SEC Registration Nos.
811-6525 and 33-44968
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 15 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 15 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, 1998
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.
<PAGE>
Calvert Municipal Fund, Inc.
Form N-1A Cross Reference Sheet
Item number Prospectus Caption
1. Cover Page
2. Financial Highlights
3. Financial Highlights
Yield and Total Return
4. Investment Objective and Policies
Management of the Fund
5. Management of the Fund
6. Alternative Sales Options
Management of the Fund
Dividends and Taxes
7. How to Buy Shares
Management of the Fund
Net Asset Value
Reduced Sales Charges
When Your Account Will Be Credited
Exchanges
8. Alternative Sales Options
How to Sell Your Shares
9. *
Statement of Additional Information Captions
10. Cover Page
11. Table of Contents
12. General Information
13. Investment Objective
Investment Policies
Investment Restrictions
Portfolio Transactions
14. Directors and Officers
15. Directors and Officers
16. Investment Advisor
Administrative Services and Distribution
Independent Accountants and Custodians
17. Portfolio Transactions
18. General Information
19. Purchases and Redemptions of Shares
Valuation of Shares
20. Tax Matters
21. Administrative Services and Distribution
22. Calculation of Yield
Calculation of Yield and Total Return
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
PROSPECTUS - APRIL 30, 1998
CALVERT MUNICIPAL INTERMEDIATE FUNDS:
CALIFORNIA MARYLAND 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 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 B shares, which impose no front-end sales charge, but will
impose a deferred sales charge at the time of redemption, depending on how
long you have owned the shares ("contingent deferred sales charge," or
"CDSC"). Class B 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 ("SAI") for the Funds (April 30, 1998)
has been filed with the Securities and Exchange Commission and is incorporated
by reference. This free SAI is available by calling: 800.368.2748.
The Commission maintains a web site (http://www.sec.gov) that contains the
SAI, material incorporated by reference, and other information regarding
registrants that file electronically with the Commission.
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
A. Shareholder National Municipal California Municipal
Transaction Costs Intermediate Fund Intermediate Fund
Class A Class B Class A Class B
Maximum Sales
Charge on
Purchases (as a
percentage of
offering price) 2.75% None 2.75% None
Maximum
Contingent
Deferred Sales
Charge
(as a percentage
of purchase price or
redemption
proceeds as
applicable) None 3.00%* None 3.00%*
Annual Fund Operating Expenses -
Fiscal Year 1997
(as a percentage of
average net assets)
Management Fees 0.70% 0.70% 0.70% 0.70%
Rule 12b-1 Service and
Distribution Fees 0.00% 1.00% 0.00% 1.00%
Other Expenses 0.27% -- 0.21% --
Total Fund
Operating Expenses1 0.97% -- 0.91% --
A. Shareholder Maryland Municipal Virginia Municipal
Transaction Costs Intermediate Fund Intermediate Fund
Class A Class B Class A Class B
Maximum
Sales Charge on
Purchases
(as a percentage
of
offering price) 2.75% None 2.75% None
Maximum
Contingent
Deferred Sales
Charge None 3.00%* None 3.00%*
(as a percentage
of purchase price
or redemption
proceeds, as applicable)
B. Annual Fund Operating Expenses - Fiscal Year 1997
(as a percentage
of average net assets)
Management Fees 0.70% 0.70% 0.70% 0.70%
Rule 12b-1 Service and
Distribution Fees 0.00% 1.00% 0.00% 1.00%
Other Expenses 0.29% -- 0.26% --
Total Fund
Operating Expenses1 0.99% -- 0.96% --
*A contingent deferred sales charge is imposed on the proceeds of Class B
shares redeemed within 4 years, subject to certain exceptions. That charge is
imposed as a percentage of net asset value at the time of purchase or
redemption, whichever is less, and declines from 3% in the first year that
shares are held, to 2% in the second and third years, and 1% in the fourth
year. There is no charge on redemptions of Class B shares held for more than
four years. See "Calculation of Contingent Deferred Sales Charge" below.
Example:
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return; (2) for Class A shares, redemption at the end of each period and
payment of maximum initial sales charge at time of purchase and (3) for Class
B shares, payment of maximum applicable contingent deferred sales charge.
1 Net Fund Operating Expenses (Class A) after reduction for fees paid
indirectly were:
National 0.94%, California 0.88%, Maryland 0.92% and Virginia 0.88%.
Fund 1 Year 3 Years 5 Years 10 Years
National
Class A $37 $58 $80 $143
Class B
Assuming a complete
redemption at end of
period
Assuming no
redemption
California
Class A $37 $56 $76 $136
Class B
Assuming a complete
redemption at end of
period
Assuming no
redemption
Maryland
Class A $37 $58 $81 $145
Class B
Assuming a complete
redemption at end of
period
Asuming no
redemption
Virginia
Class A $37 $57 $79 $142
Class B
Assuming a complete
redemption at end of
period
Assuming no
redemption
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).
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.
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. 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 and Virginia Funds commenced operation September 30, 1993. For the
first five years of operation of each Fund, Class A Rule 12b-1 expenses will
be limited to 0.15% and may thereafter be 0.25%. The Advisor may voluntarily
defer fees or assume expenses of the Funds.
The Investment Advisory Agreement provides that the Advisor may later, to the
extent permitted by law, recapture any fees it deferred or expenses it assumed
during the two prior years; provided, however, that Class A Total 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 more 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. In
addition to the compensation itemized above (sales charge and Rule 12b-1
service and distribution fees), certain broker/dealers and/or their
salespersons may receive certain compensation for the sale and distribution of
the securities or for services to the Fund. See the Statement of Additional
Information, "Method of Distribution."
Financial Highlights
The following table provides information about the Funds' financial history.
It expresses the information in terms of a single Class A share outstanding
throughout the period. No Class B shares were outstanding during the period.
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, 1997, 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.
