ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 2
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 1
CALVERT CASH RESERVES
INSTITUTIONAL PRIME FUND
Dear Shareholders:
This annual report for the Calvert Cash Reserves Institutional Prime Fund
covers the 12-month period ended September 30, 1996.
This Fund was originally a money market fund for individual investors, the
Calvert Money Management Plus Prime Portfolio. On July 1, 1996, the Fund was
renamed the Calvert Cash Reserves Institutional Prime Fund and offered
exclusively to investors meeting a much higher required minimum initial
investment of $1,000,000, primarily corporations. We made these changes so that
we would be able to offer institutional investors a very high-quality money
market investment and keep the Fund's operating expenses to a minimum. The
repositioning of this Fund also means that our institutional clients now have
competitive taxable as well as tax-free money market fund options. Our tax-free
fund is the Calvert Tax-Free Reserves Money Market Portfolio, Class O.
We are gratified that this newly positioned Fund has been well received by
institutional investors. As of this writing, Fund assets had grown to $131
million.
MARKET REVIEW
From the fourth quarter of 1995 into the first quarter 1996, the economy
continued to expand at a modest pace. The Federal Reserve continued to maintain
an easy monetary policy and, in late January, took steps to lower short-term
interest rates. In the second quarter of 1996, the economy appeared to gain
momentum, which heightened fears of inflation and increased the likelihood of a
rise in interest rates.
For the third quarter of 1996, economic growth appeared to moderate.
Reports of retail sales and personal consumption pointed to a benign level of
inflation. And, the most common indices of price changes, the consumer price
index and producer price index, did not indicate a build up of inflationary
pressures.
Money market rates continued to slide during the final quarter of 1995 and
into the first quarter of 1996, then reversed course and moved higher on
expectations of tighter monetary policy.
Long-term bonds, in general, turned in flat or just slightly negative
one-year returns. Stocks closed the one-year period with strongly positive
returns, as measured by the Standard & Poor's 500 Stock Index, which generated a
one-year return of 20%.
FUND PERFORMANCE
On September 30, 1996, the close of this reporting period, the Fund's 7-day
compound effective annualized yield was 5.67%, which compares favorably to the
5.17% yield on an average of similar funds, the Lipper Institutional Money
Market Funds Average.
The Fund's total return for the 12-month period covered by this report is
listed in the Financial Highlights section on page 11. Securities and Exchange
Commission regulations require us to present this return in the annual report to
shareholders, but it should not be considered an indication of the return on
investment for those who joined the Fund on or after July 1, 1996.
After the Fund's rebirth as the Calvert Cash Reserves Institutional Prime
Fund, portfolio managers took steps to further strengthen portfolio credit
quality. The Institutional Prime Fund's operating policy is to invest
exclusively in first tier securities, those securities with the highest credit
quality ratings. Investments are made primarily in prime commercial paper and
U.S. Government obligations.
OUTLOOK
Our outlook calls for interest rates to trend a bit higher over the course
of the next 12 months. We plan to keep the Fund's weighted average maturity near
the low end of its target range in order to reinvest maturing securities at the
higher rates.
We appreciate your investment in the Calvert Cash Reserves Institutional
Prime Fund. If you have any questions about the Fund's strategy or performance
please feel free to call me at 1-800-317-2274.
Sincerely,
Reno J. Martini
Chief Investment Officer
October 31, 1996
QUALITY STRUCTURE OF PORTFOLIO
It is the operating policy of the Fund to invest only in tier-one
securities as defined by Rule 2a-7 of the Investment Policy Act of 1940. It is a
further operating policy of the Fund that it will invest only in issues rated
A-1 or P-1 or better, or, if not rated, of equivalent quality. The fund will not
invest in A-2 or P-2 rated issues. See the Statement of Additional Information,
"Appendix, Commercial Paper and Bond Ratings."
