SEC Registration No.____________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Calvert Tax-Free Reserves
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective on
December 31, 1995 pursuant to Rule 488.
The Registrant has registered an indefinite amount of securities
under the Securities Act of 1933 pursuant to Section 24(f) under
the Investment Company Act of 1940; accordingly, no fee is
payable herewith because of reliance on Rule 24f-2. A Rule
24f-2 Notice for the Registrant's most recent fiscal year ended
December 31, 1994 was filed with the Commission on February 28,
1995. Pursuant to Rule 429, this Registration Statement relates
to shares previously registered on Form N-1A.
<PAGE>
Calvert Tax-Free Reserves
Cross Reference Sheet
Pursuant to Rule 481(a) Under the Securities Act of 1933
Item number Part A
1. Cover Page
2. Table of Contents
3. Summary; Portfolio Expenses
4. Summary; Reasons for the
Reorganization; Proposed Transaction;
Tax Consequences; Information about
the Reorganization; Comparative Information
on Shareholder Rights; Information about
the Portfolios;
5. Summary; Comparison of Investment Policies;
Information about the Portfolios; Investment
Objectives and Policies; Distribution Fees
and Expense Ratios; Purchases; Exchange Privileges;
Distribution Procedures; Redemption Procedures;
and Incorporation by Reference to Prospectus
dated 4/30/95
6. Summary; Comparison of Investment Policies;
Information about the Portfolios; Investment
Objectives and Policies; Advisory Fees,
Distribution Fees and Expense Ratios; Purchases;
Exchange Privileges; Distribution Procedures;
Redemption Procedures
7. Voting Information; Adjournment
8. Not Applicable
9. Not Applicable
Part B
10. Cover Page
11. Table of Contents
12. Statement of Additional Information of Registrant
13. Not Applicable
14. Financial Statements included in Statement of
Additional Information of Registrant
15. Indemnification PART C
Incorporated by Reference
to Part A Caption -
"Comparative Information on Shareholders' Rights"
16. Exhibits Exhibits
17. Undertakings Undertakings
<PAGE>
CALVERT TAX-FREE RESERVES
NEW JERSEY MONEY MARKET PORTFOLIO
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders of Calvert Tax-Free Reserves ("CTFR") New Jersey
Money Market Portfolio (the "NJ Portfolio") on ______ ___,
1996. At this important meeting you are being asked to consider
and approve an Agreement and Plan of Reorganization (the "Plan")
between Calvert Tax-Free Reserves- Money Market Portfolio (the
"Money Market Portfolio") and the NJ Portfolio.
The NJ Portfolio will be merged into the much larger Money
Market Portfolio. The expense ratio of the combined Portfolios
is expected to be lower.
The Board of Trustees of CTFR has unanimously approved the
proposed reorganization and recommends that shareholders of the
NJ Portfolio vote to approve the Plan. Approval of the Plan
requires the affirmative vote of a majority of shares of the NJ
Portfolio. We urge you to take the time to consider this
important matter and vote now. In order to make sure that your
vote is represented, indicate your choice on the enclosed proxy
card, date and sign it, and return it in the enclosed postage
prepaid envelope.
YOUR VOTE IS CRITICAL. PLEASE VOTE PROMPTLY BY SIGNING AND
RETURNING THE ENCLOSED PROXY IN THE POSTAGE-PREPAID ENVELOPE
PROVIDED.
Sincerely,
Clifton S. Sorrell, Jr.
President
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense
involved in validating your vote if you fail to sign your proxy
card(s) properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears
in the Registration on the proxy card(s).
2. JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the
Registration on the proxy card(s).
3. ALL OTHER ACCOUNTS: The capacity of the individual signing
the proxy card(s) should be indicated unless it is reflected in
the form of Registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. (1)ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe, Treasurer
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing
Plan (3) John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust (1) Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee (2) Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. (1) John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. (2) John B. Smith, Jr., Executor
<PAGE>
CALVERT TAX-FREE RESERVES
NEW JERSEY MONEY MARKET PORTFOLIO
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on ____ __, 1996
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders
of Calvert Tax-Free Reserves New Jersey Money Market Portfolio
will be held in the Tenth Floor Conference Room of Calvert
Group, Ltd., Air Rights North Tower, 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland at 10:00 a.m. on ___________,
__________ ___, 1996 for the
following purposes:
I. To consider and act on an Agreement and Plan of
Reorganization providing for the transfer of all of the assets
and liabilities of Calvert Tax Free Reserves New Jersey Money
Market Portfolio in exchange for
Class 0 shares of Calvert Tax-Free Reserves Money Market
Portfolio.
II. To transact any other business that may properly come
before the meeting.
Shareholders of record at the close of business on ________ __,
199__ are entitled to notice of and to vote at this meeting or
any adjournment thereof.
By Order of the Board of Trustees
William M. Tartikoff, Esq.
Secretary
Please execute the enclosed proxy and return it promptly in the
enclosed postage-prepaid envelope, thus enabling the NJ
Portfolio to avoid unnecessary expense and delay. No postage is
required if mailed in the United States. The proxy is revocable
and will not affect your right to vote in person if you attend
the meeting.
<PAGE>
PROSPECTUS AND PROXY STATEMENT
December __, 1995
Acquisition of the Assets By and in Exchange for Shares of
of Calvert Tax-Free Reserves--New Calvert Tax-Free Reserves--Money
Jersey Money Market Portfolio Market Portfolio 4550 Montgomery
4550 Montgomery Avenue Bethesda, Avenue Bethesda, Maryland 20814
Maryland 20814 (800) 368-2748 (800) 368-2748
This Prospectus and Proxy Statement relates to the proposed
transfer of all the assets and liabilities of the Calvert
Tax-Free Reserves New Jersey Money Market Portfolio (the "NJ
Portfolio") to the Calvert TaxFree Reserves Money Market
Portfolio (the "Money Market Portfolio") in exchange for Class
"O" shares of the Money Market Portfolio. Following the
transfer, Money Market Portfolio Class O shares will be
distributed to shareholders of the NJ Portfolio in liquidation
of the NJ Portfolio and the NJ Portfolio will be dissolved. As a
result of the proposed transaction, each shareholder of the NJ
Portfolio will receive that number of Money Market Portfolio
Class O shares equal in value at the date of the exchange to the
value of such shareholder's shares of the NJ Portfolio.
The Money Market Portfolio is a series of Calvert Tax-Free
Reserves ("CTFR"), which is an open-end, management investment
company. The investment objective of the Money Market Portfolio
is to earn the highest interest income exempt from federal
income taxes as is consistent with prudent investment
management, safety, preservation of capital and the quality and
maturity characteristics of the Money Market Portfolio. The NJ
Portfolio is also a series of CTFR. Calvert Asset Management
Company, Inc. ("CAM"), is the Investment Advisor for both the NJ
Portfolio and the Money Market Portfolio. The NJ
Portfolio is a non-diversified money market fund that seeks to
earn the highest level of interest income exempt from federal
income tax and the New Jersey Gross Income Tax as is consistent
with prudent investment management, preservation of capital and
the quality and maturity characteristics of the NJ Portfolio.
Both the Money Market Portfolio and the NJ Portfolio are money
market funds investing only in municipal obligations. Although
each Portfolio seeks to maintain a constant net asset value of
$1.00 per share, there can be no assurance that the Portfolio
will be successful in doing so. An investment in the Money
Market Portfolio is neither insured nor guaranteed by the U.S.
Government.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
SHARES OF THE CALVERT TAX-FREE RESERVES MONEY MARKET PORTFOLIO
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
This Prospectus and Proxy Statement, which should be retained
for future reference, sets forth concisely the information about
the Money Market Portfolio that a prospective investor should
know before investing. This Prospectus and Proxy Statement is
accompanied by the Prospectus of the Money Market Portfolio
dated April 30, 1995 and is incorporated herein by reference. A
Statement of Additional Information dated April 30, 1995
regarding this transaction containing additional information has
been filed with the Securities and Exchange Commission and is
incorporated herein by reference into this Prospectus and Proxy
Statement. A copy of the Statement may be obtained without
charge by writing the Money Market Portfolio at 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, or by calling
(800) 368-2748.
TABLE OF CONTENTS
Summary...........................................................2
Portfolio Expense
Comparison...................................... 4
Financial Highlights..............................................4
Comparison of Investment Policies.................................4
Information about the Reorganization..............................7
Comparative Information on Shareholder Rights.....................8
Information about the Portfolios..................................9
Voting Information................................................9
Adjournment......................................................10
Exhibit A - Agreement and Plan of Reorganization.......... ......11
SUMMARY
Reasons for the Reorganization. The Trustees of CTFR have been
considering various issues connected with the small size of the
NJ Portfolio. Accordingly, the Trustees have determined that it
would be beneficial to the NJ Portfolio shareholders to combine
with a larger money market fund portfolio with relatively
similar investment objectives and policies. On October 31,
1995, the Money Market Portfolio had net assets of $1.95 billion
compared to $0.03 billion of the NJ Portfolio net assets on that
date.
To this end, the Board of Trustees of CTFR recommends that
shareholders approve the proposed merger of the NJ Portfolio
into the Money Market Portfolio because both portfolios invest
solely in municipal obligations and are managed by the same
portfolio manager. The NJ Portfolio would be merged into the "O"
Class of the Money Market Portfolio. The Money Market Portfolio
hopes to preserve the NJ Portfolio assets while improving the
economies of scale of both portfolios. See "Portfolio Expense
Comparison" below.
Proposed Transaction. The Board of Trustees of CTFR has
authorized an Agreement and Plan of Reorganization (the "Plan")
providing for the transfer of all the assets and liabilities of
the NJ Portfolio to the Money Market Portfolio in exchange for
shares of the Money Market Portfolio. Following the transfer,
Money Market Portfolio Class O shares will be distributed to
shareholders of the NJ Portfolio in liquidation of the NJ
Portfolio and the NJ Portfolio will be dissolved. As a result of
the proposed transaction, each shareholder of the NJ Portfolio
will receive that number of full and fractional Money Market
Portfolio Class O shares equal in value at the date of the
exchange to the value of such shareholder's shares of the NJ
Portfolio. For the reasons stated above, the Trustees, including
the Trustees of CTFR who are not "interested persons" as that
term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act") have concluded that the reorganization
would be in the best interests of the shareholders of the NJ
Portfolio and recommend shareholder approval.
Tax Consequences. The Plan is conditioned upon receipt by the NJ
Portfolio of an opinion of counsel that no gain or loss will be
recognized by the NJ Portfolio or NJ Portfolio shareholders as a
result of the reorganization. The tax basis of Money Market
shares received by a shareholder will be the same as the tax
basis of the shareholder's NJ Portfolio shares. In addition,
the tax basis of the NJ Portfolio assets in the hands of the
Money Market Portfolio as a result of the reorganization will be
the same as the tax basis of such assets in the hands of the NJ
Portfolio prior to the reorganization. See "Information about
the Reorganization."
Investment Policies. The investment policies of the NJ Portfolio
and the Money Market Portfolio are relatively similar. Both the
NJ Portfolio and the Money Market Portfolio invest primarily in
portfolios of high quality short-term municipal obligations.
Each Portfolio's dividends are substantially exempt from federal
income tax. The NJ Portfolio invests in fixed and variable rate
high quality municipal obligations of New Jersey with maturities
of one year or less and an average maturity of 90 days or less
whose interest is exempt from federal income tax and which are
of high quality. The Money Market Portfolio invests in municipal
bonds and notes and taxexempt commercial paper within the two
highest credit ratings categories. For both Portfolios, the
credit quality of municipal obligations is determined by
reference to a commercial credit rating service, such as Moody's
Investors Service, Inc., or Standard & Poor's Corporation. See
"Comparison of Investment Policies."
Purchases. Shares of both the NJ Portfolio and the Money Market
Portfolio are sold on a continuous basis at their respective net
asset value, which is intended to remain stable at $1.00 per
share. The minimum initial investment in each Portfolio is
$2,000 and the minimum subsequent investment is $250 (except in
the case of certain retirement plans).
Exchange Privileges. Shareholders of both the NJ Portfolio and
the Money Market Portfolio may exchange Portfolio shares for
shares of a variety of other Calvert Group Funds by paying the
applicable sales charge, if any. Each such exchange represents a
sale of Portfolio
shares, which may produce a gain or loss for tax purposes. The
NJ Portfolio and the Money Market Portfolio reserve the right to
modify or eliminate this exchange privilege, with 60 days'
notice.
Distribution Procedures. Neither the NJ Portfolio nor the Money
Market Portfolio Class O shares have a Rule 12b-1 Distribution
Fee or a service fee. The Money Market Portfolio also offers
another class of shares, Class MMP shares, which are sold with a
Rule 12b-1 distribution fee of 0.35% of average daily net
assets. Class MMP shares are not offered by this prospectus.
Redemption Procedures. At any time, shares of the NJ Portfolio
and the Money Market Portfolio may be redeemed by writing a
draft or sending a written request by mail. All written orders
for redemption, and all accompanying certificates, must be
signed by the shareholder and may be required to be signature
guaranteed by a commercial bank, savings association, trust
company or member firm of any national securities exchange.
Further documentation may be required from corporations,
fiduciaries, pension plans and institutional investors.
Shares may also be redeemed by telephone or through brokers.
Both Portfolios impose a charge of $5.00 for wire transfers of
less than $1,000. The NJ Portfolio and the Money Market
Portfolio may, after 30 days' notice, close accounts if the
value of shares in the account is reduced by redemptions to less
than $1,000, and the investor fails to purchase sufficient
additional shares.
PORTFOLIO EXPENSE
COMPARISON Money Market NJ Portfolio
Portfolio Class O
Shares
Shareholder Transaction Expenses
Sales Load on Purchases None None
Sales Load on Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees None None
Exchange Fee None None
Annual Fund Operating Expenses
- Fiscal Year 1994 (see below)
(as a percentage of net assets)
Management Fees 0.46% 0.51%
Rule 12b-1 Fees None None
Other Expenses 0.16% 0.33%
Total Fund Operating Expenses 0.62% 0.84%
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each period:
1 Year 3 Years 5 Years 10 Years
Money Market
Portfolio Class O $6 $20 $35 $77
NJ Portfolio $9 $27 $47 $104
EXPLANATION OF TABLE: THE PURPOSE OF THE TABLE IS TO ASSIST
YOU IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT AN
INVESTOR IN THE PORTFOLIOS MAY BEAR DIRECTLY (SHAREHOLDER
TRANSACTION COSTS) OR INDIRECTLY (ANNUAL FUND OPERATING
EXPENSES).
A. Shareholder Transaction Costs are charges you pay when you
buy or sell shares of a Portfolio. If you request a wire redemption of
less than $1,000, you will be charged a $5 wire fee.
B. Annual Fund Operating Expenses. Management Fees are paid by
the Fund to Calvert Asset Management Company, Inc. ("Investment
Advisor") for managing each Portfolio's investments and business
affairs, and include an administrative service fee paid to
Calvert Administrative Services Company, Inc. Each Portfolio
incurs Other Expenses for maintaining shareholder records,
furnishing shareholder statements and reports, and other
services. Management Fees and Other Expenses have already been
reflected in the yield for the Money Market Portfolio and are
not charged directly to individual shareholder accounts.