Year Ended December 31,
National Municipal 1997 1996 1995
Net asset value,
beginning $10.56 $10.62 $9.81
Income from investment operations
Net investment
income. 50 .50 .51
Net realized
and unrealized
gain (loss) on investments .23 (.06) .80
Total from
investment
operations .73 .44 1.31
Distributions from
Net investment income (.50) (.50) (.50)
Net realized gains - - -
Total distributions (.50) (.50) (.50)
Total increase (decrease)
in net asset value .23 (.06) .81
Net asset value, ending $10.79 $10.56 $10.62
Total return2 7.11% 4.32% 13.64%
Ratio to average net assets
Net investment income 4.71% 4.83% 4.97%
Total expenses3 .97% 1.04% .96%
Net expenses .94% 1.01% .94%
Expenses reimbursed - - -
Portfolio turnover 29% 23% 57%
Net assets, ending
(in thousands) $48,933 $45,612 $40,146
Number of shares outstanding,
ending (in thousands) 4,535 4,319 3,780
From Inception
(Sept. 30, 1992)
Year Ended December 31, through Dec. 31,
National Municipal 1994 1993 1992
Net asset value, beginning $10.42 $10.01 $10.00
Income from investment operations
Net investment income .50 .48 .13
Net realized and unrealized gain
(loss) on investments (.62) .45 .01
Total from investment
operations (.12) .93 .14
Distributions from
Net investment income (.49) (.48) (.13)
Net realized gains - (.04) -
Total distributions (.49) (.52) (.13)
Total increase (decrease)
in net asset value (.61) .41 .01
Net asset value, ending $9.81 $10.42 $10.01
Total return2 (1.18%) 9.47% 5.40%
Ratio to average net assets
Net investment income 4.88% 5.01% 5.36%(a)
Total expenses3 - - -
Net expenses .69% .10% -
Expenses reimbursed .32% .45% 4.34%(a)
Portfolio turnover 122% 162% 12%
Net assets, ending (in thousands) $36,159 $37,467 $1,542
Number of shares outstanding,
ending (in thousands) 3,686 3,596 154
(a) Annualized
2 Total return does not reflect deduction of front-end sales charge.
3 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.
Year Ended December 31,
California Municipal 1997 1996 1995
Net asset value, beginning $10.44 $10.51 $ 9.81
Income from investment operations
Net investment income .49 .48 .47
Net realized and
unrealized gain
(loss) on investments .18 (.07) .69
Total from investment
operations .67 .41 1.16
Distributions from
Net investment income (.48) (.48) (.46)
Net realized gains - - -
Total distributions (.48) (.48) (.46)
Total increase (decrease)
in net asset value .19 (.07) .70
Net asset value, ending $10.63 $10.44 $ 10.51
Total return4 6.61% 4.04% 12.07%
Ratio to average net assets
Net investment income 4.64% 4.59% 4.59%
Total expenses5 .91% .97% .91%
Net expenses .88% .94% .89%
Expenses reimbursed - - -
Portfolio turnover 48% 25% 47%
Net assets, ending (in thousands) $35,085 $35,693 $34,424
Number of shares outstanding,
ending (in thousands) 3,300 3,419 3,276
From Inception
(May 29, 1992)
Year Ended December 31, through Dec. 31,
California Municipal 1994 1993 1992
Net asset value, beginning $10.56 $10.24 $10.00
Income from investment operations
Net investment income .48 .53 .29
Net realized and unrealized gain
(loss) on investments (.76) .36 .24
Total from investment
operations (.28) .89 .53
Distributions from
Net investment income (.47) (.53) (.29)
Net realized gains - (.04) -
Total distributions (.47) (.57) (.29)
Total increase (decrease)
in net asset value (.75) .32 .24
Net asset value, ending $9.81 $10.56 $10.24
Total return4 (2.57%) 8.88% 10.00%
Ratio to average net assets
Net investment income 4.67% 5.12% 5.24%(a)
Total expenses5 - - -
Net expenses .76% .21% -
Expenses reimbursed .13% .12% .38%(a)
Portfolio turnover 68% 21% 3%
Net assets, ending (in thousands) $34,111 $35,726 $16,046
Number of shares outstanding,
ending (in thousands) 3,476 3,383 1,567
(a) Annualized
4 Total return does not reflect deduction of front-end sales charge.
5 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.
From Inception
(Oct. 1, 1993)
Year Ended December 31,
through Dec. 31,
Maryland Municipal
1997 1996 1995 1994 1993
Net asset
value,
beginning $5.03 $5.06 $4.67 $5.05 $5.00
Income from investment
operations
Net investment
income 23 .23 .24 .24 .04
Net realized and
unrealized gain
(loss) on investments .15 (.04) .39 (.39) .05
Total from investment
operations .38 .19 .63 (.15) .09
Distributions from
Net investment income (.23) (.22) (.24) (.23) (.04)
Total increase (decrease)
in net asset value .15 (.03) .39 (.38)
.05
Net asset value, ending $5.18 $5.03 $5.06 $4.67 $5.05
Total return6 7.68% 3.96% 13.66% (2.94%) 7.46%
Ratio to average net assets
Net investment income 4.48% 4.59% 4.87% 5.01% 4.42%(a)
Total expenses7 .99% 1.00% .51% - -
Net expenses .92% .94% .48% .17% -
Expenses reimbursed - .04% .43% .86% .80%(a)
Portfolio turnover 13% 8% 11% 77%
14%
Net assets, ending
(in thousands) $12,437 $12,023 $9,411 $7,429 $5,401
Number of shares outstanding,
ending (in thousands) 2,400 2,338 1,860 1,589 1,070
From Inception
(Oct. 1, 1993)
Year Ended December 31, through Dec. 3
Virginia Municipal 1997 1996 1995 1994 1993
Net asset value,
beginning $5.10 $5.13 $4.74 $5.06 $5.00
Income from investment operations
Net investment
income .22 .22 .24 .23 .05
Net realized and unrealized gain
(loss) on
investments. 11 (.03) .39 (.32) .06
Total from investment
operations .33 .19 .63 (.09) .11
Distributions from
Net investment income(.22) (.22) (.24) (.23) (.05)
Total increase (decrease)
in net asset value .11 (.03) .39 (.32) .06
Net asset value, ending $5.21 $5.10 $5.13 $4.74
$5.06
Total return6 6.71% 3.82% 13.54% (2.04%) 8.65%
Ratio to average net assets
Net investment
income4.38% 4.35% 4.86% 4.87% 4.81%(a)
Total expenses7 .96% 1.00% .54% - -
Net expenses .88% .92% .51% .19% -
Expenses reimbursed- .03% .38% .86%
1.54%(a)
Portfolio turnover 8% 4% 11% 65% 28%
Net assets, ending
(in thousands) $13,542 $12,618 $7,295 $5,866 $2,720
Number of shares outstanding,
ending (in thousands) 2,602 2,475 1,423 1,239 537
(a) Annualized
6 Total return does not reflect deduction of front-end sales charge.
7 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.