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of Calvert Cash Reserves and Shareholders of
Institutional Prime Fund
We have audited the accompanying statement of net assets of Institutional
Prime Fund (the sole series of Calvert Cash Reserves), as of September 30, 1996,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the three years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits. The financial
highlights for each of the respective years in the period ended September 30,
1993, were audited by other auditors whose opinion dated October 29, 1993,
expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
September 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Institutional Prime Fund as of September 30, 1996, and the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and financial highlights for each of the
three years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 8, 1996
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1996
PRINCIPAL
CORPORATE OBLIGATIONS - 44.6% AMOUNT VALUE
---------------------------------------------------------------------------
Alabama State Industrial Development Authority
VRDN, 5.70%, 12/1/19,
LOC: Chemical Bank * $2,300,000 $2,300,000
Allegheny County, Pennsylvania Hospital
Development VRDN,
5.60%, 2/15/12, LOC: FNB Chicago * 5,500,000 5,500,000
Barton Healthcare, LLC. VRDN, 5.55%, 2/15/25,
LOC: American National Bank & Trust * 7,000,000 7,000,000
Berks County, Pennsylvania Industrial Development
Authority VRDN,
5.55%, 7/1/16, LOC: Corestates * 1,000,000 1,000,000
Blount/Strange Realty Holdings, LLC.
VRDN 5.70%, 7/1/16,
LOC: First Alabama * 5,000,000 5,000,000
Cloquet, Minnesota Industrial Facilities
Revenue VRDN, 5.50%, 4/1/26,
LOC: Credit Suisse * 5,900,000 5,900,000
Elgin, Illinois Industrial Development Revenue
VRDN, 5.68%, 9/1/16,
LOC: LaSalle Bank * 3,500,000 3,500,000
Fed One Dayton VRDN, Series A, 6.83%, 8/1/09,
LOC: Bank One Ohio * 2,245,000 2,245,000
Fed One Dayton VRDN, Series B, 6.83%, 8/1/09,
LOC: Bank One Ohio * 1,620,000 1,620,000
Florida Housing Finance Agency VRDN, 6.70%,
7/1/23,
LOC: Heller Financial, Confirming LOC:
Commerze Bank * 750,000 750,000
Garmong Newspaper Development Co., LLC. VRDN,
5.88%, 9/1/16,
LOC: Citizens National Bank of Evansville,
Confirming LOC: Harris Trust * 3,100,000 3,100,000
Iowa Finance Authority Economic Development
Authority Revenue
VRDN, 5.60%, 3/1/11, LOC: Rabobank Nederland * 4,400,000 4,400,000
Mahoning County, Ohio VRDN, 5.88%,
11/1/98, LOC: PNC Bank * 430,000 430,000
Mississippi Business Finance Authority VRDN,
5.70%, 6/1/10,
LOC: National Bank of Detroit * 4,460,000 4,460,000
Mississippi Business Finance Authority
VRDN, 5.55%, 2/1/19,
GA: Sara Lee * 2,000,000 2,000,000
Montgomery County, Kentucky Industrial
Development Revenue
VRDN, 5.70%, 8/1/06, LOC: Fleet Bank * 2,360,000 2,360,000
Montgomery County, Pennsylvania Industrial
Development Revenue
VRDN, 5.55%, 3/1/10, LOC: Corestates * 905,000 905,000
Physicians Plus Medical Group VRDN, 5.70%,
8/1/16,
LOC: Marshall & Ilsley Bank * 5,000,000 5,000,000
TLC Holdings, LLC. VRDN, 5.70%, 6/1/26,
LOC: Columbus Bank & Trust * 1,100,000 1,100,000
-------------------
Total Corporate Obligations (Cost $58,570,000) 58,570,000
-------------------
COMMERCIAL PAPER - 23.7%
- ------------------------------------------------------------------------
Accor, S.A., 5.47%, 10/23/96, LOC: Banque Natl de Paris 2,000,000 1,993,315
Allegheny University Hospital, 5.30%, 10/18/96, LOC: PNC Bank 2,500,000
2,493,743 Duke University, 5.39%, 11/21/96 4,000,000 3,969,457 Epson America,
Inc., 5.43%, 11/4/96, LOC: Dai-Ichi Kangyo Bank 2,000,000 1,989,743 Franciscan
Services, Inc., 5.33%, 10/16/96, LOC: Toronto-Dominion 2,000,000 1,995,558
Harley Davidson Dealer Funding, 5.40%, 10/21/96 4,050,000 4,037,850 Jefferson
