December 31, 1998
ANNUAL
REPORT
Calvert Tax-Free Reserves
<PAGE>
Contents
President's Letter
1
Portfolio
Manager Remarks
2
Report of Independent
Accountants
8
Statement of
Net Assets
9
Statements
of Operations
26
Statements of
Changes in Net Assets
27
Notes to
Financial Statements
30
Financial Highlights
34
[Picture of Barbara Krumsiek, no caption]
Dear Shareholders:
Investors' risk tolerance was tested in 1998. Global financial turmoil
contributed to a high level of market volatility. By the end of the third
quarter, most equity investors were looking at negative results for the
year-to-date. The fourth quarter brought fast relief, however, with stock
market indices bouncing back to provide investors with a fourth consecutive
year of double digit gains. Price appreciation was an integral component of
bond returns, as yields generally declined throughout the year.
Among stocks, the top performers were tightly consolidated by capitalization
range and industry group. Large-capitalization companies and technology
plays fueled most of the advance. In the bond market, long-term U.S.
Treasury securities outperformed other categories substantially.
While investors may be tempted to chase the current trend setters, that
approach comes with increased risk now, given the stock market's high levels
and increased volatility. We encourage investors to make decisions based on
their financial objectives and tolerance for risk. At this point, it would
be a good idea to reevaluate your asset allocation to be sure you are
positioned at a comfortable risk level. If you think change is in order,
your financial professional can suggest strategies that keep you on track to
meet long-term financial objectives without exposing you to undue levels of
risk.
We appreciate your investment in Calvert Group funds and look forward to
providing competitive returns in the year ahead.
Sincerely,
/s/
Barbara J. Krumsiek
President and CEO
January 19, 1999
<PAGE>
[Picture of Tom Dailey. Caption: Tom Dailey is a member of the CAMCO
portfolio management team.]
[sidebar] Calvert Tax-Free Reserves Money Market Portfolio seeks to earn the
highest interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital and the quality
and maturity characteristics of the Portfolio.
[sidebar]
Fund
Information
asset allocation
tax-exempt
money market
NASDAQ symbol
CTMXX
CUSIP number
131620-10-6
Calvert Tax-Free Reserves
Money Market Portfolio
How would you describe market conditions during 1998?
The domestic economy continued to hum along, led by strong consumer
spending. Other factors contributing to this remarkable expansion included
low interest rates, low unemployment and continued subdued inflation.
The ripple effects from the Asian financial crisis have adversely affected
markets worldwide. These events created a flight to quality into the U.S.
Treasury market, driving yields to their lowest levels since the 1960's.
The Federal Reserve's last move to hike rates and slow the pace of economic
growth was in March 1997, when they increased their target for the federal
funds rate, a key overnight bank lending rate, by one quarter of a percent.
Through September 1998, the Fed maintained a neutral monetary policy on the
assumption the Asian crisis would act as a sufficient drag on the U.S.
economy. But late in the third quarter, the possibility of a global economic
meltdown and liquidity crisis prompted the Fed to quickly lower this key
rate. Between September and November, the Fed made three separate one
quarter percent reductions, bringing the federal funds rate from 5.50% to
4.75%.
These actions helped to calm turbulent markets and signaled the Fed would
not allow the U.S. economy to falter. Global economic problems are far from
over, however. Japan remains mired in a depression, and it is not clear
whether Southeast Asia will rebound anytime soon. Moreover, several of the
United States' prominent trading partners--Canada, Brazil and Mexico--are
all experiencing economic woes.
How did the Portfolio perform?
The Money Market Portfolio's return for the year ending December 31, 1998
was 3.22%. This was above the 2.92% return for the average tax-exempt money
market fund tracked by Lipper.
What factors contributed to performance?
The very high level of market volatility caused many investors to seek the
safe haven of money market securities. Anticipating the overall increase in
demand and the corresponding decline in yields, we took steps to lengthen
the Portfolio's average maturity whenever technical factors supported a
short-term spike in rates. Supply and demand conditions have an enormous
impact on rates in the tax-free money market.
Our first opportunity to exploit seasonal supply and demand conditions came
in April, when tax season outflows cause supply to outstrip demand. This
puts upward pressure on rates. We kept the Portfolio very liquid
<PAGE>
going into this season so we would be well positioned to meet investor
redemptions and reinvest in longer term securities at lower prices.
The second opportunity came during June and July, when municipalities flood
the market with new issues of one-year notes. In 1998, however, the supply
of new note issuance was reduced by two factors. First, municipalities have
seen tax revenues rise and, therefore, do not need to issue as much debt.
Second, many of these notes were converted into even shorter term debt known
as variable rate demand notes. Therefore, we acted quickly to buy one-year
notes before rates dropped below attractive levels.
What's your outlook ?
We expect global financial markets to remain volatile in 1999. Even though
the Federal Reserve appears to be on hold at the moment, they remain
vigilant in assessing economic and market events. Rates could trend lower
still. Thus, we will continue to look for opportunities to maintain a
slightly longer average maturity (in order to enhance yield) while
preserving liquidity (so we can react quickly to changing market conditions).
January 19, 1999
Please remember, this discussion reflects the views and opinions of Calvert
Asset Management Company at December 31, 1998, the end of the reporting
period. Our strategy and the Fund's portfolio composition may differ due to
ever-changing market and economic conditions. While historical performance
is no guarantee of future results, it may give you a better and more
thorough understanding of our investment decisions and management philosophy.
Portfolio
statistics
weighted
average maturity
12.31.98 61 days
12.31.97 50 days
credit quality
distribution
as of 12.31.98
First Tier 95%
Second Tier 5%
All securities in Calvert Group money market funds are eligible securities
under rule 2a-7 of the Investment Company Act of 1940. First Tier Securities
are eligible securities rated in the highest rating category for short-term
debt obligations by at least two of the Nationally Recognized Statistical
Ratings Organizations. Second Tier Securities are eligible securities not in
the First Tier.
COMPARATIVE MONTH-END YIELDS
IBC's General
CTFR Purpose Tax-Free
Money Market Money Market
Class O Averages
12.31.98 2.92% 2.73%
11.30.98 2.91% 2.68%
10.31.98 3.04% 2.77%
9.30.98 3.13% 2.93%
8.31.98 3.04% 2.82%
7.31.98 3.08% 2.86%
6.30.98 3.27% 3.02%
class O
average annual
total return
as of 12.31.98
1 year 3.22%
5 year 3.35%
10 year 3.97%
inception 4.76%
(3.04.81)
Total returns assume reinvestment of dividends. Past performance is no
guarantee of future results. Performance information represents Class O
shares. The value of an investment in Class I shares would be different.
Sources: IBC's Money Fund Report, IBC Financial Data Inc. and Lipper
Analytical Services Inc.
<PAGE>
[Picture of Emmett Long. Caption: Emmett Long is a member of the CAMCO
portfolio management team.]
[sidebars]
Calvert Tax-Free Reserves Limited-Term Portfolio seeks to earn the highest
level of interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital and the quality
and maturity characteristics of the Portfolio.
Fund
Information
asset allocation
short-term
tax-exempt bonds
NASDAQ symbol
CTFLX
CUSIP number
131620-20-5
COMPARATIVE INVESTMENT PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS
CTFR Lipper Short Lehman
Limited-Term Municipal Debt Municipal Bond
Portfolio Funds Average Index TR
6 month 2.04% 2.46% 3.07%
1 year 3.87% 4.44% 5.84%
3 year 3.96% 4.27% 6.47%
5 year 3.91% 4.11% 6.10%
Investment performance does not reflect the deduction of any front-end sales
charge.
TR represents total return. Source: Lipper Analytical Services, Inc.
Calvert Tax-Free Reserves Limited-Term Portfolio
How did the Portfolio perform relative to its peer group?
Our one-year return was 3.87%, compared to a 4.44% return for the average
short-term municipal fund tracked by Lipper. Historically, this Portfolio
has underperformed in up markets and outperformed in down ones. This is a
function of our mandated short maturity. Prices of short-term securities are
not as sensitive to changes in interest rates. When rates decline, which was
the trend this year, short-term securities do not appreciate as much as
long-term securities.
What was your approach?
Throughout the period we kept the Portfolio's average maturity near its
target range of one year. This was significantly shorter than other funds in
our Lipper category, whose average maturity tends to be closer to three
years.
We continued to seek securities that offered the highest tax-free yields
consistent with a high degree of price stability. We looked to identify and
capitalize on undervalued sectors of the market, and we participated in a
number of new note issues that provided an opportunity to enhance the
Portfolio's liquidity. A more liquid position gives us greater flexibility
to invest in higher yielding securities should they become available.
What is your outlook?
While there should be an adequate supply of quality issues to meet the
Portfolio's needs, one of the greatest challenges we will face in 1999 will
be to find the kind of issues that have added
<PAGE>
value over the years. Interest rates have the potential to fall even
further, depending on consumers' willingness to continue spending as exports
continue to decline. If spending slows enough it could force the Federal
Reserve to cut interest rates.
January 19, 1999
Please remember, this discussion reflects the views and opinions of Calvert
Asset Management Company at December 31, 1998, the end of the reporting
period. Our strategy and the Fund's portfolio composition may differ due to
ever-changing market and economic conditions. While historical performance
is no guarantee of future results, it may give you a better and more
thorough understanding of our investment
decisions and management philosophy.
Portfolio
statistics
monthly
dividend yield
12.31.98 3.58%
12.31.97 3.71%
30 day SEC yield
12.31.98 3.07%
12.31.97 3.54%
weighted
average maturity
12.31.98 283 days
12.31.97 327 days
effective duration
12.31.98 253 days
12.31.97 295 days
credit quality
distribution
as of 12.31.98
AAA 11%
AA 11%
A 15%
BBB 32%
cash equivalents 31%
average annual
total return
as of 12.31.98
1 year 2.82%
5 year 3.70%
10 year 4.75%
inception 6.01%
(3.04.81)
GROWTH OF A HYPOTHETICAL$10,000 INVESTMENT
Total returns assume reinvestment of dividends and reflect the deduction of
Portfolio's maximum front-end sales charge of 1.00%. No sales charge has
been applied to the indices used for comparison. Past performance is no
guarantee of future returns. Source: Lipper Analytical Services, Inc.
Three-line graph here showing growth from 12.31.98 to 12.98
CTFR Limited-Term Portfolio $15,903
Lehman Municipal Bond Fund Index TR $21,893
Lipper Short Municipal Debt Funds Average $16,513
<PAGE>
[Picture of Emmett Long. Caption: Emmett Long is a member of the CAMCO
portfolio management team.]
[sidebar]
Calvert Tax-Free Reserves Long-Term Portfolio seeks to earn the highest
level of interest income exempt from federal income taxes as is consistent
with prudent investment management, preservation of capital and the quality
and maturity characteristics of the Portfolio.
Fund
Information
asset allocation
long-term
tax-exempt bonds
NASDAQ symbol
CTTLX
CUSIP number
131620-30-4
COMPARATIVE INVESTMENT PERFORMANCE
AVERAGE ANNUAL TOTAL RETURN
CTFR Lipper General Lehman
Long-Term Municipal Debt Municipal Bond
Portfolio Funds Average Index TR
6 month 3.20% 3.00% 3.07%
1 year 5.01% 5.33% 5.84%
3 year 5.41% 5.90% 6.47%
5 year 5.74% 5.43% 6.10%
Investment performance does not reflect the deduction of any front-end sales
charge.
TR represents total return. Source: Lipper Analytical Services, Inc.
Calvert Tax-Free Reserves
Long-Term Portfolio
Would you comment on the Portfolio's performance and your strategy?
The Portfolio gained 5.01% for the year, compared to an advance of 5.33% for
the average similar fund tracked by Lipper. We outperformed our benchmark
during the second half of the year, but underperformed in the first half. In
the second half of the year, we extended the Portfolio's maturity relative
to our peers and increased our position in non-callable bonds. These moves
helped to turn results around but could not completely close the gap.
Non-callables commanded premium prices late in the second quarter and
throughout the third quarter. In addition, crossover buyers invaded the
municipal market to take advantage of municipals' extreme spreads to
Treasuries. These buyers were willing to pay a premium for bonds with good
structure. This further drove up prices for the non-callables.
How will the Portfolio be managed going forward?
We expect the Portfolio will maintain an above-average maturity, relative to
our historical range. We will also be evaluating spreads on new and
secondary market issues in order to identify specific sectors that are
undervalued. Relative value trading has the potential to enhance returns in
1999.
What's your outlook?
There is the potential to see new lows on the Treasuries in 1999, depending
on whether consumers continue to spend at robust levels even as exports
continue to decline. If spending
<PAGE>
slows enough, it could force the Federal Reserve to cut interest rates
again. There is a low probability that commodity inflation will be a factor
in 1999. At this point, the Portfolio will remain long relative to its
duration benchmark. We will continue to monitor conditions and will revise
our forecast and strategy as events warrant.
January 19, 1999
Please remember, this discussion reflects the views and opinions of Calvert
Asset Management Company at December 31, 1998, the end of the reporting
period. Our strategy and the Fund's portfolio composition may differ due to
ever-changing market and economic conditions. While historical performance
is no guarantee of future results, it may give you a better and more
thorough understanding of our investment
decisions and management philosophy.
Portfolio
statistics
monthly
dividend yield
12.31.98 4.58%
12.31.97 4.66%
30 day SEC yield
12.31.98 4.10%
12.31.97 4.17%
weighted
average maturity
12.31.98 16 years
12.31.97 16 years
effective duration
12.31.98 8.75 years
12.31.97 7.35 years
credit quality
distribution
as of 12.31.98
AAA 44%
AA 22%
A 14%
BBB 4%
cash equivalents 16%
average annual
total return
as of 12.31.98
1 year 1.15%
5 year 4.94%
10 year 6.94%
inception 7.96%
(8.23.83)
GROWTH OF A HYPOTHETICAL$10,000 INVESTMENT
Total returns assume reinvestment of dividends and reflect the deduction of
Fund's maximum front-end sales charge of 3.75%. No sales charge has been
applied to the indices used for comparison. Past performance is no guarantee
of future returns. Source: Lipper Analytical Services, Inc.
