Page 1 of ___
SEC Registration Nos.
33-44968 and 811-6525
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 13 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 XX
Calvert Municipal Fund, Inc.
(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
__ Immediately upon filing XX on April 30, 1996
pursuant to paragraph (b) pursuant to paragraph (b)
__ 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of shares of beneficial interest is
being registered by this Registration Statement. On February 28, 1996,
Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1995.
<PAGE>
PROSPECTUS
April 30, 1996
CALVERT MUNICIPAL INTERMEDIATE FUNDS:
ARIZONA CALIFORNIA FLORIDA MARYLAND MICHIGAN
NEW YORK PENNSYLVANIA VIRGINIA
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
INTRODUCTION TO THE FUNDS
The Calvert National Municipal Intermediate Fund ("National Municipal")
seeks to earn the highest level of interest income exempt from federal
income taxes as is consistent with prudent investment management,
preservation of capital, and the stated quality and maturity
characteristics.
The state-specific Calvert Municipal Intermediate Funds ("State Funds")
seek to earn the highest level of interest income exempt from federal
and specific state income taxes as is consistent with prudent investment
management, preservation of capital, and the stated quality and maturity
characteristics.
The National Municipal and the State Funds (collectively, the "Funds" or
"Municipal Funds") each invest in nondiversified portfolios of municipal
obligations, including some with interest that may be subject to the
federal alternative minimum tax. The average dollar-weighted maturity of
investments is between 3 and 10 years. The net asset value per share of
each Fund will fluctuate in response to changes in the value of its
investments.
PURCHASE INFORMATION
Each Municipal Fund offers two classes of shares, each with different
expense levels and sales charges. You may choose to purchase (i) Class A
shares, with a sales charge imposed at the time you purchase the shares
("front-end sales charge"); or (ii) Class C shares which impose neither
a front-end sales charge nor a contingent deferred sales charge. Class C
shares are not available through all dealers. Class C shares have a
higher level of expenses than Class A shares, including higher Rule
12b-1 fees. These alternatives permit you to choose the method of
purchasing shares that is most beneficial to you, depending on the
amount of the purchase, the length of time you expect to hold the
shares, and other circumstances. See "Alternative Sales Options" for
further details.
TO OPEN AN ACCOUNT
Call your broker, or complete and return the enclosed Account
Application. Minimum initial investment is $2,000. Shares of each State
Fund are being made available primarily to persons residing in the state
for which the Fund is named. PLEASE CONFIRM THE AVAILABILITY OF A FUND
IN YOUR STATE BEFORE SENDING MONEY.
ABOUT THIS PROSPECTUS
Please read this Prospectus before investing. It is designed to provide
you with information you ought to know before investing and to help you
decide if a Fund's goals match your own. Keep this document for future
reference.
A Statement of Additional Information for the Funds (April 30, 1996) has
been filed with the Securities and Exchange Commission and is
incorporated by reference. This free Statement is available by calling:
800-368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
FEDERAL 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 FUNDS 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. WHEN INVESTORS OF THE FUND
SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE
AMOUNT ORIGINALLY PAID.
FUND EXPENSES
National Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution
Fees 0.00% 0.80%
Other Expenses 0.26% 0.44%
Total Fund Operating Expenses 0.96% 1.94%
Arizona Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution
Fees 0.00% 0.80%
Other Expenses 0.33% 0.62%
Total Fund Operating Expenses 1.03% 2.12%
Maryland Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution
Fees 0.00% 0.80%
Other Expenses 0.24% 0.39%
Total Fund Operating Expenses 0.94% 1.89%
New York Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge
None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution Fees
0.00% 0.80%
Other Expenses 0.32% 0.49%
Total Fund Operating Expenses 1.07% 1.99%
Virginia Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge
None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets)
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution
Fees 0.00% 0.80%
Other Expenses 0.22% 0.28%
Total Fund Operating Expenses 0.92% 1.78%
C. Example: You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return; (2) redemption at the end of
each period; and (3) for Class A, payment of maximum initial sales
charge at time of purchase:
FUND EXPENSES
California Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution
Fees 0.00% 0.80%
Other Expenses 0.21% 0.32%
Total Fund Operating Expenses 0.91% 1.82%
Florida Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases (as 2.75% None
percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
year 1995
(as a percentage of average net assets
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution Fe
0.00% 0.80%
Other Expenses 0.16% 0.48%
Total Fund Operating Expenses 0.86% 1.98%
Michigan Municipal Intermediate Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution Fe
0.00% 0.80%
Other Expenses 0.21% 0.39%
Total Fund Operating Expenses 0.91% 1.89%
Pennsylvania Municipal Intermedia Fund
A. Shareholder Transaction Costs Class A Class C
Maximum Sales Charge on Purchases 2.75% None
(as a percentage of offering price)
Contingent Deferred Sales Charge
None None
B. Annual Fund Operating Expenses - Fiscal
Year 1995
(as a percentage of average net assets
Management Fees 0.70% 0.70%
Rule 12b-1 Service and Distribution Fe
0.00% 0.80%
Other Expenses 0.32% 0.44%
Total Fund Operating Expenses 1.02% 1.94%
FUND 1 Year 3 Years
NATIONAL
CLASS A $37 $57
CLASS C $20 $61
Arizona
Class A $38 $59
Class C $22 $66
California
Class A $37 $56
Class C $18 $57
Florida
Class A $36 $54
Class C $20 $62
Maryland
Class A $37 $57
Class C $19 $59
Michigan
Class A $37 $56
Class C $19 $59
New York
Class A $38 $61
Class C $20 $62
Pennsylvania
Class A $38 $59
Class C $20 $61
Virginia
Class A $37 $56
Class C $18 $56
FUND 5 Years 10 Years
NATIONAL
CLASS A $79 $142
CLASS C
$105 $226
Arizona
Class A $83 $150
Class C $114 $245
California
Class A $76 $136
Class C $99 $214
Florida
Class A $74 $131
Class C $107 $231
Maryland
Class A $78 $140
Class C $102 $221
Michigan
Class A $76 $136
Class C $102 $221
New York
Class A $85 $154
Class C $107 $232
Pennsylvania
Class A $82 $149
Class C $105 $226
Virginia
Class A $77 $138
Class C $96 $209
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.
Explanation of Table: The purpose of the table is to assist you in
understanding the various costs and expenses that an investor 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 your Fund. See "Reduced Sales Charges" at Exhibit
A to see if you qualify for possible reductions in the sales charge. 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 Funds to Calvert Asset Management Company, Inc. for managing the
investments and business affairs of each Fund and paid to Calvert
Administrative Services Company, Inc. All expense ratios, other than
those for National Municipal and California, have been restated to
reflect expenses anticipated for fiscal year 1996. The Funds will incur
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 share price and
are not charged directly to individual shareholder accounts. Please
refer to "Management of the Funds" for further information.
The National Municipal Intermediate Fund commenced operations
on September 30, 1992, and the California Fund commenced operations on
May 29, 1992. The Maryland, Michigan, New York and Virginia Funds
commenced operation September 30, 1993. The Arizona, Florida and
Pennsylvania Funds commenced operation December 31, 1993. For the first
five years of operation of each Fund, Class A Rule 12b-1 fees will be
limited to 0.15%. The Advisor may voluntarily defer fees or assume
expenses of the Funds. If the Advisor had not done so for fiscal year
1995, Management Fees for all the Municipal Intermediate Funds would
have been 0.70%. The following table shows what Total Fund Operating
Expenses would have been, per class, without the voluntary deferral of
fees or reimbursement of expenses:
Fund Name Total Expenses Class A Total Expenses Class C
Arizona 1.07% 2.10%
Florida .86% 1.98%
Maryland .94% 1.89%
Michigan .91% 1.89%
New York 1.07% 1.99%
Pennsylvania 1.03% 1.94%
Virginia .92% 1.78%
The Investment Advisory Agreement provides that the Advisor may
ter, to the extent permitted by law, recapture any fees it deferred or
penses it assumed during the two prior years; provided, however, that
tal Annual Operating Expenses for each Fund shall not exceed 2.00% of
average net assets during any year in which the Advisor elects to
exercise the recapture provision. The above table reflects these
agreements.
The Funds' Rule 12b-1 fees include an asset-based sales charge.
Thus, it is possible that long-term shareholders in the Funds may pay
in total sales charges than the economic equivalent of the maximum
front-end sales charge permitted by rules of the National Association
of Securities Dealers, Inc.
FINANCIAL HIGHLIGHTS
The following table provides information about the Funds' financial
story. It expresses the information in terms of a single share
outstanding throughout the period. Information for Class C shares is
shown since inception, March 1, 1994. The table has been audited by
Coopers & Lybrand, L.L.P., independent accountants, whose report on the
period from the Funds' commencement of operations through December 31,
1995 is included in the Annual Report to Shareholders for each of the
respective periods presented. The table should be read in conjunction
with the financial statements and their related notes. The Annual Report
to Shareholders is incorporated by reference into the Statement of
Additional Information.
<TABLE>
<CAPTION>
National Municipal Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $9.81 $10.42
Income from investment operations
Net investment income .51 .50
Net realized and unrealized gain (loss)
on investments .80 (.62)
Total from investment operations 1.31 (.12)
Distributions from
Net investment income (.50) (.49)
Net realized gains -- --
Total distributions (.50) (.49)
Total increase (decrease) in net asset value .81 (.61)
Net asset value, ending $10.62 $9.81
Total return<F1> 13.64% (1.18%)
Ratio to average net assets
Net investment income 4.97% 4.88%
Total expenses<F2> .96% --
Net expenses .94% .69%
Expenses reimbursed -- .32%
Portfolio turnover 57% 122%
Net assets, ending (in thousands) $40,146 $36,159
Number of shares outstanding,
ending (in thousands) 3,780 3,686
<FN>
<F1>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F2>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From
Inception
Year Ended (Sept. 30, 1992)
December 31, through Dec. 31,
1993 1992
<S> <C> <C>
Net asset value, beginning $10.01 $10.00
Income from investment operations
Net investment income .48 .13
Net realized and unrealized gain (loss)
on investments .45 .01
Total from investment operations .93 .14
Distributions from
Net investment income (.48) (.13)
Net realized gains (.04) --
Total distributions (.52) (.13)
Total increase (decrease) in net asset value .41 .01
Net asset value, ending $10.42 $10.01
Total return<F3> 9.47% 5.40%
Ratio to average net assets
Net investment income 5.01% 5.36%(a)
Total expenses<F4> -- --
Net expenses .10% --
Expenses reimbursed .45% 4.34%(a)
Portfolio turnover 162% 12%
Net assets, ending (in thousands) $37,467 $1,542
Number of shares outstanding,
ending (in thousands) 3,596 154
<FN>
<F3> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F4> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
(a) Annualized
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
National Municipal Class C Shares From
Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $9.79 $10.28
Income from investment operations
Net investment income .41 .34
Net realized and unrealized gain (loss)
on investments .79 (.48)
Total from investment operations 1.20 (.14)
Distributions from
Net investment income (.41) (.35)
Net realized gains -- --
Total distributions (.41) (.35)
Total increase (decrease) in net asset value .79 (.49)
Net asset value, ending $10.58 $9.79
Total return<F5> 12.50% 1.12%)
Ratio to average net assets
Net investment income 4.00% 4.01%(a)
Total expenses<F6> 1.94% --
Net expenses 1.92% 1.71%(a)
Expenses reimbursed -- .58%(a)
Portfolio turnover 57% 122%
Net assets, ending (in thousands) $6,378 $6,067
Number of shares outstanding,
ending (in thousands) 603 620
(a) Annualized
<FN>
<F5> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F6> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
California Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $9.81 $10.56
Income from investment operations
Net investment income .47 .48
Net realized and unrealized gain (loss)
on investments .69 (.76)
Total from investment operations 1.16 (.28)
Distributions from
Net investment income (.46) (.47)
Net realized gains -- --
Total distributions (.46) (.47)
Total increase (decrease) in net asset value .70 (.75)
Net asset value, ending $10.51 $9.81
Total return<F7> 12.07% (2.57%)
Ratio to average net assets
Net investment income 4.59% 4.67%
Total expenses<F8> .91% --
Net expenses .89% .76%
Expenses reimbursed -- .13%
Portfolio turnover 47% 68%
Net assets, ending (in thousands) $34,424 $34,111
Number of shares outstanding,
ending (in thousands) 3,276 3,476
<FN>
<F7> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F8> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From
Inception
Year Ended (May 29, 1992)
December 31, through Dec. 31,
1993 1992
<S> <C> <C>
Net asset value, beginning $10.24 $10.00
Income from investment operations
Net investment income .53 .29
Net realized and unrealized gain (loss)
on investments .36 .24
Total from investment operations .89 .53
Distributions from
Net investment income (.53) (.29)
Net realized gains (.04) --
Total distributions (.57) (.29)
Total increase (decrease) in net asset value .32 .24
Net asset value, ending $10.56 $10.24
Total return<F9> 8.88% 10.00%
Ratio to average net assets
Net investment income 5.12% 5.24%(a)
Total expense<F10> -- --
Net expenses .21% --
Expenses reimbursed .12% .38%(a)
Portfolio turnover 21% 3%
Net assets, ending (in thousands) $35,726 $16,046
Number of shares outstanding,
ending (in thousands) 3,383 1,567
(a) Annualized
<FN>
<F9>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F10> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
California Class C Shares
From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $9.79 $10.40
Income from investment operations
Net investment income .38 .31
Net realized and unrealized gain (loss)
on investments .68 (.59)
Total from investment operations 1.06 (.28)
Distributions from
Net investment income (.38) (.33)
Net realized gains -- --
Total distributions (.38) (.33)
Total increase (decrease) in net asset value .68 (.61)
Net asset value, ending $10.47 $9.79
Total return<F11> 10.99% (2.42%)
Ratio to average net assets
Net investment income 3.67% 3.60%(a)
Total expenses<F12> 1.82% --
Net expenses 1.80% 1.86%(a)
Expenses reimbursed -- .38%(a)
Portfolio turnover 47% 68%
Net assets, ending (in thousands) $4,092 $3,000
Number of shares outstanding,
ending (in thousands) 391 307
(a) Annualized
<FN>
<F11> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F12> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Arizona Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.00
Income from investment operations
Net i$2,004nvestment income .22 .19
Net realized and unrealized gain (loss)
on investments .36 (.29)
Total from investment operations .58 (.10)
Distributions from
Net investment income (.22) (.19)
Total increase (decrease) in net asset value .36 (.29)
Net asset value, ending $5.07 $4.71
Total return<F13> 12.44% (1.84%)
Ratio to average net assets
Net investment income 4.43% 4.13%
Total expenses<F14> .53% --
Net expenses .41% .38%
Expenses reimbursed .54% .97%
Portfolio turnover 10% 22%
Net assets, ending (in thousands) $2,045 $2,004
Number of shares outstanding,
ending (in thousands) 403 426
<FN>
<F13> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F14> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Arizona Class C Shares
From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $4.70 $4.96
Income from investment operations
Net investment income .17 .13
Net realized and unrealized gain (loss)
on investments .38 (.25)
Total from investment operations .55 (.12)
Distributions from
Net investment income (.18) (.14)
Total increase (decrease) in net asset value .37 (.26)
Net asset value, ending $5.07 $4.70
Total return<F15> 11.77% (2.07%)
Ratio to average net assets
Net investment income 3.57% 3.26%(a)
Total expenses<F16> 1.38% --
Net expenses 1.25% 1.43%(a)
Expenses reimbursed .73% 1.24%(a)
Portfolio turnover 10% 22%
Net assets, ending (in thousands) $744 $454
Number of shares outstanding,
ending (in thousands) 147 97
(a) Annualized
<FN>
<F15> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F16> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.67 $5.00
Income from investment operations
Net investment income .24 .21
Net realized and unrealized gain (loss)
on investments .38 (.33)
Total from investment operations .62 (.12)
Distributions from
Net investment income (.23) (.21)
Total increase (decrease) in net asset value .39 (.33)
Net asset value, ending $5.06 $4.67
Total return<F17> 13.48% (2.44%)
Ratio to average net assets
Net investment income 4.73% 4.64%
Total expenses<F18> .43% --
Net expenses .35% .21%
Expenses reimbursed .43% .80%
Portfolio turnover 44% 93%
Net assets, ending (in thousands) $3,892 $3,387
Number of shares outstanding,
ending (in thousands) 769 725
<FN>
<F17> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F18> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Class C Shares From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
<S> <C> <C>
1995 1994
Net asset value, beginning $4.67 $4.93
Income from investment operations
Net investment income .19 .15
Net realized and unrealized gain (loss)
on investments .37 (.26)
Total from investment operations .56 (.11)
Distributions from
Net investment income (.18) (.15)
Total increase (decrease) in net asset value .38 (.26)
Net asset value, ending $5.05 $4.67
Total return<F19> 12.28% (1.84%)
Ratio to average net assets
Net investment income 3.82% 3.58%(a)
Total expenses<F20> 1.33% --
Net expenses 1.25% 1.32%(a)
Expenses reimbursed .65% 1.02%(a)
Portfolio turnover 44% 93%
Net assets, ending (in thousands) $401 $919
Number of shares outstanding,
ending (in thousands) 79 197
(a) Annualized
<FN>
<F19> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F20> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maryland Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.67 $5.05
Income from investment operations
Net investment income .24 .24
Net realized and unrealized gain (loss)
on investments .39 (.39)
Total from investment operations .63 (.15)
Distributions from
Net investment income (.24) (.23)
Total increase (decrease) in net asset value .39 (.38)
Net asset value, ending $5.06 $4.67
Total return<F21> 13.66% (2.94%)
Ratio to average net assets
Net investment income 4.87% 5.01%
Total expenses<F22> .51% --
Net expenses .48% .17%
Expenses reimbursed .43% .86%
Portfolio turnover 11% 77%
Net assets, ending (in thousands) $9,411 $7,429
Number of shares outstanding,
ending (in thousands) 1,860 1,589
<FN>
<F21> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F22> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception (October 1, 1993) through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss)
on investments .05
Total from investment operations .09
Distributions from
Net investment income (.04)
Total increase (decrease) in net asset value .05
Net asset value, ending $5.05
Total return<F23> 7.46%
Ratio to average net assets
Net investment income 4.42%(a)
Total expenses<F24> --
Net expenses --
Expenses reimbursed .80%(a)
Portfolio turnover 14%
Net assets, ending (in thousands) $5,401
Number of shares outstanding,
ending (in thousands) 1,070
(a) Annualized
<FN>
<F23> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F24> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Maryland Class C Shares From
Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $4.66 $4.97
Income from investment operations
Net investment income .20 .16
Net realized and unrealized gain (loss)
on investments .38 (.30)
Total from investment operations .58 (.14)
Distributions from
Net investment income (.20) (.17)
Total increase (decrease) in net asset value .38 (.31)
Net asset value, ending $5.04 $4.66
Total return<F25> 12.55% (2.60%)
Ratio to average net assets
Net investment income 4.01% 4.29%(a)
Total expenses<F26> 1.36% --
Net expenses 1.33% 1.17%(a)
Expenses reimbursed .53% .93%(a)
Portfolio turnover 11% 77%
Net assets, ending (in thousands) $2,509 $1,806
Number of shares outstanding,
ending (in thousands) 498 388
(a) Annualized
<FN>
<F25> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F26> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Michigan Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.74 $5.09
Income from investment operations
Net investment income .24 .23
Net realized and unrealized gain (loss)
on investments .37 (.35)
Total from investment operations .61 (.12)
Distributions from
Net investment income (.23) (.23)
Total increase (decrease) in net asset value .38 (.35)
Net asset value, ending $5.12 $4.74
Total return<F27> 13.08% (2.42%)
Ratio to average net assets
Net investment income 4.76% 4.76%
Total expenses<F28> .52% --
Net expenses .48% .18%
Expenses reimbursed .39% .84%
Portfolio turnover 22% 65%
Net assets, ending (in thousands) $4,556 $5,255
Number of shares outstanding,
ending (in thousands) 890 1,109
<FN>
<F27>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F28> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception (October 1, 1993) through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss)
on investments .09
Total from investment operations .13
Distributions from
Net investment income (.04)
Total increase (decrease) in net asset value .09
Net asset value, ending $5.09
Total return<F29> 10.28%
Ratio to average net assets
Net investment income 4.27%(a)
Total expenses<F30> --
Net expenses --
Expenses reimbursed .89%(a)
Portfolio turnover --
Net assets, ending (in thousands) $4,287
Number of shares outstanding,
ending (in thousands) 842
(a) Annualized
<FN>
<F29> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F30> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Michigan Class C Shares From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $4.74 $5.02
Income from investment operations
Net investment income .20 .16
Net realized and unrealized gain (loss)
on investments .36 (.28)
Total from investment operations .56 (.12)
Distributions from
Net investment income (.19) (.16)
Total increase (decrease) in net asset value .37 (.28)
Net asset value, ending $5.11 $4.74
Total return<F31> 11.96% (2.12%)
Ratio to average net assets
Net investment income 3.91% 3.95%(a)
Total expenses<F32> 1.37% --
Net expenses 1.33% 1.15%(a)
Expenses reimbursed .52% .87%(a)
Portfolio turnover 22% 65%
Net assets, ending (in thousands) $1,497 $1,219
Number of shares outstanding,
ending (in thousands) 293 257
(a) Annualized
<FN>
<F31> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F32> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.05
Income from investment operations
Net investment income .22 .23
Net realized and unrealized gain (loss)
on investments .41 (.34)
Total from investment operations .63 (.11)
Distributions from
Net investment income (.22) (.23)
Total increase (decrease) in net asset value .41 (.34)
Net asset value, ending $5.12 $4.71
Total return<F33> 13.72% (2.26%)
Ratio to average net assets
Net investment income 4.47% 4.77%
Total expenses<F34> .58% --
Net expenses .50% .18%
Expenses reimbursed .49% 1.13%
Portfolio turnover 13% 56%
Net assets, ending (in thousands) $3,573 $2,648
Number of shares outstanding,
ending (in thousands) 698 562
<FN>
<F33>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F34> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception (October 1, 1993) through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss)
on investments .05
Total from investment operations .09
Distributions from
Net investment income (.04)
Total increase (decrease) in net asset value .05
Net asset value, ending $5.05
Total return<F35> 7.22%
Ratio to average net assets
Net investment income 3.81%(a)
Total expenses<F36> --
Net expenses --
Expenses reimbursed 2.00%(a)
Portfolio turnover --
Net assets, ending (in thousands) $2,236
Number of shares outstanding,
ending (in thousands) 433
(a) Annualized
<FN>
<F35> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F36> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Class C Shares From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $4.98
Income from investment operations
Net investment income .19 .16
Net realized and unrealized gain (loss)
on investments .40 (.27)
Total from investment operations .59 (.11)
Distributions from
Net investment income (.19) (.16)
Total increase (decrease) in net asset value .40 (.27)
Net asset value, ending $5.11 $4.71
Total return<F37> 12.63% (1.97%)
Ratio to average net assets
Net investment income 3.65% 3.93%(a)
Total expenses<F38> 1.40% --
Net expenses 1.33% 1.22%(a)
Expenses reimbursed .59% .92%(a)
Portfolio turnover 13% 56%
Net assets, ending (in thousands) $2,392 $1,119
Number of shares outstanding,
ending (in thousands) 468 237
(a) Annualized
<FN>
<F37>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F38> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.00
Income from investment operations
Net investment income .25 .22
Net realized and unrealized gain (loss)
on investments .37 (.29)
Total from investment operations .62 (.07)
Distributions from
Net investment income (.23) (.22)
Total increase (decrease) in net asset value .39 (.29)
Net asset value, ending $5.10 $4.71
Total return<F39> 13.51% (1.29%)
Ratio to average net assets
Net investment income 5.10% 4.94%
Total expenses<F40> .49% --
Net expenses .41% .26%
Expenses reimbursed .54% .94%
Portfolio turnover 17% 96%
Net assets, ending (in thousands) $2,522 $1,872
Number of shares outstanding,
ending (in thousands) 495 398
<FN>
<F39> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F40> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Class C Shares From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
<S> <C> <C>
1995 1994
Net asset value, beginning $4.72 $4.91
Income from investment operations
Net investment income .21 .16
Net realized and unrealized gain (loss)
on investments .37 (.19)
Total from investment operations .58 (.03)
Distributions from
Net investment income (.19) (.16)
Total increase (decrease) in net asset value .39 (.19)
Net asset value, ending $5.11 $4.72
Total return<F41> 12.55% (.30%)
Ratio to average net assets
Net investment income 4.29% 4.20%(a)
Total expenses<F42> 1.32% --
Net expenses 1.24% 1.22%(a)
Expenses reimbursed .62% 1.15%(a)
Portfolio turnover 17% 96%
Net assets, ending (in thousands) $1,748 $1,168
Number of shares outstanding,
ending (in thousands) 342 248
(a) Annualized
<FN>
<F41>Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F42> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Virginia Class A Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.74 $5.06
Income from investment operations
Net investment income .24 .23
Net realized and unrealized gain (loss)
on investments .39 (.32)
Total from investment operations .63 (.09)
Distributions from
Net investment income (.24) (.23)
Total increase (decrease) in net asset value .39 (.32)
Net asset value, ending $5.13 $4.74
Total return<F43> 13.54% (2.04%)
Ratio to average net assets
Net investment income 4.86% 4.87%
Total expenses<F44> .54% --
Net expenses .51% .19%
Expenses reimbursed .38% .86%
Portfolio turnover 11% 65%
Net assets, ending (in thousands) $7,295 $5,866
Number of shares outstanding,
ending (in thousands) 1,423 1,239
<FN>
<F43> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F44> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception (October 1, 1993) through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .05
Net realized and unrealized gain (loss)
on investments .06
Total from investment operations .11
Distributions from
Net investment income (.05)
Total increase (decrease) in net asset value .06
Net asset value, ending $5.06
Total retur<F45> 8.65%
Ratio to average net assets
Net investment income 4.81%(a)
Total expenses<F46> --
Net expenses --
Expenses reimbursed 1.54%(a)
Portfolio turnover 28%
Net assets, ending (in thousands) $2,720
Number of shares outstanding,
ending (in thousands) 537
(a) Annualized
<FN>
<F45> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F46> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Virginia Class C Shares From Inception
Year Ended (March 1, 1994)
December 31, through Dec. 31,
1995 1994
<S> <C> <C>
Net asset value, beginning $4.74 $4.99
Income from investment operations
Net investment income .20 .16
Net realized and unrealized gain (loss)
on investments .39 (.25)
Total from investment operations .59 (.09)
Distributions from
Net investment income (.20) (.16)
Total increase (decrease) in net asset value .39 (.25)
Net asset value, ending $5.13 $4.74
Total return<F47> 12.62% (1.54%)
Ratio to average net assets
Net investment income 4.07% 4.19%(a)
Total expenses<F48> 1.35% --
Net expenses 1.31% .94%(a)
Expenses reimbursed .43% .99%(a)
Portfolio turnover 11% 65%
Net assets, ending (in thousands) $3,207 $2,766
Number of shares outstanding,
ending (in thousands) 625 583
(a) Annualized
<FN>
<F47> Total return is not annualized and does not reflect deduction of Class
A front-end sales charge.