C. Example of Expenses. The example, which is hypothetical,
should not be considered a representation of past or future
expenses. Actual expenses may be higher or lower than those
shown.
The information set forth above with respect to the Money Market
Portfolio relates only to Class O shares. The Money Market
Portfolio also offers another class of shares, Class MMP shares.
Class O Shares and Class MMP shares are the same except Class
MMP shares are subject to a Rule 12b-1 distribution fee of 0.35%
of average daily net assets.
FINANCIAL HIGHLIGHTS
The following tables provide information about the financial
history of the Money Market Portfolio's Class O shares. They
express the information in terms of a single share outstanding
throughout each period. The tables have been audited by those
independent accountants whose report is included in Calvert
Tax-Free Reserves Annual Report to Shareholders, for each of the
respective periods presented, except the six-month period ended
June 30, 1995 which is unaudited. The tables should be read in
conjunction with the financial statements and their related
notes. The current Annual Report to Shareholders is
incorporated by reference into the Statement of Additional
Information.
Money Market Portfolio Six Months Ended
June 30, 1995 Year Ended December 31,
(Unaudited) 1994 1993
Net asset value, beginning of year $1.000 $1.000 $1.000
Income from investment operations
Net investment income .020 .028 .024
Distributions to shareholders
Dividends from net investment income (.020) (.028) (.024)
Net asset value, end of year $1.000 $1.000 $1.000
Total return<F1> 2.03% 2.81% 2.41%
Ratio of expenses to average
net assets .62%(a) .62% .60%
Ratio of net investment income to
average net assets 4.03%(a) 2.75% 2.37%
Net assets, end of year $1,578,821,440 $1,344,594,922 $1,500,614,262
Number of shares outstanding
at end of year (in thousands) 1,578,904 1,344,668 1,500,557
<F1>Total return has not been audited prior to 1994.
(a) Annualized
Money Market Portfolio Year Ended December 31,
1992 1991
Net asset value, beginning of year $1.000 $ 1.000
Income from investment operations
Net investment income .031 .048
Distributions to shareholders
Dividends from net investment income (.031) (.048)
Net asset value, end of year $1.000 $1.000
Total return<F2> 3.18% 4.96%
Ratio of expenses to average
net assets .59% .61%
Ratio of net investment
income to average net assets 3.10% 4.79%
Net assets, end of year $1,552,105,640.00 $1,382,329,562.00
Number of shares outstanding
at end of year (in thousands) 1,552,061.00 1,382,288.00
<F2>Total return has not been audited prior to 1994.
Money Market Portfolio Year Ended December 31,
1990 1989
Net asset value, beginning of year $1.000 $1.000
Income from investment operations
Net investment income .059 .063
Distributions to shareholders
Dividends from net investment income (.059) (.063)
Net asset value, end of year $1.000 $1.000
Total return<F3> 6.04% 6.47%
Ratio of expenses to average
net assets .63% .62%
Ratio of net investment income
to average net assets 5.85% 6.22%
Net assets, end of year $1,071,718,868.00 $952,346,922.00
Number of shares outstanding
at end of year (in thousands) 1,071,678.00 952,257.00
<F3>Total return has not been audited prior to 1994.
Money Market Portfolio Year Ended December 31,
1988 1987
Net asset value, beginning of year $1.000 $1.000
Income from investment operations
Net investment income .052 .046
Distributions to shareholders
Dividends from net investment income (.052) (.046)
Net asset value, end of year $1.000 1.000
Total return<F4> 5.31% 4.62%
Ratio of expenses to average
net assets .62% .62%
Ratio of net investment income
to average net assets 5.19% 4.56%
Net assets, end of year $823,759,105.00 $688,967,210.00
Number of shares outstanding
at end of year (in thousands) 823,696.00 688,986.00
<F4>Total return has not been audited prior to 1994.
Money Market Portfolio Year Ended
December 31,
1986 1985
Net asset value, beginning of year $1.000 $1.000
Income from investment operations
Net investment income .048 .054
Distributions to shareholders
Dividends from net investment income (.048) (.054)
Net asset value, end of year $1.000 $1.000
Total return<F5> 4.77% 5.39%
Ratio of expenses to average
net assets .67% .71%
Ratio of net investment income
to average net assets 4.66% 5.22%
Net assets, end of year $519,491,108.00 $306,432,253.00
Number of shares outstanding
at end of year (in thousands) 519,399.00 306,411.00
<F5> Total return has not been audited prior to 1994.
COMPARISON OF INVESTMENT POLICIES
The Money Market Portfolio. The Money Market Portfolio
investment objective is to earn the highest level of interest
income exempt from federal income tax. Municipal obligations in
which the Portfolio invests are short-term, fixed and variable
rate instruments of minimal credit risk and of high quality.
Short-term obligations have remaining maturities of one year or
less. The Money Market maintains an average weighted maturity
of 90 days or less.
In pursuing its objective, the Money Market Portfolio invests
primarily in a diversified portfolio of municipal obligations
whose interest is exempt from federal income tax. Municipal
obligations in which the Portfolio invests are short-term, fixed
and variable rate instruments of minimal credit risk and of high
quality. Short-term obligations have remaining maturities of one
year or less. The Money Market maintains an average weighted
maturity of 90 days or less.
The Money Market Portfolio invests in municipal bonds and notes
and tax-exempt commercial paper within the two highest credit
rating categories or, if unrated, are determined by the Advisor
to be of comparable quality. The credit quality of municipal
obligations is determined by reference to a commercial credit
rating service, such as Moody's Investors Service, Inc. or
Standard & Poor's Corporation. In the case of any instrument
that is not rated, credit quality is determined by the Advisor
under the supervision of the Board of Trustees. There is no
limitation on the percentage of the Portfolio's assets which may
be invested in unrated obligations; such obligations may be less
liquid than rated obligations of comparable quality.
The NJ Portfolio. The NJ Portfolio seeks to earn the highest
level of interest income exempt from federal income tax and the
New Jersey Gross Income Tax as is consistent with prudent
investment management, preservation of capital and the quality
and maturity characteristics of the NJ Portfolio.
The NJ Portfolio is non-diversified and invests primarily in
municipal obligations whose interest is exempt from federal and
New Jersey state income tax. Municipal obligations in which the
NJ Portfolio invests are short-term, fixed and variable rate
instruments of minimal credit risk and of high quality.
Short-term obligations have remaining maturities of one year or
less. The NJ Portfolio maintains an average weighted maturity
of 90 days or less.
Under normal market conditions, the NJ Portfolio attempts to
invest all of its assets in tax-exempt obligations of the State
of New Jersey and its political subdivisions ("New Jersey
Municipal Obligations"). If at any time New Jersey Municipal
Obligations become unavailable, the NJ Portfolio could, to the
extent permissible, invest in debt obligations issued by other
states, territories and possessions of the United States, the
District of Columbia and their respective authorities, agencies,
instrumentalities and political subdivisions ("Municipal
Obligations").
Dividends paid by the NJ Portfolio which are derived from
interest attributable to New Jersey Municipal Obligations will
be exempt from federal and New Jersey state personal income
taxes. Dividends derived from interest on tax-exempt
obligations of other governmental issues will be exempt form
federal income tax, but will be subject to New Jersey state
income taxes.
Since the NJ Portfolio is non-diversified, it may invest in
fewer issuers than if it were diversified. Accordingly, the NJ
Portfolio's performance may be more directly impacted by changes
in conditions affecting those issuers than it would be if the NJ
Portfolio were investing in a greater number of issuers.
The NJ Portfolio invests in municipal bonds and notes and
tax-exempt commercial paper within the two highest credit
ratings categories for example, AA and AAA (or Aa and Aaa) for
municipal bonds and A-1 and A2 (or P-1 and P-2) for tax-exempt
commercial paper. These obligations are judged to be of high
quality.
There is no limitation on the percentage of the NJ Portfolio
assets that may be invested in unrated obligations; such
obligations may be less liquid than rated obligations of
comparable quality.
The NJ Portfolio may temporarily borrow money from banks to meet
redemption requests, but such borrowing may not exceed 10% of
the value of the NJ Portfolio's total assets.
Both Portfolios. Both Portfolios may invest in floating rate
and variable rate demand notes. These notes provide that the
holder may demand payment of the note at its par value plus
accrued interest by giving notice to the issuer.
Both Portfolios may invest in structured money market
instruments where the underlying security is a municipal lease.
Generally, such instruments are structured as tax-exempt
commercial or variable rate demand notes, and are usually
secured by an unconditional letter of credit. In the unlikely
event that the letter of credit is not honored, the lease would
present special risks, such as the chance that the municipality
might not appropriate funding for the lease payments. Thus, the
Advisor considers risk of cancellation in its investment
analysis. Certain leases may be considered illiquid. In all
cases, the Money Market Portfolio invests only in high-quality
instruments (rated in one of the two highest rating categories)
that meet the requirements of the Securities and Exchange
Commission's Rule 2a-7 regarding credit quality and maturity.
Both Portfolios may purchase when-issued securities. New issues
of municipal obligations are offered on a when-issued basis;
that is, delivery and payment for the securities normally takes
place 15 to 45 days after the date of the transaction. The
payment obligations and the yield that will be received on the
securities are each fixed at the time the buyer enters into the
commitment. The Money Market Portfolio will only make
commitments to purchase such securities with the intention of
actually acquiring the securities, but it may sell these
securities before the settlement date if it is deemed advisable
as a matter of investment strategy.
For liquidity purposes or pending the investment of the proceeds
of the sale of its shares, each Portfolio may invest in and
derive up to 20% of its income from taxable short-term money
market type investments. Interest earned from such taxable
investments will be taxable to the shareholder as ordinary
income unless the shareholder is otherwise exempt from the
transaction.
Each Portfolio may invest in variable and floating rate
obligations. Variable rate obligations have a yield which is
adjusted periodically based upon changes in the level of
prevailing interest rates. Floating rate obligations have an
interest rate fixed to a known lending rate, such as the prime
rate, and are automatically adjusted when that rate changes.
Variable and floating rate obligations lessen the capital
fluctuations usually inherent in fixed income investments, to
diminish the risk of capital depreciation of investments and
shares; but this also means that should interest rates decline,
the yield of the Portfolio will decline and the Portfolio would
not have as many opportunities for capital appreciation of
Portfolio investments.
Differences in Investment Restrictions. As a state-specific
money market mutual fund, the NJ Portfolio seeks to earn the
highest level of interest income exempt from federal income tax
and the New Jersey Gross Income Tax, as is consistent with
prudent investment management, preservation of capital, and the
quality and maturity characteristic of the NJ Portfolio. The
Money Market Portfolio is a so-called "national" money market
portfolio which 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 Money Market Portfolio.
Investments made by the Money Market Portfolio, while generally
exempt from federal income tax, are not exempt from the New
Jersey Gross Income Tax.
One of the more significant differences between the NJ Portfolio
and the Money Market Portfolio is, that as described above, the
NJ Portfolio is not diversified like the Money Market
Portfolio. This means that the NJ Portfolio invests primarily
in municipal obligations whose interest is exempt from federal
and New Jersey state income tax. Since the NJ Portfolio is
non-diversified, it may invest in fewer issuers than if it were
diversified. As a result the NJ Portfolio's performance may be
more directly impacted by changes in conditions affecting those
issuers than it would be if the portfolio were investing in a
greater number of issuers.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The proposed Agreement and Plan of
Reorganization (the "Agreement" or "Plan") provides that the
Money Market Portfolio will acquire all the assets and
liabilities of the NJ Portfolio in exchange for Class O shares
of the Money Market Portfolio on the Closing Date (as defined in
Section 2(b) of the Plan). A copy of the Plan is attached as
Exhibit A to this Proxy Statement. The number of full and
fractional Money Market Class O shares to be issued to
shareholders of the NJ Portfolio will equal the value of the
shares of the NJ Portfolio outstanding immediately prior to the
reorganization. Portfolio securities of the NJ Portfolio and
the Money Market Portfolio will be valued in accordance with the
valuation practices of the Money Market Portfolio which are
described in the Money Market Portfolio prospectus. At the time
of the reorganization, the Money Market Portfolio will assume
and pay all of the NJ Portfolio's obligations and liabilities.
The reorganization will be accounted for by the method of
accounting for tax-free reorganizations of investment companies,
sometimes referred to as the pooling without restatement method.
As soon as practicable after the Closing Date, the NJ Portfolio
will liquidate and distribute pro rata to its shareholders of
record as of the close of business on the Closing Date the full
and fractional Class O shares of the Money Market Portfolio at
an aggregate net asset value equal to the value of the
shareholder's investment in the NJ Portfolio next determined
after the effective time of the transaction. This method of
valuation is also consistent with interpretations of Rule 22c-1
under the Investment Company Act of 1940 by the Securities and
Exchange Commission's Division of Investment Management. Such
liquidation and distribution will be accomplished by the
establishment of accounts on the share records of the Money
Market Portfolio in the name of such NJ Portfolio shareholders,
each representing the respective pro rata number of full and
fractional shares of the Money Market Portfolio due the
shareholder.
The consummation of the Plan is subject to the conditions set
forth in
the Agreement. The Plan may be terminated and the reorganization
abandoned at any time before or after approval by NJ Portfolio
shareholders, prior to the Closing Date by mutual consent of the
NJ Portfolio and the Money Market Portfolio, or by either if any
condition set forth in the Plan has not been fulfilled or is
waived by the party entitled to its benefits. In accordance with
the Plan, the NJ Portfolio will be responsible for payment of
expenses incurred in connection with the reorganization.
Description of Money Market Portfolio Class O Shares. Full and
fractional Class Oshares of the Money Market Portfolio will be
issued to NJ Portfolio shareholders in accordance with the
procedures under the Plan as described above. Each share will be
fully paid and non assessable when issued and transferable
without restrictions and will have no preemptive or conversion
rights.
Federal Income Tax Consequences. The Plan is a tax-free
reorganization pursuant to Section 368(a)(1)(C) of the Internal
Revenue Code. The Plan is conditioned upon receipt by the NJ
Portfolio of an opinion of counsel to the NJ Portfolio, to the
effect that, on the basis of the existing provisions of the
Internal Revenue Code of 1986, current administrative rules and
court decisions, for federal income tax purposes: (1) no gain or
loss will be recognized by the NJ Portfolio or the Money Market
Portfolio upon the transfer of NJ Portfolio assets to, and the
assumption of its liabilities by, the Money Market Portfolio in
exchange for the Money Market Portfolio's shares (Section
1032(a)); (2) no gain or loss will be recognized by shareholders
of the NJ Portfolio upon the exchange of NJ Portfolio shares for
the Money Market Portfolio's Class O shares (Section 361(a));
(3) the basis and holding period immediately after the
reorganization for the Money Market shares received by each NJ
Portfolio shareholder pursuant to the reorganization will be the
same as the basis and holding period of the NJ Portfolio shares
held immediately prior to the exchange (Sections 354, 1223(1));
and (4) the basis and holding period immediately after the
reorganization of the NJ Portfolio assets acquired by the Money
Market Portfolio will be the same as the basis and holding
period of such assets of the NJ Portfolio immediately prior to
the reorganization (Sections 362(b), 1223(2)).