Three-line graph here showing growth from 12.31.98 to 12.98
CTFR Long-Term Portfolio $19,563
Lehman Municipal Bond Fund Index TR $21,893
Lipper General Municipal Debt Funds Average $20,449
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Calvert Tax-Free Reserves:
In our opinion, the accompanying statements of net assets and the related
statements of operations, statements of changes in net assets and financial
highlights present fairly, in all material respects, the financial position
of Calvert Tax-Free Reserves Money Market, Limited-Term, and Long-Term
Portfolios (three portfolios comprising Calvert Tax-Free Reserves, hereafter
referred to as the "Funds"), at December 31, 1998, the results of each of
their operations, the changes in each of their net assets and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 10, 1999
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
Principal
Municipal Obligations - 98.3% Amount Value
Alabama - 3.2%
Athens IDA Revenue VRDN, 5.60%, 6/1/05,
LOC: Tokai Bank, Ltd. $3,500,000 $3,500,000
Birmingham Airport Authority Revenue Municipal Trust Receipts,
4.15%, 7/1/26, BPA: Societe Generale,
MBIA Insured 8,000,000 8,000,000
Calhoun County Economic Development Council Revenue
VRDN, 4.35%, 3/1/18, LOC: FNB Boston 4,000,000 4,000,000
Haleyville IDA Revenue VRDN, 4.25%, 11/1/04,
LOC: Columbus Bank & Trust 1,550,000 1,550,000
Mobile Spring Hill Medical Clinic Revenue VRDN,
4.10%, 2/1/11, LOC: Amsouth Bank 3,425,000 3,425,000
Montgomery IDA Revenue VRDN,
4.50%, 9/1/04, LOC: Southtrust Bank 2,650,000 2,650,000
4.25%, 3/1/23, LOC: Southtrust Bank 3,190,000 3,190,000
Northpoint MFH Revenue VRDN,
4.25%, 9/3/15, LOC: Amsouth Bank 2,115,000 2,115,000
4.10%, 7/1/18, LOC: Amsouth Bank 5,595,000 5,595,000
State IDA Revenue VRDN, 4.25%, 11/1/14,
LOC: Southtrust Bank, AL 6,495,000 6,495,000
State MFH Revenue VRDN,
4.10%, 12/1/03, LOC: Amsouth Bank 3,230,000 3,230,000
4.255%, 9/1/20, LOC:
Southtrust Bank, AL 3,045,000 3,045,000
Series A, 4.10%, 4/1/14, LOC:
Southtrust Bank, AL 785,000 785,000
Wynlakes Government Utility Authority Revenue VRDN,
4.50%, 5/1/06, LOC: Amsouth Bank 4,000,000 4,000,000
Arizona - 1.4%
Apache County IDA Revenue VRDN, 4.15%, 12/15/18,
LOC: Bank of New York 4,600,000 4,600,000
Pinal County IDA Revenue VRDN, 5.50%, 12/1/05,
LOC: Industrial Bank of Japan 10,000,000 10,000,000
Prescott IDA Revenue VRDN, 4.05%, 12/1/14,
GA: Household Finance Corp. 8,100,000 8,100,000
Arkansas - 1.5%
Arkadelphia IDA Revenue VRDN, 4.20%, 4/1/11,
LOC: Den Danske Bank 4,000,000 4,000,000
North Little Rock Baptist Health Facilities Revenue VRDN,
4.10%, 12/1/21, BPA: Credit
Suisse, MBIA Insured 20,700,000 20,700,000
California - 15.3%
Community College Financing Authority VRDN,
3.95%, 9/30/99, BPA: Bank of
New York, FSA Insured 33,775,000 33,775,000
Fresno MFH Revenue VRDN, 5.50%, 5/1/15,
LOC: Tokai Bank, Ltd. 8,612,000 8,612,000
Inland Valley Development Agency Tax Allocation VRDN,
3.75%, 3/1/27, LOC: Sumitomo
Trust & Banking 34,485,000 34,485,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
California - (Cont'd)
Los Angeles County Tax and Revenue Anticipation Notes,
Series A, 4.50%, 6/30/99 $5,000,000 $5,019,706
Orange County Apartment Development Revenue VRDN,
6.50%, 11/1/08, LOC: Tokai Bank, Ltd. 6,300,000 6,300,000
San Francisco City and County MFH Revenue VRDN,
Series A, 5.00%, 12/1/05, LOC: Bank One 6,000,000 6,000,000
San Francisco City and County MFH Revenue VRDN,
Series B, 5.00%, 12/1/05, LOC: Bank One 6,400,000 6,400,000
State Floating Rate Receipts, 4.00%,
6/30/99, FGIC Insured 31,860,000 31,999,844
State Floating Rate Receipts, 5.00%, 8/1/15,
BPA: Societe Generale, FGIC Insured 600,000 600,000
State School Cash Reserve Program Authority Notes,
Series A, 4.50%, 7/2/99,
AMBAC Insured 61,175,000 61,415,889
State Transportation Finance Authority Revenue VRDN,
3.95%, 10/01/27 9,000,000 9,000,000
Statewide Community Development Authority Revenue VRDN,
3.95%, 9/30/99, BPA: Bank of
New York, FSA Insured 16,500,000 16,500,000
Watereuse Financing Authority Revenue VRDN, 4.05%, 5/01/28,
BPA: Credit Suisse, FSA Insured 26,000,000 26,000,000
Colorado - 2.2%
Boulder County MFH Revenue VRDN, 4.35%, 12/25/31,
LOC: Chase Manhattan 2,814,000 2,814,000
City and County of Denver MFH Revenue VRDN, 3.90%, 12/15/14,
C/LOC: Den Danske Bank,
LOC: Credit Lyonnais 8,500,000 8,500,000
Fort Collins MFH Revenue VRDN, 4.35%, 11/25/30,
LOC: Texas Commerce Bank 3,950,000 3,950,000
Jefferson County School District Tax Anticipation Notes,
4.00%, 6/30/99 15,000,000 15,061,584
Lakewood IDA Revenue VRDN, 4.50%, 8/1/07,
LOC: West One Bank 2,070,000 2,070,000
Pitkin County IDA Revenue VRDN, 5.15%, 4/1/16,
LOC: FNB Chicago 2,500,000 2,500,000
Connecticut - 0.1%
State Development Authority Revenue VRDN,
3.10%, 6/1/08, LOC: Barclays Bank, Plc. 950,500 950,500
State Health and Education Facilities Authority Revenue
VRDN, 3.10%, 2/1/09, LOC:
Barclays Bank, Plc. 1,120,000 1,120,000
District of Columbia - 3.4%
D.C. MFH Revenue VRDN, 5.50%, 12/1/05,
LOC: Sumitomo Bank, Ltd. 10,390,000 10,390,000
D.C. Municipal Trust Receipts,
4.30%, 6/1/03, LOC: Credit Suisse,
FSA Insured 5,300,000 5,300,000
4.30%, 7/27/03, LOC: Credit Suisse,
AMBAC Insured 10,900,000 10,900,000
4.30%, 6/1/05, LOC: Credit Suisse,
MBIA Insured 7,710,000 7,710,000
Tax and Revenue Anticipation GO Notes, 3.75%, 9/30/99,
LOC: Canadian Imperial Bank 20,000,000 20,094,293
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Florida - 6.4%
Broward County MFH Revenue VRDN, 6.00%, 12/1/10,
LOC: Fuji Bank Ltd. $8,500,000 $ 8,500,000
Capital Projects Financial Authority Revenue VRDN,
3.75%, 6/1/28, BPA: Credit Suisse,
FSA Insured 10,000,000 10,000,000
Series A, 4.00%, 8/1/17, BPA:
Credit Suisse, FSA Insured 20,920,000 20,920,000
Duval County MFH Revenue VRDN,
4.45%, 6/1/07, LOC: Household
Financial Corp. 2,250,000 2,250,000
4.45%, 7/1/25, LOC: Household Financial Corp. 4,350,000 4,350,000
Orange County Health Facilities Authority Revenue VRDN,
4.25%., 3/27/06, LOC: Credit Suisse,
MBIA Insured 2,600,000 2,600,000
4.25%., 10/1/06, LOC: Credit Suisse,
MBIA Insured 6,880,000 6,880,000
4.25%., 10/1/08, LOC: Credit Suisse,
MBIA Insured 4,000,000 4,000,000
Palm Beach County Education Facilities Authority Revenue
VRDN, 3.55%, 11/01/18, LOC:
First Union Bank 4,000,000 4,000,000
Palm Beach County IDA Revenue VRDN, 4.90%, 4/1/99,
IA: Escrowed Treasury Bills 8,865,000 8,865,000
Pinellas County Health Facilities Authority Revenue VRDN,
4.05%, 11/1/15, LOC: First Union Bank 3,830,000 3,830,000
State Housing Finance Agency Revenue VRDN,
3.85%, 4/1/99, SURBD: Continental
Casualty Co. 7,500,000 7,500,000
4.10%, 7/1/23, C/LOC: Commerze Bank, AG,
LOC: Heller Financial 8,800,000 8,800,000
Sunrise Utilities Systems Revenue VRDN, 4.20%, 10/1/15,
TOA: Citibank, AMBAC Insured 7,000,000 7,000,000
Volusia County MFH Revenue VRDN, 4.375%, 9/1/05,
LOC: Amsouth Bank 3,830,000 3,830,000
Georgia - 1.4%
Athens MFH Revenue VRDN, 4.375%, 8/1/05,
C/LOC: FNB Chicago, LOC:
First Bank, NA 2,000,000 2,000,000
Columbus Downtown Development Authority Revenue VRDN,
4.25%, 8/1/15, LOC: Columbus
Bank & Trust 7,725,000 7,725,000
Franklin County Industrial Building Authority Revenue VRDN,
4.35%, 1/1/07, LOC: Comerica Bank 2,560,000 2,560,000
Jackson County IDA Revenue VRDN,
4.50%, 12/1/24, LOC: Barclays Bank, Plc. 2,505,000 2,505,000
State Residential Financial Authority Revenue VRDN, Series A,
3.60%, 3/1/99, TOA: Citibank 3,565,000 3,565,000
State Residential Financial Authority Revenue VRDN, Series A,
3.60%, 12/1/20, TOA: Citibank 3,570,000 3,570,000
Hawaii - 1.6%
Hawaii State Revenue VRDN, 4.20%, 4/1/05, TOA: Citibank,
MBIA Insured 24,000,000 24,000,000
State Department Budget and Finance VRDN, 4.85%, 12/1/21,
LOC: Union Bank of California 1,400,000 1,400,000
Idaho - 1.9%
State Tax Anticipation Notes, 4.50%, 6/30/99 30,000,000 30,128,473
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Illinois - 6.5%
Arlington Heights MFH Revenue VRDN, 4.95%, 5/1/24,
LOC: Heller Financial $4,230,000 $4,230,000
Chicago Municipal Trust Receipts VRDN, 4.25%, 1/1/18,
LOC: Credit Suisse, AMBAC Insured 2,900,000 2,900,000
Elgin IDA Revenue VRDN, 3.90%, 9/1/16,
LOC: LaSalle Bank 4,400,000 4,400,000
Fulton IDA Revenue VRDN, 4.20%, 4/1/12,
LOC: Firstar Bank, Milwaukee 2,500,000 2,500,000
Galesburg Knox College Project Revenue
VRDN, 4.00%, 3/1/31,
LOC: LaSalle Bank 4,000,000 4,000,000
Rockford Economic Development Revenue
VRDN, 3.80%, 12/1/10,
LOC: Banque Paribas 2,270,000 2,270,000
State Development Financial Authority
Revenue VRDN, 4.15%,
9/1/26, LOC: Firstar Bank, Milwaukee 2,182,500 2,182,500
State Educational Facilities Authority
Revenue VRDN, 4.00%, 4/1/32, LOC:
Bank of America 25,700,000 25,700,000
State Health Facilities Authority Revenue VRDN,
5.15%, 08/15/25, BPA: Northern
Trust Company 5,600,000 5,600,000
4.10%, 04/1/33 LOC: American
Nat'l Bank & Trust 5,300,000 5,300,000
State Housing Development Authority
Revenue VRDN, 5.20%
2/1/24, LOC: Sumitomo Bank, Ltd. 2,175,000 2,175,000
State IDA Revenue VRDN, Series B,
4.05%, 1/1/10, LOC: National City Bank 2,225,000 2,225,000
State Toll Highway Authority Securities
Trust Certificate Revenue VRDN, 3.65%,
2/03/99, FSA Insured 38,700,000 38,700,000
Winnebago County IDA Revenue VRDN,
5.5025%, 12/1/06,
LOC: Bank of Nova Scotia 2,280,000 2,280,000
Indiana - 2.9%
Frankfort Economic IDA Revenue VRDN, 4.85%, 1/1/23,
LOC: Dai-Ichi Kangyo Bank 5,400,000 5,400,000
Indiana Bond Bank Advanced Funding Progress Notes,
4.00%, 01/20/99, LOC: Lasalle Bank 32,000,000 32,010,778
Indianapolis MFH Revenue VRDN, 4.10%, 12/20/33,
LOC: National City Bank 4,500,000 4,500,000
South Bend MFH Revenue VRDN, 4.30%, 10/1/09,
LOC: FHLB 4,420,000 4,420,000
Iowa - 0.1%
Davenport IDA Revenue VRDN, 5.5025%, 12/1/06,
LOC: Bank of Nova Scotia 1,600,000 1,600,000
Kansas - 0.7%
Kansas City MFH Revenue VRDN, 4.35%, 6/1/15,
LOC: Huntington National Bank 6,555,000 6,555,000
State MFH Revenue VRDN, 4.35%, 12/25/30,
LOC: Texas Commerce Bank 4,000,000 4,000,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Kentucky - 1.2%
Carroll County Solid Waste IDA Revenue
VRDN, 4.50%, 5/1/27, LOC: Banco
Bilbao Vizcaya $5,951,000 $ 5,951,000
Glasgow IRB Revenue VRDN, 5.425%, 6/1/20,
LOC: Bank of Tokyo-Mitsubishi, Ltd. 4,100,000 4,100,000
Hancock County IDA Revenue VRDN, 4.35%, 6/1/12,
LOC: Chase Manhattan 4,670,000 4,670,000
Hopkinsville IDA Revenue VRDN, 5.35%, 4/1/04,
LOC: Dai-Ichi Kangyo Bank 3,000,000 3,000,000
State Financial IDA Revenue VRDN, Series B, 4.00%, 2/1/08,
LOC: National City Bank 1,000,000 1,000,000
Louisiana - 4.0%
Caddo-Bossier Parishes Port Revenue VRDN, 4.65%, 1/1/28,
LOC: First Commercial Bank 4,000,000 4,000,000
New Orleans Levee District Revenue VRDN, 5.80%, 10/1/17,
LOC: Fuji Bank, Ltd. 24,155,000 24,155,000
New Orleans Morgan Keegan Trust Receipts,
4.20%, 6/1/06, BPA: National Westminster
Bank, FGIC Insured 33,275,000 33,275,000
State Public Facilities Authority Revenue VRDN, 4.20%, 12/1/14,
LOC: Regions Bank 2,775,000 2,775,000
Massachusetts - 0.4%
Hudson IDA Revenue VRDN, 4.375%, 10/1/13,
LOC: FNB Boston 1,025,000 1,025,000
State Industrial Finance Authority Revenue VRDN,
4.125%, 11/3/99, LOC: FNB Boston 775,000 775,000
4.375%, 8/1/14, LOC: FNB Boston 4,500,000 4,500,000
Michigan - 1.6%
Sault Sainte Marie Tribe Building Revenue VRDN,
Series A, 3.65%, 6/1/03, LOC: First of
America Bank, MI 5,090,000 5,090,000
State Hospital Authority Municipal Securities
Trust Certificates Revenue VRDN, 3.60%,
2/17/99, FSA Insured 11,970,000 11,970,000
State Strategic Fund Economic Development
LO Revenue VRDN, 5.15%, 6/15/10, LOC:
Canadian Imperial Bank 1,100,000 1,100,000
State Strategic Fund Economic Development
Revenue VRDN, 5.20%, 9/1/08, LOC:
Dai-Ichi Kangyo Bank 6,800,000 6,800,000
Minnesota - 0.8%
Cottage Grove Pollution Control Board Revenue VRDN,
4.05%, 8/1/12 1,100,000 1,100,000
Minneapolis Community Development Agency
Revenue VRDN, 5.25%, 2/1/12, LOC:
Sumitomo Bank, Ltd. 11,555,000 11,555,000
Mississippi - 0.7%
Mississippi Business Financial Corp. IDA Revenue VRDN,
4.40%, 1/1/06, LOC: National
Bank of Canada 3,675,000 3,675,000
4.50%, 6/1/07, LOC: Deposit Guaranty 1,900,000 1,900,000
Tupelo MFH Revenue Bonds, 4.00%,
4/7/99, IA: AIG 6,000,000 6,000,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Missouri - 0.4%
St. Louis IDA Revenue VRDN, 4.80%, 1/1/21,
LOC: Banca Nazionale Del Lavoro $2,100,000 $2,100,000
State IDA Revenue VRDN,
4.375%, 3/1/01, LOC: FNB Boston 755,000 755,000
4.45%, 9/1/08, LOC: Morgan
Guaranty Trust 4,000,000 4,000,000
Nebraska - 0.2%
State IDA Revenue VRDN, 5.2%, 12/1/04,
LOC: Sanwa Bank, Ltd. 4,000,000 4,000,000
New Jersey - 0.4%
State Economic Development Authority Revenue VRDN,
5.00%, 12/1/15, LOC: Asahi Bank, Ltd. 6,405,000 6,405,000
New Mexico - 1.7%
State Tax and Revenue Anticipation Notes,
4.25%, 6/30/99 27,000,000 27,083,544
New York - 3.0%
Long Island Power Authority Eagle Trust Revenue VRDN, 3.20%,
5/13/99, BPA: Citibank, FSA Insured 12,870,000 12,870,000
Long Island Power Authority Electric Revenue