<F48> Effective December 31, 1995, this ratio reflects total expenses
before reduction for fees paid indirectly; such reductions are included
in the ratio of net expenses.
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
Investment Objectives
National Municipal seeks to earn the highest level of interest income
exempt from federal income taxes as is consistent with prudent
investment management, preservation of capital, and the quality and
maturity objectives of the Fund.
National Municipal will invest at least 65% of its total assets in
municipal obligations
.
National Municipal is a nondiversified (effective upon shareholder
approval) mutual fund that invests primarily in municipal obligations
with interest that, for most investors, is exempt from federal income
tax. Municipal obligations in which the Series may invest include, but
are not limited to, general obligation bonds and notes of state and local
issuers, revenue bonds of various transportation, housing, utilities
(e.g., water and sewer), hospital and other state and local
government authorities, tax and revenue anticipation notes and bond
anticipation notes, municipal leases, and certificates of participation
therein, and private activity bonds. See further description below and
in the Statement of Additional Information. The municipal obligations
are fixed and variable rate. Fixed rate investments are limited to
obligations normally having remaining maturities of 12 years or less;
variable rate investments may have longer maturities. The average
dollar-weighted maturity will be between 3 and 10 years. Because the Fund
may invest in private activity bonds, a portion of its dividends may be
subject to the federal alternative minimum tax. See "Dividends and Taxes."
The State Funds seek to earn the highest level of interest income exempt
from federal and specific state income taxes as is consistent with
prudent investment management, preservation of capital, and the quality
and maturity objectives of each Fund.
The State Funds invest in state-specific municipal obligations.
Each State Fund invests primarily in a nondiversified portfolio of a
specific state's municipal obligations with interest that, for most
investors, is exempt from federal and that state's income tax. Municipal
obligations in which the Funds invest are fixed and variable rate
obligations. The Advisor will maintain the average dollar-weighted
maturity between 3 and 10 years.
Each State Fund invests at least 65% of its assets in debt obligations
issued by or on behalf of the state for which the Fund is named.
Under normal market conditions, each State Fund will attempt to invest
at least 65% of its total assets in municipal obligations with interest
that is exempt from federal and specific state income tax, including
those issued by or on behalf of the state for which the Fund is named
and its political subdivisions. Each State Fund will also attempt to
invest its remaining assets in these obligations, but may invest the
remaining assets in municipal obligations of other states, territories
and possessions of the United States, the District of Columbia, and
their respective authorities, agencies, instrumentalities and political
subdivisions. Dividends you receive from a Fund that are derived from
interest on tax-exempt obligations of other governmental issuers will be
exempt from federal income tax, but will be subject to state income
taxes. Because the State Funds may invest in private activity bonds, a
portion of the Fund's dividends may be subject to the federal
alternative minimum tax. See "Dividends and Taxes."
Credit Quality
As an operating policy, each Municipal Fund (including National and
California, effective upon shareholder approval) will invest at least 65% of
its total assets in investment-grade municipal obligations.
Investment-grade obligations are those which, at the date of investment,
are rated within the four highest grades established by Moody's
Investors Services, Inc. (Aaa, Aa, A, or Baa) or by Standard and Poor's
Corporation (AAA, AA, A, or BBB). Securities that are not rated may be
purchased by the Funds as part of the 65% total if the Advisor
determines that they are of quality comparable to investment-grade
securities. Bonds rated BBB or Baa, while still considered investment
grade, have certain speculative characteristics and may be more subject
to changes in economic conditions.
The remaining 35% of each Municipal Fund's total assets (including
National and California, effective upon shareholder approval) may consist of
noninvestment-grade municipal obligations (rated below Baa or BBB), or
unrated obligations that the Advisor has determined are not investment
grade. With noninvestment-grade securities there is a greater
possibility that an adverse change in the financial condition of the
issuer may affect the issuer's ability to pay principal and interest.
There is also a greater risk, with noninvestment-grade securities, of
price declines due to changes in the issuer's creditworthiness. Because
the market for lower-rated securities may be less active ("thinner")
than for higher-rated securities, market prices may be more volatile and
liquidity in the resale market may be limited.
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. Please refer to the
Appendix in the Statement of Additional Information for a description of
the ratings used by these rating services. The Funds' Advisor determines
the credit quality of unrated instruments under the supervision of the
Funds' Board of Directors/Trustees. See Management of the Funds. There
is no limitation on the percentage of assets that may be invested in
unrated obligations, which may be less liquid than rated obligations of
comparable quality.
Determinations as to credit quality are made at the time of investment.
If a change in credit quality occurs, the Advisor, under the supervision
of the Fund's Board of Directors, will consider whether it is in the
best interest of the Funds' shareholders to hold or to dispose of the
obligation.
Variable and Floating Rate Obligations
The Funds may invest in variable and floating rate obligations. Variable
rate obligations have a yield that adjusts periodically based on changes
in the level of prevailing interest rates. Floating rate obligations
have an interest rate tied to a known lending rate, such as the prime
rate, and are automatically adjusted when the known rate changes. These
obligations lessen the capital fluctuations usually inherent in fixed
income investments, which diminishes the risk of capital depreciation of
portfolio investments and of the Funds' shares. However, this also means
that if interest rates decline, a Fund's yield will decline, causing
each Fund and its shareholders to forego the opportunity for capital
appreciation of the portfolio investments.
Demand Notes
Each Fund may invest in floating rate and variable rate demand notes.
Demand notes provide that the holder may demand payment of the note at
its par value plus accrued interest by giving notice to the issuer. To
ensure the ability of the issuer to make payment upon such demand, such
notes are often supported by an unconditional bank letter of credit.
Notes with a demand feature of more than seven days are considered
illiquid and are subject to purchase restrictions. See "Nonfundamental
Investment Restrictions" in the Statement of Additional Information.
Nondiversified
There may be risks associated with each Fund being nondiversified.
Specifically, since a relatively high percentage of the assets of each
Fund may be invested in the obligations of a limited number of issuers,
the value of the shares of each Fund may be more susceptible to any
single economic, political or regulatory event than the shares of a
diversified fund would be.
Interest-Rate Risk
All fixed income instruments are subject to interest-rate risk; that is,
if the market interest rates rise, the current principal value of a bond
will decline. In general, the longer the maturity of the bond, the
greater the decline in value. Because the Funds' respective average
dollar-weighted maturity is between 3 and 10 years, the investments
would be expected to be more affected than by a rise in market interest
rates than a short-term money market fund, but less adversely affected
by a rise in market interest rates than those of a fund which invests in
longer-term bonds.
Obligations with Puts Attached
Each 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 on price at
any time during a stated period or on a certain date. Such a right is
generally denoted as a "put." Puts may be either conditional or
unconditional. Unconditional puts are readily exercisable in the event
of a default in payment of principal or interest on the underlying
securities.
Municipal Leases
Each Fund may invest in municipal leases. 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. There are
additional risks inherent in investing in this type of municipal
security. Unlike municipal notes and bonds, where a municipality is
obligated by law to make interest and principal payments when due,
funding for lease payments needs to be appropriated each fiscal year in
the budget. It is possible that a municipality will not appropriate
funds for lease payments. The Advisor considers risk of cancellation in
its investment analysis. The Funds may purchase unrated municipal
leases. The Advisor, under supervision of the Boards of
Directors/Trustees, is responsible for determining the credit quality of
such leases on an ongoing basis. The Funds will invest only in municipal
leases that meet their credit quality restrictions. Certain municipal
leases may be considered illiquid and subject to the Funds' limits on
illiquid investments. The Boards of Directors/Trustees have established
guidelines for determining whether a lease is liquid. See the Statement
of Additional Information for the factors considered by the Board in
determining liquidity and valuation of leases.
When-Issued Purchases
New issues of municipal obligations are offered on a when-issued basis;
that is, delivery and payment for the securities normally take place 15
to 45 days after the date of the transaction. The payment obligation and
the yield that will be received on the securities are each fixed at the
time the buyer enters into the commitment. The Funds will only make
commitments to purchase such securities with the intention of actually
acquiring the securities, but may sell these securities before the
settlement date if it is deemed advisable as a matter of investment
strategy.
Temporary Investments
For liquidity purposes or pending the investment of the proceeds of the
sale of its shares, a Fund may invest in and derive up to 35% (20% for
National Municipal and California) of its income from taxable short-term
money market type investments. Interest earned from such taxable
investments will be taxable to you as ordinary income unless you are
otherwise exempt from taxation. Such investments will be of investment
grade, or, if unrated, determined to be of equivalent credit quality by
the Advisor.
Financial Futures, Options, and Other Investment Techniques
(All Municipal Funds, effective upon shareholder approval for National and
California).
Each Municipal Fund can use various techniques to increase or decrease
its exposure to changing security prices, interest rates, or other
factors that affect security values. These techniques may involve
derivative transactions such as buying and selling options and futures
contracts and leveraged notes, entering into swap agreements, and
purchasing indexed securities. The Funds can use these practices either
as a substitution for or as protection against an adverse move in the
Fund's portfolio to adjust the risk and return characteristics of the
Fund's portfolio. If the Advisor judges market conditions incorrectly or
employs a strategy that does not correlate well with the Fund's
investments, or if the counterparty to the transaction does not perform
as promised, these techniques could result in a loss. These techniques
may increase the volatility of a Fund and may involve a small investment
of cash relative to the magnitude of the risk assumed. Any instruments
determined to be illiquid are subject to the Fund's 15% restriction on
illiquid securities. See the Statement of Additional Information for
more detail about these strategies.
Under certain circumstances, the Municipal Funds may purchase and sell
certain financial futures contracts and certain options on futures
contracts to hedge investments in municipal securities. A financial
futures contract obligates the seller of a contract to deliver -- and
the purchaser of a contract to take delivery of -- the type of financial
instrument covered by the contract. In the case of index-based futures
contracts, the obligation is in the form of a cash settlement at a
specific time for a specific price.
The Funds may only engage in futures transactions for the purpose of
hedging their investments in municipal securities against declines in
value and to hedge against increases in the cost of securities the Funds
intend to purchase. A sale of financial futures contracts may provide a
hedge against a decline in the value of portfolio securities because
such depreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts. Similarly, a
purchase of financial futures contracts may provide a hedge against an
increase in the cost of securities intended to be purchased, because
such appreciation may be offset, in whole or in part, by an increase in
the value of the position in the futures contracts.
Types of Futures Contracts Purchased
The Advisor intends to deal, on behalf of the Funds, in futures
contracts based on The Bond Buyer Municipal Bond Index, a price-weighted
measure of the market value of 40 large, recently-issued tax-exempt
bonds, and to engage in transactions in exchange-listed futures
contracts on U.S. Treasury securities. The Funds may also engage in
transactions in other futures contracts, such as futures contracts on
other municipal bond indices that become available, if the Advisor
believes such contracts would be appropriate for hedging the Funds'
investments in municipal securities.
When a Fund purchases a futures contract, it will maintain an amount of
cash, cash equivalents (for example, commercial paper and daily tender
adjustable notes) or short-term high grade fixed income securities in a
segregated account with the Fund's custodian, so that the segregated
amount plus the amount of initial and variation margin held in the
account of its broker equals the market value of the futures contract,
thereby ensuring that the use of such futures contract is unleveraged.
It is not anticipated that transactions in futures will have the effect
of increasing portfolio turnover.
Closing out a Futures Position -- Risks
A Fund may close out its position in a futures contract or an option on
a futures contract only by entering into an offsetting transaction on
the exchange on which the position was established and only if there is
a liquid secondary market for the futures contract. If it is not
possible to close a futures position entered into by the Fund, the Fund
could be required to make continuing daily cash payments of variation
margin in the event of adverse price movements. In such situations, if
the Fund has insufficient cash, it may have to sell portfolio securities
to meet daily margin requirements at a time when it would be
disadvantageous to do so. The inability to close futures or options
positions could have an adverse effect on the Fund's ability to hedge
effectively. There is also risk of loss by the Fund of margin deposits in
the event of bankruptcy of a broker with whom the Fund has an open
position in a futures contract. The success of a hedging strategy
depends on the Advisor's ability to predict the direction of interest
rates and other economic factors. The correlation is imperfect between
movements in the prices of futures or options contracts, and the
movements of prices of the securities which are subject to the hedge. If
a Fund used a futures or options contract to hedge against a decline in
the market, and the market later advances (or vice-versa), the Fund may
suffer a greater loss than if it had not hedged.
Please refer to the Statement of Additional Information for further
information on futures contracts.
Special considerations regarding single-state municipal obligations
There is risk inherent in investing primarily in the obligations of any
one state, since economic and political changes in the state may affect
those obligations. Since each State Fund invests primarily in municipal
obligations of individual states and is thereby limited in its
alternative investment choices, the performance of a State Fund may be
affected by local economic conditions generally and the fiscal/budgetary
condition of the State and other Municipalities in which a State Fund may
invest. With respect to any state, you should be aware that certain
proposed state or local constitutional amendments, legislative measures,
executive orders, administrative regulations or voter initiatives,
in addition to local economic conditions, could result in adverse
consequences affecting the ability of the state or its municipalities to
meet their obligations in a timely manner, which, in turn, could affect a State
Fund's performance.
Other Policies
Each Fund may temporarily borrow money from banks to meet redemption
requests, but such borrowing may not exceed 10% of the value of a Fund's
total assets. The Funds have adopted certain fundamental investment
restrictions which are discussed in detail in the Statement of
Additional Information.
YIELD AND TOTAL RETURN
Yield refers to income generated by an investment over a period of time
for each class.
Yield measures the current investment performance for each class, which
is the rate of income on portfolio investments divided by the share
price. To determine yield, (1) net investment income is computed by
adding all investment income earned by a Fund over a 30-day period and
subtracting expenses, (2) dividing by the average number of outstanding
shares during the period, and (3) annualizing the result based on the
maximum offering price per share on the last day of the period. Yields
are calculated separately for each class according to accounting methods
that are standardized for all stock and bond funds.
Taxable Equivalent Yield
A Fund may advertise its "taxable equivalent yield" for each class. The
taxable equivalent yield is the yield that you would be required to
obtain from taxable investments to equal the yield of the class, all or
a portion of which may be exempt from federal income taxes. The federal
taxable equivalent yield is computed by taking the portion of the a
Fund's yield exempt from regular federal income tax and multiplying the
exempt yield by a factor based on a given income tax rate, then adding
the portion of the yield that is not exempt from such income tax. The
double (combined state and federal) taxable equivalent yield is computed
by taking the portion of the a Fund's yield exempt from regular federal
and state income tax and multiplying the exempt yield by a factor based
on a given income tax rate, then adding the portion of the yield that is
not exempt from such income tax. The factor that is used to calculate
the taxable equivalent yield is the reciprocal of the difference between
one and the applicable income tax rate, which will be stated in the
advertisement.
A Fund may advertise its total return for each class. Total return is
based on historical results and is not intended to indicate future
performance.
Total return is calculated separately for each class. It includes not
only the effect of income dividends but also any change in net asset
value, or principal amount, during the stated period. Total return for
each class shows overall change in value, including changes in share
price and assuming reinvestment of all dividends and capital gain
distributions. Cumulative total return reflects performance over a
stated period of time. Average annual total return reflects the
hypothetical annual compounded return that would have produced the same
cumulative total return if performance had been constant over the entire
period. Because average annual returns tend to smooth out variations in
returns, you should recognize that they are not the same as actual
year-by-year results. Both types of total return for Class A shares
usually will include the effect of paying a front-end sales charge. Of
course, total returns will be higher if sales charges are not taken into
account. Quotations of "return without maximum load" do not reflect
deduction of the sales charge. You should consider these figures only if
you qualify for a reduced sales charge, or for purposes of comparison
with comparable figures which also do not reflect sales charges, such as
mutual fund averages compiled by Lipper Analytical Services, Inc.
Further information about performance is contained in the Annual Report
to Shareholders, which may be obtained without charge.
MANAGEMENT OF THE FUNDS
The Boards of Directors/Trustees supervise the activities and review
contracts with companies that provide the Funds with services.
The Arizona, California, Maryland, Michigan, National, New York,
Pennsylvania and Virginia Municipal Intermediate Funds are series
of Calvert Municipal Fund, Inc., an open-end management investment
company incorporated in Maryland. The Florida Municipal Intermediate
Fund is a series of First Variable Rate Fund for Government Income, an
open-end management company organized as a Massachusetts Business Trust.
The Funds are not required to hold annual shareholder meetings, but
special meetings may be called for certain purposes such as electing or
removing Directors/Trustees, changing fundamental policies, or approving
an investment advisory contract. As a shareholder, you receive one vote
for each share you own, except that matters affecting classes
differently, such as Distribution Plans, will be voted on separately by
the affected class(es).
Calvert Group is one of the largest investment management firms in the
Washington, D.C. area.
Calvert Group, Ltd., parent of the Funds' Advisor, transfer agent, and
distributor, is a subsidiary of Acacia Mutual Life Insurance Company of
Washington, D.C., and is one of the largest investment management firms
in the Washington, D.C. area. Calvert Group, Ltd. and its subsidiaries
are located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814. As of December 31, 1995, Calvert Group managed and administered
assets in excess of $4.8 billion in more than 200,000 shareholder and
depositor accounts.
Portfolio Managers
The Funds are managed by Reno J. Martini, Senior Vice President and
Chief Investment Officer of Calvert Asset Management Company, Inc.
("CAMCO"); Daniel K. Hayes, Vice President, Investments (CAMCO); and
Stephen N. Van Order, Vice President, Investments (CAMCO). Mr. Martini
has served as the Manager of the Portfolio Investments Department since
1985, and as portfolio manager for CAMCO since 1982. Mr. Hayes serves as
head of Portfolio Research and has been a portfolio manager for CAMCO
since 1984. Mr. Van Order serves as head of Portfolio Trading and has
been a portfolio manager with CAMCO since 1992. From 1983 to 1992, Mr.
Van Order was employed at the Federal National Mortgage Association and
Served as Director of Long-Term Funding.
Calvert Asset Management serves as Advisor to the Funds.
Calvert Asset Management Company, Inc. is each Fund's Advisor, and is
entitled to an annual fee, payable monthly, of 0.60% of each Fund's
average net assets. The Advisor may in its discretion and on a voluntary
basis only, waive or defer its fees or assume each Fund's operating
expenses. During 1995, National and California each paid investment advisory
fees of 0.60%. Arizona, Florida, Maryland, Michigan, New York, Pennsylvania,
and Virginia paid fees of 0.17%, o.27%, 0.27%, 0.31%, 0.23%, 0.22%, and
0.33%, respectively, and the remainder of each investment advisory fee was
waived. The Investment Advisory Agreement provides that the Advisor
may later, to the extent permitted by law, recapture any fees it waived,
or expenses it assumed under this limitation. The Advisor provides each
Fund with investment supervision and management, administrative services
and office space; furnishes executive and other personnel to the Funds;
and pays the salaries and fees of all Directors/Trustees who are
affiliated persons of the Advisor. The Advisor may also assume and pay
certain advertising and promotional expenses of the Funds and reserves
the right to compensate broker-dealers in return for their promotional
or administrative services.
Calvert Administrative Services Company provides administrative services
for the Funds.
Calvert Administrative Services Company ("CASC"), an affiliate of the
Advisor, provides certain administrative services for the Funds,
including the preparation of regulatory filings and shareholder reports,
the daily determination of each Fund's net asset value per share and
dividends, and the maintenance of its portfolio and general accounting
records. For providing such services, CASC is entitled to receive an
annual fee, payable monthly, of 0.10% of each Fund's average net assets
per year. During 1995, National and California each paid administrative
service fees of 0.10%. The administrative service fee was waived for Arizona,
Florida, Maryland, Michigan, New York, Pennsylvania, and Virginia.
Calvert Distributors, Inc. serves as underwriter to market shares of the
Funds.
Calvert Distributors, Inc. ("CDI") is the Funds' principal underwriter
and distributor, and is an affiliate of the Advisor. Under the terms of
its underwriting agreements for the Funds, CDI markets and distributes
each Fund's shares and is responsible for preparing advertising and
sales literature, and printing and mailing prospectuses to prospective
investors.
The transfer agent keeps your account records.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, is the
transfer, dividend disbursing and shareholder servicing agent for the
Funds.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares in several ways which are described here and in the
chart on page _______.
An account application accompanies this prospectus. A completed and
signed application is required for each new account you open, regardless
of the method you choose for making your initial investment. Additional
forms may be required from corporations, associations, and certain
fiduciaries. If you have any questions or need extra applications, call
your broker, or Calvert Group at 800-368-2748. Be sure to specify which
class you wish to purchase.
Alternative Sales Options
The Funds offer two classes of shares:
Class A Shares - Front End Load Option
Class A shares are sold with a front-end sales charge at the time of
purchase. Class A shares are not subject to a sales charge when they are
redeemed.
Class C shares - Level Load Option
Class C shares are sold without a sales charge at the time of purchase
or redemption.
Class C shares have higher expenses
Each Fund bears some of the costs of selling its shares under
Distribution Plans adopted with respect to its Class A and Class C
shares pursuant to Rule 12b-1 under the 1940 Act. Payments under the
Class A Distribution Plan are currently limited to up to 0.15% annually
of the average daily net asset value of Class A shares, although no
Class A Distribution Plan fees are being paid by the Funds at this time.
The Class C Distribution Plan provides for the payment of an annual
distribution fee to CDI of up to 0.55%, plus a service fee of up to
0.25%, for a total of 0.80%, of the average daily net assets of Class C.
Considerations for deciding which class of shares to buy
Income distributions for Class A shares will probably be higher than
those for Class C shares, as a result of the distribution expenses
described above. (See also "Yield and Total Return.") You should
consider Class A shares if you qualify for a reduced sales charge under
Class A or if you plan to hold the shares for several years. The Funds
will not normally accept any purchase of Class C shares in the amount of
$1,000,000 or more.
Class A Shares
Class A shares are offered at net asset value plus a front-end sales
charge as follows:
Amount of As a % of As a % of Allowed to Dealers
Investment offering net amount as a % of
price invested offering price
Less than $50,000 2.75% 2.83% 2.25%
$50,000 but less
than $100,000 2.25% 2.30% 1.75%
$100,000 but less
than $250,000 1.75% 1.78% 1.25%
$250,000 but less
than $500,000 1.25% 1.27% 0.95%
$500,000 but less
than $1,000,000 1.00% 1.01% 0.80%
$1,000,000 and over 0.00% 0.00% 0.25%*
**For new investments (new purchases but not exchanges) of $1 million or
more a broker-dealer will have the choice of being paid a finder's fee
by CDI in one of the following methods: (1) CDI may pay broker-dealers,
on a monthly basis for 12 months, an annual rate of up to 0.36%.
Payments will be made less redemptions; or (2) CDI may pay
broker-dealers 0.25% of the amount of the purchase; however, CDI
reserves the right to recoup any portion of the amount paid to the dealer
if the investor redeems some or all of the shares from the Funds within
thirteen months of the time of purchase. Quarterly trailing compensation
will begin in the thirteenth month.
Sales charges on Class A shares may be reduced or eliminated in certain
cases. See Exhibit A to this prospectus.
The sales charge is paid to CDI, which in turn normally reallows a
portion to your broker-dealer. Upon written notice to dealers with whom
it has dealer agreements, CDI may reallow up to the full applicable
sales charge. Dealers to whom 90% or more of the entire sales charge is
reallowed may be deemed to be underwriters under the Securities Act of
1933.
In addition to any sales charge reallowance or finder's fee, your
broker-dealer, or other financial service firm through which your
account is held, currently will be paid periodic service fees at an
annual rate of up to 0.15% of the average daily net asset value of Class
A shares held in accounts maintained by that firm.
Class A Distribution Plan
Each Fund has adopted a Distribution Plan with respect to its Class A
shares (the "Class A Distribution Plan"), which provides for payments,
which are limited to an annual rate of 0.15% for each Fund's first five
years of operation (and 0.25% thereafter) of the average daily net asset
value of Class A shares, to pay expenses associated with the
distribution and servicing of Class A shares. Amounts paid by the Funds
to CDI under the Class A Distribution Plan are used to pay to dealers
and others, including CDI salespersons who service accounts, service
fees, and to pay CDI for its marketing and distribution expenses,
including, but not limited to, preparation of advertising and sales
literature and the printing and mailing of prospectuses to prospective
investors. During the 1995 fiscal period, the Funds paid no Class A
Distribution Plan expenses.
Class C Shares
Class C shares are not available through all dealers. Class C shares are
offered at net asset value, without a front-end sales charge or a
contingent deferred sales charge. Class C expenses are higher than those
of Class A.
Class C Distribution Plan
The Funds have adopted a Distribution Plan with respect to its Class C
shares (the "Class C Distribution Plan"), which provides for payments at
an annual rate of up to 0.80% of the average daily net asset value of
Class C shares, to pay expenses of the distribution and servicing of
Class C shares. Amounts paid by the Funds under the Class C Distribution
Plan are currently used by CDI to pay dealers and other selling firms
compensation at an annual rate of up to 0.75%, which may include a
service fee, as described above under "Class A Distribution Plan," of up
to 0.25% of the average daily net asset value of the accounts maintained
by that firm. During the 1995 fiscal period, each of the Funds paid
Class C Distribution Plan expenses of 0.80%.