Pilot Corp., 5.50%, 10/1/96 2,500,000 2,500,000 Jefferson Pilot Corp., 5.32%,
10/3/96 2,000,000 1,999,409 Northwestern University, 5.33%, 11/8/96 3,000,000
2,983,122
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 4
PRINCIPAL
COMMERCIAL PAPER (CONT'D) AMOUNT VALUE
------------------------------- --------------------------------------
Oak Funding Corp., 5.45%, 10/31/96 $2,400,000 $2,389,100
Oak Funding Corp., 5.45%, 11/1/96 1,000,000 995,307
Oak Funding Corp., 5.43%, 11/4/96 1,700,000 1,691,282
Southwest Gas Corp., 5.37%, 10/11/96, LOC:
Union Bank of Switzerland 2,000,000 1,997,017
-------------------
Total Commercial Paper (Cost $31,034,903 31,034,903
-------------------
U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES - 20.5%
- ---------------------------------------------------------------------------
Federal Home Loan Bank Board, 5.48%, 1/17/97 490,000 481,944
Federal Home Loan Bank Board, 5.47%, 1/28/97 2,000,000 1,963,837
Federal Home Loan Bank Board, 5.33%, 1/30/97 2,000,000 1,964,171
Federal Home Loan Mortgage Corp., 5.35%, 10/3/96 500,000 499,851
Federal Home Loan Mortgage Corp., 5.33%, 10/15/96 1,485,000 1,481,922
Federal Home Loan Mortgage Corp., 5.35%, 10/21/96 1,000,000 997,028
Federal Home Loan Mortgage Corp., 5.38%, 10/28/96 1,000,000 995,965
Federal Home Loan Mortgage Corp., 5.33%, 10/31/96 1,485,000 1,478,404
Federal Home Loan Mortgage Corp., 5.37%, 11/1/96 1,677,000 1,669,245
Federal Home Loan Mortgage Corp., 5.31%, 11/29/96 2,000,000 1,982,595
Federal National Mortgage Assn., 5.35%, 10/28/96 1,500,000 1,493,981
Federal National Mortgage Assn., 5.27%, 11/1/96 1,000,000 995,462
Federal National Mortgage Assn., 5.27%, 11/26/96 3,000,000 2,975,407
Federal National Mortgage Assn., 5.40%, 12/2/96 4,000,000 3,962,800
Federal National Mortgage Assn., 5.45%, 12/9/96 2,000,000 1,979,108
Federal National Mortgage Assn., 5.29%, 1/30/97 2,000,000 1,964,439
-------------------
Total U.S. Government Agencies and Instrumentalities
(Cost $26,886,159) 26,886,159
-------------------
MUNICIPAL OBLIGATIONS - 20.3%
- ---------------------------------------------------------------------------
City of New York General Obligation Notes, 5.60%,
11/15/96,
LOC: Societe Generale 4,000,000 4,000,000
City of New York General Obligation Notes,
5.80%, 2/14/97,
LOC: Societe Generale 4,000,000 4,000,000
Detroit, Michigan VRDN, 5.55%, 5/1/05,
LOC: Sumitomo Bank Ltd. * 1,900,000 1,900,000
Gardena, California Certificates of
Participation VRDN, 5.90%, 7/1/25,
LOC: Sumitomo TST & Banking, Confirming
LOC: Dai-Ichi Kangyo * 2,700,000 2,700,000
New York, New York City General Obligation
Notes, 6.00%, 2/1/97 3,000,000 2,998,978
New York, New York City General Obligation
Notes, 5.67%, 3/15/97 5,000,000 4,994,666
Village of Schaumberg, Illinois VRDN,
5.55%, 12/1/20,
Bond Purchase Agreement: Credit Suisse * 1,100,000 1,100,000
Virginia State Housing Development
Authority VRDN, 5.60%, 3/1/02 * 5,000,000 5,000,000
-------------------
Total Municipal Obligations (Cost $26,693,644) 26,693,644
-------------------
TOTAL INVESTMENTS (Cost $143,184,706) - 109.1% $143,184,706
Cash overdraft: State Street Bank - (9.4)% (12,284,757)
Other assets and liabilities, net - 0.3% 318,317
-------------------
NET ASSETS - 100% $131,218,266
===================
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 5
NET ASSETS CONSIST OF: VALUE
- --------------------------------------------------------------------------------
Paid-in capital applicable to 131,216,696
shares of beneficial interest,
unlimited number of no par shares authorized $131,218,266
-------------------
NET ASSETS $131,218,266
===================
NET ASSET VALUE PER SHARE $1.00
===================
* Optional tender features give these securities a shorter effective
maturity date.