VRDN, 4.05%, 12/1/14, BPA: Bank of America,
FSA Insured 21,750,000 21,750,000
State Metro Transportation Authority Facilities
Revenue VRDN, 5.25%, 7/1/24, BPA: Commerze
Bank, AG, AMBAC Insured 3,000,000 3,000,000
State Throughway Authority Municipal Trust
Receipts, 4.10%, 1/1/25, BPA: Societe Generale,
FGIC Insured 10,165,000 10,165,000
Nevada - 0.5%
Clark County Special Facility Airport Revenue VRDN,
4.50%, 12/01/21, LOC: Bayerishe Landesbank
Girozentrale 7,535,000 7,535,000
Ohio - 0.9%
Cleveland Public Power Facilities Trust Revenue Bonds,
4.30%, 11/15/18, BPA: Commerze Bank,
AG, MBIA Insured 5,000,000 5,000,000
Hamilton County Municipal Securities Trust Certificate Revenue
VRDN, 4.20%, 6/1/06, MBIA Insured 10,000,000 10,000,000
Oklahoma - 1.0%
Cleveland MFH Revenue VRDN, 4.00%, 4/1/20,
SURBD: Continental Casualty Co. 5,930,000 5,930,000
State Housing Finance Authority Revenue VRDN, 4.75%,
12/1/05, C/LOC: Binghampton
Savings Bank 5,900,000 5,900,000
Tulsa IDA Revenue VRDN, Series A, 3.40%, 11/1/14,
LOC: St. John's Medical Ctr. 5,000,000 5,000,000
Oregon - 1.3%
Deschutes County Administrative School District No. 1 Revenue VRDN,
4.20%, 12/1/03, TOA: Citibank,
FGIC Insured 4,505,000 4,505,000
4.20%, 12/1/04, TOA: Citibank,
FGIC Insured 4,885,000 4,885,000
4.20%, 12/1/05, TOA: Citibank,
FGIC Insured 5,285,000 5,285,000
4.20%, 12/1/06, TOA: Citibank,
FGIC Insured 5,655,000 5,655,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Pennsylvania - 4.1%
Berks County IDA Revenue VRDN,
4.10%, 7/1/25, LOC: First Union $1,285,000 $1,285,000
4.10%, 9/1/25, LOC: First Union 1,200,000 1,200,000
Chester County IDA Revenue VRDN, 4.10%, 4/1/17,
LOC: First Union 3,210,000 3,210,000
Delaware County Authority Revenue VRDN, 4.05%, 7/1/14,
LOC: PNC Bank NA 8,500,000 8,500,000
Montgomery County IDA Revenue VRDN, 4.05%, 12/1/13,
LOC: PNC Bank, NA 150,000 150,000
Philadelphia MFH Redevelopment Authority Revenue
VRDN, 4.40%, 12/1/09, LOC:
Marine Midland Bank 2,950,000 2,950,000
Philadelphia Tax and Revenue Anticipation Notes, Series A,
4.25%, 6/30/99 38,150,000 38,261,494
Temple University Higher Education Revenue VRDN, Series B,
4.50%, 5/14/99 9,000,000 9,023,677
West Cornwall Township Municipal Authority Revenue VRDN,
4.15%, 3/1/16, LOC: First Union 1,780,000 1,780,000
Puerto Rico - 0.0%
Electric Power Authority GO VRDN, 3.95%, 7/1/22,
BPA: Societe Generale 100,000 100,000
Infrastructure Financing Authority Revenue VRDN, 3.80%, 07/01/28,
BPA: Merrill Lynch, AMBAC Insured 400,000 400,000
South Carolina - 1.8%
Dorchester County IDA Revenue VRDN, 4.40%, 10/1/24,
LOC: Bayerische Vereinsbank 5,100,000 5,100,000
Orangeburg Metal Leve IDA Revenue
VRDN, 4.375%, 6/1/08 4,350,000 4,350,000
State Housing Finance and Development Authority Revenue VRDN,
4.10%, 7/1/07, SURBD:
Continental Casualty Co. 6,000,000 6,000,000
State Public Service Authority Revenue VRDN, 4.10%, 1/1/25,
BPA: Bayerische Hypobank,
FGIC Insured 13,800,000 13,800,000
Tennessee - 2.9%
Coffee County IDA Revenue VRDN,
5.25%, 12/1/01, LOC: Asahi Bank 9,000,000 9,000,000
4.55%, 5/1/12, LOC: Barnett Bank
of South Florida 5,060,000 5,060,000
Sevier County Public Building Authority Revenue VRDN,
4.05%, 6/1/05, BPA: KredietBank,
AMBAC Insured 7,000,000 7,000,000
4.05%, 6/1/14, BPA: Landesbank
Hessen-TH, AMBAC Insured 3,000,000 3,000,000
4.05%, 6/1/18, BPA: Landesbank
Hessen-TH, AMBAC Insured 7,000,000 7,000,000
4.05%, 6/1/19, BPA: Landesbank
Hessen-TH, AMBAC Insured 10,000,000 10,000,000
Shelby County Health Educational and Housing Facilities Board
Revenue VRDN, 4.20%, 7/1/22,
LOC: NationsBank 5,000,000 5,000,000
Texas - 7.1%
Angelina and Neches Solid Waste Revenue VRDN
Series B, 5.15%, 5/1/14, LOC:
Credit Suisse 3,400,000 3,400,000
Series D, 5.15%, 5/1/14, LOC:
Credit Suisse 7,000,000 7,000,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Texas - (Cont'd)
Austin Utilities Municipal Securities Trust Certificate Revenue
VRDN, 3.68%, 2/10/99, MBIA Insured $23,265,000 $23,265,000
Cleburne IDA Revenue VRDN, 4.40%, 2/1/04,
LOC: National City Bank 1,875,000 1,875,000
Grand Prairie IDA Revenue VRDN, 3.60%, 12/1/06,
LOC: PNC Bank, N.A. 1,000,000 1,000,000
Harris County IDA Revenue VRDN,
5.45%, 8/1/01, LOC: Sakura Bank, Ltd. 1,200,000 1,200,000
Tax and Revenue Anticipation Notes,
4.50%, 8/31/99 75,000,000 75,519,070
Utah - 0.5%
Provo City MFH Revenue VRDN, 5.95%, 12/15/10,
LOC: Dai-Ichi Kangyo Bank 4,330,000 4,330,000
University of Utah Revenue VRDN, 3.60%, 12/1/15,
LOC: First Security Bank 4,185,000 4,185,000
Vermont - 0.1%
State Educational and Health Building Financing Agency Revenue
VRDN, 4.00%, 6/30/05, LOC: FNB Boston 660,000 660,000
State Marble Industries IDA Revenue VRDN,
4.125%, 12/1/04 370,000 370,000
Washington - 0.9%
Grant County Public Utilities VRDN, 4.50%, 10/1/11,
LOC: Southtrust Bank, AL 4,000,000 4,000,000
State Public Power Supply System Revenue VRDN,
3.95%, 7/1/17 10,000,000 10,000,000
West Virginia - 0.3%
Harris County IDA Revenue VRDN, 4.05%, 6/1/14,
LOC: Societe Generale 4,140,000 4,140,000
Wisconsin - 1.0%
Eau Claire IDA Revenue VRDN, 4.20%, 5/1/07,
LOC: Firstar Bank, Milwaukee 3,345,000 3,345,000
Germantown IDA Revenue VRDN, 4.20%, 5/1/17,
LOC: Firstar Bank, Milwaukee 1,900,000 1,900,000
Grafton IDA Revenue VRDN, 4.35%, 12/1/17,
LOC: Firstar Bank, Milwaukee 2,900,000 2,900,000
State Health & Educational Facilities Authority
Revenue VRDN, 4.15%, 11/01/23, LOC: Firstar
Bank Milwaukee 8,200,000 8,200,000
Wyoming - 1.6%
State General Fund Tax and Revenue Anticipation Notes,
4.00%, 6/25/99 25,000,000 25,049,722
Other - 11.3%
ABN Amro Chicago Corp. LeaseTOPS Trust Certificates,
4.18%, 10/4/00, BPA: Lasalle Bank 14,160,078 14,160,078
ABN Amro Chicago Corp. Municipal LeaseTOPS Trust Certificates,
4.23%, 3/1/10, MBIA Insured 17,585,000 17,585,000
Principal
Municipal Obligations - (Cont'd) Amount Value
Other - (Cont'd)
Capital Realty Investors Tax Exempt Certificates
Revenue VRDN, 4.28%, 12/1/04, BPA:
UBS, AG $23,865,000 $23,865,000
Series 96-2, 4.28%, 2/1/04, BPA:
UBS, AG 48,955,000 48,955,000
Lehman Brothers Pooled Trust Recipts VRDN,
4.40%, 7/1/12, BPA: Bank of America,
LOC: Industrial Bank of Japan 7,000,000 7,000,000
Morgan Keegan Trust Receipts,
4.30%, 4/1/99, IA:
Escrowed/Treasury Bills 4,950,000 4,950,000
4.15%, 4/6/99, IA:
Escrowed/Treasury Bills 6,955,000 6,955,000
Pitney Bowes Corporation Lease TOPS Trust
Certificates, 4.23%, 10/10/01, BPA:
Pitney Bowes Credit, AMBAC Insured 23,112,062 23,112,062
Puttable Floating Option Tax Exempt Receipts,
4.25%, 10/1/30, BPA: Societe Generale,
AMBAC Insured 33,905,000 33,905,000
TOTAL INVESTMENTS
(Cost$1,575,410,214) - 98.3% 1,575,410,214
Other assets and liabilities, net - 1.7% 26,878,315
Net Assets - 100.0% $1,602,288,529
Net Assets Consist of:
Paid-in capital applicable to the following shares of beneficial interest,
unlimited number of no par value shares authorized:
Class O: 1,355,203,424 shares outstanding $1,355,091,076
Institutional Class: 246,940,916 shares outstanding 246,938,093
Undistributed net investment income 259,360
Net Assets $1,602,288,529
Net Asset Value Per Share
Class O (based on net assets of$1,355,321,661) $1.00
Institutional Class (based on net assets of$246,966,868) $1.00
See notes to financial statements.
<PAGE>
LIMITED-TERM PORTFOLIO
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
Principal
Municipal Obligations - 97.7% Amount Value
Arizona - 2.6%
Educational Loan Marketing Corporation Revenue
Bonds, 6.55%, 3/1/99 $11,920,000 $11,981,865
Glendale County IDA Revenue Bonds, 4.10%,
12/1/14, LOC: Dresdner Bank 2,300,000 2,300,000
Arkansas - 2.0%
North Little Rock Baptist Health Facilities Revenue
VRDN, 4.10%, 12/01/21, BPA Credit
Suisse, MBIA Insured 11,000,000 11,000,000
California - 3.5%
Health Facilities Financing - Downey Community
Hospital Revenue Bonds, 4.75%, 5/15/99 2,220,000 2,233,320
San Bernardino Public Safety Authority Revenue
Bonds, 4.60%, 5/1/99 2,800,000 2,815,148
State Public Works Board Lease Revenue Bonds,
Series C, 4.75%, 9/1/99 13,960,000 14,129,056
Colorado - 2.5%
Boulder County MFH Revenue VRDN, 4.35%,
12/25/31, LOC: Chase Manhattan 5,000,000 5,000,000
Denver City & County Airport Revenue VRDN,
7.00%, 11/15/99 2,000,000 2,060,560
Fort Collins MFH Revenue VRDN, 4.35%, 12/25/31,
LOC: Chase Manhattan 6,509,000 6,509,000
Connecticut - 0.4%
State Recovery Authority Revenue Bond,
5.60%, 11/15/99 1,945,000 1,989,502
Florida - 1.5%
Orange County Housing Financial Authority Revenue
VRDN, 3.50%, 8/1/08, LOC: NationsBank 150,000 150,000
Palm Beach Housing Finance Authority Revenue
VRDN, 5.037%, 3/1/22, INSUR:
Fireman's Insurance Co. 4,820,000 4,820,000
Miami Dade County School Board Corp., 5.00%,
8/1/01, FSA Insured 3,000,000 3,101,880
Volusia County MFH Revenue VRDN, 4.375%,
9/1/05, LOC: Amsouth Bank 170,000 170,000
Georgia - 0.2%
Tri-City Hospital Authority Revenue Bonds,
5.25%, 7/1/99 1,000,000 1,007,970
Guam - 0.3%
Guam Government GO Bonds, Series A, 5.75%,
8/15/99 1,885,000 1,913,954
Hawaii - 1.6%
State Department Budget & Finance, 4.85%, 12/1/21,
LOC: Union Bank of California 8,600,000 8,600,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Illinois - 4.5%
Chicago Park District GO Bonds, 5.5%,
01/01/99, FGIC Insured $2,000,000 $2,000,000
Fulton IDA Revenue VRDN, 4.20%, 4/1/12,
LOC: Firstar Bank Milwaukee 5,000,000 5,000,000
Housing Development Authority Mortgage
Revenue Bonds, 3.85%, 2/1/99 3,725,000 3,725,000
State Educational Facilities Authority Revenue
Bonds, 4.75%, 9/1/00 1,770,000 1,799,400
State IDA Revenue VRDN, 4.41%, 9/2/05,
LOC: American National Bank & Trust 2,000,000 2,000,000
State Sales Tax Revenue Bonds, Series Q,
5.10%, 6/15/99 10,000,000 10,095,400
Indiana - 1.5%
Shelbyville Economic Development Revenue
VRDN, 5.20%, 9/1/06, LOC: Industrial
Bank of Japan 8,000,000 8,000,000
Kentucky - 1.0%
Hopkinsville IDA Revenue VRDN, 5.35%, 4/1/04,
LOC: Dai - Ichi Kangyo Bank 5,500,000 5,500,000
Louisiana - 0.3%
St. Tammany Parish Hospital Services Revenue
Bonds, 5.00%, 07/1/99 1,760,000 1,775,506
Maine - 0.5%
Finance Authority MFH Revenue Variable Rate
Notes, 5.25%, 9/1/18, LOC: Sakura Bank 2,935,000 2,935,000
Maryland - 3.5%
Baltimore (The Zamoiski Company Project),
6.061%, 12/1/09 7,370,588 7,370,588
Montgomery County Economic Development
Bonds, 5.25%, 11/1/09, LOC: FNB
of Maryland 850,000 851,845
State and Local GO Bonds, 5.00%, 3/1/00 8,000,000 8,169,520
State Health and Higher Education Facilities
Authority Revenue Bonds, 5.50%, 7/1/99 2,855,000 2,890,859
Massachusetts - 1.2%
Housing Finance Agency MFH Revenue Bonds,
Series A, 5.10%, 6/1/99, AMBAC Insured 520,000 522,574
Municipal Wholesale Electric Power Company
Revenue Bonds, Series B, 6.25%, 7/1/99 6,025,000 6,118,147
Michigan - 2.1%
State Hospital Finance Authority Pontiac Osteopathic
Revenue Bonds, 5.10%, 2/1/99 1,000,000 1,001,390
State Housing Development Authority LO
Revenue Bonds, 5.00%, 10/1/11 1,000,000 1,001,460
State Housing Development Authority Revenue
Bonds, 6.00%, 10/1/11,
(Escrowed in U.S. Treasury Obligations) 275,000 276,678
State Strategic LO Revenue VRDN, 5.25%,
11/1/09, LOC: Tokai Bank Ltd. 9,000,000 9,000,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Minnesota - 2.5%
Edina MFH Vernon Terrace Revenue VRDN,
5.00%, 7/1/25 $6,340,000 $6,391,734
St. Paul Port Authority Revenue VRDN,
4.40%, 7/1/12 7,165,000 7,167,938
Mississippi - 0.2%
Higher Education Student Loan Revenue Bonds,
6.05%, 1/1/99 1,000,000 1,000,000
Missouri - 1.1%
Saint Louis IDA Revenue VRDN, 4.65%, 1/1/21,
LOC: Banca Naz Del Lavoro 5,900,000 5,900,000
Nebraska - 0.5%
University of Nebraska Facilities Corp. Revenue
Bonds, 4.25%, 7/15/00 2,525,000 2,557,219
Nevada - 0.6%
Henderson Public Improvement Trust
Revenue VRDN, 4.18%, 4/1/07 3,300,000 3,300,000
New Hampshire - 1.0%
Business Finance Authority Industrial Facility
Revenue VRDN, 4.20%, 12/1/17 5,500,000 5,500,000
Higher Education & Health Revenue Bonds,
7.50%, 12/1/00, FGIC Insured 90,000 90,280
New Jersey - 0.9%
New Jersey State Turnpike Authority
Revenue Bonds, 5.60%, 1/1/00 5,000,000 5,114,200
New York - 24.2%
Dormitory Authority Revenue Bonds,
Series B, 5.00%, 2/15/00 3,460,000 3,525,325
5.00%, 2/15/01 3,865,000 3,970,051
Long Island Power Authority Revenue Bonds,
4.25%, 4/1/01 25,670,000 25,976,500
Municipal Assistance Corporation for the City
of New York, Series I, 5.00%, 7/1/99 15,000,000 15,154,500
Nassau County Unlimited GO Bonds,
5.125%, 3/1/00, AMBAC Insured 4,330,000 4,425,433
Series V, 5.125%, 3/1/99, AMBAC
Insured 3,800,000 3,813,338
New York City GO Bonds,
5.25%, 8/01/99 2,900,000 2,936,876
5.00%, 8/01/01 2,000,000 2,064,340
Series F, 4.25%, 8/1/00 9,005,000 9,113,060
Port Authority New York and New Jersey, Special Obligation
Revenue Bonds, 6.25%, 10/1/99 2,700,000 2,752,596
State COPs Revenue Bonds,
4.60%, 2/1/99 12,710,000 12,726,015
4.75%, 2/1/00 13,915,000 14,133,883
4.75%, 2/1/01 13,635,000 13,934,561
4.00%, 3/1/01 5,830,000 5,869,994
4.25%, 9/1/01 8,465,000 8,577,500
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
New York - (Cont'd)
State Thruway Authority Highway and Bridge
