
Signature of Investor(s)
Date
Signature of Investor(s)
Date
<PAGE>
PART C. OTHER INFORMATION
Item 23. 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, (incorporated by reference to
Registrant's Post-Effective Amendment No. 45,
April __, 1998).
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, (incorporated by reference to Registrant's
Post-Effective Amendment No. 45, April __, 1998).
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.
15. Plan of Distribution for the Class A Shares of
the Long-Term Portfolio, (incorporated by
reference to Registrant's Post-Effective
Amendment No. 5, September 13, 1983; with
respect to Class A Shares of the Vermont
Municipal Portfolio, the Plan of Distribution
was terminated, and the termination was
ratified by the Fund Trustees on November 6,
1991; for the Class B and C shares of the
Limited-Term, Long-Term, and Vermont
Portfolios, (incorporated by reference to
Registrant's Post-Effective Amendment No. 45,
April 30, 1998).
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).
Item 24. Persons Controlled By or Under Common Control With Registrant
Not applicable.
Item 25. 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 $5 million in excess directors
and officers liability coverage for the independent trustees/directors only.
Registrant also maintains an $8 million Investment Company Blanket Bond issued
by ICI Mutual Insurance Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 26. 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 Ameritas Acacia Mutual Holding Co. 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
---------------
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 Realty Square, L.L.C. Director
Realty Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
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
----------------
Ameritas Acacia Mutual Holding Co. 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 Square, L.L.C. Director
Realty Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
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
---------------
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
---------------
Victor Frye 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
----------------
The Advisors Group, Inc. Counsel
Broker-Dealer and and
Investment Advisor Compliance
7315 Wisconsin Avenue Manager
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
------------------
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 27. Principal Underwriters
(a) Registrant's principal underwriter underwrites shares of
First Variable Rate Fund for Government Income, Calvert Tax-Free Reserves,
Calvert Social Investment Fund, Calvert Cash Reserves, The Calvert Fund,
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
Bill Hairgrove Regional Vice President None
Janet Haley Regional Vice President None
Steve Himber Regional Vice President None
Ben Ogbogu Regional Vice President None
Tom Stanton Regional Vice President None
Christine Teske Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary Assistant Secretary
Ivy Wafford Duke Assistant Secretary Assistant Secretary
Victor Frye Assistant Secretary None
and Compliance Officer
(c) Inapplicable.
Item 28. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 29. Management Services
Not Applicable
Item 32. Undertakings
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
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 1st day of March, 1999.
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 3/1/99
Barbara J. Krumsiek Trustee (Principal Executive Officer)
__________**____________ Principal Accounting 3/1/99
Ronald M. Wolfsheimer Officer
__________**____________ Trustee 3/1/99
Richard L. Baird, Jr.
__________**____________ Trustee 3/1/99
Frank H. Blatz, Jr., Esq.
__________**____________ Trustee 3/1/99
Frederick T. Borts, M.D.
__________**____________ Trustee 3/1/99
Charles E. Diehl
__________**____________ Trustee 3/1/99
Douglas E. Feldman
__________**____________ Trustee 3/1/99
Peter W. Gavian
__________**____________ Trustee 3/1/99
John G. Guffey, Jr.
__________**____________ Trustee 3/1/99
M. Charito Kruvant
__________**____________ Trustee 3/1/99
Arthur J. Pugh
__________**____________ Trustee 3/1/99
David R. Rochat
__________**____________ Trustee 3/1/99
D. Wayne Silby
**By Susan Walker Bender as Attorney-in-fact, pursuant to Power of Attorney
Forms on file.
Exhibit 10
March 1, 1999
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. 47 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. 47 to its Registration Statement.
Sincerely,
/s/
Susan Walker Bender
Associate General Counsel
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 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.
January 16, 1998
Date /Signature/
Roger Wilkins Frederick Borts, M.D.
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