Explanation of Guarantees:
GA: Guarantee Agreement
LOC: Letter of Credit
Abbreviations:
VRDN: Variable Rate Demand Notes
See notes to financial statements.
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 6
PAR 143,557,000 143,557,000
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
NET INVESTMENT INCOME
- --------------------------------------------------------- ------------------
Investment Income
Interest income $2,311,281
-------------------
Expenses
Investment advisory fee 210,360
Transfer agency fees and expenses 92,834
Distribution Plan expenses 53,695
Trustees' fees and expenses 2,787
Administrative fees 13,365
Custodian fees 16,374
Registration fees 48,148
Reports to shareholders 49,951
Professional fees 7,731
Miscellaneous 11,776
Reimbursement from Advisor (198,710)
-------------------
Total expenses 308,311
Fees paid indirectly (16,374)
-------------------
Net expenses 291,937
-------------------
NET INVESTMENT INCOME 2,019,344
-------------------
REALIZED GAIN (LOSS) ON INVESTMENTS
----------------------------------------------- ----------------------
Net realized gain (loss) on investments 2,789
-------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,022,133
===================
See notes to financial statements.
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 7
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
INCREASE (DECREASE) IN NET ASSETS 1996 1995
-------------------------------------------------------------------------------
Operations
Net investment income $2,019,344 $4,077,434
Net realized gain (loss) on investments 2,789 4,547
-------------------- ------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,022,133 4,081,981
--------- -------------------
Distributions to shareholders from:
Net investment income (2,019,344) (4,077,435)
-------------------- -------------------
Total distributions (2,019,344) (4,077,435)
-------------------- -------------------
Capital share transactions in dollars and shares:
Shares sold 396,914,759 161,504,574
Reinvestment of distributions 1,595,167 3,889,856
Shares redeemed (294,069,678) (238,596,820)
-------------------- -------------------
Total capital share transactions 104,440,248 (73,202,390)
-------------------- -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 104,443,037 (73,197,844)
NET ASSETS
--------------------------------------------------------------------------
Beginning of year 26,775,229 99,973,073
-------------------- -------------------
End of year $131,218,266 $26,775,229
==================== ===================
See notes to financial statements.
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 8
NOTES TO FINANCIAL STATEMENTS
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
General: The Calvert Institutional Prime Fund (the "Fund"), the sole series
of Calvert Cash Reserves, is registered under the Investment Company Act of 1940
as a diversified, open-end management investment company. Prior to July 1, 1996,
the Fund was doing business as Money Management Plus Prime Portfolio, and was
not an institutional money market fund. The Fund offers shares of beneficial
interest to the public with no sales charge.
Security Valuation: Securities are valued at amortized cost which
approximates market.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including
accrued interest.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Fund on ex-dividend date. Dividends from net investment income are
accrued daily and paid monthly. 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.