Revenue Bonds, Series A, 4.75%, 4/1/00,
AMBAC Insured $3,675,000 $3,742,253
Ohio - 1.6%
Lorraine County Hospital Revenue Bonds,
5.00%, 9/1/99 2,000,000 2,026,340
Marion County Hospital Revenue Bonds,
5.25%, 5/15/99 1,175,000 1,183,895
Piqua Ohio IDA Revenue VRDN, 4.75%,
10/1/11, LOC: Sanwa Bank Ltd. 5,800,000 5,800,000
Pennsylvania - 2.2%
Northeastern Hospital Authority Revenue VRDN, 7.65%,
7/1/10, (Prerefunded 7/1/99 @ 102) 3,590,000 3,740,565
Philadelphia Airport Revenue Bonds,
5.25%, 6/15/99, FGIC Insured 1,750,000 1,767,238
5.25%, 6/15/00, FGIC Insured 3,690,000 3,780,737
Philadelphia Hospitals & Higher Education
Revenue Bonds, 5.35%, 7/1/99 1,335,000 1,349,325
Philadelphia Municipal Authority, Philadelphia
Gas Works Equipment COPs, Asset Guaranty
Insured, 5.95%, 4/1/99 1,600,000 1,611,056
Puerto Rico - 5.4%
Commonwealth GO Bonds, 5.50%, 7/1/99 10,200,000 10,325,664
Commonwealth Highway and Transportation Authority
Revenue Bonds, 4.25%, 7/1/00 12,490,000 12,642,128
Revenue Bonds, 4.25%, 7/1/10 6,750,000 6,750,000
South Carolina - 1.9%
Georgetown County Pollution Control Revenue VRDN,
4.30%, 9/1/01, GA: International Paper 7,000,000 7,000,000
State Education Assistance Revenue Bonds,
4.75%, 9/1/01 3,375,000 3,452,828
South Dakota - 0.2%
Housing Development Authority, Home Ownership Mortgage
Revenue Bonds, Series A, 4.60%, 5/1/99 1,000,000 1,002,500
Tennessee - 0.9%
Knox County Hospital Facility Revenue Bonds,
7.00%, 1/1/15, MBIA Insured 4,450,000 4,705,912
Texas - 8.0%
Brazos River Authority Revenue Bonds,
4.15%, 6/1/30 36,000,000 36,099,360
Harris County Housing Finance Revenue VRDN,
4.80%, 6/1/30, LOC: Heller Financial 4,000,000 4,000,000
Harris County IDA Revenue VRDN,
5.20%, 8/1/01 LOC: Bank of Tokyo,
Mitsubishi 3,300,000 3,300,000
5.45%, 8/1/01, LOC: Sakura bank 300,000 300,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Vermont - 4.6%
Student Assistance Corp. Promissory Notes,
6.50%, 6/15/00, AMBAC Insured $2,000,000 $2,080,300
4.10%, 12/15/00 10,855,000 10,927,077
4.55%, 12/15/00 11,830,000 11,952,559
Virgin Islands - 0.2%
Public Finance Authority Revenue Bonds,
5.00%, 10/1/00 1,000,000 1,020,750
Virginia - 1.0%
Henrico County IDA Revenue VRDN, 4.35%, 10/1/00,
LOC: Tokai Bank Ltd. 200,000 200,000
Public School Authority Revenue Bonds,
Series I, 4.25%, 8/1/99 5,520,000 5,561,510
Washington - 2.8%
Public Power Supply Revenue Bonds, Series A,
4.50%, 7/1/99 1,935,000 1,948,816
4.75%, 7/1/99 10,000,000 10,083,700
7.30%, 7/1/00 3,000,000 3,162,360
Other - 8.7%
Fort Mojave Indian Tribe of Arizona, California and Nevada Public
Facilities Combined LO and Revenue Bonds Adjustable Rate
and Tender Series A of 1993,
11.50%,12/1/18 3,880,180 3,880,180
Lehman Brothers. Pooled Trust Receipts,
4.40%, 7/1/12 3,000,000 3,000,000
Morgan Keegan Trust Receipts,
4.30%, 4/1/99 6,935,000 6,935,000
4.15%, 4/6/99 810,000 810,000
Puttable Floating Option Tax Exempt Receipts,
4.30%, 7/1/28, BPA: Socoete Generale 32,895,000 32,895,000
TOTAL INVESTMENTS
(Cost$532,315,718) - 97.7% 534,848,018
Other assets in excess of liabilities, net - 2.3%
12,364,062
Net Assets - 100.0% $547,212,080
Net Assets Consist of:
Paid-in capital applicable to 51,073,163 shares of beneficial interest,
unlimited number of no par value shares authorized: $544,571,670
Undistributed net investment income 87,202
Accumulated net realized gain (loss) on investments 20,908
Net unrealized appreciation (depreciation) on investments 2,532,300
Net Assets $547,212,080
Net Asset Value Per Share $10.71
<PAGE>
LONG-TERM PORTFOLIO
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
Principal
Municipal Obligations - 103.7% Amount Value
Alaska - 2.0%
Anchorage GO Bonds, 6.00%, 10/1/14,
FGIC Insured $1,000,000 $1,149,730
Arizona - 7.8%
Maricopa County School District 69 GO Bonds,
6.25%, 7/1/14, FSA Insured 2,000,000 2,354,340
Tucson GO Bonds, 5.50%, 7/1/18 2,000,000 2,161,440
California - 2.0%
Los Angeles Unified School District GO Bonds, Series A,
6.00%, 7/1/15, FGIC Insured 1,000,000 1,144,970
Colorado - 5.5%
Central City MFH Revenue Bonds, 3.55%, 12/25/30,
LOC: Texas Commerce 3,194,000 3,194,000
Florida - 10.0%
Dade County GO Bonds, 7.75%, 10/1/18,
AMBAC Insured 2,000,000 2,719,620
Dade County IDA Revenue Bonds,
8.00%, 6/1/22 1,800,000 1,980,000
Flagler County Special Assessment Revenue Bonds,
7.20%, 7/1/14 1,000,000 1,091,770
Illinois - 4.7%
Housing Development Authority Revenue VRDN, 5.20%, 2/1/24,
LOC: Sumitomo Bank Ltd. 2,700,000 2,700,000
Louisiana - 3.2%
State Public Facility Authority MFH Revenue Bonds, Series A.
7.00%, 6/1/24 1,670,000 1,860,380
Maryland - 5.7%
Dorchester General Hospital Revenue Bonds,
Series B, 8.50%, 4/1/14 2,100,000 2,391,459
State Community Development Authority Mortgage
Revenue Bonds, 7.70%, 4/1/15 845,000 872,919
Massachusetts - 11.2%
Bay Transportation Authority Revenue Bonds,
5.50%, 3/1/15, MBIA Insured 2,500,000 2,721,000
State Unlimited Tax GO Bonds, 5.25%,
08/1/18 2,000,000 2,098,780
State Water Resource Authority Revenue Bonds,
5.50%, 8/1/15, FSA Insured 1,500,000 1,634,190
Michigan - 3.8%
State Hospital Finance Authority Revenue
Bonds, 7.00%, 11/1/21 1,000,000 1,107,470
State Trunk Line Revenue Bonds, Series
A, 5.50%, 11/1/18 1,000,000 1,077,090
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Missouri - 2.3%
Saint Louis lDA Revenue VRDN, 4.65%, 1/1/21,
LOC: Banca Naz Del Lavoro $1,300,000 $1,300,000
New York - 8.1%
New York and New Jersey Port Authority,
Consolidated Revenue Bonds,
6.125%, 6/1/2094 2,500,000 2,914,025
State Dorm Authority Revenue Bonds, 5.50%,
7/1/17, MBIA Insured 1,600,000 1,735,280
North Carolina - 1.7%
Community Health Care Facilities Revenue
Bonds, 4.75%, 06/1/21 1,000,000 945,860
Ohio - 3.4%
State Turnpike Commission Revenue Bonds, 5.50%, 2/15/26,
FGIC Insured 1,800,000 1,955,016
Puerto Rico - 12.7%
Commonwealth Highway and Transportation Authority Revenue Bonds,
6.25%, 7/1/14, MBIA Insured 2,000,000 2,371,500
4.75%, 7/1/38 3,000,000 2,841,750
Puerto Rico Electric Power Authority Revenue
Bonds, 5.25%, 7/1/13, MBIA Insured 2,000,000 2,103,040
Rhode Island - 1.1%
Port Authority & Economic Development
Corporation Airport Revenue Bonds,
7.00%, 7/1/14, FSA Insured 500,000 624,010
Texas - 6.4%
Harris County MFH Revenue VRDN, 4.80%, 6/1/30,
LOC: Heller Financial 1,500,000 1,500,000
Tarrant County Health Facilities Development
Corp. Revenue Bonds, 5.75%,
2/15/15, MBIA Insured 2,000,000 2,211,220
Vermont - 1.7%
Education & Health Buildings Financing
Agency Revenue VRDN, 4.00%, 6/1/05,
LOC: First National Bank of Boston 1,000,000 1,000,000
Virginia - 5.9%
Fairfax County Water Authority Revenue
Bonds, 5.00%, 4/1/21 1,500,000 1,519,665
Henrico County IDA Revenue VRDN, 4.35%,
10/1/2000, LOC: Tokai Bank Ltd. 1,900,000 1,900,000
Washington - 4.5%
Central Puget Sound Regional Transportation
Authority Revenue Bonds, 5.25%,
2/1/21, FGIC Insured 2,500,000 2,606,450
TOTAL INVESTMENTS (Cost$57,565,384) - 103.7%59,786,974
Other assets and liabilities, net - (3.7%) (2,109,527)
Net Assets - 100.0% $57,677,447
<PAGE>
Net Assets Consist of: Value
Paid-in capital applicable to 3,430,945 shares of beneficial interest,
unlimited number of no par value shares authorized: $55,207,364
Undistributed net investment income 4,706
Accumulated net realized gain (loss) on investments 243,787
Net unrealized appreciation (depreciation) on investments 2,221,590
Net Assets $57,677,447
Net Asset Value Per Share $16.81
Explanation of Guarantees:
BPA: Bond-Purchase Agreement
IA: Investment Agreement
LOC: Letter of Credit
C/LOC: Collateralized LOC
GA: Guaranty Agreement
SURBD: Surety Bond
GIC: Guaranteed Investment Contract
TOA: Tender Option Agreement
Abbreviations:
AMBAC: American Municipal Bond Assurance Corp.
IRB: Industrial Building Authority
COP: Certificates of Participation
LO: Limited Obligation
FGIC: Financial Guaranty Insurance Company
MBIA: Municipal Bond Insurance Association
GO: General Obligation
MFH: Multi-Family Housing
IDA: Industrial Development Authority
VRDN: Variable Rate Demand Notes
Certain securities have optional or mandatory tender features which give
them a shorter effective maturity date.
See notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
Money Market Limited-Term
Net Investment Income Portfolio Portfolio
Investment Income
Interest income $60,002,016 $22,427,303
Expenses
Investment advisory fee 3,109,517 3,048,758
Transfer agency fees and expenses 1,966,625 232,673
Distribution Plan expenses:
Class A -- --
Trustees' fees and expenses 169,091 57,879
Administrative fees
Class O 3,644,196 ---
Institutional Class 85,699 ---
Class A -- 41,317
Custodian fees 141,952 56,505
Registration fees 107,124 56,228
Reports to shareholders 286,001 74,825
Professional fees 52,476 17,843
Miscellaneous 86,647 33,125
Total expenses 9,649,328 3,619,153
Fees paid indirectly (199,565) (65,597)
Net expenses 9,449,763 3,553,556
Net Investment Income 50,552,253 18,873,747
Realized and Unrealized Gain
(Loss) on Investments
Net realized gain (loss) on securities 203,276 190,601
Net realized gain (loss) on futures -- --
203,276 190,601
Change in unrealized appreciation or depreciation -- 614,093
Net Realized and Unrealized
Gain (Loss) on Investments 203,276 804,694
Increase (Decrease) in Net Assets
Resulting from Operations $50,755,529 $19,678,441
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
Long-Term
Net Investment Income Portfolio
Investment Income
Interest income $2,999,414
Expenses
Investment advisory fee 331,988
Transfer agency fees and expenses 33,072
Distribution Plan expenses:
Class A 49,798
Trustees' fees and expenses 6,418
Administrative fees
Class O --
Institutional Class --
Class A 4,476
Custodian fees 14,209
Registration fees 26,330
Reports to shareholders 9,677
Professional fees 1,998
Miscellaneous 1,406
Total expenses 481,521
Fees paid indirectly (14,905)
Net expenses 466,616
Net Investment Income 2,532,798
Realized and Unrealized Gain
(Loss) on Investments
Net realized gain (loss) on securities 1,726,365
Net realized gain (loss) on futures (117,625)
1,608,740
Change in unrealized appreciation
or depreciation (1,389,917)
Net Realized and Unrealized
Gain (Loss) on Investments 218,823
Increase (Decrease) in Net Assets
Resulting from Operations $2,751,621
See notes to financial statements.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $50,552,253 $52,453,937
Net realized gain (loss) 203,276 28,848
Increase (Decrease) in Net Assets
Resulting from Operations 50,755,529 52,482,785
Distributions to shareholders from
Net investment income:
Class O shares (44,484,980) (50,409,548)
Institutional Class shares (6,074,676) (2,109,318)
Net realized gain on investments:
Class O shares -- (27,838)
Institutional Class shares -- (1,010)
Total distributions (50,559,656) (52,547,714)
Capital share transactions
Shares sold:
Class O shares 1,893,035,372 3,040,009,059
Institutional Class shares 2,253,311,523 767,943,597
Reinvestment of distributions:
Class O shares 43,565,798 48,300,641
Institutional Class shares 3,808,687 989,318
Shares redeemed:
Class O shares (1,986,801,809) (3,233,630,004)
Institutional Class shares (2,061,263,513) (751,001,884)
Total capital share transactions 145,656,058 (127,389,273)
Total Increase (Decrease) in Net Assets 145,851,931 (127,454,202)
Net Assets
Beginning of year 1,456,436,598 1,583,890,800
End of year (including undistributed net
investment income of$259,360 and
$63,487, respectively) $1,602,288,529 $1,456,436,598
Capital Share Activity
Shares sold:
Class O shares 1,893,035,372 3,040,009,059
Institutional Class shares 2,253,311,523 767,943,597
Reinvestment of distributions:
Class O shares 43,565,798 48,300,641
Institutional Class shares 3,808,687 989,318
Shares redeemed:
Class O shares (1,986,801,809) (3,233,630,004)
Institutional Class shares (2,061,263,513) (751,001,884)
Total capital share activity 145,656,058 (127,389,273)
See notes to financial statements.
<PAGE>
LIMITED-TERM PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $18,873,747 $20,835,586
Net realized gain (loss) 190,601 159,810
Change in unrealized appreciation
or depreciation 614,093 205,433
Increase (Decrease) in Net Assets
Resulting from Operations 19,678,441 21,200,829
Distributions to shareholders from
Net investment income (18,875,335) (20,821,712)
Net realized gain (loss) on investments (73,203) --
Total distributions (18,948,538) (20,821,712)
Capital share transactions
Shares sold 321,420,461 286,871,063
Reinvestment of distributions: 15,624,101 16,952,842
Shares redeemed (280,742,089) (326,364,971)
Total capital share transactions 56,302,473 (22,541,066)
Total Increase (Decrease) in Net Assets 57,032,376 (22,161,949)
Net Assets
Beginning of year 490,179,704 512,341,653
End of year (including undistributed
net investment income of$87,202 and
$135,049, respectively) $547,212,080 $490,179,704
Capital Share Activity
Shares sold 30,000,403 26,812,094
Reinvestment of distributions 1,460,415 1,586,656
Shares redeemed (26,196,065) (30,512,482)
Total capital share activity 5,264,753 (2,113,732)
See notes to financial statements.