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 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 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
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 US 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.
Yield measures the current investment performance of 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 according to
accounting methods that are standardized for all stock and bond funds.
Taxable Equivalent Yield
A Fund may advertise its "taxable equivalent yield" of 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 Fund, 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 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 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 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 of a 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
returns usually will include the effect of paying a 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 Funds are series of Calvert Municipal Fund, Inc., an open-end management
investment company incorporated in Maryland.
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 of
the Fund you own.
Calvert Group is one of the largest investment management firms in the
Washington, DC area.
Calvert Group, Ltd., parent of the Funds' Advisor, shareholder servicing
agent, and distributor, is a subsidiary of Acacia Mutual Life Insurance
Company of Washington, DC, and is one of the largest investment management
firms in the Washington, DC area. Calvert Group, Ltd. and its subsidiaries are
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. As
of December 31, 1997, Calvert Group managed and administered assets in excess
of $5.0 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"); and
Daniel K. Hayes, 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.
Calvert Asset Management Company serves as Advisor to the Funds.
CAMCO 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 1997, each Fund paid investment
advisory fees of 0.60%. 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 received an annual fee, payable monthly, of 0.10% of each
Fund's average net assets per year.
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. is the shareholder servicing agent for each
Fund. National Financial Data Services, Inc. ("NFDS"), 1004 Baltimore, Kansas
City, Missouri 64105, is the transfer and dividend disbursing agent for each
Fund.
SHAREHOLDER GUIDE
Opening An Account
You can buy shares in several ways which are described here and in the chart
below.
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.
Alternative Sales Options
Each Fund offers 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 B Shares - Back-End Load Option
Class B shares are sold without a sales charge at the time of purchase, but
are subject to a deferred sales charge if they are redeemed within four
calendar years after purchase. Class B shares will automatically convert to
Class A shares at the end of four calendar years after purchase.
Class B shares have higher expenses.
Each Fund bears some of the costs of selling its shares under Distribution
Plans pursuant to Rule 12b-1 under the Investment Company Act of 1940.
Payments under the Class A Distribution Plan are limited to 0.25% annually of
the average daily net asset value of Class A shares, while payments under the
Class B Distribution Plan are 1.00% annually of the average daily net asset
value of Class B shares.
Considerations for deciding which class of shares to buy.
Income distributions for Class A shares will probably be higher than those for
Class B shares, as a result of the distribution expenses described above. (See
also "Total Returns.") 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. A Fund will not normally accept any purchase of Class B shares
in the amount of $250,000 or more. Brokers or others may receive different
levels of compensation depending on which class of shares they sell.
How to buy shares
Method New Accounts Additional Investments
$2,000 minimum $250 minimum
Please make your check payable Please make your check payable
to the Fund and mail it to the Fund and mail it
with your application to: with your investment slip to:
Calvert Group Calvert Group
P.O. Box 419544 P.O. Box 419739
Kansas City, MO 64179-6544 Kansas City, MO 64141-6739
Calvert Group Calvert Group
c/o NFDS, 6th Floor c/o NFDS, 6th Floor
1004 Baltimore 1004 Baltimore
Kansas City, MO 64105-1807 Kansas City, MO 64105-1807
$2,000 minimum $250 minimum
Visit the Calvert Office to make investments by check.
See back cover page for the address.
Class A Shares
Class A shares are offered at net asset value ("NAV") plus a front-end sales
charge calculated as follows:
Amount of As a % of As a % of Allowed
Investment offering net amount to Brokers
price invested as a % of
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% 0.00%*
*CDI may pay the dealer a finder's fee of up to 0.10% of the amount
of purchase on purchases over $1 million. 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 twelve months of the time of purchase.
CDI may pay the dealer a finder's fee of up to 0.10% of he amount of purchase
over $1 million.
Sales charges on Fund shares may be reduced or eliminated in certain cases.
See Exhibit A to this prospectus.
This sales charge is paid to CDI, who in turn reallows a portion to your
broker/dealer for selling the shares. In some cases, CDI may choose to reallow
up to 90% or more of the entire sales charge are considered underwriters under
the Securities Act of 1933.
In addition to the reallowance fees mentioned above, your broker/dealer or
other financial service firm through which your account is held may also be
paid periodic service fees at an annual rate of up to 0.15% of the average
daily net asset value of Fund Class A shares held in accounts maintained by
that firm.
Class A Distribution Plan
Each Fund has adopted a 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 Fund Class A shares, to pay expenses associated with the distribution
and servicing of those 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 1997 fiscal period, the
Funds paid no Class A Distribution Plan expenses.
Class B Shares
Class B shares are offered at net asset value, without a front-end sales
charge. With certain exceptions, a Fund will impose a deferred sales charge at
the time of redemption as follows:
Contingent Deferred Sales
Charge As A Percentage Of
Redemption During Net Asset Value
At Redemption
1st Year Since Purchase 3%
2nd Year Since Purchase 2%
3rd Year Since Purchase 2%
4th Year Since Purchase 1%
5th Year Since Purchase and Thereafter None
No deferred sales charge is imposed on amounts redeemed after four years from
purchase. If imposed, the deferred sales charge is deducted from the
redemption proceeds otherwise payable to you. The deferred sales charge is
retained by CDI. See "Calculation of Contingent Deferred Sales Charges and
Waiver of Sales Charges" below.
Class B shares that have been outstanding for four calendar years will
automatically convert to Class A shares, which are subject to a lower
Distribution Plan charge, without imposition of a front-end sales charge or
exchange fee. The Class B shares so converted will no longer be subject to the
higher expenses borne by Class B shares. Because the net asset value per share
of the Class A shares may be higher or lower than that of the Class B shares
at the time of conversion, although the dollar value will be the same, a
shareholder may receive more or less Class A shares than the number of Class B
shares converted. Under current law, it is the Advisor's opinion that such a
conversion will not constitute a taxable event under federal income tax law.
In the event that this ceases to be the case, the Board of Trustees will
consider what action, if any, is appropriate and in the best interests of the
Class B shareholders.