Arrangements with Broker-Dealers and Others (all classes)
CDI may also pay additional concessions, including non-cash promotional
incentives, such as merchandise or trips, to dealers employing
registered representatives who have sold or are expected to sell a
minimum dollar amount of shares of the Funds and/or shares of other
Funds underwritten by CDI. CDI may make expense reimbursements for
special training of a dealer's registered representatives, advertising
or equipment, or to defray the expenses of sales contests. Eligible
marketing and distribution expenses may be paid pursuant to the Funds'
Rule 12b-1 Distribution Plans.
Dealers or others may receive different levels of compensation depending
on which class of shares they sell. Payments pursuant to a Distribution
Plan are included in the operating expenses of the class.
Each of the Distribution Plans may be terminated at any time by a vote
of the Independent Directors/Trustees or by vote of a majority of the
outstanding voting shares of the respective class.
HOW TO BUY SHARES
BE SURE TO SPECIFY WHICH CLASS YOU ARE BUYING
Method New Accounts Additional Investments
By Mail $2,000 minimum $250 minimum
Please make your check Please make your check
payable to the appropriate payable to the appropriate
Fund and mail it with your Fund and mail it with your
investment slip to: application to:
Calvert Group Calvert Group
P.O. Box 419739 P.O. Box 419544
Kansas City, MO Kansas City, MO
64141-6739 64141-6544
By Registered, Certified, or Overnight Mail:
Calvert Group Calvert Group
c/o NFDS, 6th Floor c/o NFDS, 6th Floor
1004 Baltimore 1004 Baltimore
Kansas City, MO Kansas City, MO
64105-1807 64105-1807
Through Your
Broker $2,000 minimum $250 minimum
At the Calvert Visit the Calvert Branch Office to
make investments by check.
Branch Office See back cover page for the address.
FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT
800-368-2745
By Exchange $2,000 minimum $250 minimum
(From your account in another Calvert Group Fund)
When opening an account by exchange, your new account must be
established with the same name(s), address and taxpayer identification
number as your existing Calvert account.
By Bank Wire $2,000 minimum $250 minimum
By Calvert Money Not Available for $50 minimum
Controller* Initial Investmet
*Please allow sufficient time for Calvert Group to process your initial
request for this service, normally 10 business days. The maximum
transaction amount is $300,000, and your purchase request must be
received by 4:00 p.m. Eastern time.
NET ASSET VALUE
How share price is determined.
Net asset value ("NAV") refers to the worth of one share. NAV is
computed separately for each class by adding the value of all portfolio
holdings and other assets, deducting liabilities and then dividing the
result by the number of shares outstanding. The NAV will vary daily
based on the market values of the Funds' investments. These values are
calculated at the close of each business day, which coincides with the
closing of the regular session of the New York Stock Exchange (normally
4:00 p.m. Eastern time). The Funds are open for business each day the
New York Stock Exchange is open.
All share purchases will be confirmed and credited to your account in
full and fractional shares (rounded to the nearest 1/1000 of a share).
Portfolio securities and other assets are valued based on market
quotations. If quotations are not available, securities are valued by a
method that the appropriate Fund's Board of Directors/Trustees believes
accurately reflects fair value.
WHEN YOUR ACCOUNT WILL BE CREDITED
Before you buy shares, please read the following information to make
sure your investment is accepted and credited properly.
Your purchase will be processed at the net asset value calculated after
your order is received and accepted. If your purchase is received by
4:00 p.m. Eastern time, your account will be credited on the day of
receipt. If your purchase is received after 4:00 p.m. Eastern time, it
will be credited the next business day. Your purchases must be made in
U.S. dollars and checks must be drawn on U.S. banks. No cash will be
accepted. Each Fund reserves the right to suspend the offering of shares
for a period of time or to reject any specific purchase order. If your
check does not clear, your purchase will be cancelled and you will be
charged a $10 fee plus costs incurred by the Funds. When you purchase by
check or with Calvert Money Controller, those funds will be on hold for
10 business days from the date of receipt. During that period,
redemptions against those funds will not be honored. To avoid this
collection period, you can wire federal funds from your bank, which may
charge you a fee.
Certain financial institutions or broker-dealers that have entered into
a sales agreement with the Distributor may enter confirmed purchase
orders on behalf of customers by phone, with payment to follow within a
number of days of the order as specified by the program. If payment is
not received in the time specified, the financial institution could be
held liable for resulting fees or losses.
EXCHANGES
You may exchange shares of your Fund for shares of the same class of
other Calvert Group Funds.
If your investment goals change, the Calvert Group Family of Funds has a
variety of investment alternatives that includes common stock funds,
tax-exempt and corporate bond funds, and money market funds. The
exchange privilege is a convenient way to buy shares in other Calvert
Group Funds in order to respond to changes in your goals or in market
conditions. However, to protect your Fund's performance and to prevent
additional costs, Calvert Group discourages frequent exchanges.
Shareholders (and those managing multiple accounts) who make two
purchases and two exchange redemptions of shares of the same fund during
any 6-month period will be given written notice that they may be
prohibited from making additional investments. These policies do not
prohibit you from redeeming shares of the funds and do not apply to
trades solely among money market funds. Before you make an exchange from
a Fund or Portfolio, please note the following:
Each exchange represents the sale of shares of one Fund and the purchase
of shares of another. Thus, you could realize a taxable gain or loss.
o Call your broker or a Calvert representative for information
and a prospectus for any of Calvert's other Funds registered in your
state. Read the prospectus of the Fund or Portfolio into which you want
to exchange for relevant information, including class offerings.
o Complete and sign an application for an account in that Fund or
Portfolio, taking care to register your new account in the same name and
taxpayer identification number as your existing Calvert account(s).
Exchange instructions may then be given by telephone if telephone
redemptions have been authorized and the shares are not in certificate
form. See "Selling Your Shares" and "How to Sell Your Shares -- By
Telephone, and -- By Exchange To Another Calvert Group Fund."
o Shares on which you have already paid a sales charge at Calvert
Group and shares acquired by reinvestment of dividends and distributions
may be exchanged into another Fund at no additional charge.
For purposes of the exchange privilege, effective July 31, 1996, the
Fund is related to Summit Cash Reserves Fund by investment and investor
services. Each Fund reserves the right to terminate or modify the
exchange privilege in the future with 60 days' written notice.
OTHER CALVERT GROUP SERVICES
Calvert Information Network
24 hour yield and prices
Calvert Group has a round-the-clock telephone service that lets existing
customers use a push button phone to obtain prices, yields and account
balances. Complete instructions for this service may be found on the
back of each statement.
Calvert Money Controller
Calvert Money Controller eliminates the delay of mailing a check or the
expense of wiring funds. You can request this free service on your
application.
This service allows you to authorize electronic transfers of money to
purchase or sell shares. You use Calvert Money Controller like an
"electronic check" to move money ($50 to $300,000) between your bank
account and your Fund account with one phone call. Allow two business
days after the call for the transfer to take place; for money recently
invested, allow normal check clearing time (up to 10 business days)
before redemption proceeds are sent to your bank.
You may also arrange systematic monthly or quarterly investments (minimum
$50) into your Calvert Group account. After you give us proper
authorization, your bank account will be debited to purchase Fund shares.
A debit entry will appear on your bank statement. If you would like to
make arrangements for systematic monthly or quarterly redemptions from
your Calvert account, call your broker or Calvert for a Money Controller
Application.
Telephone Transactions
Calvert Group may record all telephone calls.
You may purchase, redeem, or exchange shares, wire funds and use Calvert
Money Controller by telephone if you have pre-authorized service
instructions. You automatically have telephone privileges unless you
elect otherwise. The Funds, the transfer agent and their affiliates are
not liable if they act in good faith on telephone instructions relating
to your account, so long as they follow reasonable procedures to
determine that the telephone instructions are genuine. Such procedures
may include recording the telephone calls and requiring some form of
personal identification. You should verify the accuracy of telephone
transactions immediately upon receipt of your confirmation statement.
Optional Services
Complete the application for the easiest way to establish services.
The easiest way to establish optional services on your Calvert Group
account is to select the options you desire when you complete your
account application. If you wish to add other options later, you may
have to provide us with additional information and a signature
guarantee. Please call your broker or Calvert Investor Relations at
800-368-2745 for further assistance. For our mutual protection, we may
require a signature guarantee on certain written transaction requests. A
signature guarantee verifies the authenticity of your signature, and may
be obtained from any bank, savings and loan association, credit union,
trust company, broker-dealer firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.
Householding of General Mailings
Householding reduces Fund expenses and saves paper and trees for the
environment.
If you have multiple accounts with Calvert, you may receive combined
mailings of some shareholder information, such as semi-annual and annual
reports. Please contact Calvert Investor Relations at 800-368-2745 to
receive additional copies of information.
Special Services and Charges
The Funds pay for shareholder services but not for special services that
are required by a few shareholders, such as a request for a historical
transcript of an account. You may be required to pay a research fee for
these special services.
If you are purchasing shares of a Fund through a program of services
offered by a securities dealer or financial institution, you should read
the program materials in conjunction with this Prospectus. Certain
features may be modified in these programs, and administrative charges
may be imposed by the broker-dealer or financial institution for the
services rendered.
SELLING YOUR SHARES
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next net asset value calculated after
your redemption request is received and accepted. See below for specific
requirements necessary to make sure your redemption request is
acceptable. Remember that your Fund may hold payment on the redemption
of your shares until it is reasonably satisfied that investments made by
check or by Calvert Money Controller have been collected (normally up to
10 business days).
Redemption Requirements to Remember
To ensure acceptance of your redemption request, please follow the
procedures described here and below.
Once your shares are redeemed, the proceeds will normally be sent to you
on the next business day, but if making immediate payment could
adversely affect a Fund, it may take up to seven (7) days. Calvert Money
Controller redemptions generally will be credited to your bank account
on the second business day after your phone call. When the New York
Stock Exchange is closed (or when trading is restricted) for any reason
other than its customary weekend or holiday closings, or under any
emergency circumstances as determined by the Securities and Exchange
Commission, redemptions may be suspended or payment dates postponed.
Minimum account balance is $1,000.
Please maintain a balance in your account of at least $1,000 per Fund,
per class. If, due to redemptions, your account falls below $1,000, it
may be closed and the proceeds mailed to you at the address of record.
You will be given notice that your account will be closed after 30 days
unless you make additional investments to increase your account balance
to the $1,000 minimum.
HOW TO SELL YOUR SHARES
By Mail To:
Calvert Group
P.O. Box 419544
Kansas City, MO
64179-6544
You may redeem available funds from your account at any time by sending
a letter of instruction, including your name, account and Fund number,
the number of shares or dollar amount, and where you want the money to
be sent. Additional requirements, below, may apply to your account. The
letter of instruction must be signed by all required authorized signers.
If you want the money to be wired to a bank not previously authorized,
then a voided bank check must be enclosed with your letter. If you do
not have a voided check or if you would like funds sent to a different
address or another person, your letter must be signature guaranteed.
Type of Requirements
Registration
Corporations Letter of instruction and a corporate
Associations resolution,signed by person(s) authorized to act on
the account,accompanied by signature guarantee(s).
Trusts
Letter of instruction signed by the Trustee(s)
(as Trustee), with a signature guarantee.
(If the Trustee's name is not registered on your
account, please provide a copy of the trust document,
certified within the last 60 days.)
By Telephone
Please call 800-368-2745. You may redeem shares from your account by
telephone and have your money mailed to your address of record or wired
to an address or bank you have previously authorized. A charge of $5 is
imposed on wire transfers of less than $1,000. See "Telephone
Transactions" on page ___. If for any reason you are unable to reach the
Funds by telephone, whether due to mechanical difficulties, heavy market
volume, or otherwise, you may send a written redemption request to the
Funds by overnight mail, or, if your account is held through a broker,
see "Through Your Broker" below.
Calvert Money Controller
Please allow sufficient time for Calvert Group to process your initial
request for this service (normally 10 business days). You may also
authorize automatic fixed amount redemptions by Calvert Money
Controller. All requests must received by 4:00 p.m. Eastern time.
Accounts cannot be closed by this service.
Exchange to Another Calvert Group Fund
You must meet the minimum investment requirement of the other Calvert
Group Fund or Portfolio. You can only exchange between accounts with
identical names, addresses and taxpayer identification number, unless
previously authorized with a signature-guaranteed letter. See
"Exchanges."
Systematic Check Redemptions
If you maintain an account with a balance of $10,000 or more, you may
have up to two (2) redemption checks for a fixed amount sent to you on
the 15th of each month simply by sending a letter with all information,
including your account number, and the dollar amount ($100 minimum). If
you would like a regular check mailed to another person or place, your
letter must be signature guaranteed.
Through your Broker
If your account is held in your broker's name ("street name"), you
should contact your broker directly to transfer, exchange or redeem
shares.
DIVIDENDS AND TAXES
Dividends from net investment income are paid monthly.
Net investment income consists of interest income, net short-term
capital gains, if any, and dividends declared and paid on investments,
less expenses. Each year, the Funds distribute substantially all of
their net investment income to shareholders. Dividend and distribution
payments will vary between classes; dividend payments are anticipated to
generally be higher for Class A shares.
Dividend payment options
Dividends and any distributions are automatically reinvested at net
asset value in additional shares of the Funds unless you elect to have
the dividends of $10 or more paid in cash (by check or by Calvert Money
Controller). Dividends and distributions may be automatically invested
in an identically registered account with the same account number in any
other Calvert Group Fund or Portfolio at net asset value. If reinvested
in the same Fund account, new shares will be purchased at net asset
value on the reinvestment date, which is generally 1 to 3 days prior to
the payment date. You must be a shareholder on the record date to
receive dividends. You must notify the Funds in writing prior to the
record date to change your payment options. 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.
"Buying a Dividend"
At the time of purchase, the share price of your Fund may reflect
undistributed income, capital gains or unrealized appreciation of
securities. Any income or capital gains from these amounts which are
later distributed to you are fully taxable. On the record date for a
distribution, your Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the record date ("buying a
dividend") you will pay the full price for the shares and then receive a
portion of the price back as a taxable distribution.
Federal Taxes
Dividends derived from interest on municipal obligations constitute
exempt-interest dividends, on which you are not subject to federal
income tax. However, dividends which are from taxable interest and any
distributions of short-term capital gains are taxable to you as ordinary
income. If the Funds make any distributions of long-term capital gains,
then these are taxable to you as long-term capital gains, regardless of
how long you held your shares.
If any taxable income or gains are paid, in January, the Funds will mail
you Form 1099-DIV indicating the federal tax status of dividends and any
capital gain distributions paid to you by the Funds during the past year.
You may realize a capital gain or loss when you redeem (sell) or
exchange shares.
If you sell or exchange your shares you will have a short or long-term
capital gain or loss, depending on how long you owned the shares. In
January, your Fund will mail you Form 1099-B indicating the proceeds
from all sales, including exchanges. You should keep your annual
year-end account statements to determine the cost (basis) of your shares
to report on your tax returns.
Alternative Minimum Tax
Each Fund may invest in municipal obligations, such as certain private
activity bonds, that earn interest subject to the federal alternative
minimum tax ("AMT"). AMT is a method of computing tax that helps ensure
that certain corporations and high-income individual taxpayers pay a
minimum amount of tax. Since the Funds are likely to invest in
obligations that are taxable under the AMT method of computing income
tax, taxpayers who are required to pay AMT may not receive as high an
after-tax yield as investors who are not subject to AMT. You should
consult your tax advisor if you have any questions regarding your status.
State Taxes
To the extent that exempt-interest dividends are derived from earnings
attributable to municipal obligations of a state, they will also be
exempt from state and local personal income tax in that state. The
dividends may be subject to franchise taxes and corporate income taxes
if received by a corporation subject to such taxes. A letter will be
mailed to you shortly after year-end informing you of the percentage of
exempt-interest dividends derived from earnings on state municipal
obligations.
Taxpayer Identification Number
Federal law requires that you provide your correct Social Security or
Taxpayer Identification Number ("TIN") on a signed certified application
or Form W-9. If not provided, the Funds may be required to withhold 31%
of any dividends or redemptions, and you may be subject to a fine. You
will also be prohibited from opening another account by exchange. If
this TIN information is not received within 60 days after your account
is established, your account may be redeemed at the current NAV on the
date of redemption. The Funds reserve the right to reject any new
account or any purchase order for failure to supply a certified TIN.
EXHIBIT A
REDUCED SALES CHARGES (CLASS A ONLY)
You may qualify for a reduced sales charge through several purchase
plans available. You must notify the Funds at the time of purchase to
take advantage of the reduced sales charge.
Right of Accumulation
The sales charge is calculated by taking into account not only the
dollar amount of a new purchase of shares, but also the higher of cost
or current value of shares previously purchased in Calvert Group Funds
that impose sales charges. This automatically applies to your account
for each new purchase.
Letter of Intent
If you plan to purchase $50,000 or more of Fund shares over the next 13
months, your sales charge may be reduced through a "Letter of Intent."
You pay the lower sales charge applicable to the total amount you plan
to invest over the 13-month period, excluding any money market fund
purchases. Part of your shares will be held in escrow, so that if you do
not invest the amount indicated, you will have to pay the sales charge
applicable to the smaller investment actually made. For more
information, see the Statement of Additional Information.
Group Purchases
If you are a member of a qualified group, you may purchase shares of the
Funds at the reduced sales charge applicable to the group taken as a
whole. The sales charge is calculated by taking into account not only
the dollar amount of the shares you purchase, but also the higher of
cost or current value of shares previously purchased and currently held
by other members of your group.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a
discount, and (iii) satisfies uniform criteria which enable CDI and
dealers offering Fund shares to realize economies of scale in
distributing such shares. A qualified group must have more than 10
members, must be available to arrange for group meetings between
representatives of CDI or dealers distributing the Funds' shares, must
agree to include sales and other materials related to each Fund in its
publications and mailings to members at reduced or no cost to CDI or
dealers, and must seek to arrange for payroll deduction or other bulk
transmission of investments to the Funds. Members of a group are not
eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund (portfolio or series) of
the Calvert Group of Funds sold to (i) current and retired members of
the Board of Trustees/Directors of the Calvert Group of Funds, (and the
Advisory Council of the Calvert Social Investment Fund); (ii) directors,
officers and employees of the Advisor, Distributor, and their affiliated
companies; (iii) directors, officers and registered representatives of
brokers distributing the Fund's shares; and immediate family members of
persons listed in (i), (ii), and (iii), above; (iv) dealers, brokers, or
registered investment advisors that have entered into an agreement with
CDI providing specifically for the use of shares of the Fund (Portfolio
or Series) in particular investment programs or products (where such
program or product already has a fee charged therein) made available to
the clients of such dealer, broker, or registered investment advisor;
(v) trust departments of banks or savings institutions for trust clients
of such bank or savings institution; and (vi) purchases placed through a
broker maintaining an omnibus account with the Fund (Portfolio or
Series) and the purchases are made by (a) investment advisors or
financial planners placing trades for their own accounts (or the
accounts of their clients) and who charge a management, consulting, or
other fee for their services; or (b) clients of such investment advisors
or financial planners who place trades for their own accounts if such
accounts are linked to the master account of such investment advisor or
financial planner on the books and records of the broker or agent; or
(c) retirement and deferred compensation plans and trusts, including,
but not limited to, those defined in Section 401(a) or Section 403(b) of the
I.R.C., and "rabbi trusts."
Dividends and Capital Gain Distributions from other Calvert Group Funds
You may prearrange to have your dividends and capital gain distributions
from another Calvert Group Fund automatically invested in another
account with no additional sales charge.
Purchases made at net asset value ("NAV")
Except for money market funds, if you make a purchase at NAV, you may
exchange that amount to another fund at no additional sales charge.
Reinstatement Privilege
If you redeem Fund shares and then within 30 days decide to reinvest in
the same Fund, you may do so at the net asset value next computed after
the reinvestment order is received, without a sales charge. You may use
the reinstatement privilege only once. The Funds reserve the right to
modify or eliminate this privilege.
TABLE OF Fund Expenses Alternative Sales Options
CONTENTS Financial Highlights When Your Account Will Be
Investment Objective and Credited
Policies Exchanges
Yield and Total Return
Management of the Funds Other Calvert Group Services
SHAREHOLDER GUIDE: Selling Your Shares
How to Buy Shares How to Sell Your Shares
Net Asset Value Dividends and Taxes
Exhibit A -Reduced Sales Charges
To Open an Account:
Prospectus
800-368-2748
April 30, 1996
Yields and Prices: Calvert Arizona Municipal Intermediate Fund
Calvert Information Network Calvert California Municipal Intermediate Fund
24 hours, 7 days a week Calvert Florida Municipal Intermediate Fund
800-368-2745 Calvert Maryland Municipal Intermediate Fund
Calvert Michigan Municipal Intermediate Fund
Service for Existing Calvert National Municipal Intermediate Fund
Accounts: Calvert New York Municipal Intermediate Fund
Shareholders 800-368-2745 Calvert Pennsylvania Municipal Intermediate Fund
Brokers 800-368-2746 Calvert Virginia Municipal Intermediate Fund
TDD for Hearing Impaired:
800-541-1524
Registered, Certified and
Overnight Mail:
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105
Branch Office:
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Calvert Group Web-Site
Address: http://www.calvertgroup.com
PRINCIPAL UNDERWRITER
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-- April 30, 1996
CALVERT CALIFORNIA MUNICIPAL
INTERMEDIATE FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
==========================================================================
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 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 Series' Prospectus, dated April 30, 1996, which may
be obtained free of charge by writing the Series at the above address or
calling the Fund at the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
Approximately February 23, 1996, a proxy statement was mailed to Calvert
California Municipal Intermediate Fund ("CCMIF" or the "Series") shareholders.
Shareholders were asked to approve certain changes in investment restrictions,
including the ability to purchase futures and options and non-investment grade
bonds. The shareholder meeting scheduled for April 18, 1996 was adjourned, but
shareholder approval of all items was expected on or about April 30, 1996.
Calvert California Municipal Intermediate Fund ("CCMIF" or the
"Series") is designed to provide individual and institutional investors
with the highest level of interest income exempt from federal and
California income taxes as is consistent with prudent investment
management, preservation of capital, and the quality and maturity
characteristics of the Series. There is, of course, no assurance that
the Series will be successful in meeting its investment objective; there
are inherent risks in the ownership of any investment.
Dividends paid by CCMIF 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 its
shares will fluctuate to reflect changes in the market value of the
Series' investments. The Series will attempt, through careful
management, to reduce these risks and enhance the opportunities for
higher income and greater price stability.
==========================================================================
INVESTMENT POLICIES
==========================================================================
CCMIF invests primarily in a nondiversified portfolio of
municipal obligations, including some with interest that may be subject
to alternative minimum tax. Fixed rate investments normally have
remaining maturities of 12 years or less; variable rate investments may
have longer maturities. A complete explanation of municipal obligations
and municipal bond and note ratings appears in the Appendix.
Under normal market conditions, CCMIF will invest at least 65%
of its total assets in municipal obligations with interest that is
exempt from federal and California income tax, including those issued by
or on behalf of the State of California and its political subdivisions
("California Municipal Obligations"). CCMIF will also attempt to invest
its remaining assets in these obligations, but may invest it in
municipal obligations of other states, territories and possessions of
the United States, the District of Columbia, and their respective
authorities, agencies, instrumentalities and political subdivisions.
Dividends you receive from CCMIF that are derived from interest on
tax-exempt obligations of other governmental issuers will be exempt from
federal income tax, but will be subject to California state income taxes.
Variable Rate Demand Notes
The Board of Directors of Calvert Municipal Fund, Inc. (the
"Fund"), of which CCMIF is a series, 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. Notes with a right of demand exceeding seven days
are considered illiquid and are subject to purchase restrictions.
Municipal Leases
CCMIF 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. CCMIF 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
CCMIF'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 CCMIF'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 CCMIF, 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 CCMIF has valued it for purposes of
calculating CCMIF'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 CCMIF'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 CCMIF.
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.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in CCMIF's portfolio are subject to changes in market value based
on 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,
CCMIF 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 its assets may vary. No new
when-issued commitments will be made if more than 50% of the Series' net
assets would become so committed.
When the time comes to pay for when-issued securities, CCMIF
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 Series' 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.
Transactions in Futures Contracts (effective upon shareholder approval)
CCMIF may engage in the purchase and sale of futures contracts
on an index of municipal bonds or on U.S. Treasury securities, or
options on such futures contracts, for hedging and substitution purposes
only. CCMIF may sell such futures contracts in anticipation of a decline
in the cost of municipal bonds it holds or may purchase such futures
contracts in anticipation of an increase in the value of municipal bonds
CCMIF intends to acquire. CCMIF also is authorized to purchase and sell
other financial futures contracts which in the opinion of the Investment
Advisor provide an appropriate hedge for some or all of CCMIF's
securities.
Because of low initial margin deposits made upon the opening of
a futures position, futures transactions involve substantial leverage.
As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses. Because
CCMIF will engage in the purchase and sale of financial futures
contracts solely for hedging and substitution purposes, however, any
losses incurred in connection therewith should, if the strategy is
successful, be offset in whole or in part by increases in the value of
securities held by CCMIF or decreases in the price of securities CCMIF
intends to acquire.
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading of
futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of fluctuation
in the price of a futures contract or option thereon during a single
trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing
the liquidation of open positions. Prices of existing contracts have in
the past moved the daily limit on a number of consecutive trading days.
CCMIF will enter into a futures position only if, in the judgment of the
Investment Advisor, there appears to be an actively traded secondary
market for such futures contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of these
instruments, as well as price movements of the securities held by CCMIF
within a given time frame. To the extent these prices remain stable
during the period in which a futures or option contract is held by
CCMIF, or move in a direction opposite to that anticipated, CCMIF may
realize a loss on the hedging transaction which is not fully or
partially offset by an increase in the value of CCMIF's securities. As a
result, CCMIF's total return for such period may be less than if it had
not engaged in the hedging transaction.
Description of Financial Futures Contracts (effective upon shareholder
approval)
Futures Contracts. A futures contract obligates the seller of a
contract to deliver and the purchaser of a contract to take delivery of
the type of financial instrument called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual
delivery or acceptance of securities, or for a cash settlement, in most
cases the contracts are closed out before the delivery date without the
delivery or acceptance taking place. CCMIF intends to close out any
futures contracts prior to the delivery date of such contracts.