<PAGE>
LONG-TERM PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $2,532,798 $2,645,626
Net realized gain (loss) 1,608,740 549,837
Change in unrealized appreciation
or depreciation (1,389,917) 942,620
Increase (Decrease) in Net Assets
Resulting from Operations 2,751,621 4,138,083
Distributions to shareholders from
Net investment income (2,569,096) (2,660,919)
Net realized gain on investments (1,694,387) (61,075)
Total distributions (4,263,483) (2,721,994)
Capital share transactions
Shares sold 15,227,311 5,996,763
Reinvestment of distributions 3,601,187 2,235,768
Shares redeemed (10,604,794) (11,628,213)
Total capital share transactions 8,223,704 (3,395,682)
Total Increase (Decrease) in Net Assets 6,711,842 (1,979,593)
Net Assets
Beginning of year 50,965,605 52,945,198
End of year (including undistributed net
Investment income of$4,706 and
$53,416, respectively) $57,677,447 $50,965,605
Capital Share Activity
Shares sold 884,903 356,893
Reinvestment of distributions 211,682 132,740
Shares redeemed (615,866) (688,631)
Total capital share activity 480,719 (198,998)
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note A -- Significant Accounting Policies
General: Calvert Tax-Free Reserves (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund is comprised of five separate portfolios, three
of which are reported herein; Money Market, Limited-Term and Long-Term. The
operations of each portfolio are accounted for separately. Each Portfolio
offers shares of beneficial interest. Money Market Class O and Institutional
Class shares are sold without a sales charge. Shares of Limited-Term and
Long-Term are sold with a maximum front-end sales charge of 1.00% and 3.75%,
respectively.
On July 29, 1997, all outstanding Class MMP shares were converted
automatically into Class O shares of the Money Market Portfolio. This
transaction was a non-taxable exchange. On August 1, 1997, Class MMP changed
its name and was converted to the Institutional Class, with a lower expected
expense ratio and a minimum initial investment of$1,000,000.
Security Valuation: Municipal securities are valued utilizing the average of
bid prices or at bid prices based on a matrix system (which considers such
factors as security prices, yields, maturities and ratings) furnished by
dealers through an independent pricing service. Securities (including
options) listed or traded on a national securities exchange are valued at
the last reported sale price. All securities for Money Market are valued at
amortized cost which approximates market. Other securities and assets for
which market quotations are not available or deemed inappropriate are valued
in good faith under the direction of the Board of Trustees.
Options: Long-Term may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss
on the option. The cost of securities acquired or the proceeds from
securities sold through the exercise of the option is adjusted by the amount
of the premium. Risks from writing or purchasing option securities arise
from possible illiquidity of the options market and the movement in the
value of the investment or in interest rates. The risk associated with
purchasing options is limited to the premium originally paid.
Futures Contracts: Long-Term may enter into futures contracts agreeing to
buy or sell a financial instrument for a set price at a future date. The
Portfolio maintains securities with a value equal to its obligation under
each contract. Initial margin deposits of either cash or securities are made
upon entering into futures contracts; thereafter, variation margin payments
are made or received daily reflecting the change in market value. Unrealized
or realized gains and losses are recognized based on the change in market
value. Risks of futures contracts arise from the possible illiquidity of the
futures markets and the movement in the value of the investment or in
interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis. Investment income
and realized gains and losses are allocated to separate classes of shares
based upon the relative net assets of each class. Expenses arising in
connection with a class are charged directly to that class. Expenses common
to the classes are allocated to each class in proportion to their relative
net assets.
<PAGE>
Distributions to Shareholders: Distributions to shareholders are recorded by
the Fund on ex-dividend date. Dividends from net investment income are
accrued daily and paid monthly for Money Market; dividends from net
investment income are declared and paid monthly for Limited-Term and
Long-Term. Distributions from net realized capital gains, if any, are paid
at least annually. Distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting
principles; accordingly, periodic reclassifications are made within the
Fund's capital accounts to reflect income and gains available for
distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
Expense Offset Arrangements: The Fund has an arrangement with its custodian
bank whereby the custodian's and transfer agent's fees may be paid
indirectly by credits earned on the Fund's cash on deposit with the bank.
Such a deposit arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Fund intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation. The Advisor provides investment advisory
services and pays the salaries and fees of officers and affiliated Trustees
of the Fund. For its services, the Advisor receives monthly fees based on
the following annual rates of average daily net assets:
First Next Over
$500 Million $500 Million $1 Billion
Money Market .25% .20% .15%
Limited-Term .60% .50% .40%
Long-Term .60% .50% .40%
Under the terms of the agreement, $428,285, $320,184, and $37,426 were
payable at year end for Money Market, Limited-Term and Long-Term,
respectively.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee. Class O and
Institutional Class of Money Market pay annual rates of .26% and .05%,
respectively, based on their average daily net assets. The remaining
portfolios of the Fund pay monthly an annual fee, of $80,000, which is
allocated between the Portfolios based on their relative net assets. Under
the terms of the agreement, $318,487, $3,340 and $354 were payable at year
end for Money Market, Limited-Term and Long-Term, respectively.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Fund. Distribution Plans, adopted by
Long-Term, allow the Portfolio to pay
<PAGE>
the distributor for expenses and services associated with distribution of
shares. The expenses paid may not exceed an annual rate of average daily net
assets of .35% on Long-Term.
The Distributor paid $129,017 in addition to the commissions charged on
sales of Limited-Term, and paid $4,778 in addition to the commissions
charged on sales of Long-Term. Under the terms of the agreement, $4,449 was
payable at year end for Long-Term.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, is
the shareholder servicing agent for the Fund. For its services, CSSI
received fees of $1,065,802, $41,620 and $4,465 for the year ended December
31, 1998 for Money Market, Limited-Term and Long-Term, respectively. Under
the terms of the agreement, $88,101, $3,561, and $387 were payable at year
end for Money Market, Limited-Term and Long-Term, respectively.
National Financial Data Services, Inc., is the transfer and dividend
disbursing agent.
Each Trustee who is not affiliated with the Advisor received an annual fee
of$20,500 plus up to$1,500 for each Board and Committee meeting attended.
Trustee fees are allocated to each of the funds served.
Note C -- Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were:
Limited-Term Long-Term
Purchases $153,933,885 $36,430,643
Sales 165,320,251 37,637,561
Money Market held only short-term investments.
The cost of investments owned at December 31, 1998 was substantially the
same for federal income tax and financial reporting purposes for each
Portfolio. The following table presents the components of net unrealized
appreciation (depreciation) as of December 31, 1998:
Money Market Limited-Term Long-Term
Unrealized appreciation -- $2,532,300 $2,295,381
Unrealized depreciation -- -- 73,791
Net -- $2,532,300 $2,221,590
As a cash management practice, Portfolios may sell or purchase short-term
variable rate demand notes from other Portfolios managed by the Advisor. All
transactions are executed at independently derived prices.
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount
of$50 million ($25 million committed and$25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings
under this facility bear interest at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per annum will be incurred on the
unused portion of the committed facility which will be allocated to all
participating funds. This fee is paid quarterly in arrears. The Fund had no
loans outstanding pursuant to this line of credit at December 31, 1998.
<PAGE>
Note E -- Subsequent Event
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation ("Acacia Mutual"). Effective January 1, 1999,
Acacia Mutual merged with Ameritas Mutual Insurance Holding Company to form
Ameritas Acacia Mutual Holding Company.
Tax Information (unaudited)
The Fund designates$181,013,$73,203,$1,571,909 as capital gain dividends
paid for Money Market , Limited-Term, and Long-Term, respectively, during
the fiscal year ended December 31, 1998.
<PAGE>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31, December 31,
Class O Shares 1998 1997 1996
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .032 .033 .033
Distributions from
Net investment income (.032) (.033) (.033)
Net asset value, ending $1.00 $1.00 $1.00
Total return* 3.22% 3.38% 3.33%
Ratios to average net assets:
Net investment income 3.17% 3.32% 3.28%
Total expenses + .65% .65% .65%
Net expenses .64% .64% .64%
Net assets, ending
(in thousands) $1,355,322 $1,405,350 $1,550,731
Number of shares outstanding,
ending (in thousands) 1,355,203 1,405,404 1,550,724
Years Ended
December 31, December 31,
Class O Shares 1995 1994
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .040 .028
Distributions from
Net investment income (.040) (.028)
Net asset value, ending $1.00 $1.00
Total return* 4.02% 2.81%
Ratios to average net assets:
Net investment income 3.93% 2.75%
Total expenses + .62% --
Net expenses .61% .62%
Net assets, ending
(in thousands) $1,740,839 $1,344,595
Number of shares outstanding,
ending (in thousands) 1,740,948 1,344,668
<PAGE>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31,
Institutional Class/MMP 1998 1997
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .035 .031
Distributions from
Net investment income (.035) (.031)
Net asset value, ending $1.00 $1.00
Total return 3.58% 3.12%
Ratios to average net assets:
Net investment income 3.54% 3.37%
Total expenses + .30% .63%
Net expenses .29% .62%
Expenses reimbursed -- (.04%)
Net assets, ending
(in thousands) $246,967 $51,087
Number of shares outstanding,
ending (in thousands) 246,941 51,084
Periods Ended
December 31, December 31,
Institutional Class/MMP++ 1996 1995^
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .030 .008
Distributions from
Net investment income (.030) (.008)
Net asset value, ending $1.00 $1.00
Total return 2.68% .79%
Ratios to average net assets:
Net investment income 2.65% 3.19%(a)
Total expenses + 1.29% 1.35%(a)
Net expenses 1.28% 1.34%(a)
Net assets, ending
(in thousands) $33,160 $41,736
Number of shares outstanding,
ending (in thousands) 33,153 41,732
<PAGE>
LIMITED-TERM PORTFOLIO
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31, December 31,
1998 1997 1996
Net asset value, beginning $10.70 $10.69 $10.72
Income from investment operations
Net investment income .40 .42 .44
Net realized and unrealized
gain (loss) .01 .01 (.03)
Total from investment
operations .41 .43 .41
Distributions from
Net investment income (.40) (.42) (.44)
Total increase (decrease)
in net asset value .01 .01 (.03)
Net asset value, ending $10.71 $10.70 $10.69
Total return* 3.87% 4.07% 3.94%
Ratios to average net assets:
Net investment income 3.70% 3.91% 4.12%
Total expenses + .71% .70% .71%
Net expenses .70% .69% .70%
Portfolio turnover 45% 52% 45%
Net assets, ending
(in thousands) $547,212 $490,180 $512,342
Number of shares outstanding,
ending (in thousands) 51,073 45,808 47,922
Years Ended
December 31, December 31,
1995 1994
Net asset value, beginning $10.59 $10.72
Income from investment operations
Net investment income .45 .39
Net realized and unrealized
gain (loss) .13 (.13)
Total from investment
operations .58 .26
Distributions from
Net investment income (.45) (.39)
Total increase (decrease) in
net asset value .13 (.13)
Net asset value, ending $10.72 $10.59
Total return* 5.55% 2.42%
Ratios to average net assets:
Net investment income 4.21% 3.60%
Total expenses + .71% --
Net expenses .70% .66%
Portfolio turnover 33% 27%
Net assets, ending
(in thousands) $457,707 $544,822
Number of shares outstanding,
ending (in thousands) 42,690 51,424
<PAGE>
LONG-TERM PORTFOLIO
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31, December 31,
1998 1997 1996
Net asset value, beginning $17.28 $16.81 $17.31
Income from investment operations
Net investment income .78 .87 .93
Net realized and unrealized
gain (loss) .06 .50 (.46)
Total from investment
operations .84 1.37 .47
Distributions from
Net investment income (.80) (.87) (.95)
Net realized gains (.51) (.03) (.02)
Total distributions (1.31) (.90) (.97)
Total increase (decrease) in
net asset value (.47) .47 (.50)
Net asset value, ending $16.81 $17.28 $16.81
Total return * 5.01% 8.41% 2.89%
Ratios to average net assets:
Net investment income 4.58% 5.16% 5.50%
Total expenses + .87% .87% .89%
Net expenses .84% .85% .86%
Portfolio turnover 72% 41% 41%
Net assets, ending
(in thousands) $57,677 $50,966 $52,945
Number of shares outstanding,
ending (in thousands) 3,431 2,950 3,149
Years Ended
December 31, December 31,
1995 1994
Net asset value, beginning $15.83 $17.15
Income from investment operations
Net investment income .95 .93
Net realized and unrealized
gain (loss) 1.53 (1.33)
Total from investments 2.48 (.40)
Distributions from
Net investment income (.91) (.92)
Net realized gains (.09) --
Total distributions (1.00) (.92)
Total increase (decrease) in
net asset value 1.48 (1.32)
Net asset value, ending $17.31 $15.83
Total return * 16.05% (2.30%)
Ratios to average net assets:
Net investment income 5.71% 5.73%
Total expenses + .87% --
Net expenses .85% .81%
Portfolio turnover 58% 98%
Net assets, ending (in thousands)$57,359 $47,267
Number of shares outstanding,
ending (in thousands) 3,314 2,985
(a) Annualized
* Total return does not reflect deduction of Class A front-end sales
charge.
+ Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included in
the ratio of net expenses. Total expenses are presented net of expense
waivers and reimbursements.
^ From October 2, 1995 inception.
++ On August 1, 1997, Class MMP changed its name and was converted to
the Institutional Class, with a lower expected expense ratio. See notes to
financial statements.
<PAGE>
CALVERT GROUP AND THE YEAR 2000
PLANS AND PROGRESS
We are now less than a year away from the year 2000, a problematic date for
computer systems coded for two-character year format. Entered as "00," the
year 2000 would be processed as 1900, a mistake that could foul a variety of
date-sensitive transactions.
As your mutual fund sponsor, our goal is make sure there is no interruption
in the level of service you receive. In the summary below, we've outlined
the steps Calvert Group is taking to ensure our systems perform reliably.
Step One--Assess Systems and Software. Develop an Action Plan.
In 1997, we identified all systems, operating platforms and software
potentially affected by the millennium bug. These included:
o Calvert Group systems--portfolio trading, sales contact and
reporting and internal management reporting
o transfer agency systems--shareholder record-keeping and transaction
processing
o subadvisor systems--investment accounting
o other third-party data and service systems.
We also formed a Y2K task force, led by Calvert's vice president of
technology. This group has identified and prioritized our efforts to achieve
year 2000 compliance.
Step Two--Test for Compliance. Repair Systems as Necessary.
Internal systems have been tested. We've made repairs and moved modified
code into production. These systems are now fully compliant. Transfer agency
systems were re-engineered for compliance in 1989. Recent tests indicate
these are, in fact, compliant. The readiness of third-party systems,
including subadvisor systems, has been evaluated. Based on information
received from these groups, we have found no significant obstacles to
compliance.
Step Three--Confirm Compliance. Finalize Contingency Plan.
Testing of transfer agency systems will continue through 1999 to ensure
these remain compliant and continue to interact correctly with external
systems and processes. The transfer agency has established a back-up site,
should main systems fail, and compliance testing of these contingency
measures are also underway. We are developing contingency plans to ensure
that any unforeseen systems failures will not adversely affect our
operations or inconvenience our shareholders.