Capitalization. The following table shows the capitalization of
the NJ Portfolio and the Money Market Portfolio as of October
31, 1995, and on a pro forma basis as of the date of the
proposed acquisition of assets at net asset value:
The Money Market
The NJ Portfolio Portfolio, Class O Proforma Combined*
Net Assets $32,113,347.00 $1,910,809,093.00 $1,942,922,440.00
Net Asset
Value Per
Share $1.00 $1.00 $1.00
Total Capital
Stock $32,119,688.00 $1,910,919,688.00 $1,943,039,376.00
*The Pro Forma combined net assets does not reflect adjustments with
respect to distributions prior to the reorganization. For each
one share of the NJ Portfolio shares owned, shareholders of the
NJ Portfolio would receive pro forma approximately one Class O
share of the Money Market Portfolio. The actual exchange ratio
will be determined based on the relative net asset value per
share on the acquisition date.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
Both Portfolios are series of CTFR, an open-end management
investment company organized as a Massachusetts business trust
and thus have the same Declaration of Trust and Bylaws.
INFORMATION ABOUT THE PORTFOLIOS
The Money Market Portfolio. Information about the Money Market
Portfolio's Class O shares is included in its current prospectus
dated April 30, 1995, a copy of which is included with this
proxy statements and incorporated by reference into it.
Additional information about the Money Market Portfolio is
included in the Statement of Additional Information also dated
April 30, 1995, which has been filed with the Securities and
Exchange Commission and is incorporated by reference in this
proxy statement. Copies of the Statement of Additional
Information may be obtained without charge by writing to the
Money Market Portfolio at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814 or by calling (800) 368-2748. The
Money Market Portfolio files proxy material, reports and other
information with the Securities and Exchange Commission. These
reports may be inspected and copied at the Public Reference
facilities maintained by the Securities and Exchange Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
the material may also be obtained from the Office of Consumer
Affairs and Information Services of the Securities and Exchange
Commission at prescribed rates.
The NJ Portfolio. Information concerning the operations and
management of the NJ Portfolio is incorporated by reference into
this proxy statement from the NJ Portfolio's current Prospectus
and Statement of Additional Information, each dated April 30, 1995.
Copies may be obtained without charge by writing the NJ Portfolio at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 or by
calling (800) 3682748. Reports and other information filed by
The NJ Portfolio can be inspected and copied at the Public
Reference Branch maintained by the Securities and Exchange
Commission, located at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies of material can be obtained at prescribed rates
from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission,
Washington, D.C. 20549.
VOTING INFORMATION
Proxies from the shareholders of the NJ Portfolio are being
solicited by the Trustees of CTFR for the Special Meeting of
Shareholders to be held in the Tenth Floor Conference Room of
Calvert Group, Ltd., Air Rights North Tower, 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland at 10:00 a.m. on
___________________, 1996, or at such later time or date made
necessary by any adjournment(s). A proxy may be revoked at any
time before the meeting or during the meeting by oral or written
notice to William M. Tartikoff, Esq., Secretary of the NJ
Portfolio, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814. Unless revoked, all valid proxies will be voted
in accordance with the specification thereon or, in the absence
of specification, for approval of the Plan. Approval of the
Plan will require the affirmative vote of the holders of at
least a majority of the outstanding shares of the NJ Portfolio
entitled to vote at the meeting.
Proxies are solicited by mail. Additional solicitations may be
made by telephone, computer communications, facsimile or other
such means, or by personal contact by officers or employees of
Calvert Group and its affiliates or by proxy soliciting firms
retained for this purpose. The NJ Portfolio will bear the
solicitation costs.
Shareholders of the NJ Portfolio of record at the close of
business on _______ __, 199__ ("record date") are entitled to
notice of and to vote at the Special Meeting or any adjournment
(s) thereof. The holders of a majority of the shares of the NJ
Portfolio outstanding at the close of business on the record
date present in person or represented by proxy will constitute a
quorum for the meeting; however, as noted above, the affirmative
vote of the holders of at least a majority of the shares
outstanding at the close of business on the record date is
required to approve the reorganization. Shareholders are
entitled to one vote for each share held. As of October 31,
1995, as shown on the books of the NJ Portfolio, there were
issued and outstanding _______________ shares of the NJ
Portfolio. The votes of the shareholders of the Money Market
Portfolio are not being solicited since their approval or
consent is not necessary for this transaction.
As of November 29, 1995, the officers and Trustees of the NJ
Portfolio as a group beneficially owned less than 1% of the
outstanding shares of the NJ Portfolio, and no persons owned 5%
or more of the outstanding shares.
ADJOURNMENT
In the event that sufficient votes in favor of the proposals set
forth in the Notice of Meeting and Proxy Statement are not
received by the time scheduled for the meeting, the persons
named as proxies may move one or more adjournments of the
meeting to permit further solicitation of proxies with respect
to any such proposals. Any such adjournment will require the
affirmative vote of a majority of the shares present at the
meeting.
By Order of the Board of Trustees
William M. Tartikoff, Esq.
Secretary
The Trustees of CTFR, Including the Independent Trustees,
Recommend a Vote FOR Approval of the Plan.
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of November
27, 1995 is by and between Calvert Tax-Free Reserves ("CTFR"), a
Massachusetts business trust, on behalf of its New Jersey Money
Market Portfolio series (the "NJ Portfolio"), and CTFR's Money
Market Portfolio series (the "Money Market Portfolio").
In consideration of the mutual promises contained in this
Agreement, the parties agree as follows:
1. SHAREHOLDER APPROVAL
Approval by Shareholders. A meeting of the shareholders of the
NJ Portfolio shall be called and held for the purpose of acting
on and authorizing the transactions contemplated in this
Agreement and Plan of Reorganization (the "Agreement" or
"Plan"). The NJ Portfolio shall furnish to the Money Market
Portfolio such data and information as shall be reasonably
requested by the Money Market Portfolio for inclusion in the
information to be furnished to its shareholders in connection
with the meeting.
2. REORGANIZATION
(a) Plan of Reorganization. The NJ Portfolio will convey,
transfer, and deliver to the Money Market Portfolio all of the
then-existing assets of the NJ Portfolio at the closing provided
for in Section 2(b) of this Agreement (the "Closing"). In
consideration thereof, the Money Market Portfolio agrees to the
following:
(i) to assume and pay, to the extent that they exist on or after
the Effective Time of the Reorganization (as defined in Section
2(b)), all of the NJ Portfolio's obligations and liabilities,
whether absolute, accrued, contingent, or otherwise; and
(ii) to deliver to the NJ Portfolio in exchange for the assets
the number of Class "O" shares of beneficial interest of Money
Market Portfolio ("Money Market Shares") to be determined as
follows: In accordance with Section 3 of this Agreement, the
number of shares shall be determined by dividing the per share
net asset value of Money Market Shares (rounded to the nearest
mill) by the net asset value per share of the NJ Portfolio
(rounded to the nearest mill) and multiplying the quotient by
the number of outstanding shares of the NJ Portfolio as of the
close of business on the closing date.
(b) Closing and Effective Time of the Reorganization. The
Closing shall occur at the "Effective Time of the
Reorganization," which shall be either
(i) the later of receipt of all necessary regulatory approvals
and the final adjournment of the meeting of shareholders of the
NJ Portfolio at which the Plan will be considered, or
(ii) such later date as the parties may mutually agree.
3. VALUATION OF NET ASSETS
(a) The value of the NJ Portfolio's net assets to be
transferred to the Money Market Portfolio under this Agreement
shall be computed as of the close of business day immediately
preceding the Closing Date (hereinafter the "Valuation Date")
using the valuation procedures as set forth in the Money
Market's prospectus.
(b) The net asset value per share of Money Market Shares for
purposes of Section 2 of this Agreement shall be determined as
of the close of business on the Valuation Date by the Money
Market Portfolio's Treasurer using the same valuation procedures
as set forth in the Money Market Portfolio's prospectus.
(c) A copy of the computation showing in reasonable detail the
valuation of the NJ Portfolio's net assets to be transferred to
the Money Market Portfolio pursuant to paragraph 2 of this
Agreement, certified by the Treasurer of the NJ Portfolio, shall
be furnished by the NJ Portfolio to the Money Market Portfolio
at the Closing. A copy of the computation showing in reasonable detail the
determination of the net asset value per share of Money Market
Shares pursuant to paragraph 2 of this Agreement, certified by
the Treasurer of the Money Market Portfolio, shall be furnished
by the Money Market Portfolio to the NJ Portfolio at the Closing.
4. LIQUIDATION AND DISSOLUTION
(a) As soon as practicable after the Closing Date, the New
Jersey Portfolio will distribute pro rata to NJ Portfolio
shareholders of record as of the close of business on the
Closing Date the shares of the Money Market Portfolio received
by the NJ Portfolio pursuant to this Section. Such liquidation
and distribution will be accompanied by the establishment of
Shareholder accounts on the share records of the Money Market
Portfolio in the names of each such shareholder of the NJ
Portfolio, representing the respective pro rate number of full
shares and fractional interests in Class O shares of the Money
Market Portfolio due to each. No such shareholder accounts
shall be established by the Money Market Portfolio or its
transfer agent for the Money Market Portfolio except pursuant to
written instructions from CTFR, and CTFR agrees to provide on
the Closing Date instructions to transfer to a shareholder
account for each former NJ Portfolio shareholder a pro rata
share of the number of Class O shares of Money Market Portfolio
received pursuant to Section 2(a) of this Agreement.
(b) Promptly after the distribution described in Section 4(a)
above, appropriate notification will be mailed by the Money
Market Portfolio or its transfer agent to each shareholder of
the NJ Portfolio receiving such distribution of shares of the
Money Market Portfolio informing such shareholder of the number
of such shares distributed to such shareholder and confirming
the registration thereof in such shareholder's name.
(c) Following the Closing Date and until surrendered, each
outstanding share certificate representing shares of the NJ
Portfolio shall be deemed for all purposes to evidence ownership
of shares of the Money Market Portfolio that the holder is
entitled to receive in exchange for the certificate. The shares
of the Money Market Portfolio that the holder is entitled to
receive with respect to the NJ Portfolio's share certificates
not yet surrendered will be held by the Money Market Portfolio's
transfer agent on behalf of the shareholder, but may not be
transferred or redeemed until surrender of the NJ Portfolio's
share certificates in proper form for transfer to the Money
Market Portfolio's transfer agent or, in lieu thereof, the
posting of a lost certificate bond or other surety instrument deemed acceptable
to the Money Market Portfolio's transfer agent. All of the Money
Market Portfolio's distributions attributable to the shares
represented by the share certificates of the NJ Portfolio
retained by shareholders will be paid to the shareholder in cash
or invested in additional shares of the Money Market Portfolio
at the net asset value in effect on the respective payment dates
in accordance with instructions previously given by the
shareholder to CTFR's transfer agent. Share certificates
representing holdings of shares of the Money Market Portfolio
shall not be issued unless requested by the shareholder and, if
such a request is made, share certificates of the Money Market
Portfolio will be issued only for full shares of the Money
Market Portfolio and any fractional interests in shares shall
be credited in the shareholder's account with the Money Market
Portfolio.
(d) As promptly as is practicable after the liquidation of the
NJ Portfolio, and in no event later than 12 months from the date
of this Agreement, the NJ Portfolio shall be terminated pursuant
to the provisions of the Plan.
(e) Immediately after the Closing Date, the share transfer books
of the NJ Portfolio shall be closed and no transfer of shares
shall thereafter be made on those books.
5. TRUST; BY-LAWS
(a) Declaration of Trust. The Declaration of Trust of CTFR,
which governs the Money Market Portfolio and the NJ Portfolio,
as in effect immediately prior to the Effective Time of the
Reorganization shall continue to be the Declaration of Trust
until amended as provided by law.
(b) By-laws. The By-laws of CTFR, which govern the Money Market
Portfolio and the NJ Portfolio, in effect at the Effective Time
of the Reorganization shall continue to be the By-laws of the
Money Market Portfolio and the NJ Portfolio until the same shall
thereafter be altered, amended, or repealed in accordance with
the Trust Indenture or said By-laws.
6. REPRESENTATIONS AND WARRANTIES OF THE MONEY MARKET PORTFOLIO
(a) Organization, Existence, etc. The Money Market Portfolio
is a duly organized series of the CTFR, validly existing and in
good standing under the laws of the Commonwealth of
Massachusetts, and has the power to carry on its business as it
is now being conducted. Currently, the Money Market Portfolio is
not qualified to do business as a foreign corporation under the
laws of any jurisdiction. The Money Market Portfolio has all
necessary federal, state and local authorization to own all of
its properties and assets and to carry on its business as now
being conducted.
(b) Registration as Investment Company. CTFR, of which the
Money Market Portfolio is a series, is registered under the
Investment Company Act of 1940 (the "Act") as an open-end
management investment company. Its registration has not been
revoked or rescinded and is in full force and effect.
(c) Capitalization. The authorized capital stock of the Money
Market Portfolio consists of an unlimited number of shares of
beneficial interest, no par value, of which as of October 31,
1995, ___________ shares were outstanding and no shares were
held in the treasury of the Money Market Portfolio. All of the
outstanding shares of the Money Market Portfolio have been duly
authorized and are validly issued, fully paid and
non-assessable. Since the Money Market Portfolio is a
series of an open-end investment company engaged in the
continuous offering and redemption of its shares, the number of
outstanding shares may change prior to the Effective Time of the
Reorganization.
(d) Financial Statements. The financial statements of the Money
Market Portfolio for the year ended December 31, 1994 (the
"Money Market Portfolio Financial Statements"), delivered to
CTFR herewith, fairly present the financial position of the
Money Market Portfolio as of December 31, 1994 and the results
of its operations and changes in its net assets for the year
then ended.
(e) Shares to be Issued Upon Reorganization. Money Market Shares
to be issued in connection with the Reorganization have been
duly authorized and upon consummation of the Reorganization will
be validly issued, fully paid and non-assessable.
(f) Authority Relative to this Agreement. CTFR has the power to
enter into the Plan on behalf of its series Money Market
Portfolio and to carry out its obligations under this Agreement.
The execution and delivery of the Plan and the consummation of
the transactions contemplated have been duly authorized by the
Board of Trustees of CTFR and no other proceedings by the Money
Market Portfolio are necessary to authorize its officers to
effectuate the Plan and the transactions contemplated. The Money
Market Portfolio is not a party to or obligated under any
charter, by-law, indenture, or contract provision or any other
commitment or obligation, or subject to any order or decree
which would be violated by its executing and carrying out the
Plan.
(g) Liabilities. There are no liabilities of CTFR on behalf of
its series the Money Market Portfolio, whether or not determined
or determinable, other than liabilities disclosed or provided
for in the Money Market Financial Statements and liabilities
incurred in the ordinary course of business subsequent to
December 31, 1994 or otherwise previously disclosed to CTFR,
none of which has been materially adverse to the business, assets or results of
operations of the Money Market Portfolio.
(h) Litigation. To the knowledge of CTFR there are no claims,
actions, suits, or proceedings, pending or threatened, which
would adversely affect the Money Market Portfolio or its assets
or business, or which would prevent or hinder consummation of
the transactions contemplated by this Agreement.
(i) Contracts. Except for contracts and agreements previously
disclosed to CTFR under which no default exists, the Money
Market Portfolio is not a party to or subject to any material
contract, debt instrument, plan, lease, franchise, license, or
permit of any kind or nature whatsoever.