CCMIF may sell futures contracts in anticipation of a decline
in the value of its investments in municipal bonds. The loss associated
with any such decline could be reduced without employing futures as a
hedge by selling long-term securities and either reinvesting the
proceeds in securities with shorter maturities or by holding assets in
cash. This strategy, however, entails increased transaction costs in the
form of brokerage commissions and dealer spreads and will typically
reduce CCMIF's average yields as a result of the shortening of
maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to CCMIF's
futures commission merchant and the relevant contract market, which
varies but is generally about 5% or less of the contract amount, must be
deposited with the broker. This amount is known as "initial margin," and
represents a "good faith" deposit assuring the performance of both the
purchaser and the seller under the futures contract. Subsequent payments
to and from the broker, known as "variation margin," are required to be
made on a daily basis as the price of the futures contract fluctuates,
making the long or short positions in the futures contract more or less
valuable, a process known as "marking to the market." Prior to the
settlement date of the futures contract, the position may be closed out
by taking an opposite position which will operate to terminate the
position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid to or
released by the broker, and the purchaser realizes a loss or gain. In
addition, a commission is paid on each completed purchase and sale
transaction.
The sale of financial futures contracts provides an alternative
means of hedging CCMIF against declines in the value of its investments
in municipal bonds. As such values decline, the value of CCMIF's
position in the futures contracts will tend to increase, thus offsetting
all or a portion of the depreciation in the market value of CCMIF's
fixed income investments which are being hedged. While CCMIF will incur
commission expenses in establishing and closing out futures positions,
commissions on futures transactions may be significantly lower than
transaction costs incurred in the purchase and sale of fixed income
securities. In addition, the ability of CCMIF to trade in the
standardized contracts available in the futures market may offer a more
effective hedging strategy than a program to reduce the average maturing
of portfolio securities, due to the unique and varied credit and
technical characteristics of the municipal debt instruments available to
CCMIF. Employing futures as a hedge may also permit CCMIF to assume a
hedging posture without reducing the yield on its investments, beyond
any amounts required to engage in futures trading.
CCMIF may engage in the purchase and sale of futures contracts
on an index of municipal securities. These instruments provide for the
purchase or sale of a hypothetical portfolio of municipal bonds at a
fixed price in a stated delivery month. Unlike most other futures
contracts, however, a municipal bond index futures contract does not
require actual delivery of securities but results in a cash settlement
based upon the difference in value of the index between the time the
contract was entered into and the time it is liquidated.
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"), the
contract market on which the futures contracts are traded. As currently
structured, the index is comprised of 40 tax-exempt term municipal
revenue and general obligation bonds. Each bond included in the index
must be rated either A- or higher by Standard & Poor's or A or higher by
Moody's Investors Service and must have a remaining maturity of 19 years
or more. Twice a month new issues satisfying the eligibility
requirements are added to, and an equal number of old issues will be
deleted from, the index. The value of the index is computed daily
according to a formula based upon the price of each bond in the index,
as evaluated by four dealer-to-dealers brokers.
CCMIF may also purchase and sell futures contracts on U.S.
Treasury bills, notes and bonds for the same types of hedging and
substitution purposes. Such futures contracts provide for delivery of
the underlying security at a specified future time for a fixed price,
and the value of the futures contract therefore generally fluctuates
with movements in interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a clearing
corporation, a nonprofit organization managed by the exchange
membership, which is also responsible for handling daily accounting of
deposits or withdrawals of margin.
CCMIF may also purchase financial futures contracts when not
fully invested in municipal bonds, in anticipation of an increase in the
cost of securities CCMIF intends to purchase. As such securities are
purchased, an equivalent amount of futures contracts will be closed out.
In a substantial majority of these transactions, CCMIF will purchase
municipal bonds upon termination of the futures contracts. Due to
changing market conditions and interest rate forecasts, however, a
futures position may be terminated without a corresponding purchase of
securities. Nevertheless, all purchases of futures contracts by CCMIF
will be subject to certain restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter
into a long position in the underlying futures contract (that is,
purchase the futures contract), in the case of a "call" option, or a
short position (sell the futures contract), in the case of a "put"
option, for a fixed price up to a stated expiration date. The option is
purchased for a non-refundable fee, known as the "premium." Upon
exercise of the option, the contract market clearing house assigns each
party to the option an opposite position in the underlying futures
contract. In the event of exercise, therefore, the parties are subject
to all of the risks of futures trading, such as payment of initial and
variation margin. In addition, the seller, or "writer," of the option is
subject to margin requirements on the option position. Options on
futures contracts are traded on the same contract markets as the
underlying futures contracts.
CCMIF may purchase options on futures contracts for the same
types of purposes described above in connection with futures contracts.
For example, in order to protect against an anticipated decline in the
value of securities it holds, CCMIF could purchase put options on
futures contracts, instead of selling the underlying futures contracts.
Conversely, in order to protect against the adverse effects of
anticipated increases in the costs of securities to be acquired, CCMIF
could purchase call options on futures contracts, instead of purchasing
the underlying futures contracts. CCMIF generally will sell options on
futures contracts only to close out an existing position.
CCMIF will not engage in transactions in such instruments
unless and until the Investment Advisor determines that market
conditions and the circumstances of CCMIF warrant such trading. To the
extent CCMIF engages in the purchase and sale of futures contracts or
options thereon, it will do so only at a level which is reflective of
the Investment Advisor's view of the hedging needs of CCMIF, the
liquidity of the market for futures contracts and the anticipated
correlation between movements in the value of the futures or option
contract and the value of securities held by the Portfolio.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in CCMIF being deemed to be a "commodity pool," as
defined under such regulations, provided that certain trading
restrictions are adhered to. In particular, CFTC regulations require
that all futures and option positions entered into by CCMIF qualify as
bona fide hedge transactions, as defined under CFTC regulations, or, in
the case of long positions, that the value of such positions not exceed
an amount of segregated funds determined by reference to certain cash
and securities positions maintained by CCMIF and accrued profits on such
positions. In addition, as a matter of operating policy, CCMIF may not
purchase or sell a futures contract or an option thereon if, immediately
thereafter, the sum of the amount of initial margin deposits on CCMIF's
existing futures positions and premiums on such options would exceed 5%
of its net assets.
When CCMIF purchases a futures contract, it will maintain an
amount of cash, cash equivalents (for example, commercial paper and
daily tender adjustable notes) or short-term high-grade fixed income
securities in a segregated account with CCMIF's custodian, so that the
amount so segregated plus the amount of initial and variation margin
held in the account of its broker equals the market value of the futures
contract, thereby ensuring that the use of such futures is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the municipal
bond index futures contract may vary from the bonds held by CCMIF. In
addition, the securities underlying futures contracts on U.S. Treasury
securities will not be the same as securities held by CCMIF. As a
result, CCMIF's ability effectively to hedge all or a portion of the
value of its municipal bonds through the use of futures contracts will
depend in part on the degree to which price movements in the index
underlying the municipal bond index futures contract, or the U.S.
Treasury securities underlying other futures contracts trade, correlate
with price movements of the municipal bonds held by CCMIF.
For example, where prices of securities in CCMIF do not move in
the same direction or to the same extent as the values of the securities
or index underlying a futures contract, the trading of such futures
contracts may not effectively hedge CCMIF's investments and may result
in trading losses. The correlation may be affected by disparities in the
average maturity, ratings, geographical mix or structure of CCMIF's
investments as compared to those comprising the index, and general
economic or political factors. In addition, the correlation between
movements in the value of the index underlying a futures contract may be
subject to change over time, as additions to and deletions from the
index alter its structure. In the case of futures contracts on U.S.
Treasury securities and options thereon, the anticipated correlation of
price movements between the U.S. Treasury securities underlying the
futures or options and municipal bonds may be adversely affected by
economic, political, legislative or other developments that have a
disparate impact on the respective markets for such securities. In the
event that the Investment Advisor determines to enter into transactions
in financial futures contracts other than the municipal bond index
futures contract or futures on U.S. Treasury securities, the risk of
imperfect correlation between movements in the prices of such futures
contracts and the prices of municipal bonds held by CCMIF may be greater.
The trading of futures contracts on an index also entails the
risk of imperfect correlation between movements in the price of the
futures contract and the value of the underlying index. The anticipated
spread between the prices may be distorted due to differences in the
nature of the markets, such as margin requirements, liquidity and the
participation of speculators in the futures markets. The risk of
imperfect correlation, however, generally diminishes as the delivery
month specified in the futures contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into a
closing purchase or sale transaction. This requires a secondary market
on the relevant contract market. CCMIF will enter into a futures or
option position only if there appears to be a liquid secondary market
therefor, although there can be no assurance that such a liquid
secondary market will exist for any particular contract at any specific
time. Thus, it may not be possible to close out a position once it has
been established. Under such circumstances, CCMIF could be required to
make continuing daily cash payments of variation margin in the event of
adverse price movements. In such situation, if CCMIF has insufficient
cash, it may be required to sell portfolio securities to meet daily
variation margin requirements at a time when it may be disadvantageous
to do so. In addition, CCMIF may be required to perform under the terms
of the futures or option contracts it holds. The inability to close out
futures or options positions also could have an adverse impact on
CCMIF's ability effectively to hedge its portfolio.
When CCMIF purchases an option on a futures contract, its risk
is limited to the amount of the premium, plus related transaction costs,
although this entire amount may be lost. In addition, in order to profit
from the purchase of an option on a futures contract, CCMIF may be
required to exercise the option and liquidate the underlying futures
contract, subject to the availability of a liquid secondary market. The
trading of options on futures contracts also entails the risk that
changes in the value of the underlying futures contract will not be
fully reflected in the value of the option, although the risk of
imperfect correlation generally tends to diminish as the maturity date
of the futures contract or expiration date of the option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
CCMIF's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate
movements within a given time frame.
Credit Quality
As an operating policy, (effective upon shareholder approval)
the Fund may not invest more than 35% of its net assets in non-investment
grade obligations. As has been the industry practice, this determination
of credit quality is made at the time the Fund acquires the obligation
However, because it is possible that subsequent downgrades could occur,
if an obligation held by the Fund is later downgraded, CCMIF's Advisor,
under the supervision of CCMIF's Board of Directors, will consider
whether it is in the best interest of CCMIF's shareholders to hold
or to dispose of the obligation. Among the criteria that may be
considered by the Advisor and the Board are the probability that the
obligations will be able to make scheduled interest and principal payments
in the future, the extent to which any devaluation of the obligation has
already been reflected in CCMIF's net asset value, and the total
percentage, if any, of obligations currently rated below investment grade
held by the Fund.
Non-investment grade securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. They involve greater risk of default or price declines
due to changes in the issuer's creditworthiness than investment-grade
debt securities. Because the market for lower-rated securities may be
thinner and less active than for higher-rated securities, there may be
market price volatility for these securities and limited liquidity in
the resale market. Market prices for these securities may decline
significantly in periods of general economic difficulty or rising
interest rates.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
Fundamental 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 CCMIF's
outstanding shares. Shares have equal rights as to voting. 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. CCMIF may not:
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 Series' total assets at the time of
the borrowing. Investment securities will not be
purchased while any borrowings are outstanding;
3) Underwrite the securities of other issuers,
except to the extent that the purchase of
municipal obligations in accordance with the
Series' investment objective and policies, either
directly from the issuer, or from an underwriter
for an issuer, may be deemed an underwriting;
4) Purchase or sell real estate, real estate
investment trust securities, or oil and gas
interests, but this shall not prevent CCMIF from
investing in municipal obligations secured by real
estate or interests therein;
5) Purchase or retain securities of an issuer if
those directors 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;
6) Purchase or sell physical commodities except that
it may enter into futures contracts and options
thereon (effective upon shareholder approval);
7) 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;
8) Invest 25% or more of its assets in the
securities of any one issuer. CCMIF may invest
more than 25% of its assets in obligations issued
or guaranteed by the U.S. Government, its agencies
or instrumentalities but will invest in more than
20% of such obligations only during abnormal
market conditions. 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;
9) Invest 25% or more of its assets in any
particular industry or industries. CCMIF may
invest more than 25% of its assets in obligations
issued or guaranteed by the U.S. Government, its
agencies or instrumentalities but will invest in
more than 20% of such obligations only during
abnormal market conditions. 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";
10) (10)Make loans to others, except in accordance
with the Series' investment objective and policies
or pursuant to contracts providing for the
compensation of service providers by compensating
balances.
Nonfundamental Investment Restrictions
The Series has adopted the following operating (i.e.,
nonfundamental) investment policies and restrictions which may be
changed by the Board of Directors without shareholder approval. CCMIF
may not:
1) Purchase illiquid securities if more than 15% of
the value of its net assets would be invested in
such securities;
2) 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;
3) Purchase or sell a futures contract or an option
thereon if immediately thereafter, the sum of the
amount of initial margin deposits on futures and
premiums on such options would exceed 5% of
CCMIF's net assets (effective upon shareholder approval);
4) Invest in puts or calls on a security, including
straddles, spreads, or any combination, if the
value of that option premium, when aggregated with
the premiums on all other options on securities
held by the Fund, exceeds 5% of CCMIF's total
assets (effective upon shareholder approval).
5) Effect short sales of securities. For purposes of
this restriction, transactions in futures
contracts and options are not deemed to constitute
selling securities short (effective upon shareholder approval).
6) Purchase securities on margin, except that it may
make margin deposits in connection with futures
contacts or options on futures (effective upon shareholder
approval).
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will be issued at no charge if requested in
writing by the investor. No certificates will be issued for fractional
shares (see Prospectus, "How to Sell Your Shares"). To change redemption
instructions already given, shareholders must send a written notice to
Calvert Group, c/o NFDS, 6th Floor, 1004 Baltimore, Kansas City, MO
64105, with a voided copy of a check for the bank wiring instructions to
be added. If a voided check does not accompany the request, then the
request must be signature guaranteed by a commercial bank, savings and
loan association, trust company, member firm of any national securities
exchange, or certain credit unions. Further documentation may be
required from corporations, fiduciaries, and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However, CCMIF
has the right to redeem shares in assets other than cash for redemption
amounts exceeding, in any 90-day period, $250,000 or 1% of the net asset
value of CCMIF, whichever is less.
Reduced Sales Charges (Class A)
CCMIF imposes reduced sales charges for Class A shares in
certain situations in which the Principal Underwriter (which offers the
Series' shares continuously and on a "best efforts" basis) and the
dealers selling CCMIF 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
$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
Series imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing CCMIF shareholders, enabling the
Series 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 Series' shares to their members. See
"Exhibit A - Reduced Sales Charges" in the Prospectus.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
CCMIF 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 will 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
Series invested in shares of any other Calvert Group Fund, at no
additional charge. If you elect to have dividends and/or distributions
paid in cash, and the U.S. Postal Service cannot deliver the check, or
if it remains uncashed for six months, it, as well as future dividends
and distributions, will be reinvested in additional shares.
==========================================================================
TAX MATTERS
==========================================================================
In 1995 the Series did qualify and in 1996 the Series intends
to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code as amended (the "Code"). By so qualifying, the
Series 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.
CCMIF'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.
CCMIF'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. If
you held shares for six months or less, losses must be offset by the
amount of exempt-interest dividends you received, and, to the extent of
capital gain distributions you received, the loss amount not offset
(disallowed) must be treated as long-term capital loss.
A shareholder may also be subject to some state and local taxes
on dividends and distributions from the Series. The Series will notify
shareholders annually about the tax status of dividends and
distributions paid by the Series 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 Series. "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 CCMIF
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 Series 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 Series may be required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction occurring
in the Series 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 Series 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 Series is required to report to the Internal
Revenue Service the following information with respect to redemption
transactions in CCMIF: (a) the shareholder's name, address, account
number and taxpayer identification number; (b) the total dollar value of
the redemptions; and (c) the Series' 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
==========================================================================
CCMIF'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 CCMIF's Advisor under the
supervision of the Board of Directors.
Valuations, market quotations and market equivalents are
provided the Fund by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Fund has been
approved by the Board of Directors. 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.
CCMIF determines the net asset value for each class 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 Series does not
determine net asset value on certain national holidays or other days on
which the New York Stock Exchange is closed: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($34,423,886/3,275,855 shares) $10.51
Maximum sales charge
(2.75% of Class A offering price) 0.30
Offering price per Class A share $10.81
Class C net asset value and offering price per share
($4,091,966/390,915 shares) $10.47
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
CCMIF may advertise 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 CCMIF's offering of shares. 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 CCMIF's dividend yield, plus or minus
realized or unrealized capital appreciation or depreciation, less fees
and expenses. All Class A total return quotations reflect the deduction
of CCMIF's maximum sales charge ("return with maximum load"), except
quotations of "return without maximum load" which do not deduct the
sales charge. Note: "Total Return" as quoted in the Financial Highlights
section of the Series' Prospectus and Annual Report to Shareholders,
however, per SEC instructions, does not reflect deduction of the sales
charge, and corresponds to "return without maximum load" as referred to
herein. Return without maximum load should be considered only by
investors, such as participants in certain pension plans, to whom the
sales charge does not apply, or for purposes of comparison only with
comparable figures which also do not reflect sales charges, such as
Lipper averages. Total return is computed according to the following
formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year
periods at the end of such periods (or portions thereof, if applicable).
Returns for the one year period and period from inception (Class A, May
29, 1992; Class C, March 1, 1994) are as follows:
Class A Shares Class A Shares Class C
Shares
With Max. Load W/O Max. Load
One Year 8.96% 12.07% 10.99%
From Inception 5.63% 6.44% 4.28%
CCMIF may also advertise its "yield" and "taxable equivalent
yield." As with total return, both yield figures are historical and are
not intended to indicate future performance. "Yield" quotations for each
class of CCMIF refer to the aggregate imputed yield-to-maturity of each
of the Series' 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 for that class 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. Yield is computed according to the
following formula:
Yield = 2[(+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 taxable equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal CCMIF's yield, all
or a portion of which may be exempt from federal income taxes. The
taxable equivalent yield for the federal and state level is computed for
each class by taking the portion of the yield exempt from regular
federal and California income taxes and multiplying the exempt yield by
a factor based on a stated income tax rate, then adding the portion of
the yield that is not exempt from regular federal and California income
taxes. The taxable equivalent yield for each class of the federal level
only is computed by taking the portion of the yield exempt from federal
income taxes and multiplying the exempt yield by a factor based on a
stated income tax rate, then adding the portion of the yield that is not
exempt from federal income taxes. The factor which is used to calculate
the tax equivalent yield is the reciprocal of the difference between 1
and the applicable income tax rate, which will be stated in the
advertisement.
For the thirty-day period ended December 31, 1995, CCMIF's
yield for Class A shares was 4.12% and its tax equivalent yield was
6.43% for an investor in the 36% federal income tax bracket, and 6.85%
for an investor in the 39.6% federal income tax bracket. For the same
period, CCMIF's yield for Class C shares was 3.38% and its federal tax
equivalent yield was 5.28% for an investor in the 36% federal income tax
bracket, and 5.62% for an investor in the 39.6% federal income tax
bracket.
==========================================================================
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 Series 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 Series,
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 Series 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.
==========================================================================
DIRECTORS 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. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. 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. Age: 73. 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. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, 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. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. 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. Age: 58. 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. Age: 47. 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. Age: 54.
<F1> RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
1 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. Age: 43.
<F1> WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
<F1> EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President
of Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds, except for
Calvert New World Fund, Inc. Age: 45.
<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. Age: 37.
<F1> Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
Each of the above directors and officers is a trustee/director
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. Blatz, Diehl, Pugh,
and Sorrell 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. Sorrell and
Martini are among the directors. The address of directors and officers,
unless otherwise noted, is 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814.
The Audit Committee of the Board of Directors is composed of
Messrs. Baird, Blatz, Feldman, Guffey, and Pugh. The Board's Investment
Policy Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat,
Silby, and Sorrell.
Directors and officers of the Fund as a group own less than 1%
of Calvert California Municipal Intermediate Fund's outstanding shares.
During fiscal 1995, directors of the Fund not affiliated with
the Fund's Advisor were paid $3,424. Directors 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/Directors 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.
Directors of the Series not affiliated with the Series' 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
Directors/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.
Director Compensation Table
Fiscal Year 1995 (unaudited Aggregate Compensation from
numbers) Registrant for service as
Director
Name of Director
............................................................
Richard L. Baird, Jr. $1,182
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $859
Charles E. Diehl $1,156
Douglas E. Feldman $1,121
Peter W. Gavian $1,137
John G. Guffey, Jr. $1,137
Arthur J. Pugh $1,201
D. Wayne Silby $1,093
Fiscal Year 1995 (unaudited Pension or Retirement
numbers) Benefits Accrued as part
of Registrant Expenses<F2>
Name of Director
.............................................................
Richard L. Baird, Jr. $0
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $0
Charles E. Diehl $1,156
Douglas E. Feldman $0
Peter W. Gavian $341
John G. Guffey, Jr. $0
Arthur J. Pugh $0
D. Wayne Silby $0
Fiscal Year 1995 (unaudited Total Compensation from
numbers) Registrant and Fund Complex
paid to Directors<F3>
Name of Director
..............................................................
Richard L. Baird, Jr. $33,450
Frank H. Blatz, Jr. $36,801
Frederick T. Borts $25,050
Charles E. Diehl $35,101
Douglas E. Feldman $30,600
Peter W. Gavian $31,951
John G. Guffey, Jr. $40,450
Arthur J. Pugh $36,801
D. Wayne Silby $47,965
<F2> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each director,
respectively.
<F3> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a 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 directors of the Fund; and further
provided that such continuance is also approved annually by the vote of
a majority of the directors 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 Directors. For its services, the Advisor receives
an annual fee of 0.60% of the first $500 million of the Series' average
daily net assets, 0.50% of the next $500 million of such assets, and
0.40% of all 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 may recapture in later years, to
the extent permitted by law, fees it waived and expenses it paid in
prior years. Specifically, the Advisor may recapture fees waived or
deferred and expenses reimbursed for the prior two-year period, but in
no event may it recapture fees or expenses for any period later than the
two-year period ending December 31, 1996. Recapture is permitted only to
the extent it does not result in the Series's aggregate expenses
exceeding an annual expense limit of 2.00% of its average daily net
assets. The advisory fee incurred in any given year will be paid in full
before any recapture fees are paid for a prior year. Recaptured fees
will apply to the most recent suspension/reimbursement period.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all directors 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 CCMIF for all expenses,
excluding brokerage, taxes, interest, and extraordinary items exceeding,
on a pro rata basis, the most restrictive expense limitation in those
states which the Series' shares are qualified for sale (currently, 2.5%
of the Series' first $30 million of average net assets, decreasing to
1.5% for assets over $100 million). During fiscal 1993, the Advisor
waived advisory fee of $162,908 and reimbursed the Series $33,272 for
other expenses. During fiscal 1994, the Advisor received advisory fees
of $194,484, and waived advisory fees of $53,268. The Advisor also
reimbursed the Series $7,343 for other expenses. During fiscal 1995, the
Advisor received advisory fees of $233,024.
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
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 Series' 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 an annual fee of 0.10% of the
Series' average net assets for providing such services. The fees paid by
the Series to Calvert Shareholder Services, Inc. for fiscal years 1993,
1994, and 1995 were $27,151, $41,292, and $38,837, respectively.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Series has entered into an agreement with Calvert
Distributors, Inc. ("CDI"), whereby CDI, acting as principal underwriter
for the Series, makes a continuous offering of the Series' securities on
a "best efforts" basis. Prior to April 1, 1995, the principal
underwriter was Calvert Securities Corporation ("CSC"). Under the terms
of the agreement, CDI bears all its expenses of providing services
pursuant to the agreement, including payment of any commissions and
service fees. CDI receives all sales charges imposed on the Series'
shares and compensates broker-dealer firms for sales of such shares (see
"Alternative Sales Options" in the Prospectus). CDI is entitled to
receive reimbursement of distribution expenses pursuant to the
Distribution Plans (see below). For the 1993, 1994, and 1995 fiscal
periods, the Series' Class A shares paid no Distribution Plan expenses.
For the fiscal periods ending December 31, 1993 and 1994, CSC received
sales charges in excess of the dealer reallowance of $72,396 and
$16,975, respectively. For fiscal 1995, CDI received sales charges in
excess of the dealer reallowance of $5,163.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Series has adopted Distribution Plans (the "Plans")
which permit it to pay certain expenses associated with the distribution
of its shares. Such expenses may not exceed, on an annual basis, 0.25%
of the Series' Class A average daily net assets. Expenses under the
Class C Plan may not exceed, on an annual basis, 0.80% of the Class C
average daily net assets. The Series' Class C shares paid no
Distribution Plan expenses in 1993, since those shares were not offered
to the public at that time. For the 1994 and 1995 fiscal periods, the
Series' Class C shares paid Distribution Plan expenses of $16,753 and
$28,141, respectively.
The Plans were approved by the Board of Directors/Trustees,
including the Directors/Trustees who are not "interested persons" of the
Funds (as that term is defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of the Plans or in any
agreements related to the Plans. The selection and nomination of the
Directors/Trustees who are not interested persons of the Fund is
committed to the discretion of such disinterested Directors/Trustees. In
establishing the Plans, the Directors/Trustees considered various
factors including the amount of the distribution fee. The
Directors/Trustees determined that there is a reasonable likelihood that
the Plans will benefit the Funds and their shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors/Trustees who have no direct or indirect
financial interest in the Plans, or by vote of a majority of the
outstanding shares of the Series and class. Any change in the Plans that
would materially increase the distribution cost to the Series requires
approval of the shareholders of the affected class; otherwise, the Plans
may be amended by the Directors/Trustees, including a majority of the
non-interested Directors/Trustees as described above.
The Plans will continue in effect successive one-year terms,
provided that such continuance is specifically approved by (i) the vote
of a majority of the Directors/Trustees who are not parties to the Plans
or interested persons of any such party and who have no direct or
indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors/Trustees.
Apart from the Plans, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Funds.