For more information or to get an update on remediation and testing efforts,
please visit us online at www.calvertgroup.com. Calvert Tax-Free Reserves
<PAGE>
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<PAGE>
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<PAGE>
Calvert Tax-Free Reserves
This report is intended to provide fund information to shareholders. It is
not authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
To Open an Account
800-368-2748
Yields and Prices
Calvert Information Network
(24 hours, 7 days a week)
800-368-2745
Service for Existing Account
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail
Calvert Group
c/o NFDS,
330 West 9th Street
Kansas City, MO 64105
Web Site
http://www.calvertgroup.com
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Calvert Group's
Family of Funds
Tax-Exempt Money Market Funds
CTFR Money Market Portfolio
CTFR California Money Market Portfolio
Taxable Money Market Funds
First Government Money Market Fund
CSIF Money Market Portfolio
Balanced Fund
CSIF Balanced Portfolio
Municipal Funds
CTFR Limited-Term Portfolio
CTFR Long-Term Portfolio
CTFR Vermont Municipal Portfolio
National Muni. Intermediate Portfolio
California Muni. Intermediate Portfolio
Maryland Muni. Intermediate Portfolio
Virginia Muni. Intermediate Portfolio
Taxable Bond Funds
CSIF Bond Portfolio
Income Fund
Equity Funds
CSIF Managed Index Portfolio
CSIF Equity Portfolio
Capital Accumulation Fund
CWV International Equity Fund
New Vision Small Cap Fund
New Africa Fund
printed on
recycled paper
using soy-
based inks
<PAGE>
DECEMBER 31, 1998
ANNUAL
REPORT
CALVERT TAX-FREE
RESERVES CALIFORNIA
MONEY MARKET
PORTFOLIO
<PAGE>
CONTENTS
President's Letter
1
Portfolio
Manager Remarks
2
Report of Independent
Accountants
4
Statement of
Net Assets
5
Statement
of Operations
8
Statements of
Changes in Net Assets
9
Notes to
Financial Statements
10
Financial Highlights
12
Year 2000 Update
13
[picture of Barbara Krumsiek, no caption]
Dear Shareholders:
Investors' risk tolerance was tested in 1998. Global financial turmoil
contributed to a high level of market volatility. By the end of the third
quarter, most equity investors were looking at negative results for the
year-to-date. The fourth quarter brought fast relief, however, with stock
market indices bouncing back to provide investors with a fourth consecutive
year of double digit gains. Price appreciation was an integral component of
bond returns, as yields generally declined throughout the year.
Among stocks, the top performers were tightly consolidated by capitalization
range and industry group. Large-capitalization companies and technology
plays fueled most of the advance. In the bond market, long-term U.S.
Treasury securities outperformed other categories substantially.
While investors may be tempted to chase the current trend setters, that
approach comes with increased risk now, given the stock market's high levels
and increased volatility. We encourage investors to make decisions based on
their financial objectives and tolerance for risk. At this point, it would
be a good idea to reevaluate your asset allocation to be sure you are
positioned at a comfortable risk level. If you think change is in order,
your financial professional can suggest strategies that keep you on track to
meet long-term financial objectives without exposing you to undue levels of
risk.
We appreciate your investment in Calvert Group funds and look forward to
providing competitive returns in the year ahead.
Sincerely,
/s/
Barbara J. Krumsiek
President and CEO
January 19, 1999
<PAGE>
[picture of Tom Dailey]
Tom Dailey is a member of the CAMCO portfolio management team.
Calvert Tax-Free Reserves California Money Market Portfolio seeks to earn
the highest level of interest income exempt from federal and California
state income taxes as is consistent with prudent investment management,
preservation of capital and the quality and maturity characteristics of the
Portfolio.
Fund
Information
asset allocation
California tax-exempt
money market
NASDAQ symbol
CTCXX
CUSIP number
131620-50-2
How would you describe market conditions in 1998?
The domestic economy continued to hum along, led by strong consumer
spending. Other factors contributing to this remarkable expansion included
low interest rates, low unemployment and continued subdued inflation.
The ripple effects from the Asian financial crisis have adversely affected
markets worldwide. These events created a flight to quality into the U.S.
Treasury market, driving yields to their lowest levels since the 1960's.
The Federal Reserve's last move to hike rates and slow the pace of economic
growth was in March 1997, when they increased their target for the federal
funds rate, a key overnight bank lending rate, by one quarter of a percent.
Through September 1998, the Fed maintained a neutral monetary policy on the
assumption the Asian crisis would act as a sufficient drag on the U.S.
economy. But late in the third quarter, the possibility of a global economic
meltdown and liquidity crisis prompted the Fed to quickly lower this key
rate. Between September and November, the Fed made three separate one
quarter percent reductions, bringing the federal funds rate from 5.50% to
4.75%.
These actions helped to calm turbulent markets and signaled the Fed would
not allow the U.S. economy to falter. Global economic problems are far from
over, however. Japan remains mired in a depression, and it is not clear
whether Southeast Asia will rebound anytime soon. Moreover, several of the
United States' prominent trading partners--Canada, Brazil and Mexico--are
all experiencing economic woes.
How did the Portfolio perform?
The Calvert Tax-Free Reserves California Money Market Portfolio's return for
the year ending December 31, 1998 was 3.19%. This was above the 2.72% return
for the average California-specific, tax-exempt money market fund tracked by
Lipper.
What was your strategy?
The very high level of market volatility caused many investors to seek the
safe haven of money market securities. Anticipating the overall increase in
demand and the corresponding decline in yields, we took steps to lengthen
the Portfolio's average maturity whenever technical factors supported a
short-term spike in rates. Supply and demand conditions have an enormous
impact on rates in the tax-free money market.
Our first opportunity to exploit seasonal supply and demand conditions came
in April, when tax season outflows cause supply to outstrip demand. This
puts upward pressure on rates. We kept the Portfolio very liquid
<PAGE>
going into this season so we would be well positioned to meet investor
redemptions and reinvest in longer term securities at lower prices.
The second opportunity came during June and July, when municipalities flood
the market with new issues of one-year notes. In 1998, however, the supply
of new note issuance was reduced by two factors. First, municipalities have
seen tax revenues rise and, therefore, do not need to issue as much debt.
Second, a significant portion of these notes were converted into even
shorter term debt known as variable rate demand notes. California notes
comprised a large amount of these converted securities. We acted quickly to
buy one-year securities before rates dropped below attractive levels.
What is your outlook?
We expect global financial markets to remain volatile in 1999. Even though
the Fed appears to be on hold at the moment, they remain vigilant in
assessing economic and market events. Rates could trend lower still. Also,
the demand for California securities has continually been greater than the
available supply, a condition that keeps downward pressure on yields. We do
not anticipate this will change anytime soon. Thus, we will continue to look
for opportunities to maintain a slightly longer average maturity while
remaining very liquid in order to react quickly to changing market
conditions.
Of course, we'll continue to monitor the strength of the economy and
inflation and will be ready to take a more conservative stance if necessary.
January 19, 1999
Please remember, this discussion reflects the views and opinions of Calvert
Asset Management Company at December 31, 1998, the end of the reporting
period. Our strategy and the Fund's portfolio composition may differ due to
ever-changing market and economic conditions. While historical performance
is no guarantee of future results, it may give you a better and more
thorough understanding of our investment decisions and management philosophy.
Portfolio
statistics
weighted
average maturity
12.31.98 60 days
12.31.97 46 days
credit quality
distribution
as of 12.31.98
First Tier 97%
Second Tier 3%
All securities in Calvert Group money market funds are eligible securities
under rule 2a-7 of the Investment Company Act of 1940. First Tier Securities
are eligible securities rated in the highest rating category for short-term
debt obligations by at least two of the Nationally Recognized Statistical
Ratings Organizations. Second Tier Securities are eligible securities not in
the First Tier.
COMPARATIVE MONTH-END YIELDS
IBC's State
CTFR Specific SB&GP
California Tax-Free Money
Money Market Market Averages
12.31.98 2.78% 2.61%
11.30.98 2.93% 2.55%
10.31.98 2.98% 2.63%
9.30.98 3.14% 2.78%
8.31.98 3.02% 2.62%
7.31.98 3.05% 2.72%
6.30.98 3.29% 2.92%
average annual
total return
as of 12.31.98
1 year 3.19%
5 year 3.21%
inception 3.62%
(10.16.89)
Total returns assume reinvestment of dividends. Past performance is no
guarantee of future results. Sources: IBC's Money Fund Report, IBC Financial
Data Inc. and Lipper Analytical Services Inc.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Calvert Tax-Free Reserves and Shareholders of
California Money Market Portfolio:
In our opinion, the accompanying statement of net assets and the related
statement of operations, statement of changes in net assets and financial
highlights present fairly, in all material respects, the financial position
of California Money Market Portfolio (one of the portfolios comprising
Calvert Tax-Free Reserves, hereafter referred to as the "Fund"), at December
31, 1998, the results of its operations, the changes in its net assets and
the financial highlights for each of the periods presented, in conformity
with generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 10, 1999
<PAGE>
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
Principal
Municipal Obligations - 97.9% Amount Value
California - 93.5%
Abn Amro California Munitops Certificates Trust VRDN:
3.10%, 7/5/06, BPA: Abn Amro Bank$8,000,000$8,000,000
3.85%, 8/1/24, BPA: Abn Amro Bank,
INSUR: FGIC 3,000,000 3,000,000
Alameda County Tax & Revenue
Anticipation Notes, 4.50%, 7/7/99 15,000,000 15,066,734
Buena Park Community Development Authority
VRDN, 4.8825%, 12/28/99, GA:
Mass Mutual Life Insurance 6,600,000 6,600,000
California Community College Financing Authority
VRDN, 3.95%, 9/30/99, BPA: Bank of
New York, INSUR: FSA 19,200,000 19,200,000
California Housing Finance Agency Revenue VRDN:
3.98%, 8/1/10, TOA: Citibank,
INSUR: MBIA 2,410,000 2,410,000
3.88%, 8/1/14, BPA: Banco Santander,
INSUR: MBIA 8,025,000 8,025,000
California Schools Cash Reserve Program Authority Revenue Notes,
Series A, 4.50%, 7/2/99,
INSUR: AMBAC 37,000,000 37,185,539
California State Revenue Anticipation Notes,
4.00%, 6/30/99 14,500,000 14,559,301
California State VRDN, 5.00%, 8/1/15, BPA: Societe Generale,
INSUR: FGIC 14,400,000 14,400,000
California Statewide Community Development Authority MFH VRDN:
3.95%, 9/30/99, BPA: Bank of New York,
INSUR: FSA 3,500,000 3,500,000
4.20%, 3/25/25, LOC: Chase Manhattan 8,000,000 8,000,000
4.30%, 7/1/27, LOC: Banque Paribas5,070,000 5,070,000
Contra Costa County MFH Revenue VRDN, 5.25%, 10/20/28,
LOC: Sumitomo Bank, Ltd. 4,410,000 4,410,000
Fresno MFH VRDN, 5.50%, 5/1/15,
LOC: Tokai Bank, Ltd. 1,188,000 1,188,000
Inland Valley Development Agency California Tax Allocation
VRDN, 3.75%, 3/1/27, BPA: National Westminster Bank,
LOC: Sumitomo Trust & Banking 10,000,000 10,000,000
Irvine Ranch Water District GO VRDN, 5.00%, 5/1/09,
LOC: Bank of America 2,000,000 2,000,000
Irvine Ranch Water District GO VRDN, 5.00%, 10/1/09,
LOC: Landesbank Hessen 8,900,000 8,900,000
Local Government Finance Joint Power Authority
COPs VRDN, 5.50%, 8/1/16,
LOC: Fuji Bank, Ltd. 3,200,000 3,200,000
Los Angeles Convention & Exhibition Center Authority
Lease Revenue VRDN, 3.88%, 8/15/18, BPA: Merrill Lynch,
INSUR: MBIA 13,500,000 13,500,000
Los Angeles County MFH Revenue VRDN:
3.75% 12/1/07, CONF: Federal Home
Loan Bank 9,000,000 9,000,000
5.35% 11/1/09, LOC: Industrial
Bank of Japan 5,000,000 5,000,000
Los Angeles County Tax & Revenue Anticipation Notes,
4.50%, 6/30/99 15,000,000 15,059,118
Los Angeles Transportation Community Sales Tax Revenue
VRDN, 4.13%, 8/20/03,
LOC: Credit Suisse, INSUR: MBIA6,000,000 6,000,000
Marin County Housing Authority MFH Revenue
VRDN, 4.50%, 10/15/29,
LOC: Dai-Ichi Kangyo Bank 18,900,000 18,900,000
Midway School District COPs VRDN, 4.40%, 2/1/23,
LOC: Union Bank of California 4,965,000 4,965,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Modesto Irrigation District Financing Authority Revenue
VRDN, 3.88%, 10/1/15, BPA: Societe
Generale, INSUR: MBIA $14,000,000 $14,000,000
Oakland Tax and Revenue Anticipation Notes,
4.25%, 9/30/99 9,000,000 9,078,700
Oceanside MFH Revenue VRDN, 4.25%, 8/1/17,
SURBD: Continental Casualty Co. 6,540,000 6,540,000
Orange County Apartment Development Revenue VRDN:
3.90%, 11/1/08, LOC: Banque Paribas9,400,0009,400,000
6.50%, 11/1/08, LOC: Tokai Bank Ltd. 3,400,000 3,400,000
Orange County MFH Authority VRDN, 3.50%, 5/1/22,
LOC: Banque Paribas 3,700,000 3,700,000
Orange County Water District COPs VRDN, 4.80%, 8/15/15,
LOC: National Westminster Bank 4,200,000 4,200,000
Palmdale School District Project Lease VRDN:
4.20%, 12/13/10, LOC: National
Westminster Bank 5,169,999 5,169,999
4.20%, 12/13/10, LOC: National
Westminster Bank 5,820,000 5,820,000
Paramount MFH Authority VRDN, 4.56%, 10/1/18,
LOC: Heller Financial 4,250,000 4,250,000
Pitney Bowes Credit Corporation Lease TOPS Trust Certificates,
4.23%, 10/10/01, BPA: Pitney Bowes Credit,
INSUR: AMBAC 14,200,000 14,200,000
Riverside County Tax Revenue Anticipation Notes,
4.50%, 9/30/99 6,000,000 6,065,926
Riverside MFH Revenue VRDN, 5.75%, 6/1/09,
LOC: Tokai Bank, Ltd. 1,000,000 1,000,000
San Bernardino COPs VRDN, 4.94%, 3/1/24,
LOC: Bank Tokyo-Mitsubishi 4,150,000 4,150,000
San Bernardino MFH Revenue VRDN, 4.00%, 6/1/05,
LOC: Household Federal Savings 2,000,000 2,000,000
San Diego Area Local Government COPs Tax & Revenue
Anticipation Notes, 4.50%, 9/30/99 4,600,000 4,647,438
San Francisco Redevelopment MFH VRDN:
3.05%, 10/1/00, LOC: Credit Suisse8,630,000 8,630,000
Series A, 5.00%, 12/1/05, LOC: Industrial
Bank of Japan 7,000,000 7,000,000
Series B, 5.00%, 12/1/05, LOC: Industrial
Bank of Japan 6,700,000 6,700,000
San Marcos IDA VRDN, 4.21%, 12/1/20,
LOC: Union Bank California 1,620,000 1,620,000
San Marcos Redevelopment VRDN, 3.875%, 12/1/10,
LOC: Bank of America 1,700,000 1,700,000
Stockton Heritage Convalescent Center Project
VRDN, 5.425%, 12/1/05, LOC:
Tokai Bank, Ltd. 1,165,000 1,165,000
Union City MFH Authority Revenue VRDN, 5.20%, 10/1/07,
CONF: Den Danske Bank, LOC:
Credit Lyonnais 9,500,000 9,500,000
Upland Apartment Development Revenue VRDN, 3.50%, 1/1/09,
LOC: Tokai Bank, Ltd. 4,000,000 4,000,000
Vallejo IDA Revenue VRDN, 3.85%, 12/1/23,
LOC: Bank Tokyo-Mitsubishi 5,300,000 5,300,000
Victorville MFH Revenue VRDN, 4.60%, 12/1/15,
C/LOC: Redlands S&L 6,610,000 6,610,000
Watereuse Finance Authority Revenue VRDN, 4.05%, 5/01/28,
BPA: Credit Suisse, INSUR: FSA 12,000,000 12,000,000
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Other Obligations - 4.4%
Puerto Rico Electric Power Authority GO
VRDN, 3.95%, 7/1/22, BPA: Societe Generale,
INSUR: MBIA $11,000,000 $11,000,000
Puerto Rico Infrastructure GO
VRDN, 3.80%, 7/1/28, BPA: Merrill Lynch,
INSUR: AMBAC 8,465,000 8,465,000
TOTAL INVESTMENTS
(Cost $428,450,755) - 97.9% $428,450,755
Other assets and liabilities, net - 2.1% 9,124,491
Net Assets - 100% $437,575,246
Net Assets Consist of:
Paid in capital applicable to 437,673,084 shares of beneficial interest,
unlimited number of no par shares authorized $437,673,125
Undistributed net investment income 17,596
Accumulated realized gain/(loss) on investments (115,475)
Net Assets $437,575,246
Net Asset Value Per Share $1.00
Explanation of Guarantees:
BPA: Bond-Purchase Agreement
CONF: Confirming Letter of Credit
GA: Guaranty Agreement
INSUR: Insurance
LOC: Letter of Credit
SURBD: Surety Bond
TOA: Tender Option Agreement
Abbreviations:
AMBAC: American Municipal Bond Assurance Corp.