(j) Taxes. The federal income tax returns of CTFR have been
filed for all taxable years to and including December 31, 1994,
and all taxes payable pursuant to such returns have been paid.
CTFR has qualified as a regulated investment company under the
Internal Revenue Code in respect to each taxable year of CTFR
since commencement of its operations.
(k) Registration Statement. CTFR shall have filed with the
Securities and Exchange Commission (the "Commission") a
"Registration Statement" under the Securities Act of 1933, as
amended ("Securities Act") relating to the shares of capital
stock of CTFR issuable under this Agreement. At the time the
Registration Statement becomes effective, the Registration
Statement
(i) will comply in all material respects with the provisions of
the
Securities Act and the rules and regulations of the Commission
thereunder (the "Regulations"), and
(ii) will not contain an untrue statement of material fact or
omit to state a material act required to be stated therein or
necessary to make the statements therein not misleading.
Further, at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to
in Section 1, and at the Effective Time of the Reorganization,
the "Prospectus" and "Statement of Additional Information"
included therein, as amended or supplemented by any amendments
or supplements filed by CTFR, will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that none of the representations and
warranties in this subsection shall apply to statements in or
omissions from the Registration Statement or Prospectus and
Statement of Additional Information made in reliance upon and in
conformity with information furnished by CTFR for use in the
Registration Statement or Prospectus and Statement of Additional
Information as provided in Section 7(k).
7. REPRESENTATIONS AND WARRANTIES OF THE NJ PORTFOLIO
(a) Organization, Existence, etc. NJ Portfolio is a duly
organized series of the CTFR, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts,
and has the power to carry on its business as it is now being
conducted. Currently, CTFR is not qualified to do business as a
foreign corporation under the laws of any jurisdiction. CTFR
has all necessary federal, state and local authorization to own
all of its properties and assets and to carry on its business as
now being conducted.
(b) Registration as Investment Company. CTFR, of which the NJ
Portfolio is a series, is registered under the Act as an
open-end management investment company. Its registration has not
been revoked or rescinded and is in full force and effect.
(c) Capitalization. The NJ Portfolio has an unlimited number of
shares of beneficial interest, no par value, of which as of
October 31, 1995, ________________ shares were outstanding and
no shares were held in the treasury of the NJ Portfolio. Since
the NJ Portfolio is a series of an open-end investment company
engaged in the continuous offering and redemption of its shares,
the number of outstanding shares of the NJ Portfolio may change prior
to the Effective Date of the Reorganization.
(d) Financial Statements. The financial statements of the NJ
Portfolio for the year ended December 31, 1994 (the "NJ
Portfolio Financial Statements"), previously delivered to the
Money Market Portfolio, fairly present the financial position of
The NJ Portfolio as of that date, and the results of its
operations and changes in its net assets for the year then ended.
(e) Authority Relative to the Plan. CTFR has the power to enter
into the Plan on behalf of the NJ Portfolio and to carry out its
obligations under this Agreement. The execution and delivery of
the Plan and the consummation of the transactions contemplated
have been duly authorized by the Trustees of CTFR and, except
for approval by the holders of its shares, no other proceedings
by CTFR are necessary to authorize its officers to effectuate
the Plan and the transactions contemplated. CTFR is not a party
to or obligated under any charter, by-law, indenture, or
contract provision or any other commitment or
obligation, or subject to any order or decree, which would be
violated by its executing and carrying out the Plan.
(f) Liabilities. There are no liabilities of CTFR whether or not
determined or determinable, other than liabilities disclosed or
provided for in the NJ Portfolio Financial Statements and
liabilities incurred in the ordinary course of business
subsequent to December 31, 1994 or otherwise previously
disclosed to the Money Market Portfolio none of which has been
materially adverse to the business, assets, or results of
operations of the NJ Portfolio.
(g) Litigation. To the knowledge of CTFR there are no claims,
actions, suits, or proceedings, pending or threatened, which
would adversely affect the NJ Portfolio or its assets or
business, or which would prevent or hinder consummation of the
transactions contemplated by this Agreement.
(h) Contracts. Except for contracts and agreements previously
disclosed to the Money Market Portfolio under which no default
exists, CTFR on behalf of the NJ Portfolio is not a party to or
subject to any material contract, debt instrument, plan, lease,
franchise, license, or permit of any kind or nature whatsoever.
(i) Taxes. The federal income tax returns of the NJ Portfolio
have been filed for all taxable years to and including the
taxable year ended December 31, 1994 and all taxes payable
pursuant to such returns have been paid. The NJ Portfolio has
qualified as a regulated investment company under the Internal
Revenue Code with respect to each past taxable year of the NJ
Portfolio since commencement of its operations.
(j) Portfolio Securities. All securities to be listed in the
schedule of investments of the NJ Portfolio as of the Effective
Time of the Reorganization will be owned by CTFR on behalf of
the NJ Portfolio free and clear of any liens, claims, charges,
options, and encumbrances, except as indicated in the schedule.
Except as so indicated, none of the securities is, or after the
Reorganization as contemplated by this Agreement will be,
subject to any legal or contractual restrictions on disposition
(including restrictions as to the public offering or sale of the
securities under the Securities Act), and all the securities are
or will be readily marketable.
(k) Registration Statement. CTFR will cooperate with the Money
Market Portfolio in connection with the Registration Statement
referred to in Section 6(k) of this Agreement, and will furnish
to the Money Market Portfolio the information relating to the NJ
Portfolio required by the Securities Act and its Regulations to
be set forth in the Registration Statement (including the
Prospectus and Statement of Additional Information). At the time
the Registration Statement becomes effective, the Registration
Statement, insofar as it relates to the NJ Portfolio,
(i) will comply in all material respects with the provisions of
the Securities Act and its Regulations, and
(ii) will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
Further, at the time the Registration Statement becomes
effective, at the time of the shareholders' meeting referred to
in Section I and at the Effective Time of the Reorganization,
the Prospectus and Statement of Additional Information, as
amended or supplemented by any
amendments or supplements filed by Money Market, insofar as it
relates to the NJ Portfolio, will not contain an untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in
this subsection shall apply only to statements in or omissions
from the Registration Statement or Prospectus and Statement of
Additional Information made in reliance upon and in conformity
with information furnished by CTFR for use in the Registration
Statement or Prospectus and Statement of Additional Information
as provided in this Section 7(k).
8. CONDITIONS TO OBLIGATIONS OF THE NJ PORTFOLIO
The obligations of the NJ Portfolio under this Agreement with
respect to the consummation of the Reorganization are subject to
the satisfaction of the following conditions:
(a) Shareholder Approval. The Plan shall have been approved by
the affirmative vote of the holders of a majority of the
outstanding shares of the NJ Portfolio.
(b) Representations, Warranties and, Agreements. As of the
Effective Time of the Reorganization, the NJ Portfolio shall
have complied with each of its responsibilities under this
Agreement, each of the representations and warranties contained
in this Agreement shall be true in all material respects, and
there shall have been no material adverse change in the
financial condition, results of operations, business,
properties, or assets of the NJ Portfolio since December 31,
1994 As of the Effective Time of the Reorganization, the NJ
Portfolio shall have received a certificate from the Money
Market Portfolio satisfactory in form and substance to the NJ
Portfolio indicating that it has met the terms stated in this
Section.
(c) Regulatory Approval. The Registration Statement referred to
in Section 6(k) shall have been declared effective by the
Commission and no stop orders under the Securities Act
pertaining thereto shall have been issued; all necessary orders
of exemption under the Act with respect to the transactions
contemplated by this Agreement shall have been granted by the
Commission; and all approvals, registrations, and exemptions
under federal and state laws considered to be necessary shall
have been obtained.
(d) Tax Opinion. CTFR shall have received the opinion of
counsel, dated the Effective Time of the Reorganization,
addressed to and in form and substance satisfactory to CTFR, as
to certain of the federal income tax consequences of the
Reorganization under the Internal Revenue Code to the NJ
Portfolio and its shareholders. For purposes of rendering its
opinion, counsel may rely exclusively and without independent
verification, as to factual matters, on the statements made in
the Plan, the proxy statement which will be distributed to the
shareholders of the NJ Portfolio in connection with the
Reorganization, and on such other written representations as
CTFR and the NJ Portfolio, respectively, will have verified as
of the Effective Time of the Reorganization. The opinion of
counsel will be to the effect that, based on the facts and
assumptions stated therein, for federal income tax purposes:
(i) neither the NJ Portfolio nor the Money Market Portfolio will
recognize any gain or loss upon the transfer of the assets of
the NJ Portfolio to and the assumption of its liabilities by the
Money Market Portfolio in exchange for the Money Market Shares
and upon the distribution (whether actual or constructive) of
the Money Market Shares to its shareholders in exchange for
their shares of capital stock of the NJ Portfolio;
(ii) the shareholders of the NJ Portfolio who receive Money
Market Shares pursuant to the Reorganization will not recognize
any gain or loss upon the exchange (whether actual or
constructive) of their shares of capital stock of the NJ
Portfolio for Money Market Shares (including any fractional
share interests they are deemed to have received) pursuant to
the Reorganization;
(iii) the basis of Money Market Shares received by the NJ
Portfolio's shareholders will be the same as the basis of the
shares of capital stock of the NJ Portfolio surrendered in the
exchange; and
(iv) the basis of the NJ Portfolio assets acquired by the Money
Market Portfolio will be the same as the basis of such assets to
the NJ Portfolio immediately prior to the Reorganization.
9. CONDITIONS TO OBLIGATIONS OF THE MONEY MARKET PORTFOLIO
The obligations of the Money Market Portfolio under this
Agreement with respect to the consummation of the Reorganization
are subject to the satisfaction of the following conditions:
(a) Representations, Warranties, and Agreements. As of the
Effective Time of the Reorganization, the Money Market Portfolio
shall have complied with each of its obligations under this
Agreement, each of the representations and warranties contained
in this Agreement shall be true in all material respects, and
there shall have been no material adverse change in the
financial condition, results of operations, business, properties
or assets of the Money Market Portfolio since December 31,
1994. The Money Market Portfolio shall have received a
certificate from the NJ Portfolio satisfactory in form and
substance to the Money Market Portfolio indicating that it has
met the terms stated in this Section.
(b) Regulatory Approval. All necessary orders of exemption under
the Act with respect to the transactions contemplated by this
Agreement shall have been granted by the Commission, and all
approvals, registrations, and exemptions under state securities
laws considered to be necessary shall have been obtained.
(c) Tax Opinion. The Money Market Portfolio shall have received
the opinion of counsel, dated the Effective Time of the
Reorganization, addressed to and in form and substance
satisfactory to the Money Market Portfolio, as to certain of the
federal income tax consequences of the Reorganization under the
Internal Revenue Code to the NJ Portfolio and the shareholders
of the NJ Portfolio. For purposes of rendering its opinion,
counsel may rely exclusively and without independent
verification, as to factual matters, on the statements made in
the Plan, the proxy statement which will be distributed to the
shareholders of the NJ Portfolio in connection with the
Reorganization, and on such other written representations as
CTFR and the Money Market Portfolio, respectively, will have
verified as of the Effective Time of the Reorganization. The
opinion of counsel will be to the effect that, based on the
facts and assumptions stated therein, for federal income tax
purposes:
(i) neither the NJ Portfolio nor the Money Market Portfolio will
recognize any gain or loss upon the transfer of the assets of
the NJ Portfolio to, and the assumption of its liabilities by,
the Money Market Portfolio in exchange for Money Market Shares
and upon the distribution (whether actual or constructive) of
Money Market Shares to its shareholders in exchange for their
shares of beneficial interest of t he NJ Portfolio;
(ii) the shareholders of the NJ Portfolio who receive Money
Market
Shares pursuant to the Reorganization will not recognize any
gain or loss upon the exchange (whether actual or constructive)
of their shares of capital stock of the NJ Portfolio for Money
Market Shares (including any fractional share interests they are
deemed to have received) pursuant to the Reorganization;
(iii) the basis of Money Market Shares received by the NJ
Portfolio's shareholders will be the same as the basis of the
shares of capital stock of the NJ Portfolio surrendered in the
exchange; and
(iv) the basis of the NJ Portfolio assets acquired by the Money
Market Portfolio will be the same as the basis of such assets to
the NJ Portfolio immediately prior to the Reorganization.
10. AMENDMENTS, TERMINATIONS, NON-SURVIVAL OF COVENANTS,
WARRANTIES AND REPRESENTATIONS
(a) The parties hereto may, by agreement in writing authorized
by the Board of Trustees, amend the Plan at any time before or
after approval of the Plan by shareholders of the NJ Portfolio,
but after such approval, no amendment shall be made that
substantially changes the terms of this Agreement.
(b) At any time prior to the Effective Time of the
Reorganization, any of the parties may by written instrument
signed by it (i) waive any inaccuracies in the representations
and warranties made pursuant to this Agreement, and (ii) waive
compliance with any of the covenants or conditions made for its
benefit pursuant to this Agreement.
(c) The NJ Portfolio may terminate the Plan at any time prior to
the Effective Time of the Reorganization by notice to the Money
Market Portfolio if (i) a material condition to its performance
under this Agreement or a material covenant of the Money Market
Portfolio contained in this Agreement is not fulfilled on or
before the date specified for the fulfillment thereof, or (ii) a
material default or material breach of the Plan is made by the
Money Market Portfolio.
(d) The Money Market Portfolio may terminate the Plan at any
time prior to the Effective Time of the Reorganization by notice
to the NJ Portfolio if (i) a material condition to its
performance under this Agreement or a material covenant of the
NJ Portfolio contained in this Agreement is not fulfilled on or
before the date specified for the fulfillment thereof, or (ii) a
material default or material breach of the Plan is made by the
NJ Portfolio.
(e) The Plan may be terminated by either party at any time prior
to the Effective Time of the Reorganization upon notice to the
other party, whether before or after approval by the
shareholders of the NJ Portfolio, without liability on the part
of either party hereto or its respective trustees, officers, or
shareholders, and shall be terminated without liability as of
the close of business on December 31, 1996 if the Effective Time
of the Reorganization is not on or prior to such date.
(f) No representations, warranties, or covenants in or pursuant
to the Plan (including certificates of officers) shall survive
the Reorganization.
11. EXPENSES
The NJ Portfolio and the Money Market Portfolio will bear their
own expenses incurred in connection with this Reorganization.
12. GENERAL
This Plan supersedes all prior agreements between the parties
(written or oral), is intended as a complete and exclusive
statement of the terms of the Plan between the parties and may
not be changed or terminated orally. The Plan may be executed
in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when one
or more counterparts have been executed by each Portfolio and
delivered to each of the parties hereto. The headings contained
in the Plan or for reference purposes only and shall not affect
in any way the meaning or interpretation of the Plan. Nothing
in the Plan, expressed or implied, is intended to confer upon
any other person any rights or remedies by reason of the Plan.
IN WITNESS WHEREOF, CTFR has caused the Plan to be executed on
behalf of its NJ Portfolio and Money Market Portfolios by the
Chairman, President, or a Vice President, and its seals to be
affixed hereto and attested by the Secretary or Assistant
Secretary, all as of the day and year first above written, and
to be delivered as required.