Class B Distribution Plan
Each Fund has adopted a Distribution Plan with respect to its Class B shares
(the "Class B Distribution Plan"), which provides for payments to the
underwriter at an annual rate of up to 1.00% of the average daily net asset
value of Class B shares, to pay expenses of the distribution of Class B
shares. Amounts paid by each Fund under the Class B Distribution Plan are
currently used by CDI to pay others (1) a commission at the time of purchase
of 2.25% of the value of each share sold; and/or (2) service fees at an annual
rate of 0.25% of the average daily net asset value of shares sold by such
others, beginning in the 13th month after purchase.
Calculation of Contingent Deferred Sales Charge and Waiver of Sales Charges
Class B shares that are redeemed will not be subject to a contingent deferred
charge to the extent that the value of such shares represents (1) reinvestment
of dividends or capital gains distributions, (2) shares held more than four
years or (3) capital appreciation of shares redeemed. Any contingent deferred
sales charge is imposed on the net asset value of the shares at the time of
redemption or purchase, whichever is lower. Upon request for redemption,
shares not subject to the contingent deferred sales charge will be redeemed
first. Thereafter, shares held the longest will be the first to be redeemed.
The contingent deferred sales charge on Class B Shares will be waived in the
following circumstances: (1) redemption upon the death or disability of the
shareholder, plan participant, or beneficiary ("disability" shall mean a total
disability as evidenced by a determination by the federal Social Security
Administration); (2) minimum required distributions from retirement plan
accounts for shareholders 70 1/2 and older (with the maximum amount subject to
this waiver being based only upon the shareholder's Calvert retirement
accounts); (3) return of an excess contribution or deferral amounts, pursuant
to sections 408(d)(4) or (5), 401(k)(8), or 402)(g)(2), or 401(m)(6) of the
Internal Revenue Code; (4) involuntary redemptions of accounts under
procedures set forth by the Fund's Board of Directors; (5) a single annual
withdrawal under a systematic withdrawal plan of up to 10% per year of the
shareholder's account balance (minimum account balance $50,000 to establish).
Arrangements with Broker/Dealers and Others
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. All such payments will be in
compliance with NASD rules.
When your account will be credited
Your purchase will be processed at the next NAV calculated after your order is
received and accepted (less any applicable CDSC). All of your purchases must
be made in US dollars and checks must be drawn on US banks. No cash will be
accepted. The Funds reserve the right to suspend the offering of shares for a
period of time or to reject any specific purchase order. If your check is not
paid, your purchase will be canceled and you will be charge d a $10 fee plus
costs incurred by the Funds. When you purchase by check or with Calvert Money
Controller, the purchase will be on hold for up to 10 business days from the
date of receipt. During that period, the proceeds of redemptions against those
funds will be held until the transfer agent is reasonable satisfied that the
purchase payment has been collected. Drafts written on a Money Market
Portfolio against such funds will be returned for uncollected funds. To avoid
this collection period, you can wire federal funds from your bank, which may
charge you a feel. As a convenience, check purchases can be received at
Calvert's offices for overnight mail delivery to the Transfer Agent and will be
credited the next business day, or upon receipt. Any check purchase received
without an investment slip may cause delayed crediting.
Certain financial institutions or broker/dealers which 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 certain 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.
Other Calvert GROUP Features
Calvert Information Network
For 24 hour performance and account information call 800.368.2745 or visit
http://www.calvertgroup.com.
You can obtain up to the minute performance and pricing information, verify
account balances, and authorize certain transactions with the convenience of
one phone call, 24 hours a day.
Account Services
By signing up for services when you open your account, you avoid having to
obtain a signature guarantee. If you wish to add services at a later date, a
signature guarantee to verify your signature may be obtained from any bank,
trust company and savings and loan association, credit union, broker/dealer
firm or member of a domestic stock exchange. A notary public cannot provide a
signature guarantee.
Calvert Money Controller
Calvert Money Controller allows you to purchase or sell shares anytime from
anywhere with ease, without the time delay of mailing a check or the added
expense of wiring funds. Use this service to transfer up to $300,000
electronically. Allow one or two business days after you place your request
for the transfer to take place. Money transferred to purchase new shares will
be subject to a hold of up to 10 business days before redemption requests will
be honored. Transaction requests must be received by 4 pm ET. You may request
this service on your initial account application. Unless they otherwise
qualify for a waiver, Class B shares redeemed by Calvert Money Controller will
be subject to the Contingent Deferred Sales Charge.
Telephone Transactions
You may purchase, redeem, or exchange shares, wire funds and use Calvert Money
Controller by telephone if you have pre-authorized service instructions. You
receive this service automatically when you open your account unless you elect
otherwise. For our mutual protection, the Fund, the shareholder servicing
agent and their affiliates use precautions such as verifying shareholder
identity and recording telephone calls to confirm instructions given by phone.
A confirmation statement is sent for most transactions. Please review this
statement and verify the accuracy of your transaction immediately.
Exchanges
Calvert Group of Funds offers a wide variety of investment options that
includes common stock funds, tax-exempt and corporate bond funds, and money
market funds (call your broker or Calvert representative for more
information). We make it easy for you to purchase shares in other funds should
your investment goals change with changes in market conditions. The exchange
privilege offers flexibility, by allowing you to exchange shares on which you
have already paid a sales charge from one mutual fund to another at no
additional charge.
Complete and sign an account application, 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.
Before you make an exchange, please note the following:
Each exchange represents the sale of shares of one portfolio and the purchase
of shares of another. Therefore, you could realize a taxable gain or loss.
Shareholders (and those managing multiple accounts) who make two purchases and
two exchange redemptions of shares of the same Portfolio during a six-months
period will be given written notice and may be prohibited from placing
additional investments. This policy does not prohibit a shareholder from
redeeming shares of any Portfolio, and does not apply to trades solely among
money market funds.
Shares may only be exchanged for shares of the same class of another Calvert
Group Fund
No CDSC is imposed on exchanges of shares subject to a CDSC at the time of the
exchange. The applicable CDSC is imposed at the time the shares acquired by
the exchange are redeemed.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days written notice.
Combined General Mailings
Join us in our efforts to conserve paper and save on postage.
If you have multiple accounts with Calvert, you may receive combined mailings
of shareholder
information, such as account statements, confirmations of transactions,
prospectuses and semi-annual and annual reports.