COPs: Certificates of Participation
FGIC: Financial Guaranty Insurance Company
FSA: Financial Security Advisor
GO: General Obligation
IDA: Industrial Development Authority
MBIA: Municipal Bond Insurance Association
MFH: Multi-Family Housing
VRDN: Variable Rate Demand Note
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
Net Investment Income
Investment Income
Interest income $14,134,046
Expenses
Investment advisory fee 1,866,734
Transfer agency fees and expenses 442,357
Trustees' fees and expenses 43,591
Administrative fees 30,080
Custodian fees 33,118
Registration fees 34,619
Reports to shareholders 99,324
Professional fees 13,442
Miscellaneous 20,181
Total expenses 2,583,446
Reimbursement from Advisor (84,515)
Fees paid indirectly (55,239)
Net expenses 2,443,692
Net Investment Income 11,690,354
Realized Gain (Loss) on Investments
Net realized gain (loss) 16,197
Increase (Decrease) in Net Assets
Resulting from Operations $11,706,551
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $11,690,354 $10,583,693
Net realized gain (loss) on securities 16,197 12,061
Increase (Decrease) in Net Assets
Resulting from Operations 11,706,551 10,595,754
Distributions to shareholders from
Net investment income (11,679,754) (10,603,640)
Capital share transactions
Shares sold 466,041,563 373,188,095
Reinvestment of distributions 11,503,395 10,433,911
Shares redeemed (360,997,804) (408,620,397)
Total capital share transactions 116,547,154
(24,998,391)
Total Increase (Decrease) in Net Assets 116,573,951 (25,006,277)
Net Assets
Beginning of year 321,001,295 346,007,572
End of year (including undistributed net investment income
of $17,596 and $6,996, respectively) $437,575,246 $321,001,295
Share Activity
Shares sold 466,041,563 373,188,095
Reinvestment of distributions 11,503,395 10,433,911
Shares redeemed (360,997,804) (408,620,397)
Net share activity 116,547,154 (24,998,391)
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note A - Significant Accounting Policies
General: The California Money Market Portfolio (the "Portfolio"), a series
of Calvert Tax-Free Reserves (the "Fund"), is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company. The operations of each series are accounted for
separately. The Portfolio offers shares of beneficial interest to the public
with no sales charges.
Security Valuation: Securities are valued at amortized cost which
approximates market.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded by
the Portfolio on ex-dividend date. Dividends from net investment income are
earned daily and paid monthly. Distributions from net realized capital
gains, if any, are paid at least annually. Distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles; accordingly, periodic reclassifications are
made within the Portfolio's capital accounts to reflect income and gains
available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's and transfer agent's fees may be paid
indirectly by credits earned on the Portfolios' cash on deposit with the
bank. Such a deposit arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B - Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation. The Advisor provides investment advisory
services and pays the salaries and fees of officers and affiliated Trustees
of the Fund. For its services, the Advisor receives a monthly fee based on
the following annual rates of average daily net assets: .50% on the first
$500 million, .45% on the next $500 million and .40% on the excess of $1
billion. Under the terms of the agreement, $225,899 was payable at year end.
The Advisor voluntarily reimbursed the Fund for advisory fees,
administrative fees, and other operating expenses of $84,515 for the year
ended December 31, 1998.
<PAGE>
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee. The Fund
(exclusive of Money Market portfolios, Class O and Institutional Class) pays
monthly an annual fee of $80,000, which is allocated between the Portfolios
based on their relative net assets. Under the terms of the agreement, $2,658
was payable at year end.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Portfolio.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, is
the shareholder servicing agent for the Fund. For its services, CSSI
received a fee of $235,610 for the year ended December 31, 1998. Under the
terms of the agreement, $20,314 was payable at year end. National Financial
Data Services, Inc. is the transfer and dividend disbursing agent.
Each Trustee who is not affiliated with the Advisor received an annual fee
of $20,500 plus up to $1,500 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
Note C - Investment Activity
The cost of investments owned at December 31, 1998 was substantially the
same for federal income tax and financial reporting purposes. The table
below presents the net capital loss carryforwards as of December 31, 1998
with expiration dates:
Capital Loss Carryforwards Expiration Dates
$115,124 12/31/03
351 12/31/04
Capital loss carryforwards may be utilized to offset current and future
capital gains until expiration.
As a cash management practice, the Portfolio may sell or purchase short-term
variable rate demand notes from other Portfolios managed by the Advisor. All
transactions are executed at independently derived prices.
Note D - Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount of
$50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings
under this facility bear interest at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per annum will be incurred on the
unused portion of the committed facility which will be allocated to all
participating funds. This fee is paid quarterly in arrears. The Fund had no
loans outstanding pursuant to this line of credit at December 31, 1998.
Note E - Subsequent Event
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation ("Acacia Mutual"). Effective January 1, 1999,
Acacia Mutual merged with Ameritas Mutual Insurance Holding Company to form
Ameritas Acacia Mutual Holding Company.
<PAGE>
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31, December 31,
1998 1997 1996
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .031 .032 .031
Distributions from
Net investment income (.031) (.032) (.031)
Net asset value, ending $1.00 $1.00 $1.00
Total return 3.19% 3.28% 3.17%
Ratios to average net assets:
Net investment income 3.13% 3.22% 3.14%
Total expenses + .67% .66% .69%
Net expenses .65% .65% .68%
Expenses reimbursed .02% .05% .03%
Net assets, ending
(in thousands) $437,575 $321,001 $346,008
Number of shares outstanding,
ending (in thousands) 437,673 321,126 346,124
Years Ended
December 31, December 31,
1995 1994
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .037 .026
Distributions from
Net investment income (.037) (.026)
Net asset value, ending $1.00 $1.00
Total return 3.78%* 2.62% *
Ratios to average net assets:
Net investment income 3.69% 2.55%
Total expenses + .76% -
Net expenses .75% .69%
Net assets, ending (in thousands) $300,351 $260,719
Number of shares outstanding,
ending (in thousands) 300,544 260,716
* Total return numbers do not reflect the Tender Option Agreement. On
December 15, 1994, the Portfolio entered into a Tendered Option Agreement
with the Advisor valued at $600,000 to secure payment of an "at risk"
investment. On June 30, 1995, the investment paid the Portfolio in full and
the Option expired unused. The expiration loss was applied against the
Advisor's capital contribution of the Option.
+ Effective December 31, 1995, this ratio reflects total expenses before
reduction of fees paid indirectly; such reductions are included in the ratio
of net expenses. Total expenses are presented net of expense waivers and
reimbursements.
<PAGE>
CALVERT GROUP AND THE YEAR 2000
PLANS AND PROGRESS
We are now less than a year away from the year 2000, a problematic date for
computer systems coded for two-character year format. Entered as "00," the
year 2000 would be processed as 1900, a mistake that could foul a variety of
date-sensitive transactions.
As your mutual fund sponsor, our goal is make sure there is no interruption
in the level of service you receive. In the summary below, we've outlined
the steps Calvert Group is taking to ensure our systems perform reliably.
Step One--Assess Systems and Software. Develop an Action Plan.
In 1997, we identified all systems, operating platforms and software
potentially affected by the millennium bug. These included:
Calvert Group systems--portfolio trading, sales contact and reporting
and internal management reporting
transfer agency systems--shareholder record-keeping and transaction
processing
subadvisor systems--investment accounting
other third-party data and service systems.
We also formed a Y2K task force, led by Calvert's vice president of
technology. This group has identified and prioritized our efforts to achieve
year 2000 compliance.
Step Two--Test for Compliance. Repair Systems as Necessary.
Internal systems have been tested. We've made repairs and moved modified
code into production. These systems are now fully compliant. Transfer agency
systems were re-engineered for compliance in 1989. Recent tests indicate
these are, in fact, compliant. The readiness of third-party systems,
including subadvisor systems, has been evaluated. Based on information
received from these groups, we have found no significant obstacles to
compliance.
Step Three--Confirm Compliance. Finalize Contingency Plan.
Testing of transfer agency systems will continue through 1999 to ensure
these remain compliant and continue to interact correctly with external
systems and processes. The transfer agency has established a back-up site,
should main systems fail, and compliance testing of these contingency
measures are also underway. We are developing contingency plans to ensure
that any unforeseen systems failures will not adversely affect our
operations or inconvenience our shareholders.
For more information or to get an update on remediation and testing efforts,
please visit us online at www.calvertgroup.com.
<PAGE>
Calvert
Tax-Free
Reserves
California
Money
Market
Portfolio
This report is intended to provide fund information to shareholders. It is
not authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
To Open an Account
800-368-2748
Yields and Prices
Calvert Information Network
(24 hours, 7 days a week)
800-368-2745
Service for Existing Account
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail
Calvert Group
c/o NFDS,
330 West 9th Street
Kansas City, MO 64105
Web Site
http://www.calvertgroup.com
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Calvert Group's
Family of Funds
Tax-Exempt Money Market Funds
CTFR Money Market Portfolio
CTFR California Money Market Portfolio
Taxable Money Market Funds
First Government Money Market Fund
CSIF Money Market Portfolio
Balanced Fund
CSIF Balanced Portfolio
Municipal Funds
CTFR Limited-Term Portfolio
CTFR Long-Term Portfolio
CTFR Vermont Municipal Portfolio
National Muni. Intermediate Portfolio
California Muni. Intermediate Portfolio
Maryland Muni. Intermediate Portfolio
Virginia Muni. Intermediate Portfolio
Taxable Bond Funds
CSIF Bond Portfolio
Income Fund
Equity Funds
CSIF Managed Index Portfolio
CSIF Equity Portfolio
Capital Accumulation Fund
CWV International Equity Fund
New Vision Small Cap Fund
New Africa Fund
Printed on
recycled paper
using soy-
based inks
<PAGE>
DECEMBER 31, 1998
ANNUAL
REPORT
CALVERT TAX-FREE
RESERVES VERMONT
MUNICIPAL PORTFOLIO
<PAGE>
CONTENTS
President's Letter
2
Portfolio
Manager Remarks
3
Report of Independent
Accountants
5
Statement of
Net Assets
6
Statement of
Operations
8
Statements of
Changes in Net Assets
9
Notes to
Financial Statements
10
Financial Highlights
13
Year 2000 Update
14
[picture of Barbara Krumsiek, no caption]
Dear Shareholders:
Investors' risk tolerance was tested in 1998. Global financial turmoil
contributed to a high level of market volatility. By the end of the third
quarter, most equity investors were looking at negative results for the
year-to-date. The fourth quarter brought fast relief, however, with stock
market indices bouncing back to provide investors with a fourth consecutive
year of double digit gains. Price appreciation was an integral component of
bond returns, as yields generally declined throughout the year.
Among stocks, the top performers were tightly consolidated by capitalization
range and industry group. Large-capitalization companies and technology
plays fueled most of the advance. In the bond market, long-term U.S.
Treasury securities outperformed other categories substantially.
While investors may be tempted to chase the current trend setters, that
approach comes with increased risk now, given the stock market's high levels
and increased volatility. We encourage investors to make decisions based on
their financial objectives and tolerance for risk. At this point, it would
be a good idea to reevaluate your asset allocation to be sure you are
positioned at a comfortable risk level. If you think change is in order,
your financial professional can suggest strategies that keep you on track to
meet long-term financial objectives without exposing you to undue levels of
risk.
We appreciate your investment in Calvert Group funds and look forward to
providing competitive returns in the year ahead.
Sincerely,
/s/
Barbara J. Krumsiek
President and CEO.
January 19, 1999
<PAGE>
[picture of Emmett Long]
Emmett Long is a member of the CAMCO portfolio management team.
Calvert Tax-Free Reserves Vermont Municipal Portfolio seeks to earn the
highest level of interest income exempt from Vermont and federal income
taxes as is consistent with prudent investment management, preservation of
capital, and the quality characteristics of the Portfolio.
Fund
Information
asset allocation
Vermont long-term
tax-exempt bonds
NASDAQ symbol
CGVTX
CUSIP number
131620-70-0
COMPARATIVE INVESTMENT PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS
CTFR Lipper Other States Lehman
Vermont Municipal Municipal Debt Municipal Bond
Portfolio Funds Average Index TR
6 month 3.42% 2.85% 3.07%
1 year 5.67% 5.18% 5.84%
3 year 5.51% 5.66% 6.47%
5 year 5.46% 5.19% 6.10%
Investment performance does not reflect the deduction of any front-end sales
charge. TR represents total return. Source: Lipper Analytical Services, Inc.
CALVERT TAX-FREE RESERVES VERMONT MUNICIPAL PORTFOLIO
How would you characterize the bond market over the past year?
Events abroad contributed to increased volatility here at home. Concerned
for the stability of markets in Asia, Latin America and Russia, investors
sought the safety of U.S. Treasury securities. All bond yields trended
generally lower into the third quarter, with Treasuries benefiting from
significantly greater price appreciation (Bond yields and prices move in
opposite directions.)
The events overseas led to a flight to quality in the form of Treasury bonds
as the equity market realized a significant retreat in the third quarter.
Fearing a liquidity squeeze, the Federal Reserve cut rates three times.
How did the Fund perform?
The Vermont Fund performed well relative to its benchmark. The Fund returned
5.67% for the year. The benchmark returned 5.18%.
The Vermont Fund's duration was considerably shorter than most long-term
bond funds. However, the scarcity of Vermont issues drove prices for
portfolio securities to historical levels. We compensated for the lack of
supply by investing in non-callable securities issued by the territories of
Puerto Rico and the Virgin Islands, and these also performed very well.
What was your approach?
The scarcity of new issues makes managing the Vermont Fund a tremendous
challenge. The Fund continues to grow, but the number of issues available
for investment shrinks.
In 1998, we supplemented Vermont securities with debt issued by the
territories because there were less than a dozen issues large enough for the
Fund to participate in. Interest earned on securities issued by U.S.
territories is also tax-free to Vermont residents. In 1999, we'll continue
to buy Vermont securities along the yield curve and add to the portfolio
with territory issues.
<PAGE>
What should investors expect over the coming months?
The state and its instrumentalities have pared back new issuance over the
last few years, as the strong economy has reduced the need for financing.
This trend should not change substantially in 1999.
The economic outlook isn't totally clear. We are closely watching consumer
spending and other measures that indicate American's ability to fuel the
economy's growth. As exports continue to decline, our economy is largely
supported by domestic spending. At this point, it appears more likely the
Federal Reserve will hold rates steady or take further steps to reduce rates.
January 19, 1999
Please remember, this discussion reflects the views and opinions of Calvert
Asset Management Company at December 31, 1998, the end of the reporting
period. Our strategy and the Fund's portfolio composition may differ due to
ever-changing market and economic conditions. While historical performance
is no guarantee of future results, it may give you a better and more
thorough understanding of our investment
decisions and management philosophy.
PORTFOLIO
STATISTICS
monthly
dividend yield
12.31.98 4.38%
12.31.97 4.78%
30 day SEC yield
12.31.98 4.12%
12.31.97 4.32%
weighted
average maturity
12.31.98 16 years
12.31.97 15 years
effective duration
12.31.98 7.29 years
12.31.97 6.30 years
credit quality
distribution
as of 12.31.98
AAA 46%
AA 31%
A 13%
BBB 8%
cash & equivalents 2%
average annual
total return
as of 12.31.98
1 year 1.71%
5 year 4.66%
inception 6.47%
(4.01.91)
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Total returns assume reinvestment of dividends and reflect the deduction of
Fund's maximum front-end sales charge of 3.75%. No sales charge has been
applied to the indices used for comparison. Past performance is no guarantee
of future returns.