Attest: CALVERT TAX-FREE RESERVES NEW JERSEY
MONEY MARKET PORTFOLIO
By:
Clifton S. Sorrell, President
Attest: CALVERT TAX-FREE RESERVES
MONEY MARKET PORTFOLIO
By:
Clifton S. Sorrell, President
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
____________________, 199___
Acquisition of the Assets of
CALVERT TAX-FREE RESERVES--
NEW JERSEY MONEY MARKET PORTFOLIO
4550 Montgomery Avenue,
Suite 1000N Bethesda,
Maryland 20814
By and in Exchange for Shares of
CALVERT TAX-FREE RESERVES--MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
This Statement of Additional Information dated _______
___, 199___, relates to the proposed transfer of assets of
Calvert Tax-Free Reserves--New Jersey Money Market Portfolio to
Calvert Tax-Free Reserves Money Market Portfolio. The Statement
consists of this cover page and the Statement of Additional
Information of Calvert Tax-Free Reserves Money Market Portfolio
dated April 30, 1995, and an unaudited balance sheet and
statement of operations for the Calvert Tax-Free Reserves Money
Market Portfolio as of June 30, 1995.
This Statement of Additional information is not a
prospectus.
A Prospectus/Proxy Statement dated ___________ ___, 199___,
relating to the above-referenced matter may be obtained from The
Calvert Group,
Ltd., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814. This Statement of Additional information relates to, and
should be read in conjunction with, such Prospectus/Proxy
Statement.
The date of this Statement of Information is ____________ ___, 199___.
<PAGE>
Calvert Tax-Free Reserves
Money Market Portfolio
Limited-Term Portfolio
Statement of Additional Information
April 30, 1995
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TRANSFER AGENT
Calvert Shareholder Services, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, L.L.P.
217 Redwood Street
Baltimore, Maryland 21202-3316
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 3
Purchases and Redemptions of Shares 4
Reduced Sales Charges (Class A) 5
Dividends and Distributions 5
Tax Matters 6
Valuation of Shares 7
Calculation of Yield and Total Return 8
Advertising 10
Trustees and Officers 10
Investment Advisor 13
Administrative Services 14
Independent Accountants and Custodians 14
Method of Distribution 14
Portfolio Transactions 15
General Information 16
Financial Statements 16
Appendix 16
STATEMENT OF ADDITIONAL INFORMATION-April 30, 1995
CALVERT TAX-FREE RESERVES
Money Market Portfolio
Limited-Term Portfolio
4550 Montgomery Avenue, Bethesda, Maryland 20814
New Account Information: (800) 368-2748
(301) 951-4820
Shareholder Services: (800) 368-2745
(301) 951-4810
Broker Services: (800) 368-2746
(301) 951-4850
TDD for the Hearing-Impaired:
(800) 541-1524
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Calvert Tax-Free Reserves Prospectus, dated April
30, 1995, which may be obtained free of charge by writing the Fund at
the above address or calling the telephone numbers listed above.
INVESTMENT OBJECTIVE
The Money Market and Limited-Term Portfolios (the "Portfolios")
are series of Calvert Tax-Free Reserves (the "Fund"), and are designed
to provide individual and institutional investors in higher tax brackets
with the highest level of interest income exempt from federal income
taxes as is consistent with prudent investment management, preservation
of capital, and the quality and maturity characteristics prescribed for
each Portfolio. The Money Market Portfolio further seeks to maintain a
constant net asset value of $1.00 per share. There is, of course, no
assurance that the Portfolios will be successful in meeting their
investment objectives or maintaining the Money Market Portfolio's net
asset value constant at $1.00 per share because there are inherent risks
in the ownership of any investment.
Dividends paid by the Portfolios will fluctuate with income
earned on investments. In addition, the dividends and distributions paid
and the value of each share will vary by class of shares; the value of
the Limited-Term Portfolio's shares will fluctuate to reflect changes in
the market value of the Portfolio's investments. The Portfolios will
attempt, through careful management and diversification, to reduce these
risks and enhance the opportunities for higher income and greater price
stability.
INVESTMENT POLICIES
The Money Market Portfolio and Limited-Term Portfolio each
invest primarily in a diversified portfolio of municipal obligations
whose interest is exempt from federal income tax. The Portfolios differ
in their anticipated income yields, quality, length of average weighted
maturity, and capital value volatility. A complete explanation of
municipal obligations and municipal bond and note ratings is set forth
in the Appendix.
The credit rating of each Portfolio's assets as of its most
recent fiscal year-end appears in the Annual Report to Shareholders,
incorporated by reference herein.
Variable Rate Demand Notes
The Board of Trustees has approved investments in floating and
variable rate demand notes upon the following conditions: the Fund has
right of demand, upon notice not to exceed thirty days, against the
issuer to receive payment; the issuer will be able to make payment upon
such demand, either from its own resources or through an unqualified
commitment from a third party; and the rate of interest payable is
calculated to ensure that the market value of such notes will
approximate par value on the adjustment dates. The remaining maturity of
such demand notes is deemed the period remaining until such time as the
Fund has the right to dispose of the notes at a price which approximates
par and market value.
Municipal Leases
The Portfolio may invest in municipal leases, or structured instruments
where the underlying security is a municipal lease. A municipal lease is
an obligation of a government or governmental authority, not subject to
voter approval, used to finance capital projects or equipment
acquisitions and payable through periodic rental payments. The Portfolio
may purchase unrated leases. The Fund's Advisor, under the supervision
of the Board of Trustees/Directors, is responsible for determining the
credit quality of such leases on an ongoing basis, including an
assessment of the likelihood that the lease will not be canceled.
Certain municipal leases may be considered illiquid and subject to the
Portfolio's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease
as a liquid security if it satisfies the following conditions: (A) such
treatment must be consistent with the Portfolio's investment
restrictions; (B) the Advisor should be able to conclude that the
obligation will maintain its liquidity throughout the time it is held by
the Portfolio, based on the following factors: (1) whether the lease may
be terminated by the lessee; (2) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (3) the
lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); (4) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an "event of
nonappropriation"), and (5) any credit enhancement or legal recourse
provided upon an event of nonappropriation or other termination of the
lease; (C) the Advisor should determine whether the obligation can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Portfolio has valued it for
purposes of calculating the Portfolio's net asset value, taking into
account the following factors: (1) the frequency of trades and quotes;
(2) the volatility of quotations and trade prices; (3) the number of
dealers willing to purchase or sell the security and the number of
potential purchasers; (4) dealer undertakings to make a market in the
security; (5) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer); (6)
the rating of the security and the financial condition and prospects of
the issuer; and (7) other factors relevant to the Portfolio's ability to
dispose of the security; and (D) the Advisor should have reasonable
expectations that the municipal lease obligation will maintain its
liquidity throughout the time the instrument is held by the Portfolio.
Obligations with Puts Attached
The Fund has authority to purchase securities at a price which
would result in a yield to maturity lower than that generally offered by
the seller at the time of purchase when it can acquire at the same time
the right to sell the securities back to the seller at an agreed upon
price at any time during a stated period or on a certain date. Such a
right is generally denoted as a "put." A Portfolio may not acquire
obligations subject to puts if immediately thereafter, with respect to
75% of the total amortized cost value of its assets, that Portfolio
would have more than 5% of its assets invested in securities underlying
puts from the same institution. A Portfolio may, however, invest up to
10% of its assets in securities underlying unconditional puts from the
same institution. Unconditional puts are readily exercisable in the
event of a default in payment of principal or interest on the underlying
securities. The Money Market Portfolio must limit its portfolio
investments, including puts, to instruments of high quality as
determined by a nationally recognized statistical rating organization.
Temporary Investments
Short-term money market type investments consist of:
obligations of the U.S. Government, its agencies and instrumentalities;
certificates of deposit of banks with assets of one billion dollars or
more; commercial paper or other corporate notes of investment grade
quality; and any of such items subject to short-term repurchase
agreements.
The Fund intends to minimize taxable income through investment,
when possible, in short-term tax-exempt securities. To minimize taxable
income, the Fund may also hold cash which is not earning income. It is a
fundamental policy of the Fund that during normal market conditions the
Fund's assets be invested so that at least 80% of the Fund's annual
income will be tax-exempt. While the Fund has the authority to invest in
short-term taxable obligations, the Fund has not done so since its
inception and, barring unusual market conditions, does not expect in the
future to invest in taxable obligations.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in the Fund's Portfolios are subject to changes in market value
based upon the public's perception of the creditworthiness of the issuer
and changes in the level of interest rates (which will generally result
in both changing in value in the same way, i.e., both experiencing
appreciation when interest rates decline and depreciation when interest
rates rise). Therefore, if in order to achieve higher interest income,
the Fund remains substantially fully invested at the same time that it
has purchased securities on a when-issued basis, there will be a greater
possibility that the market value of the Fund's assets may vary. No new
when-issued commitments will be made by a Portfolio if more than 50% of
that Portfolio's net assets would become so committed.
When the time comes to pay for when-issued securities, the Fund
will meet its obligations from then available cash flow, sale of
securities or, although it would not normally expect to do so, from sale
of the when-issued securities themselves (which may have a market value
greater or less than the Fund's payment obligation). Sale of securities
to meet such obligations carries with it a greater potential for the
realization of capital losses and capital gains which are not exempt
from federal income tax.
INVESTMENT RESTRICTIONS
The foregoing investment objective and policies and the
following investment restrictions and fundamental policies may not be
changed without the consent of the holders of a majority of the Fund's
outstanding shares, including a majority of the shares of each
Portfolio. Shares have equal rights as to voting, except that only
shares of a Portfolio are entitled to vote on matters affecting only
that Portfolio (such as changes in investment objective, policies or
restrictions). A majority of the shares means the lesser of (i) 67% of
the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the
outstanding shares. Neither Portfolio may:
(1) Purchase common stocks, preferred stocks, warrants,
or other equity securities;
(2) Issue senior securities, borrow money, or pledge,
mortgage, or hypothecate its assets, except as may be
necessary to secure borrowings from banks for temporary
or emergency (not leveraging) purposes and then in an
amount not greater than 10% of the value of the
Portfolio's total assets at the time of the borrowing.
Investment securities will not be purchased while any
borrowings are outstanding;
(3) Sell securities short, purchase securities on
margin, or write put or call options. The Fund reserves
the right to purchase securities with puts attached.
See "Obligations with Puts Attached";
(4) Underwrite the securities of other issuers, except
to the extent that the purchase of municipal
obligations in accordance with the Fund's investment
objective and policies, either directly from the
issuer, or from an underwriter for an issuer, may be
deemed an underwriting;
(5) Purchase securities which are subject to legal or
contractual restrictions on resale, i.e., restricted
securities, or other securities which are not readily
marketable assets, including repurchase agreements not
terminable within seven days, with respect to no more
than 10% of its total assets;
(6) Purchase or sell real estate, real estate
investment trust securities, commodities, or commodity
contracts, or oil and gas interests, but this shall not
prevent the Fund from investing in municipal
obligations secured by real estate or interests therein;
(7) Purchase or retain securities of an issuer if those
trustees of the Fund, each of whom owns more than 1/2
of 1% of the outstanding securities of such issuer,
together own more than 5% of such outstanding
securities;
(8) Make loans to others, except in accordance with the
Fund's investment objective and policies or pursuant to
contracts providing for the compensation of service
providers by compensating balances;
(9) Invest in companies for the purpose of exercising
control; or invest in securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets, or in
connection with a trustee's/director's deferred
compensation plan, as long as there is no duplication
of advisory fees;
(10) Invest more than 25% of its assets in the
securities of any one issuer or of issuers located
within the same state, except that each Portfolio may
invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. For purposes of this
limitation, the entity which has the ultimate
responsibility for the payment of principal and
interest on a particular security will be treated as
its issuer;
(11) Invest more than 25% of its assets in any
particular industry or industries, except that either
Portfolio may invest more than 25% of its assets in
obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Industrial development bonds, where the payment of
principal and interest is the responsibility of
companies within the same industry, are grouped
together as an "industry";
(12) Invest more than 5% of the value of its total
assets in securities where the payment of principal and
interest is the responsibility of a company or
companies with less than three years' operating history.
PURCHASES AND REDEMPTIONS OF SHARES
Share certificates will not be issued unless requested in
writing by the investor. No charge will be made for share certificate
requests. No certificates will be issued for fractional shares.
Draft writing is available for the Money Market Portfolio.
Shareholders wishing to use the draft writing service should complete
the signature card enclosed with the Investment Application. This
service will be subject to the customary rules and regulations governing
checking accounts, and the Portfolio reserves the right to change or
suspend the service. Generally, there is no charge to you for the
maintenance of this service or the clearance of drafts, but the
Portfolio reserves the right to charge a service fee for drafts returned
for insufficient funds. As a service to shareholders, the Portfolio may
automatically transfer the dollar amount necessary to cover drafts you
have written on the Portfolio to your account from any other of your
identically registered accounts in Calvert money market funds or Calvert
Insured Plus. The Portfolio may charge a fee for this service.
Drafts presented to the Custodian for payment which would
require the redemption of shares purchased by check or electronic funds
transfer within the previous 10 business days will not be honored.
When a payable through draft ("check") is presented for
payment, a sufficient number of full and fractional shares from the
shareholder's account to cover the amount of the draft will be redeemed
at the net asset value next determined. If there are insufficient shares
in the shareholder's account, the draft will be returned.
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or credit union. Further
documentation may be required from corporations, fiduciaries, and
institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
REDUCED SALES CHARGES (CLASS A)
The Limited-Term Portfolio imposes reduced sales charges for
Class A shares in certain situations in which the Principal Underwriter
(which offers the Portfolio's shares continuously and on a "best
efforts" basis) and the dealers selling Limited-Term Portfolio shares
may expect to realize significant economies of scale with respect to
such sales. Generally, sales costs do not increase in proportion to the
dollar amount of the shares sold; the per-dollar transaction cost for a
sale to an investor of shares worth, say, $5,000 is generally much
higher than the per-dollar cost for a sale of shares worth $1,000,000.
Thus, the applicable sales charge declines as a percentage of the dollar
amount of shares sold as the dollar amount increases.
When a shareholder agrees to make purchases of shares over a
period of time totaling a certain dollar amount pursuant to a Letter of
Intent, the Underwriter and selling dealers can expect to realize the
economies of scale applicable to that stated goal amount. Thus the
Portfolio imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing Portfolio shareholders, enabling the
Portfolio to afford existing shareholders the Right of Accumulation. The
Underwriter and selling dealers can also expect to realize economies of
scale when making sales to the members of certain qualified groups which
agree to facilitate distribution of Portfolio shares to their members.
See "Exhibit A - Reduced Sales Charges" in the Limited-Term Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The Money Market Portfolio declares daily and pays monthly
dividends of its daily net income to shareholders of record as of the
close of business each business day, thus allowing daily compounding of
dividends. The Limited-Term Portfolio declares and pays monthly
dividends of its net income to shareholders of record as of the close of
business on each designated monthly record date. Dividends and
distributions paid by the Limited-Term Portfolio may differ among the
classes. Net investment income consists of the interest income earned on
investments (adjusted for amortization of original issue discounts or
premiums or market premiums), less estimated expenses. Capital gains, if
any, are normally paid once a year and will be automatically reinvested
at net asset value in additional shares. Dividends and any distributions
are automatically reinvested in additional shares of the Fund, unless
you elect to have the dividends of $10 or more paid in cash (by check or
by Calvert Money Controller). You may also request to have your
dividends and distributions from the Portfolio invested in shares of any
other Calvert Group Fund, subject to the applicable sales charge for
that Fund or Portfolio. If you elect to have dividends and/or
distributions paid in cash, and the U.S. Postal Service cannot deliver
the check, or if it remains uncashed for six months, it, as well as
future dividends and distributions, will be reinvested in additional
shares.