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 fee for these special services.
If you are purchasing shares of a Fund through a program of services offered
by a broker/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.
Minimum Account Balance is $1,000 per Fund, per Class
Please maintain a balance in each of your Fund accounts of at least $1,000. If
the balance in your account falls below the $1,000 minimum during a month, or
the account may be closed and the proceeds mailed to the address of record.
You will receive a notice that your account is below the minimum, and will be
closed or charged if the balance is not brought up to the required minimum
amount within 30 days.
DIVIDENDS, CAPITAL GAINS AND TAXES
Net investment income consists of interest income, net short-term capital
gains, if any, and dividends declared and paid on investments, less expenses.
Distributions of net short-term capital gains (treated as dividends for tax
purposes) and net long-term capital gains, if any, are normally paid once a
year; however, the Funds do not anticipate making any such distributions
unless available capital loss carryovers have been used or have expired.
Dividend and distribution payments will vary between classes; dividend
payments are anticipated to be generally higher for Class A shares.
Dividend payment options (available monthly or quarterly)
Dividends and any distributions are automatically reinvested in the same
Portfolio at NAV (no sales charge), unless you elect to have the dividends of
$10 or more paid in cash (by check or by Calvert Money Controller). Dividends
and distributions from any Calvert Group Fund or Portfolio may be
automatically invested in an identically registered account in any other
Calvert Group Fund at NAV. If reinvested in the same Fund account, new shares
will be purchased at NAV on the reinvestment date, which is generally 1 to 3
days prior to the payment date. You must notify the Funds in writing to change
your payment options. If you elect to have dividends and/or distributions paid
in cash, and the US Postal Service cannot deliver the check, or if it remains
uncashed for an extended period, it, as well as future dividends and
distributions, will be reinvested in additional shares. No dividends will
accrue on amounts represented by uncashed distribution or redemption checks.
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, 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
In January, your Fund will mail you Form 1099-DIV indicating the federal tax
status of dividends and any capital gain distributions paid to you during the
past year. Generally, dividends and distributions are taxable in the year they
are paid. However, any dividends and distributions paid in January but
declared during the prior three months are taxable in the year declared.
Dividends and distributions are taxable to you regardless of whether they are
taken in cash or reinvested. Dividends, including short-term capital gains,
are taxable as ordinary income. Distributions from long-term capital gains are
taxable as long-term capital gains, regardless of how long you have owned
shares.
For Non-Money Market Funds
You may realize a capital gain or loss when you sell or exchange shares. This
capital gain or loss will be short- or long-term, depending on how long you
have owned the shares which were sold. In January, the Portfolios will mail
you Form 1099-B indicating the total amount of all sales, including exchanges.
You should keep your annual year-end account statements to determine the cost
(basis) of the shares to report on your tax returns.
Other Tax Information
In addition to federal taxes, you may be subject to state or local taxes on
your investment, depending on the laws in your area. You will be notified to
the extent, if any, that dividends reflect interest received from US
government securities. Such dividends may be exempt from certain state income
taxes.
Taxpayer Identification Number
If we do not have your correct Social Security or Taxpayer Identification
Number ("TIN") and a signed certified application or Form W-9, Federal law
requires us to withhold 31% of your dividends, and possibly 31% of certain
redemptions. In addition, 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 (closed) at the current NAV on the date of redemption. Calvert
Group reserves the right to reject any new account or any purchase order for
failure to supply a certified TIN.
How to Sell Shares
You may redeem all or a portion of your shares on any business day. Your
shares will be redeemed at the next NAV calculated after your redemption
request is received (less any applicable CDSC). The proceeds will normally be
sent to you on the next business day, but if making immediate payment could
adversely affect the Funds, 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. Remember, investment made by check
or Calvert Money Controller may be subject to a hold before shares can be
redeemed. 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.
Net Asset Value - "NAV"
NAV refers to the worth of one share. NAV is computed by adding the value of
all portfolio
holdings, plus other assets, deducting liabilities and then dividing the
result by the number of shares outstanding. For Portfolios with more than one
class of shares, the NAVs of each class will vary daily depending on the
number of shares outstanding for each class.
Portfolio securities and other assets are valued based on market quotations,
except that securities maturing within 60 days are valued at amortized cost.
Money Market securities are valued according to the "amortized cost" method,
which is intended to stabilize the NAV at $1 per share. If quotations are not
available, securities are valued by a method that the particular Fund's Board
of Trustees/Directors believes accurately reflects fair value.
The NAV is calculated at the close of each business day, which coincides with
the closing of the regular session of the New York Stock Exchange (normal 4 pm
ET). Each Fund is open for business each day the New York Stock Exchange is
open. All purchases will be confirmed and credited to your account in full and
fractional shares (rounded to the nearest 1/1000 of a share).
Follow these suggestions to ensure timely processing of your redemption request
By Telephone
You may redeem shares from your account by telephone and have your money
mailed to your address of record or electronically transferred or wired to a
bank you have previously authorized. A charge of $5 may be imposed on wire
transfers of less than $1,000.
Written Requests
Calvert Group, PO Box 419544, Kansas City, MO 64141-6544
Your letter should include your account number and fund and the number of
shares or the
dollar amount your are redeeming. Please provide a daytime telephone number,
if possible, for us to call if we have questions. If the money is being sent
to a new bank, person, or address other than the address of record, your
letter must be signature guaranteed.
The following requirements may also apply to your account:
Type of Registration Requirements
Corporations, Letter of instruction and corporate resolution, signed by
person(s)
Associations authorized to act on the account, accompanied by signature
guarantee(s).
Trusts Letter of instruction signed by the Trustee(s) (as Trustees), with a
signature guarantee. (If the Trustee's name is not registered on your account,
provide a copy of the trust document, certified within the last 60 days.)
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 breakpoints are 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 SAI.
Group Purchases
If you are a member of a qualified group, you may purchase shares 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 brokers offering 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 brokers distributing shares, must
agree to include sales and other materials related to the Fund in its
publications and mailings to members at reduced or no cost to CDI or brokers.
Pension plans may not qualify participants for group purchases; however, such
plans may qualify for reduced sales charges under a separate provision (see
below). Members of a group are not eligible for a Letter of Intent.