Three-line graph here showing growth from 4.01.91 to 12.98
CTFR Vermont Municipal Portfolio $16,265
Lehman Municipal Bond Fund Index TR $17,774
Lipper Other States Municipal Debt Funds Average $15,981
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Calvert Tax-Free Reserves and Shareholders of
Vermont Municipal Portfolio:
In our opinion, the accompanying statement of net assets and the related
statement of operations, statement of changes in net assets and financial
highlights present fairly, in all material respects, the financial position
of Vermont Municipal Portfolio (one of the portfolios comprising Calvert
Tax-Free Reserves, hereafter referred to as the "Fund"), at December 31,
1998, the results of its operations, the changes in its net assets and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 10, 1999
<PAGE>
STATEMENT OF NET ASSETS
DECEMBER 31, 1998
Principal
Municipal Obligations - 101.7% Amount Value
Vermont - 86.1%
Burlington Electric Revenue Bonds, Series A, 6.375%, 7/1/10,
MBIA Insured $3,125,000 $3,700,656
Burlington GO Bonds, 6.50%, 5/1/02 700,000 707,420
Chittenden Solid Waste District GO Bonds, 6.60%, 1/1/12,
Asset Guaranty Insured 2,000,000 2,205,820
Rutland County Solid Waste GO Bonds:
5.80%, 11/1/99 110,000 112,419
5.95%, 11/1/00 110,000 114,630
6.10%, 11/1/01 110,000 116,756
6.25%, 11/1/02 110,000 118,911
6.35%, 11/1/03 110,000 120,942
6.45%, 11/1/04 110,000 122,891
6.50%, 11/1/05 105,000 118,830
6.55%, 11/1/06 100,000 114,415
6.60%, 11/1/07 100,000 115,816
6.70%, 11/1/08 100,000 117,693
6.75%, 11/1/09 100,000 119,326
6.80%, 11/1/10 100,000 120,507
6.80%, 11/1/11 100,000 121,202
6.85%, 11/1/12 100,000 121,610
University of Vermont and State Agriculture College Revenue Bonds,
4.75%, 10/01/38, MBIA Insured 3,600,000 3,403,584
Vermont Education and Health - Central Vermont Hospital, 5.00%,
11/15/15, AMBAC Insured 2,000,000 2,009,320
Vermont Education and Health - Central Vermont Hospital, 7.00%,
10/1/22, (Prerefunded) 1,800,000 2,034,738
Vermont Education and Health - Lyndon Institute Project,
6.60%, 12/1/14 1,000,000 1,128,960
Vermont Education and Health - Middlebury
College, 5.50%, 11/1/16 3,000,000 3,138,900
Vermont Education and Health - Northeast
Regional Hospital, 4.00%, 06/1/05, VRDN,
LOC: First National Bank of Boston 600,000 600,000
Vermont Education and Health - Northwestern Medical Center,
6.25%, 9/1/18 2,000,000 2,100,020
Vermont Education and Health - Norwich University,
5.75%, 9/1/05 580,000 623,488
5.50%, 7/1/18 1,955,000 1,976,603
Vermont Education and Health - Southwest Medical Center,
5.625%, 10/1/25, FSA Insured 1,000,000 1,053,190
Vermont Housing Finance Authority Single Family Housing Bonds,
Series 2, 7.20%, 11/1/11 1,200,000 1,268,436
Vermont Municipal Bond Bank Revenue Bonds, Series 2,
5.50%, 12/1/22, AMBAC Insured 1,000,000 1,043,610
Vermont State Colleges Revenue Bonds,
5.125%, 7/1/18 1,000,000 996,950
<PAGE>
Principal
Municipal Obligations - (Cont'd) Amount Value
Vermont - (Cont'd)
Vermont State GO Bonds:
6.50%, 2/1/01 $1,740,000 $1,844,017
6.50%, 2/1/07, (Prerefunded) 500,000 538,845
6.40%, 2/1/08 1,000,000 1,096,840
5.00%, 1/15/11 3,000,000 3,148,650
6.45%, 2/1/12 1,950,000 2,141,646
Series A, 6.30%, 1/15/06 2,500,000 2,836,275
Series C, Zero Coupon, 8/1/08 400,000 266,816
Series C, Zero Coupon, 8/1/09 300,000 190,251
Vermont Student Assistance Corporation Education
Loan Revenue Bonds, Series A-3, 6.50%,
12/15/05, FSA Insured 2,240,000 2,432,730
Total Vermont Municipal Obligations
(Cost $41,391,975) 44,143,713
Territories - 15.6%
Puerto Rico Commonwealth Highway Electric
Power Authority Revenue Bonds, 5.25%,
7/1/13, MBIA Insured 2,000,000 2,103,040
Puerto Rico Commonwealth Highway Electric
Power Authority VRDN, 3.95%,
7/1/13, BPA: Societe Generale 400,000 400,000
Puerto Rico Commonwealth Highway Transportation
Authority Revenue Bonds, 6.25%, 7/1/14,
LOC: FSA Insured 1,000,000 1,185,750
Puerto Rico Commonwealth Highway Transportation
Authority Revenue Bonds, 4.75%, 7/1/38 3,000,000 2,841,750
Puerto Rico Commonwealth Infrastructure Financing
Authority Revenue Bonds, Series A, 5.00%,
7/1/21, AMBAC Insured 1,500,000 1,491,974
Total Territories Municipal Obligations
(Cost $7,904,346) 8,022,514
TOTAL INVESTMENTS
(Cost $49,296,321) - 101.7% 52,166,227
Other assets in excess of liabilities,
net - (1.7%) (873,830)
Net Assets - 100% $51,292,397
Net Assets Consist of:
Paid-in capital applicable to 3,150,493 Class A shares
of beneficial interest, unlimited number of no
par shares authorized: $48,274,828
Undistributed net investment income 147,663
Net unrealized appreciation (depreciation) on investments 2,869,906
Net Assets $51,292,397
Net Asset Value Per Share $16.28
Abbreviations:
AMBAC: AMBAC Indemnity Corporation
FSA: Financial Security Assurance
GO: General Obligation
MBIA: MBIA Insurance Corporation
Explanation of Guarantees:
BPA: Bond-Purchase Agreement
LOC: Letter of Credit
VRDN: Variable Rate Demand Notes
See notes to financial statements.
<PAGE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
Net Investment Income
Investment Income
Interest income $2,780,008
Expenses
Investment advisory fee 305,695
Transfer agency fees and expenses 30,245
Trustees' fees and expenses 5,889
Administrative fees 4,127
Custodian fees 13,649
Registration fees 5,141
Reports to shareholders 10,582
Professional fees 1,846
Miscellaneous 4,808
Total expenses 381,982
Fees paid indirectly (13,631)
Net expenses 368,351
Net Investment Income 2,411,657
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on securities 786,239
Net realized gain (loss) on futures (89,075)
697,164
Change in unrealized appreciation or depreciation (258,557)
Net Realized and Unrealized Gain
(Loss) on Investments 438,607
Increase (Decrease) in Net Assets
Resulting From Operations $2,850,264
See notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $2,411,657 $2,519,418
Net realized gain (loss) 697,164 108,335
Change in unrealized appreciation
or depreciation (258,557) 680,995
Increase (Decrease) in Net Assets
Resulting From Operations 2,850,264 3,308,748
Distributions to shareholders from
Net investment income (2,385,302) (2,498,801)
Net realized gain (953,229) (433,259)
Total distributions (3,338,531) 2,932,060
Capital share transactions
Shares sold 6,525,371 6,041,427
Reinvestment of distributions 1,874,083 1,536,702
Shares redeemed (6,812,642) (7,535,048)
Total capital share transactions 1,586,812 43,081
Total Increase (Decrease) in Net Assets 1,098,545 419,769
Net Assets
Beginning of year 50,193,852 49,774,083
End of year (including undistributed net investment income of
$147,663 and $181,139, respectively) $51,292,397 $50,193,852
Capital Share Activity
Shares sold 397,896 374,036
Reinvestment of distributions 114,634 95,114
Shares redeemed (415,155) (465,394)
Total capital share activity 97,375 3,756
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note A -- Significant Accounting Policies
General: The Vermont Municipal Portfolio (the "Portfolio"), a series of
Calvert Tax-Free Reserves (the "Fund"), is registered under the Investment
Company Act of 1940 as a nondiversified, open-end management investment
company. The operations of each series are accounted for separately. Shares
of the Portfolio are sold with a maximum front-end sales charge of 3.75%.
Security Valuation: Municipal securities are valued utilizing the average of
bid prices or at bid prices based on a matrix system (which considers such
factors as security prices, yields, maturities and ratings) furnished by
dealers through an independent pricing service. Securities (including
options) listed or traded on a national securities exchange are valued at
the last reported sale price. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good
faith under the direction of the Board of Trustees.
Options: The Portfolio may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss
on the option. The cost of securities acquired or the proceeds from
securities sold through the exercise of the option is adjusted by the amount
of the premium. Risks from writing or purchasing option securities arise
from possible illiquidity of the options market and the movement in the
value of the investment or in interest rates. The risk associated with
purchasing options is limited to the premium originally paid.
Futures Contracts: The Portfolio may enter into futures contracts agreeing
to buy or sell a financial instrument for a set price at a future date. The
Portfolio maintains securities with a value equal to its obligation under
each contract. Initial margin deposits of either cash or securities are made
upon entering into futures contracts; thereafter, variation margin payments
are made or received daily reflecting the change in market value. Unrealized
or realized gains and losses are recognized based on the change in market
value. Risks of futures contracts arise from the possible illiquidity of the
futures markets and the movement in the value of the investment or in
interest rates.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded by
the Portfolio on ex-dividend date. Dividends from net investment income are
paid monthly. Distributions from net realized capital gains, if any, are
paid at least annually. Distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles; accordingly, periodic reclassifications are made within the
Portfolio's capital accounts to reflect income and gains available for
distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
<PAGE>
at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ from
those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's and transfer agent's fees may be paid
indirectly by credits earned on the Portfolio's cash on deposit with the
bank. Such a deposit arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation. The Advisor provides investment advisory
services and pays the salaries and fees of officers and affiliated Trustees
of the Portfolio. For its services, the Advisor receives a monthly fee based
on an annual rate of .60% of the Portfolio's average daily net assets. Under
the terms of the agreement, $31,618 was payable at year end.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee. The Fund
(exclusive of Money Market portfolios, Class O and Institutional Class) pays
monthly an annual fee of $80,000, which is allocated between the Portfolios
based on their relative net assets. Under the terms of the agreement, $315
was payable at year end.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Portfolio. The Distributor received
$28,472 as its portion of commissions charged on sales of the Portfolio.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, is
the shareholder servicing agent for the Portfolio. For its services, CSSI
received a fee of $5,276 for the year ended December 31, 1998. Under the
terms of the agreement, $621 was payable at year end. National Financial
Data Services, Inc., is the transfer and dividend disbursing agent.
Each Trustee who is not affiliated with the Advisor received an annual fee
of $20,500 plus up to $1,500 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
Note C -- Investment Activity
During the year, purchases and sales of investments, other than short-term,
were $18,068,702 and $15,799,285, respectively.
The cost of investments owned at December 31, 1998 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $2,869,906, of which $2,894,133 related to
appreciated securities and $24,227 related to depreciated securities.
As a cash management practice, the Portfolio may sell or purchase short-term
variable rate demand notes from other Portfolios managed by the Advisor. All
transactions are executed at independently derived prices.
<PAGE>
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount of
$50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings
under this facility bear interest at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per annum will be incurred on the
unused portion of the committed facility which will be allocated to all
participating funds. This fee is paid quarterly in arrears. The Fund had no
loans outstanding pursuant to this line of credit at December 31, 1998.
Note E -- Subsequent Event
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Holding Corporation. ("Acacia Mutual"). Effective January 1, 1999,
Acacia Mutual merged with Ameritas Mutual Insurance Holding Company to form
Ameritas Acacia Mutual Holding Company.
Tax Information (Unaudited)
The fund designates $922,190 as capital gain dividends paid during fiscal
year ended December 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS
Years Ended
December 31, December 31, December 31,
Class A Shares 1998 1997 1996
Net asset value, beginning $16.45 $16.33 $16.62
Income from investment operations
Net investment income .78 .82 .88
Net realized and unrealized
gain (loss) .13 .26 (.25)
Total from investment
operations .91 1.08 .63
Distributions from
Net investment income (.77) (.82) (.85)
Net realized gains (.31) (.14) (.07)
Total distributions (1.08) (.96) (.92)
Total increase (decrease) in
net asset value (.17) .12 (.29)
Net asset value, ending $16.28 $16.45 $16.33
Total return * 5.67% 6.90% 3.98%
Ratios to average net assets:
Net investment income 4.73% 5.11% 5.27%
Total expenses + .75% .76% .77%
Net expenses .72% .73% .73%
Portfolio turnover 32% 14% 24%
Net assets, ending
(in thousands) $51,292 $50,194 $49,774
Number of shares outstanding,
ending (in thousands) 3,150 3,052 3,048
Years Ended
December 31, December 31,
Class A Shares 1995 1994
Net asset value, beginning $15.34 $16.66
Income from investment operations
Net investment income .87 .87
Net realized and unrealized gain (loss) 1.35 (1.35)
Total from investment operations 2.22 (.48)
Distributions from
Net investment income (.85) (.84)
Net realized gains (.09) --
Total distributions (.94) (.84)
Total increase (decrease) in net asset value 1.28 (1.32)
Net asset value, ending $16.62 $15.34
Total return * 14.86% (2.88%)
Ratios to average net assets:
Net investment income 5.35% 5.47%
Total expenses + .76% --
Net expenses .75% .73%
Portfolio turnover 12% 11%
Net assets, ending (in thousands) $60,203 $64,215
Number of shares outstanding,
ending (in thousands) 3,621 4,185
* Total return does not reflect deduction of Class A front-end sales
charge.
+ Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included in
the ratio of net expenses. Total expenses are presented net of expense
waivers and reimbursements.
<PAGE>
CALVERT GROUP AND THE YEAR 2000
PLANS AND PROGRESS
We are now less than a year away from the year 2000, a problematic date for
computer systems coded for two-character year format. Entered as "00," the
year 2000 would be processed as 1900, a mistake that could foul a variety of
date-sensitive transactions.
As your mutual fund sponsor, our goal is make sure there is no interruption
in the level of service you receive. In the summary below, we've outlined
the steps Calvert Group is taking to ensure our systems perform reliably.
Step One--Assess Systems and Software. Develop an Action Plan.
In 1997, we identified all systems, operating platforms and software
potentially affected by the millennium bug. These included:
Calvert Group systems--portfolio trading, sales contact and
reporting and internal management reporting
transfer agency systems--shareholder record-keeping and transaction
processing
subadvisor systems--investment accounting
other third-party data and service systems.
We also formed a Y2K task force, led by Calvert's vice president of
technology. This group has identified and prioritized our efforts to achieve
year 2000 compliance.
Step Two--Test for Compliance. Repair Systems as Necessary.
Internal systems have been tested. We've made repairs and moved modified
code into production. These systems are now fully compliant. Transfer agency
systems were re-engineered for compliance in 1989. Recent tests indicate
these are, in fact, compliant. The readiness of third-party systems,
including subadvisor systems, has been evaluated. Based on information
received from these groups, we have found no significant obstacles to
compliance.
Step Three--Confirm Compliance. Finalize Contingency Plan.
Testing of transfer agency systems will continue through 1999 to ensure
these remain compliant and continue to interact correctly with external
systems and processes. The transfer agency has established a back-up site,
should main systems fail, and compliance testing of these contingency
measures are also underway. We are developing contingency plans to ensure
that any unforeseen systems failures will not adversely affect our
operations or inconvenience our shareholders.
For more information or to get an update on remediation and testing efforts,
please visit us online at www.calvertgroup.com.
<PAGE>
Calvert
Tax-Free
Reserves
Vermont Municipal
Portfolio
This report is intended to provide fund information to shareholders. It is
not authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
To Open an Account
800-368-2748
Yields and Prices
Calvert Information Network
(24 hours, 7 days a week)
800-368-2745
Service for Existing Account
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail
Calvert Group
c/o NFDS,
330 West 9th Street
Kansas City, MO 64105
Web Site
http://www.calvertgroup.com
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Calvert Group's
Family of Funds
Tax-Exempt Money Market Funds
CTFR Money Market Portfolio
CTFR California Money Market Portfolio
Taxable Money Market Funds
First Government Money Market Fund
CSIF Money Market Portfolio
Balanced Fund
CSIF Balanced Portfolio
Municipal Funds
CTFR Limited-Term Portfolio
CTFR Long-Term Portfolio
CTFR Vermont Municipal Portfolio
National Muni. Intermediate Portfolio
California Muni. Intermediate Portfolio
Maryland Muni. Intermediate Portfolio
Virginia Muni. Intermediate Portfolio
Taxable Bond Funds
CSIF Bond Portfolio
Income Fund
Equity Funds
CSIF Managed Index Portfolio
CSIF Equity Portfolio
Capital Accumulation Fund
CWV International Equity Fund
New Vision Small Cap Fund
New Africa Fund
printed on
recycled paper
using soy-
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