Supplement to:
Calvert Tax-Free Reserves Money Market, Limited-Term
and Long-Term Portfolio
Calvert Tax-Free Reserves California Money Market Portfolio
Calvert Tax-Free Reserves Vermont Municipal Portfolio
Prospectuses
dated April 30, 1998
Date of this Supplement: January 11, 1999
Shareholders in the Calvert Tax-Free Reserves portfolios are
currently voting on various changes to the Fund, pursuant to a proxy statement
mailed this week. In addition to voting to elect the Fund's current Board of
Trustees, ratify the current auditors, PricewaterhouseCoopers, and approve a
new investment advisory agreement with Calvert Asset Management Company, Inc.
(CAMCO), the investment advisor (identical to the current investment advisory
agreement in all material respects), shareholders will be asked to approve
certain changes to the investment policy and restrictions, including:
To change the fundamental policy concerning credit quality to a nonfundamental
policy allowing Calvert Tax-Free Reserves ("CTFR") Limited-Term, Long-Term,
and Vermont Municipal Portfolios to invest in non-investment grade securities.
Reason for Proposal
Limited-Term, Long-Term, and Vermont Municipal (the "Funds") all have the same
fundamental credit quality policies, to invest primarily in investment-grade
municipal obligations. CAMCO proposes to change the credit quality guidelines
to permit the Funds to invest in non-investment grade obligations: up to 15%
for Limited-Term, and up to 35% for Long-Term and Vermont Municipal. CAMCO
believes this will give more flexibility in purchasing securities where there
are no published ratings and where there may be a question of investment grade
rating. In addition, it will bring the credit quality policy of each Fund more
in line with its peers, allowing more accurate comparisons.
To change Long-Term from a diversified to a nondiversified fund.
Reason for Proposal
CAMCO believes that Long-Term will have greater investment flexibility if it
becomes nondiversified (allowed to invest more than 5% in any one issuer).
This will permit it to acquire larger positions in the securities of
individual issuers, such as hospitals, housing bonds, or utilities, and may
provide opportunities to enhance the investment performance with minimal
additional risk.
To approve amended fundamental investment restrictions in all of the Calvert
Tax-Free Reserves Portfolios to (a) delete restrictions that are no longer
required to be fundamental due to changes in state laws or which otherwise
need not be fundamental; and (b) to revise the language of those restrictions
that are still required to be fundamental.
Reason for Proposal
Current investment restrictions and policies are more restrictive than Federal
law. CAMCO and the Fund's Board have recommended that the investment
restrictions of the Portfolios be changed to conform to, but not be more
restrictive than, federal law, and changing the policies so that they can be
altered by the Board without a shareholder vote (nonfundamental policies or
restrictions). This would give each of the Portfolios more flexibility and may
help each Portfolio to more easily adapt to different investment environments.
None of the changes in fundamental investment restrictions (other than the
changes in credit quality and non-diversification discussed above) would
affect the Portfolios' primary investment strategies.
Please be aware that discussion of these matters in the April 30,
1998 prospectus will be modified accordingly, depending on the outcome of the
shareholder vote.