==========================================================================
TRANSFER AND SHAREHOLDER SERVICING AGENT
==========================================================================
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, 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 semi-annual 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. The fees paid by the Series to Calvert
Shareholder Services, Inc. for fiscal periods 1993, 1994, and 1995 were
$16,897, $22,368, and $24,388, respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers and Lybrand L.L.P. has been selected by the Board of
Directors to serve as independent accountants of the Fund for fiscal
year 1996. State Street Bank & Trust Company, N.A., 225 Franklin Street,
Boston, MA 02110, serves as custodian of the Fund's investments. First
National Bank of Maryland, 25 South Charles Street, Baltimore, Maryland
21203 acts as custodian of certain of the Series's cash assets. Neither
custodian has any part in deciding the Fund's investment policies or the
choice of securities that are to be purchased or sold by the Fund.
==========================================================================
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 Directors.
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 CCMIF or who provide it 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 or director of the Fund or any
of their affiliates, or broker-dealers for the 1993, 1994, or 1995
fiscal periods.
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 or its affiliate
may compensate, at its expense, such broker-dealers in consideration of
their promotional and administrative services.
The portfolio turnover for the 1993, 1994, and 1995 fiscal
periods was 21%, 68%, and 47%, respectively.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Fund was organized as a corporation under the General
Corporation Law of the State of Maryland on February 4, 1992. The Fund's
other series are: Calvert National Municipal Intermediate Fund, Calvert
Arizona Municipal Intermediate Fund, Calvert Maryland Municipal
Intermediate Fund, Calvert Michigan Municipal Intermediate Fund, Calvert
New York Municipal Intermediate Fund, Calvert Pennsylvania Municipal
Intermediate Fund, and Calvert Virginia Municipal Intermediate Fund.
Prior to March 1, 1994, Calvert National Municipal Intermediate Fund was
known as Calvert Intermediate Municipal Fund.
CCMIF will send its shareholders unaudited semi-annual and
audited annual reports that will include the Series' 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.
Each share of the 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 the Series as
declared by the Board. The Series offers two separate classes of shares:
Class A and Class C. 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
will result in differing net asset values and distributions. Upon any
liquidation of the Series, shareholders of each class are entitled to
share pro rata in the net assets available for distribution.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Series' Annual Report
to Shareholders, dated December 31, 1995, 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 Series.
==========================================================================
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<F4>*)
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:
<F4> *"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
__ $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)
Calvert Municipal Fund, Inc.
CALVERT CALIFORNIA MUNICIPAL
INTERMEDIATE FUND
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand L.L.P. Calvert Distributors, Inc.
217 E. Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 3
Purchases and Redemptions
of Shares 5
Dividends and Distributions 5
Tax Matters 6
Valuation of Shares 7
Calculation of Yield
and Total Return 7
Advertising 9
Directors and Officers 9
Investment Advisor 12
Administrative Services 13
Method of Distribution 13
Transfer and
Shareholder Servicing Agent 14
Independent Accountants and
Custodians 14
Portfolio Transactions 14
General Information 15
Financial Statements 15
Appendix 15
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
==========================================================================
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 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 Prospectus, dated April 30, 1996, which may be
obtained free of charge by sending a request to the above address or
calling the telephone numbers listed above.
==========================================================================
INVESTMENT OBJECTIVE
==========================================================================
Approximately February 23, 1996, a proxy statement was mailed to Calvert
National Municipal Intermediate Fund ("National Municipal" or the "Series")
shareholders were asked to approve certain changes in investment restrictions,
including the ability to purchase futures and options and non-investment grade
bonds, and to make the Series mondiversified. The shareholder meeting scheduled
for April 18, 1996 was adjourned, but shareholder approval of all items was
expected on or about April 30, 1996.
Calvert National Municipal Intermediate Fund ("National
Municipal" or the "Series") is designed to provide individual and
institutional investors 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 of the Series. There is, of course, no assurance that
the Series will be successful in meeting its investment objective; there
are inherent risks in the ownership of any investment.
Dividends paid by National Municipal 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
its shares will fluctuate to reflect changes in the market value of the
Series' investments. The Series will attempt, through careful
management, to reduce these risks and enhance the opportunities for
higher income and greater price stability.
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INVESTMENT POLICIES
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National Municipal invests primarily in a nondiversified
portfolio of municipal obligations, including some with interest that
may be subject to alternative minimum tax. The average dollar-weighted
maturity of investments is between 3 and 10 years. Fixed rate
investments normally have remaining maturities of 12 years or less;
variable rate investments may have longer maturities. A complete
explanation of municipal obligations and municipal bond and note ratings
appears in the Appendix.
Under normal market conditions, National Municipal will invest
at least 65% of its total assets in municipal obligations with interest
that is exempt from federal income tax. To the extent the obligations
are issued by your state of residence, you may also be exempt from
certain state and local income taxes.
Variable Rate Demand Notes
The Board of Directors of Calvert Municipal Fund, Inc. (the
"Fund"), of which National Municipal is a series, has approved
investments in floating and variable rate demand notes upon the
following conditions: the Series 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 Series has the right to dispose of the
notes at a price which approximates par and market value. Notes with a
right of demand exceeding seven days are considered illiquid and are
subject to purchase restrictions.
Municipal Leases
National Municipal 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. National Municipal 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 National Municipal'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
National Municipal'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 National Municipal, 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
National Municipal has valued it for purposes of calculating National
Municipal'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 National Municipal'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 National Municipal.
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.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in National Municipal's portfolio are subject to changes in market
value based on 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, National Municipal 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 its
assets may vary. No new when-issued commitments will be made if more
than 50% of the Series' net assets would become so committed.
When the time comes to pay for when-issued securities, National
Municipal 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 Series' 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.
Transactions in Futures Contracts (effective upon shareholder approval)
National Municipal may engage in the purchase and sale of
futures contracts on an index of municipal bonds or on U.S. Treasury
securities, or options on such futures contracts, for hedging and
substitution purposes only. National Municipal may sell such futures
contracts in anticipation of a decline in the cost of municipal bonds it
holds or may purchase such futures contracts in anticipation of an
increase in the value of municipal bonds National Municipal intends to
acquire. National Municipal also is authorized to purchase and sell
other financial futures contracts which in the opinion of the Investment
Advisor provide an appropriate hedge for some or all of National
Municipal's securities.
Because of low initial margin deposits made upon the opening of
a futures position, futures transactions involve substantial leverage.
As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses. Because
National Municipal will engage in the purchase and sale of financial
futures contracts solely for hedging and substitution purposes, however,
any losses incurred in connection therewith should, if the strategy is
successful, be offset in whole or in part by increases in the value of
securities held by National Municipal or decreases in the price of
securities National Municipal intends to acquire.
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading of
futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of fluctuation
in the price of a futures contract or option thereon during a single
trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing
the liquidation of open positions. Prices of existing contracts have in
the past moved the daily limit on a number of consecutive trading days.
National Municipal will enter into a futures position only if, in the
judgment of the Investment Advisor, there appears to be an actively
traded secondary market for such futures contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of these
instruments, as well as price movements of the securities held by
National Municipal within a given time frame. To the extent these prices
remain stable during the period in which a futures or option contract is
held by National Municipal, or move in a direction opposite to that
anticipated, National Municipal may realize a loss on the hedging
transaction which is not fully or partially offset by an increase in the
value of National Municipal's securities. As a result, National
Municipal's total return for such period may be less than if it had not
engaged in the hedging transaction.
Description of Financial Futures Contracts (effective upon shareholder
approval)
Futures Contracts. A futures contract obligates the seller of a
contract to deliver and the purchaser of a contract to take delivery of
the type of financial instrument called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual
delivery or acceptance of securities, or for a cash settlement, in most
cases the contracts are closed out before the delivery date without the
delivery or acceptance taking place. National Municipal intends to close
out any futures contracts prior to the delivery date of such contracts.
National Municipal may sell futures contracts in anticipation
of a decline in the value of its investments in municipal bonds. The
loss associated with any such decline could be reduced without employing
futures as a hedge by selling long-term securities and either
reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. This strategy, however, entails increased
transaction costs in the form of brokerage commissions and dealer
spreads and will typically reduce National Municipal's average yields as
a result of the shortening of maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to
National Municipal's futures commission merchant and the relevant
contract market, which varies but is generally about 5% or less of the
contract amount, must be deposited with the broker. This amount is known
as "initial margin," and represents a "good faith" deposit assuring the
performance of both the purchaser and the seller under the futures
contract. Subsequent payments to and from the broker, known as
"variation margin," are required to be made on a daily basis as the
price of the futures contract fluctuates, making the long or short
positions in the futures contract more or less valuable, a process known
as "marking to the market." Prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position
which will operate to terminate the position in the futures contract. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker, and the purchaser
realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
The sale of financial futures contracts provides an alternative
means of hedging National Municipal against declines in the value of its
investments in municipal bonds. As such values decline, the value of
National Municipal's position in the futures contracts will tend to
increase, thus offsetting all or a portion of the depreciation in the
market value of National Municipal's fixed income investments which are
being hedged. While National Municipal will incur commission expenses in
establishing and closing out futures positions, commissions on futures
transactions may be significantly lower than transaction costs incurred
in the purchase and sale of fixed income securities. In addition, the
ability of National Municipal to trade in the standardized contracts
available in the futures market may offer a more effective hedging
strategy than a program to reduce the average maturing of portfolio
securities, due to the unique and varied credit and technical
characteristics of the municipal debt instruments available to National
Municipal. Employing futures as a hedge may also permit National
Municipal to assume a hedging posture without reducing the yield on its
investments, beyond any amounts required to engage in futures trading.
National Municipal may engage in the purchase and sale of
futures contracts on an index of municipal securities. These instruments
provide for the purchase or sale of a hypothetical portfolio of
municipal bonds at a fixed price in a stated delivery month. Unlike most
other futures contracts, however, a municipal bond index futures
contract does not require actual delivery of securities but results in a
cash settlement based upon the difference in value of the index between
the time the contract was entered into and the time it is liquidated.
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"), the
contract market on which the futures contracts are traded. As currently
structured, the index is comprised of 40 tax-exempt term municipal
revenue and general obligation bonds. Each bond included in the index
must be rated either A- or higher by Standard & Poor's or A or higher by
Moody's Investors Service and must have a remaining maturity of 19 years
or more. Twice a month new issues satisfying the eligibility
requirements are added to, and an equal number of old issues will be
deleted from, the index. The value of the index is computed daily
according to a formula based upon the price of each bond in the index,
as evaluated by four dealer-to-dealers brokers.
National Municipal may also purchase and sell futures contracts
on U.S. Treasury bills, notes and bonds for the same types of hedging
and substitution purposes. Such futures contracts provide for delivery
of the underlying security at a specified future time for a fixed price,
and the value of the futures contract therefore generally fluctuates
with movements in interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a clearing
corporation, a nonprofit organization managed by the exchange
membership, which is also responsible for handling daily accounting of
deposits or withdrawals of margin.
National Municipal may also purchase financial futures
contracts when not fully invested in municipal bonds, in anticipation of
an increase in the cost of securities National Municipal intends to
purchase. As such securities are purchased, an equivalent amount of
futures contracts will be closed out. In a substantial majority of these
transactions, National Municipal will purchase municipal bonds upon
termination of the futures contracts. Due to changing market conditions
and interest rate forecasts, however, a futures position may be
terminated without a corresponding purchase of securities. Nevertheless,
all purchases of futures contracts by National Municipal will be subject
to certain restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter
into a long position in the underlying futures contract (that is,
purchase the futures contract), in the case of a "call" option, or a
short position (sell the futures contract), in the case of a "put"
option, for a fixed price up to a stated expiration date. The option is
purchased for a non-refundable fee, known as the "premium." Upon
exercise of the option, the contract market clearing house assigns each
party to the option an opposite position in the underlying futures
contract. In the event of exercise, therefore, the parties are subject
to all of the risks of futures trading, such as payment of initial and
variation margin. In addition, the seller, or "writer," of the option is
subject to margin requirements on the option position. Options on
futures contracts are traded on the same contract markets as the
underlying futures contracts.
National Municipal may purchase options on futures contracts
for the same types of purposes described above in connection with
futures contracts. For example, in order to protect against an
anticipated decline in the value of securities it holds, National
Municipal could purchase put options on futures contracts, instead of
selling the underlying futures contracts. Conversely, in order to
protect against the adverse effects of anticipated increases in the
costs of securities to be acquired, National Municipal could purchase
call options on futures contracts, instead of purchasing the underlying
futures contracts. National Municipal generally will sell options on
futures contracts only to close out an existing position.
National Municipal will not engage in transactions in such
instruments unless and until the Investment Advisor determines that
market conditions and the circumstances of National Municipal warrant
such trading. To the extent National Municipal engages in the purchase
and sale of futures contracts or options thereon, it will do so only at
a level which is reflective of the Investment Advisor's view of the
hedging needs of National Municipal, the liquidity of the market for
futures contracts and the anticipated correlation between movements in
the value of the futures or option contract and the value of securities
held by National Municipal.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in National Municipal being deemed to be a "commodity
pool," as defined under such regulations, provided that certain trading
restrictions are adhered to. In particular, CFTC regulations require
that all futures and option positions entered into by National Municipal
qualify as bona fide hedge transactions, as defined under CFTC
regulations, or, in the case of long positions, that the value of such
positions not exceed an amount of segregated funds determined by
reference to certain cash and securities positions maintained by
National Municipal and accrued profits on such positions. In addition,
as a matter of operating policy, National Municipal may not purchase or
sell a futures contract or an option thereon if, immediately thereafter,
the sum of the amount of initial margin deposits on National Municipal's
existing futures positions and premiums on such options would exceed 5%
of its net assets.
When National Municipal purchases a futures contract, it will
maintain an amount of cash, cash equivalents (for example, commercial
paper and daily tender adjustable notes) or short-term high-grade fixed
income securities in a segregated account with National Municipal's
custodian, so that the amount so segregated plus the amount of initial
and variation margin held in the account of its broker equals the market
value of the futures contract, thereby ensuring that the use of such
futures is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the municipal
bond index futures contract may vary from the bonds held by National
Municipal. In addition, the securities underlying futures contracts on
U.S. Treasury securities will not be the same as securities held by
National Municipal. As a result, National Municipal's ability
effectively to hedge all or a portion of the value of its municipal
bonds through the use of futures contracts will depend in part on the
degree to which price movements in the index underlying the municipal
bond index futures contract, or the U.S. Treasury securities underlying
other futures contracts trade, correlate with price movements of the
municipal bonds held by National Municipal.
For example, where prices of securities in National Municipal
do not move in the same direction or to the same extent as the values of
the securities or index underlying a futures contract, the trading of
such futures contracts may not effectively hedge National Municipal's
investments and may result in trading losses. The correlation may be
affected by disparities in the average maturity, ratings, geographical
mix or structure of National Municipal's investments as compared to
those comprising the index, and general economic or political factors.
In addition, the correlation between movements in the value of the index
underlying a futures contract may be subject to change over time, as
additions to and deletions from the index alter its structure. In the
case of futures contracts on U.S. Treasury securities and options
thereon, the anticipated correlation of price movements between the U.S.
Treasury securities underlying the futures or options and municipal
bonds may be adversely affected by economic, political, legislative or
other developments that have a disparate impact on the respective
markets for such securities. In the event that the Investment Advisor
determines to enter into transactions in financial futures contracts
other than the municipal bond index futures contract or futures on U.S.
Treasury securities, the risk of imperfect correlation between movements
in the prices of such futures contracts and the prices of municipal
bonds held by National Municipal may be greater.
The trading of futures contracts on an index also entails the
risk of imperfect correlation between movements in the price of the
futures contract and the value of the underlying index. The anticipated
spread between the prices may be distorted due to differences in the
nature of the markets, such as margin requirements, liquidity and the
participation of speculators in the futures markets. The risk of
imperfect correlation, however, generally diminishes as the delivery
month specified in the futures contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into a
closing purchase or sale transaction. This requires a secondary market
on the relevant contract market. National Municipal will enter into a
futures or option position only if there appears to be a liquid
secondary market therefor, although there can be no assurance that such
a liquid secondary market will exist for any particular contract at any
specific time. Thus, it may not be possible to close out a position once
it has been established. Under such circumstances, National Municipal
could be required to make continuing daily cash payments of variation
margin in the event of adverse price movements. In such situation, if
National Municipal has insufficient cash, it may be required to sell
portfolio securities to meet daily variation margin requirements at a
time when it may be disadvantageous to do so. In addition, National
Municipal may be required to perform under the terms of the futures or
option contracts it holds. The inability to close out futures or options
positions also could have an adverse impact on National Municipal's
ability effectively to hedge its portfolio.
When National Municipal purchases an option on a futures
contract, its risk is limited to the amount of the premium, plus related
transaction costs, although this entire amount may be lost. In addition,
in order to profit from the purchase of an option on a futures contract,
National Municipal may be required to exercise the option and liquidate
the underlying futures contract, subject to the availability of a liquid
secondary market. The trading of options on futures contracts also
entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option,
although the risk of imperfect correlation generally tends to diminish
as the maturity date of the futures contract or expiration date of the
option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
National Municipal's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate
movements within a given time frame.
Credit Quality
As an operating policy, (effective upon shareholder approval)
National Municipal may not invest more than 35% of its net assets
in non-investment grade municipal obligations. As has been the industry
practice, this determination of credit quality is made at the time the
Series acquires the obligation. However, because it is possible that
subsequent downgrades could occur, if an obligation held by National
Municipal is later downgraded, the Advisor, under the supervision of the
Fund's Board of Directors, will consider whether it is in the best interest
of the shareholders to hold or to dispose of the obligation. Among
the criteria that may be considered by the Advisor and the Board are
the probability that the obligations will be able to make scheduled
interest and principal payments in the future, the extent to which any
devaluation of the obligation has already been reflected in the Series'
net asset value, and the total percentage, if any, of obligations currently
rated below investment-grade held by National Municipal.
Noninvestment-grade securities have moderate to poor protection
of principal and interest payments and have speculative characteristics.
They involve greater risk of default or price declines due to changes in
the issuer's creditworthiness than investment-grade debt securities.
Because the market for lower-rated securities may be thinner and less
active than for higher-rated securities, there may be market price
volatility for these securities and limited liquidity in the resale
market. Market prices for these securities may decline significantly in
periods of general economic difficulty or rising interest rates.
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INVESTMENT RESTRICTIONS
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Fundamental 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 National
Municipal's outstanding shares. Shares have equal rights as to voting. 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.
National Municipal may not:
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 Series' total assets at the time of
the borrowing. Investment securities will not be
purchased while any borrowings are outstanding;
3) Make loans other than through the purchase of
money market instruments and repurchase agreements
or by the purchase of bonds, debentures or other
debt securities. The purchase by a Portfolio of
all or a portion of an issue of publicly or
privately distributed debt obligations in
accordance with its investment objective, policies
and restrictions, shall not constitute the making
of a loan.
4) Underwrite the securities of other issuers,
except to the extent that the purchase of
municipal obligations in accordance with the
Series' investment objective and policies, either
directly from the issuer, or from an underwriter
for an issuer, may be deemed an underwriting;
5) Purchase or sell real estate, real estate
investment trust securities, commodities, or
commodity contracts, or oil and gas interests, but
this shall not prevent National Municipal from
investing in municipal obligations secured by real
estate or interests therein;
6) Purchase or sell physical commodities except that
it may enter into futures contracts and options
thereon (effective upon shareholder approval);
7) Purchase or retain securities of an issuer if
those directors 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) 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;
9) Invest 25% or more of its assets in any
particular industry or industries. 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."
Nonfundamental Investment Restrictions
The Series has adopted the following operating (i.e.,
nonfundamental) investment policies and restrictions which may be
changed by the Board of Directors without shareholder approval. National
Municipal may not:
1) Purchase illiquid securities if more than 15% of
the value of its net assets would be invested in
such securities;
2) 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.
3) Purchase or sell a futures contract or an option
thereon if immediately thereafter, the sum of the
amount of initial margin deposits on futures and
premiums on such options would exceed 5% of the
Fund's net assets (effective upon shareholder approval);
4) Invest in puts or calls on a security, including
straddles, spreads, or any combination, if the
value of that option premium, when aggregated with
the premiums on all other options on securities
held by the Fund, exceeds 5% of the Fund's total
assets (effective upon shareholder approval).
5) Effect short sales of securities. For purposes of
this restriction, transactions in futures
contracts and options are not deemed to constitute
selling securities short (effective upon shareholder approval).
6) Purchase securities on margin, except that it may
make margin deposits in connection with futures
contacts or options on futures (effective upon shareholder
approval).
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PURCHASES AND REDEMPTIONS OF SHARES
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Share certificates will be issued at no charge if requested in
writing by the investor. No certificates will be issued for fractional
shares (see Prospectus, "How to Sell Your Shares").
To change redemption instructions already given, shareholders
must send a written notice to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or certain credit unions.
Further documentation may be required from corporations, fiduciaries,
and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However,
National Municipal has the right to redeem shares in assets other than
cash for redemption amounts exceeding, in any 90-day period, $250,000 or
1% of the net asset value of National Municipal, whichever is less.
Reduced Sales Charges (Class A)
National Municipal imposes reduced sales charges in certain
situations in which the Principal Underwriter (which offers the Series'
shares continuously and on a "best efforts" basis) and the dealers
selling National Municipal 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; for
example, the per-dollar transaction cost for a sale to an investor of
shares worth $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
Series imposes the sales charge applicable to the goal amount.
Similarly, the Underwriter and selling dealers also experience cost
savings when dealing with existing National Municipal shareholders,
enabling the Series 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 the Series'
shares to their members. See "Exhibit A - Reduced Sales Charges" in the
Prospectus.
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DIVIDENDS AND DISTRIBUTIONS
==========================================================================
National Municipal 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 will 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
Series invested in shares of any other Calvert Group Fund, at no
additional charge. If you elect to have dividends and/or distributions
paid in cash, and the U.S. Postal Service cannot deliver the check, or
if it remains uncashed for six months, it, as well as future dividends
and distributions, will be reinvested in additional shares.
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TAX MATTERS
==========================================================================
In 1995 National Municipal did qualify and in 1996 National
Municipal intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code as amended (the "Code"). By so
qualifying, it 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.
National Municipal'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. National Municipal'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. If you held shares for six months
or less, losses must be offset by the amount of exempt-interest
dividends you received, and, to the extent of capital gain distributions
you received, the loss amount not offset (disallowed) must be treated as
long-term capital loss.
A shareholder may also be subject to some state and local taxes
on dividends and distributions. National Municipal will notify
shareholders annually about the tax status of dividends and
distributions paid by the Series 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 "nonexempt 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
National Municipal 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 Series 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.
National Municipal may be required to withhold 31% of any
long-term capital gain dividends and 31% of each redemption transaction
occurring in the Series 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 Series is required to report to the Internal
Revenue Service the following information with respect to redemption
transactions in National Municipal: (a) the shareholder's name, address,
account number and taxpayer identification number; (b) the total dollar
value of the redemptions; and (c) the Series' 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. Nonresident aliens also are generally not subject to
either requirement but, along with certain foreign partnerships and
foreign corporations, may instead be subject to withholding under
section 1441 of the Code. Shareholders claiming exemption from backup
withholding and broker reporting should call or write the Fund for
further information.
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VALUATION OF SHARES
==========================================================================
National Municipal'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 Directors.
Valuations, market quotations and market equivalents are
provided by Kenny S&P Evaluation Services, a subsidiary of McGraw-Hill.
The use of Kenny as a pricing service by the Fund has been approved by
the Board of Directors. 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.
National Municipal determines the net asset value for each
class 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
Series does not determine net asset value on certain national holidays
or other days on which the New York Stock Exchange is closed: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
Net Asset Value and Offering Price Per Share
Class A net asset value per share
($40,146,014/3,780,274 shares) $10.62
Maximum sales charge
(2.75% of Class A offering price) 0.30
Offering price per Class A share $10.92
Class C net asset value and offering price per share
($6,378,151/602,574 shares) $10.47
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CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
National Municipal may advertise 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 National Municipal's
offering of shares. 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 National
Municipal's dividend yield, plus or minus realized or unrealized capital
appreciation or depreciation, less fees and expenses. All Class A total
return quotations reflect the deduction of National Municipal's maximum
sales charge ("return with maximum load"), except quotations of "return
without maximum load" which do not deduct the sales charge. Note: "Total
Return" as quoted in the Financial Highlights section of the Series'
Prospectus and Annual Report to Shareholders, however, per SEC
instructions, does not reflect deduction of the sales charge, and
corresponds to "return without maximum load" as referred to herein.
Return without maximum load should be considered only by investors, such
as participants in certain pension plans, to whom the sales charge does
not apply, or for purposes of comparison only with comparable figures
which also do not reflect sales charges, such as Lipper averages. Total
return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year
periods at the end of such periods (or portions thereof, if applicable).
Returns for the one year period and period from inception (Class A,
September 30, 1992; Class C, March 1, 1994) are as follows:
Class A Shares Class A Shares Class C Shares
With Max. Load W/O Max. Load
One Year 10.49% 13.64% 12.50%
From Inception 6.11% 7.01% 5.87%
National Municipal may also advertise its "yield" and "taxable
equivalent yield." As with total return, both yield figures are
historical and are not intended to indicate future performance. "Yield"
quotations for each class of National Municipal refer to the aggregate
imputed yield-to-maturity of each of the Series' 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 for that class 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.
Yield is computed according to the following formula:
Yield = 2[(+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 taxable equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal National
Municipal's yield, all or a portion of which may be exempt from federal
income taxes. The taxable equivalent yield is computed for each class by
taking the portion of the yield exempt from federal income taxes and
multiplying the exempt yield by a factor based on a stated income tax
rate, then adding the portion of the yield that is not exempt from
federal income taxes. The factor which is used to calculate the tax
equivalent yield is the reciprocal of the difference between 1 and the
applicable income tax rate, which will be stated in the advertisement.
For the thirty-day period ended December 31, 1995, National
Municipal's yield for Class A shares was 4.46% and its tax equivalent
yield was 6.96% for an investor in the 36% federal income tax bracket,
and 6.85% for an investor in the 39.6% federal income tax bracket. For
the same period, National Municipal's yield for Class C shares was 3.63%
and its tax equivalent yield was 5.67% for an investor in the 36%
federal income tax bracket, and 6.03% for an investor in the 39.6%
federal income tax bracket.
==========================================================================
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 Series 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 Series,
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 Series 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.