Purchasers of shares of the Money Market Portfolio will begin
receiving dividends upon the date federal funds are received by the
Fund. Purchases by bank wire received by 12:30 p.m., Eastern time are
immediately available federal funds; purchases by domestic check may
take one day to convert into federal funds for the Money Market
Portfolio. Shareholders redeeming shares by telephone electronic funds
transfer or written request will receive dividends through the date that
the redemption request is received; Money Market Portfolio shareholders
redeeming shares by draft will receive dividends up to the date such
draft is presented to the Portfolio for payment.
TAX MATTERS
In 1994 the Fund did qualify and in 1995 the Fund intends to
qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code as amended (the "Code"). By so qualifying, the
Fund will not be subject to federal income tax, nor to the federal
excise tax imposed by the Tax Reform Act of 1986 (the "Act"), to the
extent that it distributes its net investment income and realized
capital gains.
The Fund's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally
subject to federal income tax; however under the Act, dividends
attributable to interest on certain private activity bonds must be
included in federal alternative minimum taxable income for the purpose
of determining liability (if any) for individuals and for corporations.
Each Portfolio's dividends derived from taxable interest and
distributions of net short-term capital gains, whether taken in cash or
reinvested in additional shares, are taxable to shareholders as ordinary
income and do not qualify for the dividends received deduction for
corporations.
A shareholder may also be subject to state and local taxes on
dividends and distributions from the Fund. The Fund will notify
shareholders annually about the federal tax status of dividends and
distributions paid by the Fund and the amount of dividends withheld, if
any, during the previous year.
The Code provides that interest on indebtedness incurred or
continued in order to purchase or carry shares of a regulated investment
company which distributes exempt-interest dividends during the year is
not deductible. Furthermore, entities or persons who are "substantial
users" (or persons related to "substantial users") of facilities
financed by private activity bonds should consult their tax advisors
before purchasing shares of the Fund. "Substantial user" is generally
defined as including a "non-exempt person" who regularly uses in trade
or business a part of a facility financed from the proceeds of private
activity bonds.
Investors should note that the Code may require investors to
exclude the initial sales charge, if any, paid on the purchase of
Limited-Term Portfolio shares from the tax basis of those shares if the
shares are exchanged for shares of another Calvert Group Fund within 90
days of purchase. This requirement applies only to the extent that the
payment of the original sales charge on the shares of the Portfolio
causes a reduction in the sales charge otherwise payable on the shares
of the Calvert Group Fund acquired in the exchange, and investors may
treat sales charges excluded from the basis of the original sales as
incurred to acquire the new shares.
The Fund is required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the
Limited-Term Portfolio if: (a) the shareholder's social security number
or other taxpayer identification number ("TIN") is not provided or an
obviously incorrect TIN is provided; (b) the shareholder does not
certify under penalties of perjury that the TIN provided is the
shareholder's correct TIN and that the shareholder is not subject to
backup withholding under section 3406(a)(1)(C) of the Code because of
underreporting (however, failure to provide certification as to the
application of section 3406(a)(1)(C) will result only in backup
withholding on capital gain dividends, not on redemptions); or (c) the
Fund is notified by the Internal Revenue Service that the TIN provided
by the shareholder is incorrect or that there has been underreporting of
interest or dividends by the shareholder. Affected shareholders will
receive statements at least annually specifying the amount withheld.
In addition, the Limited-Term Portfolio is required to report
to the Internal Revenue Service the following information with respect
to redemption transactions in the Portfolio: (a) the shareholder's name,
address, account number and taxpayer identification number; (b) the
total dollar value of the redemptions; and (c) the Portfolio's
identifying CUSIP number.
Certain shareholders are, however, exempt from the backup
withholding and broker reporting requirements. Exempt shareholders
include: corporations; financial institutions; tax-exempt organizations;
individual retirement plans; the U.S., a State, the District of
Columbia, a U.S. possession, a foreign government, an international
organization, or any political subdivision, agency, or instrumentality
of any of the foregoing; U.S. registered commodities or securities
dealers; real estate investment trusts; registered investment companies;
bank common trust funds; certain charitable trusts; and foreign central
banks of issue. Non-resident aliens also are generally not subject to
either requirement but, along with certain foreign partnerships and
foreign corporations, may instead be subject to withholding under
section 1441 of the Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
VALUATION OF SHARES
Money Market Portfolio
The Money Market Portfolio's assets, including commitments to
purchase securities on a when-issued basis, are normally valued at their
amortized cost, which does not take into account unrealized capital
gains or losses. This involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. While this method provides certainty
in valuation, it may result in periods during which value, as determined
by amortized cost, is higher or lower than the price that would be
received upon sale of the instrument. During periods of declining
interest rates, the daily yield on shares of the Money Market Portfolio
may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market
prices and estimates of market prices for all of its portfolio
instruments. Thus, if the use of amortized cost by the Money Market
Portfolio resulted in a lower aggregate portfolio value on a particular
day, a prospective investor in the Portfolio would be able to obtain a
somewhat higher yield than would result from investment in a fund
utilizing solely market values, and existing investors in the Portfolio
would receive less investment income. The converse would apply in a
period of rising interest rates.
Rule 2a-7 under the Investment Company Act of 1940 permits the
Fund to value the assets of the Money Market Portfolio at amortized cost
if the Money Market Portfolio maintains a dollar-weighted average
maturity of 90 days or less and only purchases obligations having
remaining maturities of one year or less. Rule 2a-7 requires, as a
condition of its use, that the Money Market Portfolio invest only in
obligations determined by the Trustees to be of high quality with
minimal credit risks and further requires the Trustees to establish
procedures designed to stabilize, to the extent reasonably possible, the
Portfolio's price per share as computed for the purpose of sales and
redemptions at $1.00. Such procedures include review of the Portfolio's
investment holdings by the Trustees, at such intervals as they may deem
appropriate, to determine whether the Portfolio's net asset value
calculated by using available market quotations or equivalents deviates
from $1.00 per share based on amortized cost. If such deviation exceeds
0.50%, the Trustees will promptly consider what action, if any, will be
initiated. In the event the Trustees determine that a deviation exists
which may result in material dilution or other unfair results to
investors or existing shareholders, the Trustees will take such
corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions from
capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based on available market
quotations.
Limited-Term Portfolio
The Limited-Term Portfolio's assets are valued, utilizing the
average bid dealer market quotation as furnished by an independent
pricing service. Securities and other assets for which market quotations
are not readily available are valued based on the current market for
similar securities or assets, as determined in good faith by the Fund's
Advisor under the supervision of the Board of Trustees.
Valuations, market quotations and market equivalents are
provided the Portfolio by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Portfolio has
been approved by the Board of Trustees. Valuations provided by Kenny are
determined without exclusive reliance on quoted prices and take into
consideration appropriate factors such as institution-size trading in
similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
Each Portfolio determines the net asset value of its shares
every business day at the close of the regular session of the New York
Stock Exchange (generally, 4:00 p.m. Eastern time), and at such other
times as may be necessary or appropriate. The Portfolios do not
determine net asset value on certain national holidays or other days on
which the New York Stock Exchange is closed: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
CALCULATION OF YIELD AND TOTAL RETURN
Money Market Portfolio
From time to time the Money Market Portfolio advertises its
"yield" and "effective yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance.
The "yield" of the Money Market Portfolio refers to the income generated
by an investment in the Portfolio over a particular base period of time.
The length and closing date of the base period will be stated in the
advertisement. If the base period is less than one year, the yield is
then "annualized." That is, the net change, exclusive of capital
changes, in the value of a share during the base period is divided by
the net asset value per share at the beginning of the period, and the
result is multiplied by 365 and divided by the number of days in the
base period. Capital changes excluded from the calculation of yield are:
(1) realized gains and losses from the sale of securities, and (2)
unrealized appreciation and depreciation. The Money Market Portfolio's
"effective yield" for a seven-day period is its annualized compounded
yield during the period calculated according to the following formula:
Effective yield = (base period return + 1)365/7 - 1
For the seven-day period ended December 31, 1994, the Money Market
Portfolio's yield was 4.86% and its effective yield was 4.98%.
The Money Market Portfolio also may advertise, from time to
time, its "tax equivalent yield." The tax equivalent yield is the yield
an investor would be required to obtain from taxable investments to
equal the Portfolio's yield, all or a portion of which may be exempt
from federal income taxes. The tax equivalent yield is computed by
taking the portion of the Portfolio's effective yield exempt from
regular federal income tax and multiplying the exempt yield by a factor
based upon a stated income tax rate, then adding the portion of the
yield that is not exempt from regular federal income tax. The factor
which is used to calculate the tax equivalent yield is the reciprocal of
the difference between 1 and the applicable income tax rate, which will
be stated in the advertisement. For the seven-day period ended December
31, 1994, the Money Market Portfolio's tax equivalent yield, for an
investor in the 36% federal income tax bracket, was 7.78%, and, for the
39.6% federal income tax bracket, 8.25%.
Limited-Term Portfolio
From time to time, the Limited-Term Portfolio advertises its
"total return." Total return is calculated separately for each class.
Total return is historical in nature and is not intended to indicate
future performance. Total return will be quoted for the most recent
one-year period, five-year period, and period from inception of the
Portfolio's offering of shares. Total return quotations for periods in
excess of one year represent the average annual total return for the
period included in the particular quotation. Total return is a
computation of the Portfolio's dividend yield, plus or minus realized or
unrealized capital appreciation or depreciation, less fees and expenses.
All total return quotations reflect the deduction of the Portfolio's
maximum sales charge for Class A shares, except quotations of "overall
return" which do not deduct the sales charge and "actual return," which
reflect deduction of the sales charge only for those periods when a
sales charge was actually imposed. Thus, in the formula below, for
overall return, P = the entire $1,000 hypothetical initial investment
and does not reflect the deduction of any sales charge; for actual
return, P = a hypothetical initial payment of $1,000. Note: "Total
Return" as quoted in the Financial Highlights section of the Fund's
Prospectus and Annual Report to Shareholders, per SEC instructions, does
not reflect deduction of the sales charge, and corresponds to "overall"
return as referred to herein. Overall return should be considered only
by investors, such as participants in certain pension plans, to whom the
sales charge does not apply, or for purposes of comparison only with
comparable figures which also do not reflect sales charges, such as
Lipper averages. Total return is computed according to the following
formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year
periods at the end of such periods (or portions thereof, if applicable).
The Limited-Term Portfolio also advertises, from time to time,
its "yield" and "tax equivalent yield." As with total return, both yield
figures are historical and are not intended to indicate future
performance.
Unlike the yield quotations for the Money Market Portfolio,
"yield" quotations for each class of the Limited-Term Portfolio refer to
the aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price on
the last day of the period (so that the effect of the sales charge is
included in the calculation), compounded on a "bond equivalent," or
semi-annual, basis. The Limited-Term Portfolio's yield is computed
according to the following formula:
Yield = 2[(a-b/cd +1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily
number of shares outstanding during the period that were entitled to
receive dividends; and d = the maximum offering price per share on the
last day of the period.
The tax equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Limited-Term
Portfolio's yield, all or a portion of which may be exempt from federal
income taxes. The tax equivalent yield is computed for each class by
taking the portion of the yield exempt from regular federal income tax
and multiplying the exempt yield by a factor based upon a stated income
tax rate, then adding the portion of the yield that is not exempt from
regular federal income tax. The factor which is used to calculate the
tax equivalent yield is the reciprocal of the difference between 1 and
the applicable income tax rate, which will be stated in the
advertisement. For the thirty-day period ended December 31, 1994, the
Portfolio's yield for Class A Shares was 4.41% and its tax equivalent
yield was 6.89% for an investor in the 36% federal income tax bracket,
and 7.30% for an investor in the 39.6% federal income tax bracket. For
the same period. the yield for Class C Shares was 3.76% and its tax
equivalent yield was 5.88% for an investor in the 36% federal income tax
bracket. and 6.23% for an investor in the 39.6% federal income tax
bracket.
Periods Ended Class A Shares Class A Shares
December 31, 1994 Overall Return SEC Total Return
One Year 2.42% 0.36%
Five Years 4.87% 4.44%
Ten Years 5.87% 5.66%
Total return for the Fund's Class C shares from March 1, 1994
to December 31, 1994 was 1.43%.
ADVERTISING
The Fund or its affiliates may provide information such as, but
not limited to, the economy, investment climate, investment principles,
sociological conditions and political ambiance. Discussion may include
hypothetical scenarios or lists of relevant factors designed to aid the
investor in determining whether the Fund is compatible with the
investor's goals. The Fund may list portfolio holdings or give examples
or securities that may have been considered for inclusion in the
Portfolio, whether held or not.
The Fund or its affiliates may supply comparative performance
data and rankings from independent sources such as Donoghue's Money Fund
Report, Bank Rate Monitor, Money, Forbes, Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Wiesenberger Investment
Companies Service, Russell 2000/Small Stock Index, Mutual Fund Values
Morningstar Ratings, Mutual Fund Forecaster, Barron's, The Wall Street
Journal, and Schabacker Investment Management, Inc. Such averages
generally do not reflect any front- or back-end sales charges that may
be charged by Funds in that grouping. The Fund may also cite to any
source, whether in print or on-line, such as Bloomberg, in order to
acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or
regulated by the securities industry, including, but not limited to,
certificates of deposit and Treasury notes. The Fund, its Advisor, and
its affiliates reserve the right to update performance rankings as new
rankings become available.
TRUSTEES AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Director of
Finance for the Family Health Council, Inc. in Pittsburgh, Pennsylvania,
a non-profit corporation which provides family planning services,
nutrition, maternal/child health care, and various health screening
services. Mr. Baird is a trustee/director of each of the investment
companies in the Calvert Group of Funds, except for Acacia Capital
Corporation, Calvert New World Fund and Calvert World Values Fund.
Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Abrams, Blatz, Gran, Hendricks & Reina, P.A. Address:
900 Oak Tree Road, South Plainfield, New Jersey 07080.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Address: 2040 Nuuanu Avenue
#1805, Honolulu, Hawaii 96817.
<F1>CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Address: 1658 Quail
Hollow Court, McLean, Virginia 22101.
DOUGLAS E. FELDMAN, M.D., Trustee. Dr. Feldman practices head
and neck reconstructive surgery in the Washington, D.C., metropolitan
area. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
1. Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is a principal of
Gavian De Vaux Associates, an investment banking firm. He was formerly
President of Corporate Finance of Washington, Inc. Address: 1953 Gallows
Road, Suite 130, Vienna, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, and the Treasurer and Director
of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a
trustee/director of each of the other investment companies in the
Calvert Group of Funds, except for Acacia Capital Corporation and
Calvert New World Fund. Address: 7205 Pomander Lane, Chevy Chase,
Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030.
<F1>DAVID R. ROCHAT, Senior Vice President and Trustee. Mr.