Other Circumstances
There is no sales charge on shares of any fund or portfolio of the Calvert
Group of Funds sold to (i) current or retired Directors, Trustees, or Officers
of the Calvert Group of Funds, employees of Calvert Group, Ltd. and its
affiliates, or their family members; (ii) CSIF Advisory Council Members,
directors, officers, and employees of any subadvisor for the Calvert Group of
Funds, employees of broker/dealers distributing the Fund's shares and
immediate family members of the Council, subadvisor, of broker/dealer; (iii)
Purchases made through a Registered Investment Advisor, (iv) Trust departments
of banks or savings institutions for trust clients of such bank or
institution, (v) Purchases through a broker maintaining an omnibus account
with the fund or portfolio, provided 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 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 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.
<PAGE>
3
Calvert Municipal Fund, Inc.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data Services, Inc
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies
Investment Restrictions 6
Purchases and Redemptions of Shares 7
Dividends and Distributions 8
Tax Matters 8
Valuation of Shares 9
Calculation of Yield and Total Return 10
Advertising 11
Directors and Officers 11
Investment Advisor 14
Administrative Services 15
Method of Distribution 15
Transfer and Shareholder Servicing Agent 16
Independent Accountants and Custodians 16
Portfolio Transactions 16
General Information 16
Financial Statements 17
Control Persons and Principal Holders of Securities 17
Appendix 17
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1998
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, 1998, which may be obtained free of
charge by sending a request to the above address or calling the telephone
numbers listed above.
INVESTMENT OBJECTIVE
National Municipal 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.
INVESTMENT POLICIES
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
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
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, 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.
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 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:
Purchase common stocks, preferred stocks, warrants, or other equity securities;
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;
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.
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;
Purchase or sell in real estate, real estate investment trust securities, or
oil and gas interests, but this shall not prevent National Municipal from
investing in municipal obligations secured by real estate or interests therein;
Purchase or sell physical commodities except that it may enter into futures
contracts and options thereon;
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;
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;
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:
Purchase illiquid securities if more than 15% of the value of its net assets
would be invested in such securities;
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;
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.
Effect short sales of securities. For purposes of this restriction,
transactions in futures contracts and options are not deemed to constitute
selling securities short.
Purchase securities on margin, except that it may make margin deposits in
connection with futures contacts or options on futures.
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.
Certain Class B shares may be subject to a contingent deferred sales
charge which is subtracted from the redemption proceeds (see Prospectus,
"Calculation of Contingent Deferred Sales Charges and Waiver of Sales
Charges").
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
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.
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.
TAX MATTERS
In 1997 National Municipal did qualify and in 1998 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.
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 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, Martin Luther King Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Net Asset Value and Offering Price Per Share
Net asset value per share
($48,933,364/4,535,479 shares) $10.79
Maximum sales charge
(2.75% of offering price) 0.31
Offering price per share $11.10
CALCULATION OF YIELD AND TOTAL RETURN
National Municipal may advertise its "total return." 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. 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 and
five year periods and period from inception (September 30, 1992) through
December 31, 1997 are as follows:
National Municipal National Municipal
With Max. Load W/O Max. Load
One Year 4.15% 7.11%
Five Year 5.89% 6.48%
From Inception 5.87% 6.43%
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
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
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[(a-b/cd)+1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily number of
shares outstanding during the period that were entitled to receive dividends;
and d = the maximum offering price per share on the last day of the period.
The 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 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, 1997, National
Municipal's yield was 4.00% and its federal tax equivalent yield was 6.25% for
an investor in the 36% federal income tax bracket, and 6.62% 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.
Calvert Group is the nation's leading family of socially responsible mutual
funds, both in terms of socially responsible mutual fund assets under
management, and number of socially responsible mutual fund portfolios offered
(source: Social Investment Forum, November 30, 1997). Calvert Group was also
the first to offer a family of socially responsible mutual fund portfolios.
DIRECTORS AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice President
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 Calvert Variable Series, Inc., Calvert New World Fund and
Calvert World Values Fund. DOB: 05/09/48. 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. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
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. DOB: 07/23/49. Address: 16 Iliahi Street,
Honolulu, Hawaii, 96817.
*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. DOB: 10/13/22. 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. DOD:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. DOB: 12/08/32. 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, a director of Ariel Funds, 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 Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase, Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek 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. She 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. Prior to joining Calvert
Group, Ms. Krumsiek served as Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings Bank.
DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*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. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont
05038.
*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
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of GroupServe, an internet company focused on community
building collaborative tools, and 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. DOB: 07/20/48. Address: 1715 18th Street, N.W.,
Washington, D.C. 20009.
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, Inc. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Chief Financial Officer 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.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is 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. DOB: 08/12/47.
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. DOB: 09/09/50.
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. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Associate
General Counsel of Calvert Group 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. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and Compliance
Officer. Ms. Newton is Associate General Counsel of Calvert Group 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. DOB: 12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group 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. Prior to working at
Calvert Group, Ms. Duke was an Associate in the Investment Management Group of
the Business and Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and
officers of the Fund as a group own less than 1% of the Fund's outstanding
shares. Trustees marked with an *, above, are "interested persons" of the
Fund, under the Investment Company Act of 1940.
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, and Silby and Ms. Krumsiek are among the trustees/directors;
Calvert Variable Series, Inc., of which only Messrs. Blatz, Diehl, and Pugh
and Ms. Krumsiek are among the directors, and Calvert New World Fund, Inc., of
which only and Ms. Krumsiek and Mr. Martini are among the directors.
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, and Silby.
Directors and officers of the Fund as a group own less than 1% of
Calvert National Municipal Intermediate Fund's outstanding shares.