==========================================================================
DIRECTORS 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. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. 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. Age: 73. 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. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, 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. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. 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. Age: 58. 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. Age: 47. 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. Age: 54.
<F1> RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
<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. Age: 43.
<F1> WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
<F1> EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
<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, Inc. Age: 45.
<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. Age: 37.
<F1> Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
Each of the above directors and officers is a trustee or
officer of other investment companies in the Calvert Group of Funds
except Calvert Social Investment Fund, and Calvert World Values Fund,
Inc., of which only Messrs. Baird, Guffey, Silby and Sorrell are among
the trustees/directors; Acacia Capital Corporation, of which only
Messrs. Blatz, Diehl, Pugh and Sorrell are among the directors, and
Calvert New World Fund, Inc., of which only Messrs. Sorrell and Martini
are among the directors. The address of directors and officers, unless
otherwise noted, is 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
The Audit Committee of the Board of Directors is composed of
Messrs. Baird, Blatz, Feldman, Guffey and Pugh. The Board's Investment
Policy Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat,
Silby and Sorrell.
Directors and officers of the Fund as a group own less than 1%
of Calvert National Municipal Intermediate Fund's outstanding shares.
During fiscal 1995, directors of the Fund not affiliated with
the Fund's Advisor were paid $4,073. Directors 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/Directors 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.
Directors of the Series not affiliated with the Series' 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
Directors/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.
Director Compensation Table
Fiscal Year 1995 (unaudited Aggregate Compensation from
numbers) Registrant for service as
Director
Name of Director
...........................................................
Richard L. Baird, Jr. $1,182
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $859
Charles E. Diehl $1,156
Douglas E. Feldman $1,121
Peter W. Gavian $1,137
John G. Guffey, Jr. $1,137
Arthur J. Pugh $1,201
D. Wayne Silby $1,093
Fiscal Year 1995 (unaudited Pension or Retirement
numbers) Benefits Accrued as part
of Registrant Expenses<F2>
Name of Director
.................................................................
Richard L. Baird, Jr. $0
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $0
Charles E. Diehl $1,156
Douglas E. Feldman $0
Peter W. Gavian $341
John G. Guffey, Jr. $0
Arthur J. Pugh $0
D. Wayne Silby $0
Fiscal Year 1995 (unaudited Total Compensation from
numbers) Registrant and Fund Complex
paid to Directors<F3>
Name of Director
................................................................
Richard L. Baird, Jr. $33,450
Frank H. Blatz, Jr. $36,801
Frederick T. Borts $25,050
Charles E. Diehl $35,101
Douglas E. Feldman $30,600
Peter W. Gavian $31,951
John G. Guffey, Jr. $40,450
Arthur J. Pugh $36,801
D. Wayne Silby $47,965
<F2> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each director,
respectively.
<F3> As of December 31, 1995. The Fund Complex consists of eight (8 registered
investment companies.
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INVESTMENT ADVISOR
==========================================================================
The Fund's Investment Advisor is Calvert Asset Management
Company, Inc., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, a subsidiary of Calvert Group, Ltd., which is a 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 directors of the Fund; and further
provided that such continuance is also approved annually by the vote of
a majority of the directors 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 Fun's assets, subject to the direction and control
of the Fund's Board of Directors. For its services, the Advisor receives
an annual fee of 0.60% of the first $500 million of the Series' average
daily net assets, 0.50% of the next $500 million of such assets, and
0.40% of all 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 may recapture in later years, to
the extent permitted by law, fees it waived or deferred and expenses it
paid in prior years. Specifically, the Advisor may recapture fees waived
or deferred and expenses reimbursed for the prior two-year period, but
in no event may it recapture fees or expenses for any period later than
the two-year period ending December 31, 1996. Recapture is permitted
only to the extent it does not result in the Series's aggregate expenses
exceeding an annual expense limit of 2.00% of its average daily net
assets. The advisory fee incurred in any given year will be paid in full
before any recapture fees are paid for a prior year. Recaptured fees
will apply to the most recent suspension/reimbursement period. During
fiscal year 1993, the Advisor waived advisory fees of $117,106 and
reimbursed the Series $89,240 for other expenses. During fiscal 1994,
the Advisor waived advisory fees of $139,628 and reimbursed the Series
$20,701 for other expenses. During fiscal year 1995, the Fund paid
advisory fees of $270,912.
The Advisor provides the Fund with investment advice and
research, pays the salaries and fees of all directors 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 National Municipal for all
expenses, excluding brokerage, taxes, interest, and extraordinary items
exceeding, on a pro rata basis, the most restrictive expense limitation
in those states which the Series' shares are qualified for sale
(currently, 2.5% of the Series' first $30 million of average net assets,
decreasing to 1.5% for assets over $100 million).
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
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
Series' 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 is entitled to receive an annual
fee of 0.10% of the Series' average net assets for providing such
services. For the 1992 fiscal period, CASC waived its entire fee. The
fees paid by the Series to Calvert Administrative Services Company, Inc.
for fiscal years 1993, 1994, and 1995 were $19,672, $45,876, and
$45,152, respectively.
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METHOD OF DISTRIBUTION
==========================================================================
The Series has entered into an agreement with Calvert
Distributors, Inc. ("CDI"), whereby CDI, acting as principal underwriter
for the Series, makes a continuous offering of the Series' securities on
a "best efforts" basis. Prior to April 1, 1995, the principal
underwriter was Calvert Securities Corporation ("CSC"). Under the terms
of the agreement, CDI bears all its expenses of providing services
pursuant to the agreement, including payment of any commissions and
service fees. CDI receives all sales charges imposed on the Series'
shares and compensates broker-dealer firms for sales of such shares (see
"Alternative Sales Options" in the Prospectus). CDI is entitled to
receive reimbursement of distribution expenses pursuant to the
Distribution Plans (see below). For the fiscal periods ending December
31, 1993 and 1994, CSC received sales charges in excess of the dealer
reallowance of $81,086 and $37,135, respectively. During fiscal 1995,
CDI received sales charges in excess of the dealer reallowance of $5,917.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Series has adopted Distribution Plans (the "Plans")
which permit it to pay certain expenses associated with the distribution
of its shares. Such expenses may not exceed, on an annual basis, 0.25%
of the Series' Class A average daily net assets. No Class A Distribution
Plan expenses were paid in fiscal 1994. Expenses under the Class C Plan
may not exceed, on an annual basis, 0.80% of the Class C average daily
net assets. The Series' Class C shares paid no Distribution Plan
expenses in 1993, since those shares were not offered to the public at
that time. During fiscal 1994 and 1995, the Series paid Class C
Distribution Plan expenses of $31,491 and $51,542, respectively.
The Plans were approved by the Board of Directors/Trustees,
including the Directors/Trustees who are not "interested persons" of the
Funds (as that term is defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of the Plans or in any
agreements related to the Plans. The selection and nomination of the
Directors/Trustees who are not interested persons of the Fund is
committed to the discretion of such disinterested Directors/Trustees. In
establishing the Plans, the Directors/Trustees considered various
factors including the amount of the distribution fee. The
Directors/Trustees determined that there is a reasonable likelihood that
the Plans will benefit the Funds and their shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors/Trustees who have no direct or indirect
financial interest in the Plans, or by vote of a majority of the
outstanding shares of the Series and class. Any change in the Plans that
would materially increase the distribution cost to the Series requires
approval of the shareholders of the affected class; otherwise, the Plans
may be amended by the Directors/Trustees, including a majority of the
non-interested Directors/Trustees as described above.
The Plans will continue in effect successive one-year terms,
provided that such continuance is specifically approved by (i) the vote
of a majority of the Directors/Trustees who are not parties to the Plans
or interested persons of any such party and who have no direct or
indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors/Trustees.
Apart from the Plans, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Funds.
==========================================================================
TRANSFER AND SHAREHOLDER SERVICING AGENT
==========================================================================
Calvert Shareholder Services, Inc., a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, 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 semi-annual 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. The fees paid by the Series to Calvert
Shareholder Services, Inc. for the fiscal periods 1993, 1994, and 1995
were $12,469, $25,149, and $ 30,243, respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers and Lybrand L.L.P. has been selected by the Board of
Directors to serve as independent accountants of the Fund for fiscal
year 1996. State Street Bank & Trust Company, N.A., 225 Franklin Street,
Boston, MA 02110, serves as custodian of the Series's investments. First
National Bank of Maryland, 25 South Charles Street, Baltimore, Maryland
21203 acts as custodian of certain of the Series's cash assets. Neither
custodian has any part in deciding the Fund's investment policies or the
choice of securities that are to be purchased or sold by the Series.
==========================================================================
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 Advisor under the
direction and supervision of the Board of Directors.
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 National Municipal or who provide
it 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 or director of the Fund or any
of their affiliates, or broker-dealers for the period ended December 31,
1993, 1994, or 1995.
The Advisor may also execute portfolio transactions with or
through broker-dealers who have sold shares of National Municipal.
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 shares sold. The Advisor or its affiliate may
compensate, at its expense, broker-dealers in consideration of their
promotional and administrative services.
The portfolio turnover was 162%, 122%, and 57% for the 1993,
1994, and 1995 fiscal years, respectively.
==========================================================================
GENERAL INFORMATION
==========================================================================
The Fund was organized as a corporation under the General
Corporation Law of the State of Maryland on February 4, 1992. The Fund's
other series are: Calvert California Municipal Intermediate Fund,
Calvert Arizona Municipal Intermediate Fund, Calvert Maryland Municipal
Intermediate Fund, Calvert Michigan Municipal Intermediate Fund, Calvert
New York Municipal Intermediate Fund, Calvert Pennsylvania Municipal
Intermediate Fund, and Calvert Virginia Municipal Intermediate Fund.
Prior to March 1, 1994, Calvert National Municipal Intermediate Fund was
known as Calvert Intermediate Municipal Fund.
National Municipal will send its shareholders unaudited
semi-annual and audited annual reports that will include the Series' net
asset value per share, portfolio securities, income and expenses, and
other financial information.
Each share of the 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 the Series as
declared by the Board. The Series offers two separate classes of shares:
Class A and Class C. 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
will result in differing net asset values and distributions. Upon any
liquidation of the Series, shareholders of each class are entitled to
share pro rata in the net assets available for distribution.
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 Series' Annual Report
to Shareholders, dated December 31, 1995, 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 Series.
==========================================================================
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<F4>*)
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:
<F4> *"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
__ $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)
Calvert Municipal Fund, Inc.
CALVERT NATIONAL MUNICIPAL
INTERMEDIATE FUND
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand L.L.P. Calvert Distributors, Inc.
217 E. Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 3
Purchases and Redemptions of Shares 4
Dividends and Distributions 5
Tax Matters 5
Valuation of Shares 6
Calculation of Yield and Total Return 7
Advertising 8
Directors and Officers 8
Investment Advisor 11
Administrative Services 12
Method of Distribution 12
Transfer and Shareholder Servicing
Agent 13
Independent Accountants and Custodians 13
Portfolio Transactions 13
General Information 14
Financial Statements 14
Appendix 14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1996
CALVERT MUNICIPAL INTERMEDIATE FUNDS:
ARIZONA, FLORIDA, MARYLAND,
MICHIGAN, NEW YORK, PENNSYLVANIA AND VIRGINIA
4550 Montgomery Avenue, Bethesda, Maryland 20814
==========================================================================
New Account (800) 368-2748 Shareholder (800) 368-2745
Information: (301) 951-4820 Services: (301) 951-4810
==========================================================================
Broker (800) 368-2746 TDD for the Hearing-
Services: (301) 951-4850 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 Fund's Prospectus, dated April 30, 1996, 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 Calvert Municipal Intermediate Funds ("Funds" or "Fund")
are designed to provide individual and institutional investors with the
highest level of interest income exempt from federal and specific state
income taxes as is consistent with prudent investment management,
preservation of capital, and the quality and maturity characteristics of
the Fund. There is, of course, no assurance that the Funds will be
successful in meeting their investment objectives; there are inherent
risks in the ownership of any investment.
Dividends paid by the Funds will fluctuate with income earned
on investments. In addition, dividends and distributions paid and the
value of each share will vary by class of shares: the share values will
fluctuate to reflect changes in the market value of investments. Each
Fund will attempt, through careful management, to reduce these risks and
enhance the opportunities for higher income and greater price stability.
==========================================================================
INVESTMENT POLICIES
==========================================================================
Each Fund invests primarily in a nondiversified portfolio of
municipal obligations, including some with interest that may be subject
to alternative minimum tax. A complete explanation of municipal
obligations and municipal bond and note ratings appears in the Appendix.
Under normal market conditions, each Fund will attempt to
invest at least 65% of its total assets in municipal obligations with
interest that is exempt from federal and specific state income tax,
including those issued by or on behalf of the state for which the Fund
is named and the state's political subdivisions. Each Fund will also
attempt to invest the remaining 35% of its total assets in these
obligations, but may invest it in municipal obligations of other states,
territories and possessions of the United States, the District of
Columbia, and their respective authorities, agencies, instrumentalities
and political subdivisions. Dividends you receive from the Fund that are
derived from interest on tax-exempt obligations of other governmental
issuers will be exempt from federal income tax, but will be subject to
state income taxes.
Variable Rate Demand Notes
The Boards of Directors/Trustees have approved investments in
floating and variable rate demand notes upon the following conditions:
each 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. Notes with a right of demand exceeding seven days
are considered illiquid and are subject to purchase restrictions.
Municipal Leases
The Funds 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 Funds may purchase unrated leases. The Funds' Advisor,
under the supervision of the Boards of Directors/Trustees, 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 a Fund's limit on illiquid securities. The
Boards of Directors/Trustees have 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 Fund'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 Fund, 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 Fund has valued it for purposes of
calculating the Fund'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 Fund'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 Fund.
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.
When-Issued Purchases
Securities purchased on a when-issued basis and the securities
held in a Fund's portfolio are subject to changes in market value based
on 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 Funds remain 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 their assets may vary. No new
when-issued commitments will be made if more than 50% of a Fund's net
assets would become so committed.
The Funds will meet their obligations to pay for when-issued
securities from then- available cash flow, sale of securities or,
although the Funds 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.
Transactions in Futures Contracts
The Funds may engage in the purchase and sale of futures
contracts on an index of municipal bonds or on U.S. Treasury securities,
or options on such futures contracts, for hedging purposes only. A Fund
may sell such futures contracts in anticipation of a decline in the cost
of municipal bonds it holds or may purchase such futures contracts in
anticipation of an increase in the value of municipal bonds the Fund
intends to acquire. The Funds also are authorized to purchase and sell
other financial futures contracts which in the opinion of the Investment
Advisor provide an appropriate hedge for some or all of the Funds'
securities.
Because of low initial margin deposits made upon the opening of
a futures position, futures transactions involve substantial leverage.
As a result, relatively small movements in the price of the futures
contract can result in substantial unrealized gains or losses. Because
the Funds will engage in the purchase and sale of financial futures
contracts solely for hedging purposes, however, any losses incurred in
connection therewith should, if the hedging strategy is successful, be
offset in whole or in part by increases in the value of securities held
by a Fund or decreases in the price of securities the Fund intends to
acquire.
Municipal bond index futures contracts commenced trading in
June 1985, and it is possible that trading in such futures contracts
will be less liquid than that in other futures contracts. The trading of
futures contracts and options thereon is subject to certain market
risks, such as trading halts, suspensions, exchange or clearing house
equipment failures, government intervention or other disruptions of
normal trading activity, which could at times make it difficult or
impossible to liquidate existing positions.
The liquidity of a secondary market in futures contracts may be
further adversely affected by "daily price fluctuation limits"
established by contract markets, which limit the amount of fluctuation
in the price of a futures contract or option thereon during a single
trading day. Once the daily limit has been reached in the contract, no
trades may be entered into at a price beyond the limit, thus preventing
the liquidation of open positions. Prices of existing contracts have in
the past moved the daily limit on a number of consecutive trading days.
A Fund will enter into a futures position only if, in the judgment of
the Investment Advisor, there appears to be an actively traded secondary
market for such futures contracts.
The successful use of transactions in futures contracts and
options thereon depends on the ability of the Investment Advisor to
correctly forecast the direction and extent of price movements of these
instruments, as well as price movements of the securities held by a Fund
within a given time frame. To the extent these prices remain stable
during the period in which a futures or option contract is held by a
Fund, or move in a direction opposite to that anticipated, a Fund may
realize a loss on the hedging transaction which is not fully or
partially offset by an increase in the value of the Fund's securities.
As a result, the Fund's total return for such period may be less than if
it had not engaged in the hedging transaction.
Description of Financial Futures Contracts
Futures Contracts. A futures contract obligates the seller of a
contract to deliver and the purchaser of a contract to take delivery of
the type of financial instrument called for in the contract or, in some
instances, to make a cash settlement, at a specified future time for a
specified price. Although the terms of a contract call for actual
delivery or acceptance of securities, or for a cash settlement, in most
cases the contracts are closed out before the delivery date without the
delivery or acceptance taking place. The Funds intend to close out any
futures contracts prior to the delivery date of such contracts.
A Fund may sell futures contracts in anticipation of a decline
in the value of its investments in municipal bonds. The loss associated
with any such decline could be reduced without employing futures as a
hedge by selling long-term securities and either reinvesting the
proceeds in securities with shorter maturities or by holding assets in
cash. This strategy, however, entails increased transaction costs in the
form of brokerage commissions and dealer spreads and will typically
reduce the Fund's average yields as a result of the shortening of
maturities.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or
received. Instead, an amount of cash or securities acceptable to the
Fund's futures commission merchant and the relevant contract market,
which varies but is generally about 5% or less of the contract amount,
must be deposited with the broker. This amount is known as "initial
margin," and represents a "good faith" deposit assuring the performance
of both the purchaser and the seller under the futures contract.
Subsequent payments to and from the broker, known as "variation margin,"
are required to be made on a daily basis as the price of the futures
contract fluctuates, making the long or short positions in the futures
contract more or less valuable, a process known as "marking to the
market." Prior to the settlement date of the futures contract, the
position may be closed out by taking an opposite position which will
operate to terminate the position in the futures contract. A final
determination of variation margin is then made, additional cash is
required to be paid to or released by the broker, and the purchaser
realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
The sale of financial futures contracts provides an alternative
means of hedging a Fund against declines in the value of its investments
in municipal bonds. As such values decline, the value of the Fund's
position in the futures contracts will tend to increase, thus offsetting
all or a portion of the depreciation in the market value of the Fund's
fixed income investments which are being hedged. While a Fund will incur
commission expenses in establishing and closing out futures positions,
commissions on futures transactions may be significantly lower than
transaction costs incurred in the purchase and sale of fixed income
securities. In addition, the ability of a Fund to trade in the
standardized contracts available in the futures market may offer a more
effective hedging strategy than a program to reduce the average maturing
of portfolio securities, due to the unique and varied credit and
technical characteristics of the municipal debt instruments available to
the Fund. Employing futures as a hedge may also permit a Fund to assume
a hedging posture without reducing the yield on its investments, beyond
any amounts required to engage in futures trading.
The Funds may engage in the purchase and sale of futures
contracts on an index of municipal securities. These instruments provide
for the purchase or sale of a hypothetical portfolio of municipal bonds
at a fixed price in a stated delivery month. Unlike most other futures
contracts, however, a municipal bond index futures contract does not
require actual delivery of securities but results in a cash settlement
based upon the difference in value of the index between the time the
contract was entered into and the time it is liquidated.
The municipal bond index underlying the futures contracts
traded by the Portfolio is The Bond Buyer Municipal Bond Index,
developed by The Bond Buyer and the Chicago Board of Trade ("CBT"), the
contract market on which the futures contracts are traded. As currently
structured, the index is comprised of 40 tax-exempt term municipal
revenue and general obligation bonds. Each bond included in the index
must be rated either A- or higher by Standard & Poor's or A or higher by
Moody's Investors Service and must have a remaining maturity of 19 years
or more. Twice a month new issues satisfying the eligibility
requirements are added to, and an equal number of old issues will be
deleted from, the index. The value of the index is computed daily
according to a formula based upon the price of each bond in the index,
as evaluated by four dealer-to-dealers brokers.
The Funds may also purchase and sell futures contracts on U.S.
Treasury bills, notes and bonds for the same types of hedging purposes.
Such futures contracts provide for delivery of the underlying security
at a specified future time for a fixed price, and the value of the
futures contract therefore generally fluctuates with movements in
interest rates.
The municipal bond index futures contract, futures contracts on
U.S. Treasury securities and options on such futures contracts are
traded on the CBT, which, like other contract markets, assures the
performance of the parties to each futures contract through a clearing
corporation, a nonprofit organization managed by the exchange
membership, which is also responsible for handling daily accounting of
deposits or withdrawals of margin.
The Funds may also purchase financial futures contracts when
not fully invested in municipal bonds, in anticipation of an increase in
the cost of securities a Fund intends to purchase. As such securities
are purchased, an equivalent amount of futures contracts will be closed
out. In a substantial majority of these transactions, a Fund will
purchase municipal bonds upon termination of the futures contracts. Due
to changing market conditions and interest rate forecasts, however, a
futures position may be terminated without a corresponding purchase of
securities. Nevertheless, all purchases of futures contracts by a Fund
will be subject to certain restrictions, described below.
Options on Futures Contracts. An option on a futures contract
provides the purchaser with the right, but not the obligation, to enter
into a long position in the underlying futures contract (that is,
purchase the futures contract), in the case of a "call" option, or a
short position (sell the futures contract), in the case of a "put"
option, for a fixed price up to a stated expiration date. The option is
purchased for a non-refundable fee, known as the "premium." Upon
exercise of the option, the contract market clearing house assigns each
party to the option an opposite position in the underlying futures
contract. In the event of exercise, therefore, the parties are subject
to all of the risks of futures trading, such as payment of initial and
variation margin. In addition, the seller, or "writer," of the option is
subject to margin requirements on the option position. Options on
futures contracts are traded on the same contract markets as the
underlying futures contracts.
The Funds may purchase options on futures contracts for the
same types of hedging purposes described above in connection with
futures contracts. For example, in order to protect against an
anticipated decline in the value of securities it holds, a Fund could
purchase put options on futures contracts, instead of selling the
underlying futures contracts. Conversely, in order to protect against
the adverse effects of anticipated increases in the costs of securities
to be acquired, a Fund could purchase call options on futures contracts,
instead of purchasing the underlying futures contracts. The Funds
generally will sell options on futures contracts only to close out an
existing position.
The Funds will not engage in transactions in such instruments
unless and until the Investment Advisor determines that market
conditions and the circumstances of the Fund warrant such trading. To
the extent a Fund engages in the purchase and sale of futures contracts
or options thereon, it will do so only at a level which is reflective of
the Investment Advisor's view of the hedging needs of a Fund, the
liquidity of the market for futures contracts and the anticipated
correlation between movements in the value of the futures or option
contract and the value of securities held by the Portfolio.
Restrictions on the Use of Futures Contracts and Options on
Futures Contracts. Under regulations of the Commodity Futures Trading
Commission ("CFTC"), the futures trading activities described herein
will not result in a Fund being deemed to be a "commodity pool," as
defined under such regulations, provided that certain trading
restrictions are adhered to. In particular, CFTC regulations require
that all futures and option positions entered into by a Fund qualify as
bona fide hedge transactions, as defined under CFTC regulations, or, in
the case of long positions, that the value of such positions not exceed
an amount of segregated funds determined by reference to certain cash
and securities positions maintained by a Fund and accrued profits on
such positions. In addition, a Fund may not purchase or sell any such
instruments if, immediately thereafter, the sum of the amount of initial
margin deposits on the Fund's existing futures positions would exceed 5%
of the market value of its net assets.
When a Fund purchases a futures contract, it will maintain an
amount of cash, cash equivalents (for example, commercial paper and
daily tender adjustable notes) or short-term high-grade fixed income
securities in a segregated account with the Fund's custodian, so that
the amount so segregated plus the amount of initial and variation margin
held in the account of its broker equals the market value of the futures
contract, thereby ensuring that the use of such futures is unleveraged.
Risk Factors in Transactions in Futures Contracts. The
particular municipal bonds comprising the index underlying the municipal
bond index futures contract may vary from the bonds held by a Fund. In
addition, the securities underlying futures contracts on U.S. Treasury
securities will not be the same as securities held by the Fund. As a
result, a Fund's ability effectively to hedge all or a portion of the
value of its municipal bonds through the use of futures contracts will
depend in part on the degree to which price movements in the index
underlying the municipal bond index futures contract, or the U.S.
Treasury securities underlying other futures contracts trade, correlate
with price movements of the municipal bonds held by the Fund.
For example, where prices of securities in a Fund do not move
in the same direction or to the same extent as the values of the
securities or index underlying a futures contract, the trading of such
futures contracts may not effectively hedge the Fund's investments and
may result in trading losses. The correlation may be affected by
disparities in the average maturity, ratings, geographical mix or
structure of the Fund's investments as compared to those comprising the
index, and general economic or political factors. In addition, the
correlation between movements in the value of the index underlying a
futures contract may be subject to change over time, as additions to and
deletions from the index alter its structure. In the case of futures
contracts on U.S. Treasury securities and options thereon, the
anticipated correlation of price movements between the U.S. Treasury
securities underlying the futures or options and municipal bonds may be
adversely affected by economic, political, legislative or other
developments that have a disparate impact on the respective markets for
such securities. In the event that the Investment Advisor determines to
enter into transactions in financial futures contracts other than the
municipal bond index futures contract or futures on U.S. Treasury
securities, the risk of imperfect correlation between movements in the
prices of such futures contracts and the prices of municipal bonds held
by a Fund may be greater.
The trading of futures contracts on an index also entails the
risk of imperfect correlation between movements in the price of the
futures contract and the value of the underlying index. The anticipated
spread between the prices may be distorted due to differences in the
nature of the markets, such as margin requirements, liquidity and the
participation of speculators in the futures markets. The risk of
imperfect correlation, however, generally diminishes as the delivery
month specified in the futures contract approaches.