Rochat is Executive Vice President of Calvert Asset Management Company,
Inc., Director and Secretary of Grady, Berwald and Co., Inc., and
Director and President of Chelsea Securities, Inc. Address: Box 93,
Chelsea, Vermont 05038.
<F1>D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a
trustee/director of each of the investment companies in the Calvert
Group of Funds, except for Acacia Capital Corporation and Calvert New
World Fund. Mr. Silby is an officer, director and shareholder of Silby,
Guffey & Company, Inc., which serves as general partner of Calvert
Social Venture Partners ("CSVP"). CSVP is a venture capital firm
investing in socially responsible small companies. He is also a Director
of Acacia Mutual Life Insurance Company. Address: 1715 18th Street,
N.W., Washington, D.C. 20009.
<F1>CLIFTON S. SORRELL, JR., President and Trustee. Mr.
Sorrell serves as President, Chief Executive Officer and Vice Chairman
of Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. He is a director of Calvert-Sloan Advisers.
L.L.C., and a trustee/director of each of the investment companies in
the Calvert Group of Funds.
<F1>RENO J. MARTINI, Senior Vice President. Mr. Martini is
Senior Vice President of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset Management Company, Inc.
Mr. Martini is also a director and President of Calvert-Sloan Advisers
L.L.C., and a director and officer of Calvert New World Fund.
<F1>ROBERT L. BENNETT, Vice President. Mr. Bennett is a
Director of Calvert Group, Ltd. and its subsidiaries, President of
Calvert Shareholder Services, Inc., and Executive Vice President of
Calvert Group, Ltd. He is an officer of each of the investment companies
in the Calvert Group of Funds, except for Calvert New World Fund.
<F1>RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is
Senior Vice President and Controller of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other investment companies in
the Calvert Group of Funds. Mr. Wolfsheimer is Vice President and
Treasurer of Calvert-Sloan Advisers. L.L.C., and a director of Calvert
Distributors. Inc.
<F1>WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary.
Mr. Tartikoff is an officer of each of the investment companies in the
Calvert Group of Funds, and is Senior Vice President, Secretary, and
General Counsel of Calvert Group, Ltd., and each of its subsidiaries.
Mr. Tartikoff is Vice President and Secretary of Calvert-Sloan Advisers.
L.L.C., and is an officer of Acacia National Life Insurance Company.
<F1>EVELYNE S. STEWARD, Vice President. Ms. Steward is Senior
Vice President of Calvert Group, Ltd., and a director of Calvert-Sloan
Advisers. L.L.C.
<F1>DANIEL K. HAYES, Vice President. Mr. Hayes is Vice
President of Calvert Asset Management Company, Inc., and is an officer
of each of the other investment companies in the Calvert Group of Funds,
except for Calvert New World Fund.
<F1>Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
<F1>SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender
is Associate General Counsel of Calvert Group, Ltd., and an officer of
each of its subsidiaries and Calvert-Sloan Advisers. L.L.C. She is also
an officer of each of the other investment companies in the Calvert
Group of Funds.
<F1>BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is
Associate General Counsel of Calvert Group, Ltd., and an officer of each
of its subsidiaries and Calvert-Sloan Advisers. L.L.C. She is also an
officer of each of the other investment companies in the Calvert Group
of Funds.
Each of the above named trustees and officers is a trustee or
officer of each of the investment companies in the Calvert Group of
Funds with the exception of Calvert Social Investment Fund, of which
only Messrs. Baird, Guffey, Silby and Sorrell are among the Trustees,
Acacia Capital Corporation, of which only Messrs. Sorrell, Blatz, Diehl
and Pugh are among the Directors, Calvert World Values Fund, Inc., of
which only Messrs. Guffey, Silby, and Sorrell are among the Directors,
and Calvert New World Fund, Inc., of which only Messrs. Martini and
Sorrell are among the Directors. The address of Trustees and Officers,
unless otherwise noted, is 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. Trustees and Officers as a group own less than
1% of the Portfolio's outstanding shares.
The Board's Audit Committee is composed of Messrs. Baird,
Blatz, Feldman, Guffey and Pugh. The Investment Policy Committee is
composed of Messrs. Borts, Diehl, Gavian, Rochat, Silby and Sorrell.
During 1994, Trustees of the Fund not affiliated with the
Fund's Advisor were paid $124,364 and $55,034 by the Money Market and
Limited-Term Portfolios, respectively. Trustees of the Fund not
affiliated with the Advisor currently receive an annual fee of $20,250
for service as a member of the Board of Trustees of the Calvert Group of
Funds plus a fee of $750 to $1200 for each Board and Committee meeting
attended; such fees are allocated among the Funds on the basis of their
net assets.
Trustees of the Fund not affiliated with the Fund's Advisor may
elect to defer receipt of all or a percentage of their fees and invest
them in any fund in the Calvert Family of Funds through the Trustees
Deferred Compensation Plan (shown as "Pension or Retirement Benefits
Accrued as part of Fund Expenses," below). Deferral of the fees is
designed to maintain the parties in the same position as if the fees
were paid on a current basis. Management believes this will have a
negligible effect on the Fund's assets, liabilities, net assets, and net
income per share, and will ensure that there is no duplication of
advisory fees.
Trustee Compensation Table
Name of Trustee Aggregate Pension or
Total Compensation
Compensation Retirement
Benefits from Registrant
from Fund for Accrued as part
and Fund Complex
service as Trustee of Fund
Expenses paid to Trustees
Richard L. Baird, Jr.$25,818 $0 $33,150
Frank H. Blatz, Jr. $25,069 $25,069
$32,600
Frederick T. Borts $20,485 $0
$25,050
Charles E. Diehl $27,900 $27,900
$35,300
Douglas E. Feldman $24,646 $0
$29,850
Peter W. Gavian $26,639 $9,676
$32,250
John G. Guffey, Jr. $26,639 $0
$34,650
Arthur J. Pugh $28,889 $0
$36,500
D. Wayne Silby $24,448 $0
$45,764
1. Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
INVESTMENT ADVISOR
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a subsidiary of
Acacia Mutual Life Insurance Company of Washington, D.C. ("Acacia
Mutual").
The Advisory Contract between the Fund and the Advisor will
remain in effect indefinitely, provided continuance is approved at least
annually by the vote of the holders of a majority of the outstanding
shares of the Fund, or by the Trustees of the Fund; and further provided
that such continuance is also approved annually by the vote of a
majority of the Trustees of the Fund who are not parties to the Contract
or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval. The Contract may be
terminated without penalty by either party on 60 days' prior written
notice; it automatically terminates in the event of its assignment.
Under the Contract, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control
of the Fund's Board of Trustees. For its services, the Advisor receives
an annual fee of:
i) with respect to the Money Market Portfolio, 0.50% of the
first $500 million of such Portfolio's average daily net assets, 0.45%
of the next $500 million of such assets, and 0.40% of all such assets
over $1 billion; and
ii) with respect to the Limited-Term Portfolio, 0.60% of the
first $500 million of the Portfolio's average daily net assets, 0.50% of
the next $500 million of such assets, and 0.40% of all such assets over
$1 billion.
The advisory fee is payable monthly. The Advisor reserves the
right (i) to waive all or a part of its fee and (ii) to compensate, at
its expense, broker-dealers in consideration of their promotional and
administrative services.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all Trustees and executive
officers of the Fund who are principals of the Advisor, and pays certain
Fund advertising and promotional expenses. The Fund pays all other
administrative and operating expenses, including: custodial fees;
shareholder servicing, dividend disbursing and transfer agency fees;
administrative service fees; federal and state securities registration
fees; insurance premiums; trade association dues; interest, taxes and
other business fees; legal and audit fees; and brokerage commissions and
other costs associated with the purchase and sale of portfolio
securities.
The Advisor has agreed to reimburse the Money Market and
Limited-Term Portfolios for all expenses, excluding brokerage, taxes,
interest, and extraordinary items exceeding, on a pro rata basis, the
most restrictive expense limitation of those states in which the
Portfolios' shares are qualified for sale (currently, 2.50% of the first
$30 million of the Portfolio's average net assets, 2.0% of the next $70
million, and 1.50% of all such assets in excess of $100 million). The
advisory fees paid by the Money Market Portfolio to Calvert Asset
Management Company were $7,464,335, $7,093,465, and $6,636,334, for
years 1992, 1993, and 1994, respectively. The advisory fees paid by the
Limited-Term Portfolio to Calvert Asset Management Company were
$2,708,196, $3,527,101, and $3,863,616, for years 1992, 1993, and 1994,
respectively.
ADMINISTRATIVE SERVICES
Calvert Shareholder Services, Inc., a wholly-owned subsidiary
of Calvert Group, Ltd., has been retained by the Fund to act as transfer
agent, dividend disbursing agent and shareholder servicing agent. These
responsibilities include: responding to shareholder inquiries and
instructions concerning their accounts; crediting and debiting
shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions; daily updating of shareholder accounts to
reflect declaration and payment of dividends; and preparing and
distributing quarterly statements to shareholders regarding their
accounts. For such services, Calvert Shareholder Services, Inc.,
receives compensation based on the number of shareholder accounts and
the number of transactions.
Calvert Administrative Services Company, a wholly-owned
subsidiary of Calvert Group, Ltd., has been retained by the Fund to
provide certain administrative services necessary to the conduct of the
Fund's affairs. Such services include the preparation of corporate and
regulatory reports and filings, portfolio accounting, and the daily
determination of net investment income and net asset value per share.
Calvert Administrative Services Company receives a fee of $200,000 per
year for providing such services, allocated among Portfolios based on
assets. The service fees paid by the Money Market Portfolio to Calvert
Administrative Services Company were $125,449, $115,912, and $110,396,
for years 1992, 1993, and 1994, respectively. The service fees paid by
the Limited-Term Portfolio to Calvert Administrative Services Company
were $33,636, $44,251, and $50,942, for years 1992, 1993, and 1994,
respectively.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
Coopers & Lybrand, L.L.P. has been selected by the Board of
Trustees to serve as independent accountants for fiscal year 1995. State
Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, currently serves as custodian of the Portfolio's investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain of the Portfolio's
cash assets. Neither custodian has any part in deciding the Portfolio's
investment policies or the choice of securities that are to be purchased
or sold for the Portfolio.
METHOD OF DISTRIBUTION
The Portfolio has entered into a principal underwriting
agreement with Calvert Distributors Inc. ("CDI"). Pursuant to the
agreement, CDI serves as distributor and principal underwriter for the
Portfolio. Prior to April 1, 1995, Calvert Securities Corporation
("CSC") was the principal underwriter. CDI bears all its expenses of
providing services pursuant to the agreement, including payment of any
commissions and service fees. CDI is entitled to receive a service fee
and a distribution fee for Class C shares, payable monthly pursuant to
the Limited Term Portfolio's Distribution Plan, of 0.25%, respectively,
of the Portfolio's average daily net assets. For the ten months ended
December 31. 1994, the Distribution Plan expenses totaled $101,723 for
Class C Shares of the Limited-Term Portfolio. CDI also receives all
sales charges imposed on Limited-Term Portfolio Class A shares and
compensates broker-dealer firms for sales of shares at a maximum
commission rate of 1.50%, as specified in the table of applicable sales
charges (see "Alternative Sales Options" in the Prospectus). For the
fiscal years ended December 31, 1992, 1993, and 1994, CSC received sales
charges in excess of the dealer reallowance of $634,439, $3,275, and $0,
respectively.
The Limited-Term Portfolio's Class C Distribution Plan was
approved by the Board of Trustees, including the Trustees who are not
"interested persons" of the Fund (as that term is defined in the
Investment Company Act of 1940) and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements
related to the Plan. The selection and nomination of the Trustees who
are not interested persons of the Fund is committed to the discretion of
such disinterested Trustees. In establishing the Plan, the Trustees
considered various factors including the amount of the distribution fee.
The Trustees determined that there is a reasonable likelihood that the
Plan will benefit the Portfolio and its shareholders.
The Plan may be terminated by vote of a majority of the
non-interested Trustees who have no direct or indirect financial
interest in the Plan, or by vote of a majority of the outstanding shares
of the Fund. Any change in the Plan that would materially increase the
distribution cost to the Fund requires approval of the shareholders of
the affected class; otherwise, the Plan may be amended by the Trustees,
including a majority of the non-interested Trustees as described above.
The Plan will continue in effect indefinitely, if not sooner
terminated in accordance with its terms. Thereafter, the Plan will
continue in effect for successive one year periods provided that such
continuance is annually approved by (i) the vote of a majority of the
Trustees who are not parties to the Plan or interested persons of any
such party and who have no direct or indirect financial interest in the
Plan, and (ii) the vote of a majority of the entire Board of Trustees.
Apart from the Plan, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Portfolio. The Portfolio paid no expenses pursuant to the Plan during
fiscal 1992, 1993, and 1994.
PORTFOLIO TRANSACTIONS
Portfolio transactions are undertaken on the basis of their
desirability from an investment standpoint. Investment decisions and the
choice of brokers and dealers are made by the Fund's Advisor under the
direction and supervision of the Fund's Board of Trustees.
For the fiscal years ended December 31, 1992, 1993, and 1994,
the portfolio turnover rates of the Limited-Term Portfolio were 5%, 14%,
and 27%, respectively. Broker-dealers who execute portfolio transactions
on behalf of the Fund are selected on the basis of their professional
capability and the value and quality of their services. The Advisor
reserves the right to place orders for the purchase or sale of portfolio
securities with broker-dealers who have sold shares of the Fund or who
provide the Fund with statistical, research, or other information and
services. Although any statistical research or other information and
services provided by broker-dealers may be useful to the Advisor, the
dollar value of such information and services is generally
indeterminable, and its availability or receipt does not serve to
materially reduce the Advisor's normal research activities or expenses.
No brokerage commissions have been paid to any officer, trustee or
Advisory Council member of the Fund or any of their affiliates, or
broker-dealers for the years ended December 31, 1992, 1993, and 1994.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of the Fund. However, such
sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer be
based on the volume of Fund shares sold. The Advisor may compensate, at
its expense, such broker-dealers in consideration of their promotional
and administrative services.
GENERAL INFORMATION
The Fund was organized as a Massachusetts business trust on
October 20, 1980. The other series of the Fund include the Long-Term
Portfolio, Money Management Plus Tax-Free Portfolio, California Money
Market Portfolio, New Jersey Money Market Portfolio, and the Vermont
Municipal Portfolio. The Fund's Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Fund.
The shareholders of a Massachusetts business trust might, however, under
certain circumstances, be held personally liable as partners for its
obligations. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of Fund assets for any shareholder held
personally liable for obligations of the Fund. The Declaration of Trust
provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund
and satisfy any judgment thereon. The Declaration of Trust further
provides that the Fund may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection
of the Fund, its shareholders, Trustees, officers, employees, and agents
to cover possible tort and other liabilities. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which both inadequate insurance exists
and the Fund itself is unable to meet its obligations.