Expense Offset Arrangement: The Fund has an arrangement with its custodian
bank whereby the custodian's fees are paid indirectly by credits earned on the
Fund's cash on deposit with the bank. Such deposit arrangement is an alternative
to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code and to distribute substantially all of
its earnings.
NOTE B - RELATED PARTY TRANSACTIONS
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Trustees of the Fund.
For its services, the Advisor received a monthly fee based on an annual rate of
.50% on the first $500 million of average daily net assets.
Effective July 1, 1996, Calvert Administrative Services Company, an
affiliate of the Advisor, provides administrative services to the Fund for an
annual fee, payable monthly, of .05% of the average daily net assets of the
Fund.
The Advisor voluntarily reimbursed the Fund for advisory fees,
administrative fees, and other operating expenses of $198,710.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Fund. A Distribution Plan, adopted by the
shareholders, allowed the Fund to pay the Distributor for expenses and services
associated with distribution of shares. The expenses paid could not exceed .35%
annually of the Fund's average daily net assets. This Distribution Plan was
terminated effective June 30, 1996.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Each Trustee who is not affiliated with the Advisor receives an annual fee
of $20,250 plus up to $1,200 for each Board and Committee meeting attended.
Trustee's fees are allocated to each of the funds served.
NOTE C - INVESTMENT ACTIVITY
The cost of investments owned at September 30, 1996 was substantially the
same for federal income tax and financial reporting purposes.
As a cash management practice, the Fund may sell or purchase short-term
variable rate demand notes from other Portfolios managed by the Advisor. The
transactions are effected at par with no gain or loss to the Fund, in accordance
with policies of the Fund.
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR
ENDED ENDED ENDED
30, SEPT. 30, SEPT.30, SEPT. 30,
1996 1995 1994
- ----------------------------------------------------------------------------
Net asset value, beginning $1.00 $1.00 $1.00
============== =============== ==========
Income from investment operations
Net investment income 0.040 0.045 0.028
Distributions from
Net investment income (0.040) (0.045) (0.028
Net asset value, ending $1.00 $1.00 $1.00
============== =============== =============
Total return 3.99% 4.55% 2.78%
============== =============== =============
Ratios to average net assets:
Net investment income 4.80% 4.53% 2.75%
Total expenses * 0.73% 1.41% -
============== =============== ==============
Net expenses 0.69% 1.39% 1.23%
============== =============== ==============
Expenses reimbursed 0.47% - -
============== =============== ==============
Net assets, ending (in thousands) $131,218 $26,775 $99,973
============== =============== ==============
Number of shares outstanding,
ending (in thousands) 131,217 26,821 100,024
============== =============== =============
YEAR YEAR
ENDED ENDED
SEPT. 30, SEPT. 30,
1993 1992
- ------------------------------
$1.00 $1.00
============= ==============
0.025 0.037
(0.025) (0.037)
- ------------- --------------
$1.00 $1.00
============= ==============
2.59% 3.72%
============= ==============
2.48% 3.69%
============= ==============
- -
============= ==============
0.92% 0.87%
============= ==============
- -
============= ==============
$102,325 $106,851
============= ==============
102,370 106,897
============= ==============
* Effective September 30, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
ANNUAL REPORT CALVERT CASH RESERVES INSTITUTIONAL PRIME FUND - 11
TO OPEN AN ACCOUNT:
..................................................
800-317-2274
PERFORMANCE AND PRICES:
..............................................................
Calvert Information Network
24 hours, 7 days a week
800-368-2745
SERVICE FOR
EXISTING ACCOUNT:
..................................................
800-317-2274
TDD FOR HEARING
IMPAIRED:
..................................................
800-541-1524
BRANCH OFFICE:
..................................................
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
REGISTERED, CERTIFIED
OR OVERNIGHT MAIL:
..................................................
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
WEB SITE
..................................................
Address: http://www.calvertgroup.com
PRINCIPAL
UNDERWRITER
..................................................
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
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.