Prior to exercise or expiration, a position in futures
contracts or options thereon may be terminated only by entering into a
closing purchase or sale transaction. This requires a secondary market
on the relevant contract market. The Funds will enter into a futures or
option position only if there appears to be a liquid secondary market
therefor, although there can be no assurance that such a liquid
secondary market will exist for any particular contract at any specific
time. Thus, it may not be possible to close out a position once it has
been established. Under such circumstances, a Fund could be required to
make continuing daily cash payments of variation margin in the event of
adverse price movements. In such situation, if a Fund has insufficient
cash, it may be required to sell portfolio securities to meet daily
variation margin requirements at a time when it may be disadvantageous
to do so. In addition, a Fund may be required to perform under the terms
of the futures or option contracts it holds. The inability to close out
futures or options positions also could have an adverse impact on the
Fund's ability effectively to hedge its portfolio.
When a Fund purchases an option on a futures contract, its risk
is limited to the amount of the premium, plus related transaction costs,
although this entire amount may be lost. In addition, in order to profit
from the purchase of an option on a futures contract, the Fund may be
required to exercise the option and liquidate the underlying futures
contract, subject to the availability of a liquid secondary market. The
trading of options on futures contracts also entails the risk that
changes in the value of the underlying futures contract will not be
fully reflected in the value of the option, although the risk of
imperfect correlation generally tends to diminish as the maturity date
of the futures contract or expiration date of the option approaches.
"Trading Limits" or "Position Limits" may also be imposed on
the maximum number of contracts which any person may hold at a given
time. A contract market may order the liquidation of positions found to
be in violation of these limits and it may impose other sanctions or
restrictions. The Investment Advisor does not believe that trading
limits will have any adverse impact on the strategies for hedging the
Portfolio's investments.
Further, the trading of futures contracts is subject to the
risk of the insolvency of a brokerage firm or clearing corporation,
which could make it difficult or impossible to liquidate existing
positions or to recover excess variation margin payments.
In addition to the risks of imperfect correlation and lack of a
liquid secondary market for such instruments, transactions in futures
contracts involve risks related to leveraging and the potential for
incorrect forecasts of the direction and extent of interest rate
movements within a given time frame.
Noninvestment-Grade Debt Securities
The Funds may invest in lower quality debt securities
(generally those rated BB or lower by S&P or Ba or lower by Moody's),
subject to the Funds' investment policy which provides that they may not
invest more than 35% of their assets in securities rated below BBB by
either rating service, or in unrated securities determined by the
Advisor to be comparable to securities rated below BBB by either rating
service. These securities have moderate to poor protection of principal
and interest payments and have speculative characteristics. These
securities involve greater risk of default or price declines due to
changes in the issuer's creditworthiness than investment-grade debt
securities. Because the market for lower-rated securities may be thinner
and less active than for higher-rated securities, there may be market
price volatility for these securities and limited liquidity in the
resale market. Market prices for these securities may decline
significantly in periods of general economic difficulty or rising
interest rates. Unrated debt securities may fall into the lower quality
category. Unrated securities usually are not attractive to as many
buyers as are rated securities, which may make them less marketable.
The quality limitation set forth in the investment policy is
determined immediately after a Fund's acquisition of a security.
Accordingly, any later change in ratings will not be considered when
determining whether an investment complies with the Fund's investment
policy.
When purchasing high-yielding securities, rated or unrated, the
Advisors prepare their own careful credit analysis to attempt to
identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
==========================================================================
INVESTMENT RESTRICTIONS
==========================================================================
Fundamental Investment Restrictions
The following investment restrictions and fundamental policies
may not be changed without the consent of the holders of a majority of a
Fund's outstanding shares. Shares have equal rights as to voting. 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.
The Funds may not:
(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 Fund'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, except to the
extent permitted under "Transactions in Futures
Contracts" or elsewhere in the Prospectus or SAI. The
Funds reserve 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) 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;
(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 a Fund from investing in municipal obligations
secured by real estate or interests therein;
(7) Invest 25% or more of its assets in the securities
of any one issuer. Each Funds may invest more than 25%
of its assets in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
but will invest in more than 20% of such obligations
only during abnormal market conditions. 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;
(8) Invest 25% or more of its assets in any particular
industry or industries. Each Fund may invest more than
25% of its assets in obligations issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities but will invest in more than 20% of
such obligations only during abnormal market
conditions. 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."
Nonfundamental Investment Restrictions
Each Fund has adopted the following operating (i.e.,
nonfundamental) investment policies and restrictions which may be
changed by the Board of Directors/Trustees without shareholder approval.
The Funds may not:
(1) Purchase illiquid securities if more than 15% of
the value of its net assets would be invested in such
securities;
(2) 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.
(3) Purchase or retain securities of an issuer if those
directors 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;
(4) Invest in companies for the purpose of exercising
control; or invest in securities of other investment
companies, except as permitted under the Investment
Company Act or in connection with a
director's/trustee's deferred compensation plan, as
long as there is no duplication of advisory fees;
==========================================================================
PURCHASES AND REDEMPTIONS OF SHARES
==========================================================================
Share certificates will be issued at no charge if requested in
writing by the investor. No certificates will be issued for fractional
shares. Purchases by bank wire received by 4:00 p.m., Eastern time are
immediately available federal funds. Your purchases must be made in U.S.
dollars and checks must be drawn on U.S. banks.
Amounts redeemed by check redemption may be mailed to the
investor without charge. Amounts of more than $50 and less than $300,000
may be transferred electronically at no charge to the investor. Amounts
of $1,000 or more will be transmitted by wire, without charge by
Calvert, to the investor's account at a domestic commercial bank that is
a member of the Federal Reserve System or to a correspondent bank. A
charge of $5 is imposed on wire transfers of less than $1,000. If the
investor's bank is not a Federal Reserve System member, failure of
immediate notification to that bank by the correspondent bank could
result in a delay in crediting the funds to the investor's bank account.
Telephone redemption requests that would require the redemption
of shares purchased by check or electronic funds transfer within the
previous 10 business days may not be honored. The Funds reserve the
right to modify the telephone redemption privilege.
To change redemption instructions already given, you must send
a written notice addressed to Calvert Group, c/o NFDS, 6th Floor, 1004
Baltimore, Kansas City, MO 64105, with a voided copy of a check for the
bank wiring instructions to be added. If a voided check does not
accompany the request, then the request must be signature guaranteed by
a commercial bank, savings and loan association, trust company, member
firm of any national securities exchange, or certain credit unions.
Additional documentation may be required from corporations, fiduciaries,
and institutional investors.
The right of redemption may be suspended or the date of payment
postponed for any period during which the New York Stock Exchange is
closed (other than customary weekend and holiday closings), when trading
on the New York Stock Exchange is restricted, or an emergency exists, as
determined by the SEC, or if the Commission has ordered such a
suspension for the protection of shareholders. Redemption proceeds are
normally mailed or wired the next business day after a proper redemption
request has been received, unless redemptions have been suspended or
postponed as described above.
Redemption proceeds are normally paid in cash. However, a Fund
has the right to redeem shares in assets other than cash for redemption
amounts exceeding, in any 90-day period, $250,000 or 1% of the net asset
value of the Fund, whichever is less.
Reduced Sales Charges (Class A)
Each Fund imposes reduced sales charges for Class A shares in
certain situations in which the Principal Underwriter (which offers the
Fund's shares continuously and on a "best efforts" basis) and the
dealers selling Fund 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,
for example, $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 Fund
imposes the sales charge applicable to the goal amount. Similarly, the
Underwriter and selling dealers also experience cost savings when
dealing with existing shareholders, enabling the Fund 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 Fund's shares to their members. See "Exhibit A - Reduced
Sales Charges" in the Prospectus.
==========================================================================
DIVIDENDS AND DISTRIBUTIONS
==========================================================================
Each Fund 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 Funds 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 Fund
invested in shares of any other Calvert Group Fund at no additional
charge. If you elect to have dividends and/or distributions paid in
cash, and the U.S. Postal Service cannot deliver the check, or if it
remains uncashed for six months, it, as well as future dividends and
distributions, will be reinvested in additional shares.
==========================================================================
TAX MATTERS
==========================================================================
Each Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code (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 Funds' 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.
Further, for corporations, all tax-exempt income must be taken into
account in calculating "adjusted current earnings" for purposes of the
federal alternative minimum tax. Fund 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. If you held shares for six months
or less, losses must be offset by the amount of exempt-interest
dividends you received, and, to the extent of capital gain distributions
you received, the loss amount not offset (disallowed) must be treated as
long-term capital loss. A shareholder may also be subject to some state
and local taxes on dividends and distributions from the Funds. The Funds
will notify shareholders annually about the 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. 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 Revenue Reconciliation Act of
1989 may require investors to exclude the initial sales charge, if any,
paid on the purchase of Fund 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 Fund
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 Funds may be required to withhold 31% of any long-term
capital gain dividends and 31% of each redemption transaction occurring
in a Fund 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) a 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, each Fund is required to report to the Internal
Revenue Service the following information with respect to redemption
transactions in the Fund: (a) the shareholder's name, address, account
number and taxpayer identification number; (b) the total dollar value of
the redemptions; and (c) the Fund'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 Funds for
further information.
==========================================================================
VALUATION OF SHARES
==========================================================================
Fund 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 Directors/Trustees.
Each Fund determines the net asset value for each class 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. They do not determine
net asset value on certain national holidays or other day 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.
Valuations, market quotations and market equivalents are
provided the Funds by Kenny S&P Evaluation Services, a subsidiary of
McGraw-Hill. The use of Kenny as a pricing service by the Funds has been
approved by the Boards of Directors/Trustees. Valuations provided by
Kenny are determined without exclusive reliance on quoted prices and
take into consideration appropriate factors such as institution-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data.
Net Asset Value and Offering Price Per Share
Arizona
Class A net asset value per share
($2,045,307/403,282 shares) $5.07
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.21
Class C net asset value and offering price per share
($744,285/146,762 shares) $5.07
Florida
Class A net asset value per share
($3,892,077/769,257 shares) $5.06
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.20
Class C net asset value and offering price per share
($401,165/79,413 shares) $5.05
Maryland
Class A net asset value per share
($9,410,671/1,859,558 shares) $5.06
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.20
Class C net asset value and offering price per share
($2,509,035/497,712 shares) $5.04
Michigan
Class A net asset value per share
($4,555,919/889,834 shares) $5.12
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.26
Class C net asset value and offering price per share
($1,496,519/292,709 shares) $5.11
New York
Class A net asset value per share
($3,572,584/697,982 shares) $5.12
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.26
Class C net asset value and offering price per share
($2,392,342/468,288 shares) $5.11
Pennsylvania
Class A net asset value per share
($2,521,732/494,926 shares) $5.10
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.24
Class C net asset value and offering price per share
($1,748,492/342,498 shares) $5.11
Virginia
Class A net asset value per share
($7,294,740/1,422,964 shares) $5.07
Maximum sales charge
(2.75% of Class A offering price) 0.14
Offering price per Class A share $5.21
Class C net asset value and offering price per share
($3,206,911/625,064 shares) $5.07
==========================================================================
CALCULATION OF YIELD AND TOTAL RETURN
==========================================================================
Each Fund may advertise 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 Fund's offering of shares. 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 a Fund's dividend yield, plus or minus
realized or unrealized capital appreciation or depreciation, less fees
and expenses. All Class A total return quotations reflect the deduction
of the Fund's maximum sales charge ("return with maximum load"), except
quotations of "return without maximum load" which do not deduct the
sales charge. Note: "Total Return" as quoted in the Financial Highlights
section of the Funds' Annual Report to Shareholders, however, per SEC
instructions, does not reflect deduction of the sales charge, and
corresponds to "return without maximum load" as referred to herein.
Return without maximum load should be considered only by investors, such
as participants in certain pension plans, to whom the sales charge does
not apply, or for purposes of comparison only with comparable figures
which also do not reflect sales charges, such as Lipper averages. Total
return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year
periods at the end of such periods (or portions thereof, if applicable).
Returns with maximum load (average annual total return) for
Class A shares are as follows:
Periods Ended One Year Since Inception
December 31, 1995
============================================================================
Arizona 9.42% 3.51% (12/31/93)
Florida 10.41% 3.68% (12/31/93)
Maryland 10.58% 4.05% (9/30/93)
Michigan 10.06% 4.38% (9/30/93)
New York 10.67% 4.36% (9/30/93)
Pennsylvania 10.47% 4.41% (12/31/93)
Virginia 10.51% 4.65% (9/30/93)
Returns without maximum load for Class A shares are as follows:
Periods Ended One Year Since Inception
December 31, 1995
=========================================================================
Arizona 12.44% 4.95% (12/31/93)
Florida 13.48% 5.13% (12/31/93)
Maryland 13.66% 5.34% (9/30/93)
Michigan 13.08% 5.67% (9/30/93)
New York 13.72% 5.65% (9/30/93)
Pennsylvania 13.51% 5.86% (12/31/93)
Virginia 13.54% 5.95% (9/30/93)
Average annual total returns for Class C shares are as follows:
Periods Ended One Year Since Inception (3/1/94)
December 31, 1995
======================================================================
Arizona 11.77% 4.81%
Florida 12.28% 5.21%
Maryland 12.55% 5.03%
Michigan 11.96% 5.00%
New York 12.63% 5.44%
Pennsylvania 12.55% 6.26%
Virginia 12.62% 5.69%
A Fund may also advertise its "yield" and "taxable equivalent
yield." As with total return, both yield figures are historical and are
not intended to indicate future performance. "Yield" quotations for each
class of the Fund refer to the aggregate imputed yield-to-maturity of
each of the Fund'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 for that class 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. Yield is computed according to the
following formula:
Yield = 2[(+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 taxable equivalent yield is the yield an investor would be
required to obtain from taxable investments to equal the Fund's yield,
all or a portion of which may be exempt from federal income taxes. The
double taxable equivalent yield for the combined federal and state level
is computed for each class by taking the portion of the yield exempt
from regular federal and the specific state income taxes and multiplying
the exempt yield by a factor based on a stated income tax rate, then
adding the portion of the yield that is not exempt from regular federal
and specific state income taxes. The taxable equivalent yield for the
federal level only is computed for each class by taking the portion of
the yield exempt from federal income taxes and multiplying the exempt
yield by a factor based on a stated income tax rate, then adding the
portion of the yield that is not exempt from federal income taxes. The
factor which is used to calculate the tax equivalent yield is the
reciprocal of the difference between 1 and the applicable income tax
rate, which will be stated in the advertisement.
The yield and tax equivalent yield for the Fund's Class A
shares for the thirty days ending December 31, 1995 is as follows:
Class A Shares Tax Equivalent Yield at Tax Equivalent Yield
36% Yield Federal at 39.6% Federal
Tax Rate Tax Rate
==============================================================================
Arizona 3.83% 5.98% 6.37%
Florida 4.09% 6.39% 6.80%
Maryland 3.99% 6.23% 6.63%
Michigan 4.05% 6.32% 6.73%
New York 4.24% 6.62% 7.05%
Pennsylvania 4.01% 6.26% 6.67%
Virginia 4.08% 6.37% 6.78%
The yield and tax equivalent yield for the Fund's Class C
shares for the thirty days ending December 31, 1995 is as follows:
Class C Shares Tax Equivalent Yield Tax Equivalent Yield
at 36% Yield Federal at 39.6% Federal
Tax Rate Tax Rate
============================================================================
Arizona 3.08% 4.81% 5.12%
Florida 3.34% 5.21% 5.55%
Maryland 3.30% 5.15% 5.49%
Michigan 3.37% 5.26% 5.60%
New York 3.56% 5.56% 5.92%
Pennsylvania 3.29% 5.14% 5.47%
Virginia 3.41% 5.32% 5.67%
==========================================================================
ADVERTISING
==========================================================================
The Funds or their 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 Funds are compatible with
the investor's goals. The Funds may list portfolio holdings or give
examples or securities that may have been considered for inclusion in
the Funds, whether held or not.
The Funds or their 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 Funds may
also cite to any source, whether in print or on-line, such as Bloomberg,
in order to acknowledge origin of information. The Funds may compare
themselves or their 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 Funds, their
Advisor, and their affiliates reserve the right to update performance
rankings as new rankings become available.
==========================================================================
DIRECTORS/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. Age:
47. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.
FRANK H. BLATZ, JR., Esq., Trustee. Mr. Blatz is a partner in
the law firm of Snevily, Ely, Williams, Gurrieri & Blatz. He was
formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Age: 59. Address: 308 East Broad Street, PO Box 2007, Westfield, New
Jersey 07091.
FREDERICK T. BORTS, M.D., Trustee. Dr. Borts is a radiologist
with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem
Medical Imaging in Allentown, Pennsylvania. Age: 46. 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. Age: 73. 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. Age: 47. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian was a principal of
Gavian De Vaux Associates, an investment banking firm. He continues to
be President of with Corporate Finance of Washington, Inc. Age: 63.
Address: 3005 Franklin Road North, Arlington, Virginia 22201.
JOHN G. GUFFEY, JR., Trustee. Mr. Guffey is chairman of the
Calvert Social Investment Foundation, organizing director of the
Community Capital Bank in Brooklyn, New York, and a financial consultant
to various organizations. In addition, he is a Director of the Community
Bankers Mutual Fund of Denver, Colorado, 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. Age: 47. Address: 7205 Pomander Lane, Chevy
Chase, Maryland 20815.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves as a Director of
Acacia Federal Savings Bank. Age: 58. 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. Age: 58. 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. Age: 47. 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. Age: 54.
<F1> RENO J. MARTINI, Senior Vice President. Mr. Martini is a
director and Senior Vice President of Calvert Group, Ltd., and Senior
Vice President and Chief Investment Officer of Calvert Asset Management
Company, Inc. Mr. Martini is also a director and President of
Calvert-Sloan Advisers, L.L.C., and a director and officer of Calvert
New World Fund. Age: 46.
<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. Age: 43.
<F1> WILLIAM M. TARTIKOFF, Esq., Vice President and Assistant
Secretary. Mr. Tartikoff is an officer of each of the investment
companies in the Calvert Group of Funds, and is Senior Vice President,
Secretary, and General Counsel of Calvert Group, Ltd., and each of its
subsidiaries. Mr. Tartikoff is also Vice President and Secretary of
Calvert-Sloan Advisers, L.L.C., a director of Calvert Distributors,
Inc., and is an officer of Acacia National Life Insurance Company. Age:
48.
<F1> EVELYNE S. STEWARD, Vice President. Ms. Steward is a director
and Senior Vice President of Calvert Group, Ltd., and a director of
Calvert-Sloan Advisers, L.L.C. She is the sister of Philip J. Schewetti,
the portfolio manager of the CSIF Equity Portfolio. Age: 43.
<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, Inc. Age: 45.
<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. Age: 37.
_________
<F1> Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation
with the Fund's Advisor.
Each of the above directors/trustees and officers is a
director/trustee or officer of each of the investment companies in the
Calvert Group of Funds with the exception of Calvert Social Investment
Fund, of which only Messrs. Baird, Guffey, Silby and Sorrell are among
the trustees, Acacia Capital Corporation, of which only Messrs. Blatz,
Diehl, Pugh and Sorrell 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.
Sorrell and Martini are among the directors. The address of directors
and officers, unless otherwise noted, is 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814.
The Audit Committee of the Board of Directors/Trustees is
composed of Messrs. Baird, Blatz, Feldman, Guffey and Pugh. The Board's
Investment Policy Committee is composed of Messrs. Borts, Diehl, Gavian,
Rochat, Silby and Sorrell.
Directors/Trustees and officers of the Fund as a group own less
than 1% of each Fund's outstanding shares.
Directors/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 Directors/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. For
the 1995 fiscal period, the Funds paid director/trustee fees of $260,
$357, $960, $572, $439, $327, and $904, for the Arizona, Florida,
Maryland, Michigan, New York, Pennsylvania, and Virginia Portfolios,
respectively.
Directors/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
Directors/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.
Director Compensation Table
Fiscal Year 1995 (unaudited Aggregate Compensation from
numbers) Registrant for service as
Director
Name of Director
...........................................................................
Richard L. Baird, Jr. $1,182
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $859
Charles E. Diehl $1,156
Douglas E. Feldman $1,121
Peter W. Gavian $1,137
John G. Guffey, Jr. $1,137
Arthur J. Pugh $1,201
D. Wayne Silby $1,093
Fiscal Year 1995 (unaudited Pension or Retirement
numbers) Benefits Accrued as part
of Registrant Expenses<F2>
Name of Director
.............................................................
Richard L. Baird, Jr. $0
Frank H. Blatz, Jr. $1,201
Frederick T. Borts $0
Charles E. Diehl $1,156
Douglas E. Feldman $0
Peter W. Gavian $341
John G. Guffey, Jr. $0
Arthur J. Pugh $0
D. Wayne Silby $0
Fiscal Year 1995 (unaudited Total Compensation from
numbers) Registrant and Fund Complex
paid to Directors<F3>
Name of Director
................................................................
Richard L. Baird, Jr. $33,450
Frank H. Blatz, Jr. $36,801
Frederick T. Borts $25,050
Charles E. Diehl $35,101
Douglas E. Feldman $30,600
Peter W. Gavian $31,951
John G. Guffey, Jr. $40,450
Arthur J. Pugh $36,801
D. Wayne Silby $47,965
<F2> Messrs. Blatz, Diehl, Gavian, and Pugh have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $89,054, and $150,841, for each director,
respectively.
<F3> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
==========================================================================
INVESTMENT ADVISOR
==========================================================================
The Funds' 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.
The Investment Advisory Agreement 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 Funds, or by the directors/trustees of the
Funds; and further provided that such continuance is also approved
annually by the vote of a majority of the directors/trustees of the
Funds who are not parties to the Agreement or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on
such approval. The Agreement 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 Agreement, the Advisor manages the investment and
reinvestment of the Fund's assets, subject to the direction and control
of the Funds' Boards of Directors/Trustees. For its services, the
Advisor receives an annual fee of 0.60% of the first $500 million of the
Fund's average daily net assets, 0.50% of the next $500 million of such
assets, and 0.40% of all 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 may recapture in later years, to
the extent permitted by law, fees it waived and expenses it paid in
prior years. Specifically, the Advisor may recapture any fees waived or
deferred and expenses reimbursed for the prior two-year period, but in
no event may it recapture fees or expenses for any period later than the
two-year period ending December 31, 1996. Recapture is permitted only to
the extent it does not result in the Fund's aggregate expenses exceeding
an annual expense limit of 2.00% of its average daily net assets. The
advisory fee incurred in any given year will be paid in full before any
recapture fees are paid for a prior year. Recaptured fees will apply to
the most recent suspension/reimbursement period. During the 1993 fiscal
period, the Advisor waived advisory fee of $4,088, $3,443, $1,579, and
$2,144 for the Maryland, Michigan, New York, and Virginia portfolios,
respectively, and reimbursed the portfolios $5,478, $5,091, $5,201, and
$5,487 for the Maryland, Michigan, New York, and Virginia portfolios,
respectively, for other expenses. For the 1994 fiscal period, the
Advisor received advisory fees of $0, $43, $2,444, $1,690, $659, $109,
and $2,392, for the Arizona, Florida, Maryland, Michigan, New York,
Pennsylvania, and Virginia Portfolios, respectively, and, for the same
period, waived advisory fees of $12,272, $19,011, $50,168, $42,150,
$19,257, $12,665, and $41,569, for the Arizona, Florida, Maryland,
Michigan, New York, Pennsylvania, and Virginia Portfolios, respectively.
For the 1995 fiscal period, the Advisor received advisory fees of
$17,286, $25,034, $270,912, $37,455, $29,584, $21,720, and $59,769, for
the Arizona, Florida, Maryland, Michigan, New York, Pennsylvania, and
Virginia Portfolios, respectively, and, for the same period, waived
advisory fees of $14,027, $15,204, $38,349, $19,899, $21,022, $16,922,
and $29,520, for the Arizona, Florida, Maryland, Michigan, New York,
Pennsylvania, and Virginia Portfolios, respectively.
The Advisor provides each Fund with investment advice and
research, pays the salaries and fees of all directors/trustees and
executive officers of the Fund who are principals of the Advisor, and
pays certain Fund advertising and promotional expenses. The Funds pay
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 Funds for all expenses,
excluding brokerage, taxes, interest, and extraordinary items exceeding,
on a pro rata basis, the most restrictive expense limitation in those
states which the Fund's shares are qualified for sale.
==========================================================================
ADMINISTRATIVE SERVICES
==========================================================================
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 an annual fee of 0.10%
of each Fund's average net assets for providing such services. The Funds
waived the fee for the 1993, 1994, and 1995 fiscal periods.
==========================================================================
METHOD OF DISTRIBUTION
==========================================================================
The Funds have entered into an agreement with Calvert
Distributors, Inc. ("CDI"), whereby CDI, acting as principal underwriter
for the Series, makes a continuous offering of the Series' securities on
a "best efforts" basis. Prior to April 1, 1995, the principal
underwriter was Calvert Securities Corporation ("CSC"). Under the terms
of the agreement, CDI bears all its expenses of providing services
pursuant to the agreement, including payment of any commissions and
service fees. CDI receives all sales charges imposed on the Funds'
shares and compensates broker-dealer firms for sales of such shares (see
"Alternative Sales Options" in the Prospectus). CDI is entitled to
receive reimbursement of distribution expenses pursuant to the
Distribution Plans (see below). For the 1993, 1994, and 1995 fiscal
periods, the Funds' Class A shares paid no Distribution Plan expenses.
In fiscal 1993, CSC received sales charges in excess of the dealer
reallowance of $22,295, $4,909, $11,439, and $27,524 for the Maryland,
Michigan, New York, and Virginia portfolios, respectively. For fiscal
1994, CSC received sales charges in excess of the dealer reallowance of
$7,757, $20,467, $29,470, $0, $7,872, $718, and $43,471, for the
Arizona, Florida, Maryland, Michigan, New York, Pennsylvania, and
Virginia Portfolios, respectively. For fiscal 1995, CDI received sales
charges in excess of the dealer reallowance of $3,016, $287, $6,482,
$1,441, $3,925, $2,788, and $6,479, for the Arizona, Florida, Maryland,
Michigan, New York, Pennsylvania, and Virginia Portfolios, respectively.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Funds have adopted Distribution Plans (the "Plans")
which permit them to pay certain expenses associated with the
distribution of its shares. Such expenses may not exceed, on an annual
basis, 0.25% of the Funds' Class A average daily net assets. Expenses
under the Class C Plan may not exceed, on an annual basis, 0.80% of the
Class C average daily net assets. For the 1994 fiscal period, Class C
Distribution Plan expenses were $2,252, $1,812, $5,973, $5,342, $3,937,
$4,046, and $10,851, for the Arizona, Florida, Maryland, Michigan, New
York, Pennsylvania, and Virginia Portfolios, respectively. For the 1995
fiscal period, Class C Distribution Plan expenses were $5,806, $4,952,
$18,167, $11,234, $14,199, $11,131, and $23,210, for the Arizona,
Florida, Maryland, Michigan, New York, Pennsylvania, and Virginia
Portfolios, respectively.