Each share of each series represents an equal proportionate
interest in that series with each other share and is entitled to such
dividends and distributions out of the income belonging to such series
as declared by the Board. The Portfolios offer two separate classes of
shares. The Money Market Portfolio offers Class O (offered in the
Calvert Tax-Free Reserves Money Market Prospectus) and Class MMP
(offered in the Money Management Plus Prospectus). Class A and Class C
is offered by the Limited-Term Portfolio. Each class represents
interests in the same portfolio of investments but, as further described
in the prospectus, each class is subject to differing sales charges and
expenses, which differences will result in differing net asset values
and distributions. Upon any liquidation of the Funds, shareholders of
each class are entitled to share pro rata in the net assets belonging to
that series available for distribution.
General costs, expenses, and liabilities of the Fund
attributable to a particular Portfolio are borne by that Portfolio;
costs, expenses, and liabilities not attributable to a particular
Portfolio are allocated between the Fund's Portfolios on the basis of
the respective net assets of each Portfolio.
The Portfolios will send their shareholders unaudited
semi-annual and audited annual reports that will include the Portfolios'
net asset value per share, portfolio securities, income and expenses,
and other financial information.
This Statement of Additional Information does not contain all
the information in the Fund's registration statement. The registration
statement is on file with the Securities and Exchange Commission and is
available to the public.
FINANCIAL STATEMENTS
The audited financial statements in the Portfolios' Annual
Report to Shareholders dated December 31, 1994, are expressly
incorporated by reference and made a part of this Statement of
Additional Information. A copy of the Annual Report may be obtained free
of charge by writing or calling the Portfolios.
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states,
cities, municipalities, and their agencies to obtain funds for various
public purposes. Such purposes include the construction of a wide range
of public facilities, the refunding of outstanding obligations, the
obtaining of funds for general operating expenses, and the lending of
funds to other public institutions and facilities. In addition, certain
types of industrial development bonds are issued by or on behalf of
public authorities to obtain funds for many types of local, privately
operated facilities. Such debt instruments are considered municipal
obligations if the interest paid on them is exempt from federal income
tax in the opinion of bond counsel to the issuer. Although the interest
paid on the proceeds from private activity bonds used for the
construction, equipment, repair or improvement of privately operated
industrial or commercial facilities may be exempt from federal income
tax, current federal tax law places substantial limitations on the size
of such issues.
Municipal obligations are generally classified as either
"general obligation" or "revenue'' bonds. General obligation bonds are
secured by the issuer's pledge of its faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable from
the revenues derived from a particular facility or class of facilities
or, in some cases, from the proceeds of a special excise tax or other
specific revenue source, but not from the general taxing power.
Tax-exempt industrial development bonds are in most cases revenue bonds
and do not generally carry the pledge of the credit of the issuing
municipality. There are, of course, variations in the security of
municipal obligations, both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a
quoted yield to maturity, and the price of the security is adjusted so
that relative to the stated rate of interest it will return the quoted
rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three
months and one year. Pre-Refunded Bonds with longer nominal maturities
that are due to be retired with the proceeds of an escrowed subsequent
issue at a date within one year and three years of the time of
acquisition are also considered short-term and limited-term municipal
obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other
short-term obligations are designated Moody's Investment Grade ("MIG").
This distinction is in recognition of the differences between short-term
credit risk and long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding
group.
MIG3: Notes bearing this designation are of favorable quality,
with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Market access for refinancing, in
particular, is likely to be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the
Letter of Intent option on my Fund Account Application Form, I agree to
be bound by the terms and conditions applicable to Letters of Intent
appearing in the Prospectus and the Statement of Additional Information
for the Fund and the provisions described below as they may be amended
from time to time by the Fund. Such amendments will apply automatically
to existing Letters of Intent.
I intend to invest in the shares of: (Fund or Portfolio name*)
during the thirteen (13) month period from the date
of my first purchase pursuant to this Letter (which cannot be more than
ninety (90) days prior to the date of this Letter or my Fund Account
Application Form, whichever is applicable), an aggregate amount
(excluding any reinvestments of distributions) of at least fifty
thousand dollars ($50,000) which, together with my current holdings of
the Fund (at public offering price on date of this Letter or my Fund
Account Application Form, whichever is applicable), will equal or exceed
the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms
of escrow, to which I hereby agree, each purchase occurring after the
date of this Letter will be made at the public offering price applicable
to a single transaction of the dollar amount specified above, as
described in the Fund's prospectus. No portion of the sales charge
imposed on purchases made prior to the date of this Letter will be
refunded.
I am making no commitment to purchase shares, but if my
purchases within thirteen months from the date of my first purchase do
not aggregate the minimum amount specified above, I will pay the
increased amount of sales charges prescribed in the terms of escrow
described below. I understand that 4.75% of the minimum dollar amount
specified above will be held in escrow in the form of shares (computed
to the nearest full share). These shares will be held subject to the
terms of escrow described below.
From the initial purchase (or subsequent purchases if
necessary), 4.75% of the dollar amount specified in this Letter shall be
held in escrow in shares of the Fund by the Fund's transfer agent. For
example, if the minimum amount specified under the Letter is $50,000,
the escrow shall be shares valued in the amount of $2,375 (computed at
the public offering price adjusted for a $50,000 purchase). All
dividends and any capital gains distribution on the escrowed shares will
be credited to my account.
If the total minimum investment specified under the Letter is
completed within a thirteen month period, escrowed shares will be
promptly released to me. However, shares disposed of prior to completion
of the purchase requirement under the Letter will be deducted from the
amount required to complete the investment commitment.
Upon expiration of this Letter, the total purchases pursuant to
the Letter are less than the amount specified in the Letter as the
intended aggregate purchases, Calvert Distributors, Inc. ("CDI") will
bill me for an amount equal to the difference between the lower load I
paid and the dollar amount of sales charges which I would have paid if
the total amount purchased had been made at a single time. If not paid
by the investor within 20 days, CDI will debit the difference from my
account. Full shares, if any, remaining in escrow after the
aforementioned adjustment will be released and, upon request, remitted
to me.
I irrevocably constitute and appoint CDI as my
attorney-in-fact, with full power of substitution, to surrender for
redemption any or all escrowed shares on the books of the Fund. This
power of attorney is coupled with an interest.
The commission allowed by Calvert Distributors, Inc. to the
broker-dealer named herein shall be at the rate applicable to the
minimum amount of my specified intended purchases.
The Letter may be revised upward by me at any time during the
thirteen-month period, and such a revision will be treated as a new
Letter, except that the thirteen-month period during which the purchase
must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases.
In determining the total amount of purchases made hereunder,
shares disposed of prior to termination of this Letter will be deducted.
My broker-dealer shall refer to this Letter of Intent in placing any
future purchase orders for me while this Letter is in effect.
Dealer Name of
Investor(s)
By
Authorized Signer Address
Date Signature of Investor(s)
Date Signature of Investor(s)
- --------
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
<PAGE>
Calvert Tax-Free Reserves
Statements of Operations
Six Months ended June 30, 1995 (Unaudited)
Money
Market
Investment Income Portfolio
- ------------------------------------------------------
--------------------
Interest $36,093,248
income.................................................
--------------------
Expenses -- Note B
Investment advisory 3,479,981
fee.............................................
Transfer, dividend disbursing and
shareholder servicing agent's 777,944
fee...........................
Administrative services 59,998
fees......................................
Distribution plan ---
expenses........................................
Federal and state registration 19,360
fees...........................
Insurance.............................................................. 12,736
Postage and 102,648
delivery................................................
Printing and 194,992
stationery..............................................
Professional 44,983
fees......................................................
Telephone...............................................................10,277
Trustees' fees and 66,081
expenses..................................
Valuation 107
service.....................................................
Dues and 20,550
subscriptions...........................................
Miscellaneous......................................................... 24,916
----------------
Total 4,814,573
expenses................................................
----------------
NET INVESTMENT INCOME 31,278,675
----------------
Realized and Unrealized Gain
(Loss) on Investments
- ------------------------------------------------------------- ---------------
Net realized gain (158)
(loss)...........................................
Change in unrealized appreciation
or depreciation ---
---------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS.................... (158)
================
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS........................................ $31,278,517
================
<PAGE>
Calvert Tax-Free Reserves
Statements of Assets and Liabilities
June 30, 1995 (Unaudited)
Money
Market
Assets Portfolio
- ------------------------------------------------------------- -----------------
Investments in securities, at value --
see accompanying $1,604,896,056
portfolios...................................
Cash................................................................10,447,903
Interest 14,926,068
receivable......................................................
Receivable for securities 48,757,370
sold.....................................
Receivable for shares 3,280,985
sold.........................................
Other 61,872
assets...............................................................
----------------
Total 1,682,370,254
assets..........................................................
----------------
Liabilities
- ------------------------------------------------------------- ----------------
Payable to Calvert Asset Mgt. Co., Inc. --
Note 683,378
B.....................................................................
Payable to Calvert Administrative Svcs. Co. --
Note 10,131
B....................................................................
Payable to Calvert Shareholder Svcs., Inc. --
Note 153,639
B....................................................................
Payable to Calvert Distributors, Inc. --
Note ---
B....................................................................
Payable for income 146,906
distributions...............................
Payable for securities 102,501,691
purchased..............................
Other 53,069
liabilities...........................................................
----------------
Total liabilities 103,548,814
===============
Net assets $1,578,821,440
===============
Net Assets
- ------------------------------------------------------------- ---------------
Net Assets consisting of:
Paid-in capital applicable to 1,578,903,727
outstanding shares of beneficial interest,
for the Money Market Portfolio,
no par value (unlimited number of
shares 1,578,919,700
authorized)................................................
Accumulated net investment income --
net of (7,028)
distributions.................................................
Accumulated realized gains/(losses) --
net of (91,232)
distributions.................................................
Net unrealized appreciation (depreciation)
on ---
investments.....................................................
===============
Net $1,578,821,440
assets......................................................
===============
Net Assets Value and
Offering Price per Share
- ------------------------------------------------------------- ===============
Money Market Portfolio
($1,578,821,440 / 1,578,903,727 shares).......... $1.00
================
<PAGE>
CALVERT TAX-FREE RESERVES--
NEW JERSEY MONEY MARKET PORTFOLIO
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
The undersigned, revoking previous proxies, hereby
appoint(s) William M. Tartikoff, Esq. and Clifton S. Sorrell,
Jr. attorneys, with full power of substitution, to vote all
shares of Calvert Tax-Free Reserves-New Jersey Money Market
Portfolio that the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held in the Tenth Floor
Conference Room of Calvert Group, 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814 on _________ __, 1996 at 10:00
a.m. and at any adjournment thereof. All powers may be
exercised by a majority of the proxy holders or substitutes
voting or acting or, if only one votes and acts, then by that
one. This proxy shall be voted on the proposal described in the
Proxy Statement. Receipt of the Notice of the Meeting and the
accompanying Proxy Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on the
Proxy. When signing in a fiduciary capacity,
such as executor, administrator, trustee, guardian, etc.,
please so indicate. Corporate and partnership proxies should
be signed by an authorized person indicating the person's
title.
Date ____________________________, 1996
_____________________________________
_____________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
_____________________________________________
Please refer to the Proxy Statement discussion on this matter.
IF NO SPECIFICATION IS MADE,
THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said attorneys shall vote in
accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
1. To act upon a proposal to approve an Agreement and
Plan of Reorganization providing for the transfer of all of the assets
and liabilities of the Calvert Tax-Free Reserves ("CTFR") New
Jersey Money Market Portfolio in exchange for Class O shares
of the CTFR Money Market Portfolio.
FOR-AGAINST-ABSTAIN
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit
1 of this Registration Statement, provides, in summary, that
officers, trustees, employees, and agents shall be indemnified
by Registrant against liabilities and expenses incurred by such
persons in connection with actions, suits, or proceedings
arising out of their offices or duties of employment, except
that no indemnification can be made to such a person if he has
been adjudged liable of willful misfeasance, bad faith, gross
negligence, or reckless disregard of his duties. In the absence
of such an adjudication, the determination of eligibility for
indemnification shall be made by independent counsel in a
written opinion or by the vote of a majority of a quorum of
trustees who are neither "interested persons" of Registrant, as
that term is defined in Section 2(a)(19) of the Investment
Company Act of 1940, nor parties to the proceeding.
Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance eon behalf of any
officer, trustee, employee or agent against any liabilities
arising from such status. In this regard, Registrant maintains
a Directors & Officers (Partners) Liability Insurance Policy
with Chubb Group of Insurance Companies, 15 Mountain View Road,
Warren, New Jersey 07061, providing Registrant with $5 million
in directors and officers liability coverage, plus $3 million in
excess directors and officers liability coverage for the
independent trustees/directors only. Registrant also maintains
a $9 million Investment Company Blanket bond issued by ICI
Mutual Insurance Company, P.O. Box 730, Burlington, Vermont,
05402, and an additional $5 million in excess of $9 million
blanket bond with Chubb Group of Insurance Companies, 15
Mountain View Road, Warren, New Jersey 07061.
Item 16. Exhibits
1. Declaration of Trust (incorporated by reference to
Registrant's
Initial Registration Statement, October 20, 1980).
2. By-Laws (incorporated by reference to Registrant's
Initial
Registration Statement, October 20, 1980).
4. Plan of Reorganization (herewith) (Exhibit A to the N-14
prospectus).
6. Advisory Contract (incorporated by reference to
Registrant's
Post-Effective Amendment No. 29, August 30, 1991).
7. Underwriting and Dealer Agreements (incorporated by
reference to Registrant's Post-Effective Amendment No. 40, February 8,
1995).
8. Trustees' Deferred Compensation Agreement (incorporated
by reference to Registrant's Post-Effective Amendment No. 3-,
January 31, 1992).
9. Custodial Contract (Incorporated by reference to
Registrant's Post-Effective Amendment No. 34, November 30, 1993);
11. Opinion and consent of Counsel as to Legality of
Shares Being Registered (herewith)
12. Tax Opinion (herewith)
14. Consent of Independent Accountants (herewith)
16. Powers of Attorney (herewith)
17.(a) Prospectus of Portfolio Being Acquired
17.(b) Prospectus of Acquiring Portfolio
17.(c) Declaration Pursuant to Rule 24f-2
Exhibits 3, 5, 10, 13 and 15 are omitted because they are
inapplicable.
Item 17. Undertakings
Not Applicable
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
registration statement pursuant to the Securities Act of 1933
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereto duly authorized in the
City of Bethesda, and State of Maryland, on the __ day of
November, 1995.
CALVERT TAX-FREE RESERVES
By: ______________________________
Clifton S. Sorrell, Jr.
President and Trustee
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities indicated.
Clifton S. Sorrell, Jr 12/11/95
Trustee and Principal Executive Officer
Ronald M. Wolfsheimer 12/11/95
Principal Accounting Officer
_________________________
12/11/95
Richard L. Baird, Jr.
Trustee
_________________________
12/11/95
Frank H. Blatz, Jr., Esq.
Trustee
________________________
12/11/95
Frederick T. Borts, M.D.
Trustee
________________________
12/11/95
Douglas E. Feldman, M.D.
Trustee
_________________________
12/11/95
John G. Guffey, Jr.
Trustee
_________________________
12/11/95
Arthur J. Pugh
Trustee
________________________
12/11/95
David R. Rochat
Trustee
_________________________
12/11/95
D. Wayne Silby
Trustee
** Signed by Susan Walker Bender, Esq., attorney-in-fact,
pursuant to power of attorney, attached hereto.
_______________________________
1Total return has not been audited prior to 1994.