During fiscal 1997, directors of the Fund not affiliated with the
Fund's Advisor were paid $6,389. Directors of the Fund not affiliated with the
Advisor currently receive an annual fee of $20,500 for service as a member of
the Board of Trustees/Directors of the Calvert Group of Funds plus a fee of
$750 to $1,500 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 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 1997 Aggregate Pension or Total
(unaudited numbers) Compensation Retirement Compensation
from Benefits from
Registrant Accrued as Registrant
for service part of and Fund
as Director Registrant Complex paid
Expenses* to Director**
Name of Director
Richard L. Baird, Jr. $1,174 $0 $34,450
Frank H. Blatz, Jr. $1,552 $1,552 $46,000
Frederick T. Borts $1,171 $0 $32,500
Charles E. Diehl $1,494 $1,494 $44,500
Douglas E. Feldman $1,122 $0 $32,500
Peter W. Gavian $1,361 $637 $38,500
John G. Guffey, Jr. $1,524 $0 $61,615
M. Charito Kruvant $1,256 $0 $36,250
Arthur J. Pugh $1,573 $53 $48,250
D. Wayne Silby $1,203 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of their
compensation. As of December 31, 1997, total deferred compensation, including
dividends and capital appreciation, was $555,901.79, $545,259.10, $137,436.70
and $187,735.55, for each director, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9) 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 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' 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 years 1995, 1996 and 1997, the Fund paid advisory fees of $270,912,
$275,574 and $285,023, respectively.
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. The fees paid by the Series to Calvert
Administrative Services Company, Inc. for fiscal years 1995, 1996, and 1997
were $45,152, $45,929 and $47,504, 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 a distribution fee pursuant to the Distribution Plans (see
below). During fiscal 1995, 1996 and 1997, CDI received sales charges in
excess of the dealer reallowance of $5,917, $13,952 and $11,597, respectively.
For Class B shares, CDI receives any CDSC paid.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Series has adopted a Class A and B Distribution Plan (the
"Plan") 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% and 1.00% of the Series average Class A and B daily net assets,
respectively. No Distribution Plan expenses were paid in fiscal 1995, 1996 and
1997.
The Plan was 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 Plan or in any agreements related to the
Plan. 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 Plan, 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 Plan will benefit the Funds and their shareholders.
The Plan may be terminated by vote of a majority of the
non-interested Directors/Trustees who have no direct or indirect financial
interest in the Plan, or by vote of a majority of the outstanding shares of
the Series. Any change in the Plan that would materially increase the
distribution cost to the Series requires approval of the shareholders;
otherwise, the Plan may be amended by the Directors/Trustees, including a
majority of the non-interested Directors/Trustees as described above.
The Plan 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 Plan or interested
persons of any such party and who have no direct or indirect financial
interest in the Plan, and (ii) the vote of a majority of the entire Board of
Directors/Trustees.
Apart from the Plan, the Advisor, at its expense, may incur costs and
pay expenses associated with the distribution of shares of the Fund.
Certain broker/dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finders' fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
National Financial Data Services, Inc. ("NFDS"), a subsidiary of State Street
Bank & Trust, has been retained by the Fund to act as transfer agent and
dividend disbursing agent. These responsibilities include: responding to
certain shareholder inquiries and instructions, crediting and debiting
shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions, and daily updating of shareholder accounts to
reflect declaration and payment of dividends.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act as
shareholder servicing agent. Shareholder servicing responsibilities include
responding to shareholder inquiries and instructions concerning their
accounts, entering any telephoned purchases or redemptions into the NFDS
system, maintenance of broker-dealer data, and preparing and distributing
statements to shareholders regarding their accounts. Calvert Shareholder
Services, Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services, Inc.
receive a total fee of $14.00 per shareholder account and $1.60 per
shareholder transaction.
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
1998. State Street Bank & Trust Company, N.A., 225 Franklin Street, Boston, MA
02110, serves as custodian of the Series' investments. First National Bank of
Maryland, 25 South Charles Street, Baltimore, Maryland 21203 acts as custodian
of certain of the Series' 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.
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 23% and 29% for the 1996 and 1997 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 Maryland 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.
The Fund offers two separate classes of shares: Class A and Class B.
Each class represents interests in the same portfolio of investments but, as
further described in the prospectus, each class is subject to differing sales
charges and expenses, which differences will result in differing net asset
values and distributions. Upon any liquidation of the Fund, shareholders of
each class are entitled to share pro rata in the net assets belonging to that
series available for distribution.
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. Upon any liquidation of the Series, shareholders 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, 1997, 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.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998, the following shareholder(s) owned of record 5%
of the Class A shares of the Fund:
Name and Address % of Ownership
The Lawrence B. Taishoff Flint Trust
Robert P. Taishoff, Trustee
1321 Washington Drive
Annapolis, MD 21403-4730 6.77%
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states, cities,
municipalities, and their agencies to obtain funds for various public
purposes. Such purposes include the construction of a wide range of public
facilities, the refunding of outstanding obligations, the obtaining of funds
for general operating expenses, and the lending of funds to other public
institutions and facilities. In addition, certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on them
is exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private activity bonds
used for the construction, equipment, repair or improvement of privately
operated industrial or commercial facilities may be exempt from federal income
tax, current federal tax law places substantial limitations on the size of
such issues.
Municipal obligations are generally classified as either "general
obligation" or "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source, but not
from the general taxing power. Tax-exempt industrial development bonds are in
most cases revenue bonds and do not generally carry the pledge of the credit
of the issuing municipality. There are, of course, variations in the security
of municipal obligations, both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a quoted
yield to maturity, and the price of the security is adjusted so that relative
to the stated rate of interest it will return the quoted rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three months and
one year. Pre-Refunded Bonds with longer nominal maturities that are due to be
retired with the proceeds of an escrowed subsequent issue at a date within one
year and three years of the time of acquisition are also considered short-term
and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This distinction
is in recognition of the differences between short-term credit risk and
long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable strength of the
preceding grades. Market access for refinancing, in particular, is likely to
be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required of
an investment security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's municipal
bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to pay
principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make long-term risks
appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay interest
and repay principal. There may be some large uncertainties and major risk
exposure to adverse conditions. The higher the degree of speculation, the
lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of: (Fund or
Portfolio name) during the thirteen (13) month period from the date of my
first purchase pursuant to this Letter (which cannot be more than ninety (90)
days prior to the date of this Letter or my Fund Account Application Form,
whichever is applicable), an aggregate amount (excluding any reinvestments of
distributions) of at least fifty thousand dollars ($50,000) which, together
with my current holdings of the Fund (at public offering price on date of this
Letter or my Fund Account Application Form, whichever is applicable), will
equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. "Fund" in this Letter of Intent shall refer to the Fund or
Portfolio, as the case may be, here indicated. 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 SignerAddress
Date Signature of Investor(s)
Date Signature of Investor(s)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION-- April 30, 1998
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 Fund's Prospectus, dated April 30, 1998, which may be obtained free
of charge by writing the Fund at the above address or calling the Fund at the
telephone numbers listed above.