The Plans were approved by the Board of Directors/Trustees,
including the Directors/Trustees who are not "interested persons" of the
Funds (as that term is defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of the Plans or in any
agreements related to the Plans. The selection and nomination of the
Directors/Trustees who are not interested persons of the Fund is
committed to the discretion of such disinterested Directors/Trustees. In
establishing the Plans, the Directors/Trustees considered various
factors including the amount of the distribution fee. The
Directors/Trustees determined that there is a reasonable likelihood that
the Plans will benefit the Funds and their shareholders.
The Plans may be terminated by vote of a majority of the
non-interested Directors/Trustees who have no direct or indirect
financial interest in the Plans, or by vote of a majority of the
outstanding shares of the respective Fund and class. Any change in the
Plans that would materially increase the distribution cost to the Funds
requires approval of the shareholders of the affected class; otherwise,
the Plans may be amended by the Directors/Trustees, including a majority
of the non-interested Directors/Trustees as described above.
The Plans will continue in effect successive one-year terms,
provided that such continuance is specifically approved by (i) the vote
of a majority of the Directors/Trustees who are not parties to the Plans
or interested persons of any such party and who have no direct or
indirect financial interest in the Plans, and (ii) the vote of a
majority of the entire Board of Directors/Trustees.
Apart from the Plans, the Advisor, at its expense, may incur
costs and pay expenses associated with the distribution of shares of the
Funds.
==========================================================================
TRANSFER AND SHAREHOLDER SERVICING AGENT
==========================================================================
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of
Calvert Group, Ltd., and Acacia Mutual, has been retained by the Funds
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 semi-annual 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. The fees paid by
the Series to Calvert Shareholder Services, Inc. for fiscal period 1993
were $665, $324, $451, and $707 for the Maryland, Michigan, New York,
and Virginia portfolios, respectively. For the 1994 fiscal period, CSSI
received $1,495, $1,143, $6,690, $2,771, $3,207, $2,022, and $5,258, for
the Arizona, Florida, Maryland, Michigan, New York, Pennsylvania, and
Virginia Portfolios, respectively. For the 1995 fiscal period, CSSI
received $4,131, $3,389, $9,630, $5,414, $6,915, $4,711, and $8,735, for
the Arizona, Florida, Maryland, Michigan, New York, Pennsylvania, and
Virginia Portfolios, respectively.
==========================================================================
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
==========================================================================
Coopers and Lybrand L.L.P. has been selected by the Board of
Directors to serve as independent accountants for all portfolios of the
Fund for fiscal year 1996. State Street Bank & Trust Company, N.A., 225
Franklin Street, Boston, MA 02110, serves as custodian of the Series's
investments. First National Bank of Maryland, 25 South Charles Street,
Baltimore, Maryland 21203 acts as custodian of certain of the Series's
cash assets. Neither custodian has any part in deciding the Fund's
investment policies or the choice of securities that are to be purchased
or sold by the Series.
==========================================================================
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 Directors/Trustees.
Broker-dealers who execute portfolio transactions on behalf of
the Funds are selected on the basis of their professional capability and
the value and quality of their services. The Advisor may 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 or its affiliate may compensate, at their expense,
such broker-dealers in consideration of their promotional and
administrative services.
The Advisor anticipates the portfolio turnover of the Funds
during the first full fiscal year to be less than 25%. The portfolio
turnover for the 1993 fiscal period was 14% and 28%, for the Maryland
and Virginia portfolios, respectively, and 0% each for the Michigan and
New York portfolios. For the 1994 fiscal period, the portfolio turnover
was 22%, 93%, 77%, 65%, 56%, 96%, and 65%, for the Arizona, Florida,
Maryland, Michigan, New York, Pennsylvania, and Virginia Portfolios,
respectively. For the 1995 fiscal period, the portfolio turnover was
10%, 44%, 11%, 22%, 13%, 17%, and 11%, for the Arizona, Florida,
Maryland, Michigan, New York, Pennsylvania, and Virginia Portfolios,
respectively.
==========================================================================
GENERAL INFORMATION
==========================================================================
Calvert Municipal Fund, Inc., was organized as a corporation
under the General Corporation Law of the State of Maryland on February
4, 1992. The Fund includes the following series: (list all except
Florida) Calvert National Municipal Intermediate Fund and Calvert
California Municipal Intermediate Fund, Calvert Maryland Municipal
Intermediate Fund. Prior to March 1, 1994, Calvert National Municipal
Intermediate Fund was known as Calvert Intermediate Municipal Fund.
First Variable Rate Fund for Government Income was originally
organized as a Maryland corporation, and became a Massachusetts business
trust on April 30, 1984. It has two series, one doing business as
Calvert First Government Money Market Fund, and the other, Calvert
Florida Municipal Intermediate Fund.
Each share of each Fund represents an equal proportionate
interest in that Fund 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 Funds offer two separate classes of
shares: Class A and Class C. 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
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 Fund available for
distribution.
The Funds will send shareholders unaudited semi-annual and
audited annual reports that will include the Funds' net asset value per
share, portfolio securities, income and expenses, and other financial
information.
The Funds' registration statements, containing additional
information, are on file with the Securities and Exchange Commission and
are available to the public.
==========================================================================
FINANCIAL STATEMENTS
==========================================================================
The audited financial statements in the Funds' Annual Report to
Shareholders, dated December 31, 1995, 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 Funds.
==========================================================================
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 Note and Bond 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:
*"Fund" in this Letter of Intent shall refer to the Fund or Portfolio,
as the case may be, here indicated.
__ $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)
CALVERT ARIZONA MUNICIPAL INTERMEDIATE FUND
CALVERT FLORIDA MUNICIPAL INTERMEDIATE FUND
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT MICHIGAN MUNICIPAL INTERMEDIATE FUND
CALVERT NEW YORK MUNICIPAL INTERMEDIATE FUND
CALVERT PENNSYLVANIA MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
Statement of Additional Information
April 30, 1996
INVESTMENT ADVISOR TRANSFER AGENT
Calvert Asset Management Company, Inc. Calvert Shareholder Services, Inc.
4550 Montgomery Avenue 4550 Montgomery Avenue
Suite 1000N Suite 1000N
Bethesda, Maryland 20814 Bethesda, Maryland 20814
INDEPENDENT ACCOUNTANTS PRINCIPAL UNDERWRITER
Coopers & Lybrand L.L.P. Calvert Distributors, Inc.
217 E. Redwood Street 4550 Montgomery Avenue
Baltimore, Maryland 21202-3316 Suite 1000N
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 7
Purchases and Redemptions of Shares 8
Dividends and Distributions 10
Tax Matters 10
Valuation of Shares 11
Calculation of Yield and Total Return 11
Advertising 14
Directors/Trustees and Officers 15
Investment Advisor 17
Administrative Services 18
Method of Distribution 18
Transfer and Shareholder Servicing Agent 19
Independent Accountants and Custodians 19
Portfolio Transactions 20
General Information 20
Financial Statements 20
Appendix 21
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements
Financial statements incorporated by reference to:
Registrant's Annual Report to Shareholders of the
Calvert Municipal Fund, Inc., Calvert California
Municipal Intermediate Fund, dated December 31, 1995,
and filed March 11, 1996.
Schedules II-VII, inclusive, for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission, are omitted because
they are not required under the related instructions,
or they are inapplicable, or the required information
is presented in the financial statements or notes
thereto.
(b) Exhibits:
1.Articles of Incorporation, (incorporated by reference
to Registrant's Pre-Effective Amendment No. 2,
April 27, 1992, and as amended, incorporated
by reference to Registrant's Pre-Effective
Amendment No. 3, May 21, 1992).
2.By-Laws (incorporated by reference to Registrant's
Pre-Effective Amendment No. 2, April 27, 1992).
4.Specimen Stock Certificate for Calvert California
Municipal Intermediate Fund, (incorporated by
reference to Registrant's Post-Effective
Amendment No. 1, filed July 27, 1992).
5.Investment Advisory Contract (incorporated by reference
to Registrant's Pre-Effective Amendment No. 2,
April 27, 1992).
6.Underwriting Agreement, filed herewith.
7.Directors' Deferred Compensation Agreement
(incorporated by reference to Registrant's
Pre-Effective Amendment No. 2, April 27, 1992).
8.Custodial Contract (incorporated by reference to
Registrant's Pre-Effective Amendment No. 2,
April 27, 1992).
9.a. Transfer Agency Contract (incorporated by
reference to Registrant's Pre-Effective
Amendment No. 2, April 27, 1992).
9.b. Administrative Services Agreement
(incorporated by reference to Registrant's
Pre-Effective Amendment No. 2, April 27, 1992).
10. Opinion and Consent of Counsel as to Legality
of Shares Being Registered.
11. Consent of Independent Auditors to Use of Report.
15. Plan of Distribution, filed herewith.
16. Schedule for Computation of Performance
Quotation, (incorporated by reference to
Registrant's Post-Effective Amendment No. 4,
August 2, 1993).
17. (i) Rule 414 Statement of Successor Entity
(incorporated by reference to Registrant's
Pre-Effective Amendment No. 3, May 21, 1992).
(ii) Financial Data Schedules
18. Funds Multiple Class Plan under Rule 18f-3
dated January 25, 1996 (filed herewith).
Exhibits 3 and 12 through 14 are omitted because they are
inapplicable.
Item 25. Persons Controlled By or Under Common Control With Registrant
Registrant is controlled by its Board of Directors. Some
members of Registrant's Board also serve on the Board of
Trustees/Directors for Calvert Social Investment Fund, Calvert World
Values Fund, Inc., Calvert New World Fund, Inc., or Acacia Capital
Corporation, and/or a common Board with four other registered investment
companies, First Variable Rate Fund for Government Income, Calvert
Tax-Free Reserves, Calvert Cash Reserves (d/b/a Money Management Plus),
and The Calvert Fund.
Item 26. Number of Holders of Securities
As of March 31, 1996, there were 955 holders of record of
Registrant's Class A shares of common stock for the Calvert California
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1996, there were 1,119 holders of record of
Registrant's Class A shares of common stock for the Calvert National
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1996, there were 116 holders of record of
Registrant's Class A shares of common stock for the Calvert Maryland
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1996, there were 110 holders of record of
Registrant's Class A shares of common stock for the Calvert Michigan
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1996, there were 144 holders of record of
Registrant's Class A shares of common stock for the Calvert New York
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1996, there were 262 holders of record of
Registrant's Class A shares of common stock for the Calvert Virginia
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 84 holders of record
of Registrant's Class A shares of common stock for the Calvert Arizona
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 98 holders of record
of Registrant's Class A shares of common stock for the Calvert
Pennsylvania Municipal Intermediate Fund series of Calvert Municipal
Fund, Inc.
As of February 28, 1995, there were 186 holders of record
of Registrant's Class C shares of common stock for the Calvert
California Municipal Intermediate Fund series of Calvert Municipal Fund,
Inc.
As of February 28, 1995, there were 321 holders of record
of Registrant's Class C shares of common stock for the Calvert National
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 288 holders of record of
Registrant's Class C shares of common stock for the Calvert Maryland
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 63 holders of record
of Registrant's Class C shares of common stock for the Calvert Michigan
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 120 holders of record
of Registrant's Class C shares of common stock for the Calvert New York
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 114 holders of record
of Registrant's Class C shares of common stock for the Calvert Virginia
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 27 holders of record
of Registrant's Class C shares of common stock for the Calvert Arizona
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of February 28, 1995, there were 62 holders of record
of Registrant's Class C shares of common stock for the Calvert
Pennsylvania Municipal Intermediate Fund series of Calvert Municipal
Fund, Inc.
Item 27. Indemnification
Registrant's Bylaws, Exhibit 2 to this Registration Statement,
provide that officers and directors will be indemnified by the Fund
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 a
person who has been adjudged liable of willful misfeasance, bad faith,
gross negligence, or reckless disregard of 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 directors 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 Articles of Incorporation also provide that
Registrant may purchase and maintain liability insurance on behalf of
any officer, trustee, employee or agent against any liabilities arising
from such status. In this regard, Registrant maintains a Directors &
Officers (Partners) Liability Insurance Policy with Chubb Group of
Insurance Companies, 15 Mountain View Road, Warren, New Jersey 07061,
providing Registrant with $5 million in directors and officers liability
coverage, plus $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 28. Business and Other Connections of Investment Adviser
Name of Company, Principal Capacity
Name Business and Address
Clifton S.
Sorrell, Jr. Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
4550 Montgomery Avenue
Bethesda, MD 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, MD 20814
----------------
Calvert Shareholder Officer
Services, Inc. and
Transfer Agent Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Md. 20814
--------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Ronald M. First Variable Rate Fund Officer
Wolfsheimer for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Reno J. Martini Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Md. 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and
Insurance Companies Director
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
---------------
Gardner Montgomery CompanyDirector
Tax Return Preparation Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Charles T. Nason Acacia Federal Savings Bank Director
(continued) Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Realty Corporation Officer
Real Estate Investments
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
---------------
Gardner Montgomery Company Officer
Tax Return Preparation Services and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Calvert Group, Ltd. Director
Sands Holding Company
(continued) 4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services, Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Director
Co., Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Director
Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
William M. Tartikoff Calvert Administrative Officer
(continued) Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Susan Walker Bender Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Daniel K. Hayes Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites First
Variable Rate Fund for Government Income, Calvert Tax-Free Reserves,
Calvert Social Investment Fund, Calvert Cash Reserves (d/b/a Money
Management Plus), The Calvert Fund, Calvert New World Fund, Inc., and
Calvert World Values Fund, Inc., as well as Acacia Capital Corporation.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Registrant Underwriter
Clifton S. Sorrell, Jr. Director President
and Director
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Controller
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Steven J. Schueth President None
Karen Becker Vice President None
Robert Knaus Regional Vice President None
Lee Mahfouz Regional Vice President None
Item 29. Principal Underwriter (continued)
(b) Positions of Underwriter's Officers and Directors
(continued)
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary None
Lisa Crossley Compliance Officer None
The principal business address of the above individuals is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Controller
and
William M. Tartikoff, Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a) Not Applicable
b) Not Applicable
c) The Registrant undertakes to furnish to each person to
whom a Prospectus is delivered, a copy of the
Registrant's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
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 Rule 485(b) under 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 25th day of April, 1996.
CALVERT MUNICIPAL FUND, INC.
By:
/s/Clifton S. Sorrell, Jr.
Clifton S. Sorrell, Jr.
President and Director
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title Date
________________________ Director and 04/29/96
Clifton S. Sorrell, Jr. Principal Executive
Officer
________________________ Principal Accounting 04/29/96
Ronald M. Wolfsheimer Officer
__________**____________ Director 04/29/96
Richard L. Baird, Jr.
__________**____________ Director 04/29/96
Frank H. Blatz, Jr., Esq.
__________**____________ Director 04/29/96
Frederick T. Borts, M.D.
__________**____________ Director 04/29/96
Charles E. Diehl
__________**____________ Director 04/29/96
Douglas E. Feldman
__________**____________ Directo 04/29/96
Peter W. Gavian
__________**____________ Director 04/29/96
John G. Guffey, Jr.
__________**____________ Director 04/29/96
Arthur J. Pugh
__________**____________ Director 04/29/96
David R. Rochat
__________**____________ Director 04/29/96
D. Wayne Silby
** Signed by Katherine (Thomas) Stoner pursuant to power of attorney, attached
hereto.
/s/Katherine (Thomas) Stoner
<PAGE>
EXHIBIT INDEX
Form N-1A
Item No.
Ex-23
24(b)(10) Form of Opinion and Consent of Counsel
Ex-23
24(b)(11) Independent Auditors' Consent
Ex-24 Power of Attorney
Ex-27
24(17) Financial Data Schedules
Ex-99
24(18) Rule 18f-3 Multiple Class Plan
April 30, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Calvert Municipal Fund, Inc.
File Numbers 811-6525 and 33-44968
Ladies and Gentlemen:
As counsel to Calvert Group, Ltd., it is my opinion that the
securities being registered by this Post-Effective Amendment No. 13 will
be legally issued, fully paid and non-assessable when sold. My opinion
is based on an examination of documents related to Calvert Municipal
Fund, Inc. (the "Fund"), including its Articles of Incorporation, other
original or photostatic copies of Fund records, certificates of public
officials, documents, papers, statutes, or authorities as I deemed
necessary to form the basis of this opinion.
I therefore consent to filing this opinion of counsel with the
Securities and Exchange Commission as an Exhibit to the Fund's
Post-Effective Amendment No. 13 to its Registration Statement.
Sincerely,
/s/Katherine Stoner
Katherine Stoner
Assistant Counsel
COOPERS Coopers & Lybrand L.L.P.
&LYBRAND a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
First Variable Rate Fund for
Government Income
We consent to the incorporation by reference in Post-Effective Amendment
No. 13 to the Registration Statement of Calvert Municipal Fund, Inc. (comprised
of the Calvert National, Arizona, California, Florida, Maryland, Michigan, New
York, Pennylvania, and Virginia Municipal Intermediate Funds) on Form N-1A
(File Numbers 33-44968 and 811-6525) of our reports dated February 9, 1996, on
our audits of the financial statements and financial highlights of the Funds,
which reports are included in the Annual Reports to Shareholders for the year
ended December 31, 1995, which are incorporated by reference in the
Registration Statement. We also consent to the reference to our Firm under the
caption "Independent Accountants and Custodians" in the Statement of Additional
Information.
COOPERS & LYBRAND, L.L.P.
/Coopers & Lybrand, L.L.P./
Baltimore, Maryland
April 17, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First
Variable Rate Fund for Government Income, Calvert Tax-Free Reserves,
Calvert Cash Reserves (doing business as Money Management Plus), The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the
"Funds"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Funds with any federal or state agency, and to
do all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Funds
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Richard L. Baird, Jr.
Witness Name of
Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Frank H. Blatz, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Frederick T. Borts
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Charles E. Diehl
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Douglas E. Feldman
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Peter W. Gavian
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
John G. Guffey, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Arthur J. Pugh
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
David R. Rochat
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
D. Wayne Silby
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund
for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker Bender,
Beth-ann Roth, and Katherine Stoner my true and lawful attorneys, with
full power to each of them, to sign for me and in my name in the
appropriate capacities, all registration statements and amendments filed
by the Funds with any federal or state agency, and to do all such things
in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Funds with any
government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994
Date Signature
Clifton S. Sorrell, Jr.
Witness Name of Trustee/Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Officer of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves
(doing business as Money Management Plus), The Calvert Fund, and Calvert
Municipal Fund, Inc. (collectively, the "Funds"), hereby constitute
William M. Tartikoff, Susan Walker Bender, Beth-ann Roth, and Katherine
Stoner my true and lawful attorneys, with full power to each of them, to
sign for me and in my name in the appropriate capacities, all
registration statements and amendments filed by the Funds with any
federal or state agency, and to do all such things in my name and behalf
necessary for registering and maintaining registration or exemptions
from registration of the Funds with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Funds, including, but not limited to, the Securities Act of 1933,
the Securities Exchange Act of 1934, the Investment Company Act of 1940,
the Investment Advisers Act of 1940, and all state laws regulating the
securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Funds in
connection with any transaction approved by the Board of
Trustee/Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Funds, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
March 1, 1995
Date Signature
Ronald M. Wolfsheimer
Witness Name of Officer
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000882671
<NAME> CALVERT MUNICIPAL FUND, INC
<SERIES>
<NUMBER> 021
<NAME> CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND, CLASS A
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 36372
<INVESTMENTS-AT-VALUE> 37992
<RECEIVABLES> 528
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38595
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 80
<TOTAL-LIABILITIES> 80
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33999
<SHARES-COMMON-STOCK> 3276
<SHARES-COMMON-PRIOR> 3476
<ACCUMULATED-NII-CURRENT> 64
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1100)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1461
<NET-ASSETS> 34424
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1934
<OTHER-INCOME> 0
<EXPENSES-NET> 314
<NET-INVESTMENT-INCOME> 1620
<REALIZED-GAINS-CURRENT> (416)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3948
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1584)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5413
<NUMBER-OF-SHARES-REDEEMED> (8757)
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<ACCUMULATED-GAINS-PRIOR> (18)
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<SHARES-REINVESTED> 26
<NET-CHANGE-IN-ASSETS> 592
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> (5)
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<GROSS-EXPENSE> 15
<AVERAGE-NET-ASSETS> 726
<PER-SHARE-NAV-BEGIN> 4.70
<PER-SHARE-NII> .17
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<PER-SHARE-DIVIDEND> (.18)
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<ACCUMULATED-NII-CURRENT> 11
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<ACCUMULATED-NET-GAINS> (66)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 103
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<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 9
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<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 597
<NUMBER-OF-SHARES-REDEEMED> (201)
<SHARES-REINVESTED> 90
<NET-CHANGE-IN-ASSETS> 652
<ACCUMULATED-NII-PRIOR> 2
<ACCUMULATED-GAINS-PRIOR> (67)
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<GROSS-EXPENSE> 24
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<PER-SHARE-NAV-BEGIN> 4.71
<PER-SHARE-NII> .25
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<PER-SHARE-DIVIDEND> (.23)
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<ACCUMULATED-NET-GAINS> (10)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 88
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<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 17
<NET-INVESTMENT-INCOME> 60
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<APPREC-INCREASE-CURRENT> 100
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (54)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 652
<NUMBER-OF-SHARES-REDEEMED> (231)
<SHARES-REINVESTED> 53
<NET-CHANGE-IN-ASSETS> 580
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12)
<OVERDISTRIB-NII-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 27
<AVERAGE-NET-ASSETS> 1391
<PER-SHARE-NAV-BEGIN> 4.72
<PER-SHARE-NII> .21
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<PER-SHARE-DIVIDEND> (.19)
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<PER-SHARE-NAV-END> 5.11
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Rule 18f-3 Multiple Class Plan
Calvert Municipal Fund
Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"), requires that an investment company desiring to offer
multiple classes of shares pursuant to the Rule adopt a plan setting
forth the differences among the classes with respect to shareholder
services, distribution arrangements, expense allocations and any related
conversion features or exchange privileges. Any material amendment to
the plan must be approved by the investment company's Board of
Trustees/Directors, including a majority of the disinterested Board
members, who must find that the plan is in the best interests of each
class individually and the investment company as a whole.
1. Class Designation. Fund shares shall be designated
either Class A or Class C.
2. Differences in Availability. Class A shares and Class
C shares shall both be available through the same distribution channels,
except that Class C shares; (1) may not be available through some
dealers, and, (2) are not available for purchases of $1 million or more.
3. Differences in Services. The services offered to
shareholders of each Class shall be substantially the same, except that
Rights of Accumulation, Letters of Intent and Reinvestment Privileges
shall be available only to holders of Class A shares.
4. Differences in Distribution Arrangements. Class A
shares shall be offered with a front-end sales charge, as such term is
defined in Article III, Section 26(b), of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. The amount of the
front-end sales charge on Class A shares is set forth at Exhibit I.
Class A shares shall be subject to a Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act. The amount of the Distribution Plan
expenses for Class A shares, as set forth at Exhibit I, are used to pay
the Fund's Distributor for distributing the Fund's Class A shares. This
amount includes a service fee at the annual rate of .25 of 1% of the
value of the average daily net assets of Class A.
Class C shares shall be subject to neither a front-end sales
charge, nor a contingent deferred sales charge (CDSC). Class C shares
shall be subject to a Distribution Plan adopted pursuant to Rule 12b-1
under the 1940 Act. The amount of the Distribution Plan expenses for
Class C shares is set forth at Exhibit I. The Class C Distribution Plan
pays the Fund's Distributor for distributing the Fund's Class C shares.
This amount includes a service fee at the annual rate of .25 of 1% of
the value of the average daily net assets of Class C.
5. Expense Allocation. The following expenses shall be
allocated, to the extent practicable, on a Class-by-Class basis: (a)
Distribution Plan fees; (b) transfer agent fees and expenses; (c)
printing and postage expenses payable by the Fund relating to preparing
and distributing materials, such as proxies, to current shareholders of
a specific Class; (d) class specific state registration fees; (e) class
specific litigation or other legal expenses; (f) certain class specific
reimbursement from the investment advisor ; (g) certain class specific
contract services (e.g., proxy solicitation) and (h) any other expenses
subsequently identified that, in the opinion of counsel, or the Fund's
independent public accountants are properly allocated by Class.
6. Conversion Features. No Class shall be subject to any
automatic conversion feature.
7. Exchange Privileges. Class A shares shall be
exchangeable only for (a) Class A shares of other funds managed,
administered, or underwritten by Calvert Group; (b) shares of funds
managed, administered or underwritten by Calvert Group which do not have
separate share classes; and (c) shares of certain other funds specified
from time to time.
Class C shares shall be exchangeable only for (a) Class C
shares of other funds managed, administered or underwritten by Calvert
Group; (b) Class A shares of other funds managed, administered or
underwritten by Calvert Group, if the front-end load on the Class A
shares is paid at the time of the exchange; and (c) shares of certain
other funds specified from time to time.
Dated: January 25, 1996
<PAGE>
EXHIBIT I
Calvert Municipal Fund
Maximum Class A Maximum
Class A Maximum Class C
Front-End Sales 12b-1 Fee
12b-1 fee
Charge
California Intermediate 2.75% 0.25%*
0.80%
National Intermediate 2.75% 0.25%*
0.80%
Maryland Intermediate 2.75% 0.25%*
0.80%
Virginia Intermediate 2.75% 0.25%*
0.80%
Michigan Intermediate 2.75% 0.25%*
0.80%
New York Intermediate 2.75% 0.25%*
0.80%
Pennsylvania Intermediate 2.75% 0.25%*
0.80%
Arizona Intermediate 2.75% 0.25%*
0.80%
* The Class A 12b-1 Plan limits this to 0.15% for specified periods (see
the Class A 12b-1 Plan for exact dates)