INVESTMENT OBJECTIVE
Calvert California Municipal Intermediate Fund (the "Fund") 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 Fund. There is, of course, no
assurance that the Fund will be successful in meeting its investment
objective; there are inherent risks in the ownership of any investment.
Dividends paid by the Fund will fluctuate with income earned on
investments. In addition, the value of its shares will fluctuate to reflect
changes in the market value of the Fund's investments. the Fund will attempt,
through careful management, to reduce these risks and enhance the
opportunities for higher income and greater price stability.
INVESTMENT POLICIES
The Fund 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, the Fund 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"). the Fund 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 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 California state income
taxes.
Variable Rate Demand Notes
The Board of Directors of Calvert Municipal Fund, Inc. (the "Fund"),
of which the Fund 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
The Fund 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 Fund may purchase unrated
leases. The Fund's Advisor, under the supervision of the Board of
Trustees/Directors, is responsible for determining the credit quality of such
leases on an ongoing basis, including an assessment of the likelihood that the
lease will not be canceled. Certain municipal leases may be considered
illiquid and subject to the Fund's limit on illiquid securities. The Board of
Trustees/Directors has directed the Advisor to treat a municipal lease as a
liquid security if it satisfies the following conditions: (A) such treatment
must be consistent with the 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 the 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 Fund remains substantially fully invested
at the same time that it has purchased securities on a when-issued basis,
there will be a greater possibility that the market value of its assets may
vary. No new when-issued commitments will be made if more than 50% of the
Fund's net assets would become so committed.
When the time comes to pay for when-issued securities, the Fund will
meet its obligations from then available cash flow, sale of securities or,
although it would not normally expect to do so, from sale of the when-issued
securities themselves (which may have a market value greater or less than the
Fund's payment obligation). Sale of securities to meet such obligations
carries with it a greater potential for the realization of capital losses and
capital gains which are not exempt from federal income tax.
Transactions in Futures Contracts
The Fund 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. The 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 Fund 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 the Fund'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 the Fund 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 the 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. The 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 the 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 the Fund, or move in a direction opposite to
that anticipated, the 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 Fund intends to close out any futures contracts prior to the delivery date
of such contracts.
The 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 the 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 the 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 the
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 the Fund to assume a
hedging posture without reducing the yield on its investments, beyond any
amounts required to engage in futures trading.
The Fund 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 Fund 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.
The Fund may also purchase financial futures contracts when not fully
invested in municipal bonds, in anticipation of an increase in the cost of
securities the 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, the 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 the 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 Fund 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, the 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, the Fund could purchase call options on futures
contracts, instead of purchasing the underlying futures contracts. the Fund
generally will sell options on futures contracts only to close out an existing
position.
The Fund 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 the 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 the 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
the 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 the 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 the Fund and
accrued profits on such positions. In addition, as a matter of operating
policy, the Fund 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 the Fund's existing futures positions and premiums on such options
would exceed 5% of its net assets.
When the 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 the 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, the 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 the 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 the 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 Fund 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, the Fund
could be required to make continuing daily cash payments of variation margin
in the event of adverse price movements. In such situation, if the 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, the 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 the 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 Fund'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, 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,
the Fund's Advisor, under the supervision of the Fund's Board of Directors,
will consider whether it is in the best interest of the Fund'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 the Fund'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 the 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 Fund may not:
Purchase common stocks, preferred stocks, warrants, or other equity securities;
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;
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;
Purchase or sell real estate, real estate investment trust securities, or oil
and gas interests, but this shall not prevent the Fund from investing in
municipal obligations secured by real estate or interests therein;
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;
Purchase or sell physical commodities except that it may enter into futures
contracts and options thereon;
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;
Invest 25% or more of its assets in the securities of any one issuer. The 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. 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;
Invest 25% or more of its assets in any particular industry or industries. The
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";
(10)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.
Nonfundamental Investment Restrictions
The Fund has adopted the following operating (i.e., nonfundamental)
investment policies and restrictions which may be changed by the Board of
Directors without shareholder approval. The Fund may not:
Purchase illiquid securities if more than 15% of the value of its net assets
would be invested in such securities;
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;
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.
Effect short sales of securities. For purposes of this restriction,
transactions in futures contracts and options are not deemed to constitute
selling securities short.
Purchase securities on margin, except that it may make margin deposits in
connection with futures contacts or options on futures.
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.
Certain Class B shares may be subject to a contingent deferred sales
charge which is subtracted from the redemption proceeds (see Prospectus,
"Calculation of Contingent Deferred Sales Charges and Waiver of Sales
Charges").
Redemption proceeds are normally paid in cash. However, the 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
The Fund imposes reduced sales charges for 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 the 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 $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 the Fund 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 Series' shares to their members. See "Exhibit A
- - Reduced Sales Charges" in the Prospectus.
DIVIDENDS AND DISTRIBUTIONS
The 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 will differ between 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
In 1997 the Fund did qualify and in 1998 the Fund intends to qualify
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code as amended (the "Code"). By so qualifying, the Fund will not be subject
to federal income tax, nor to the federal excise tax imposed by the Tax Reform
Act of 1986 (the "Act"), to the extent that it distributes its net investment
income and realized capital gains.
The Fund's dividends of net investment income constitute
exempt-interest dividends on which shareholders are not generally subject to
federal income tax; however under the Act, dividends attributable to interest
on certain private activity bonds must be included in federal alternative
minimum taxable income for the purpose of determining liability (if any) for
individuals and for corporations. The Fund'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 Fund. The Fund 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.
Furthermore, entities or persons who are "substantial users" (or persons
related to "substantial users") of facilities financed by private activity
bonds should consult their tax advisors before purchasing shares of the Fund.
"Substantial user" is generally defined as including a "non-exempt person" who
regularly uses in trade or business a part of a facility financed from the
proceeds of private activity bonds.
Investors should note that the Code may require investors to exclude
the initial sales charge, if any, paid on the purchase of the 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 Fund may be required to withhold 31% of any long-term capital
gain dividends and 31% of each redemption transaction occurring in the 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) 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 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 Fund for further information.
VALUATION OF SHARES
The Fund'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 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.
The Fund determines the net asset value for 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 Fund 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, Martin Luther King Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day.
Net Asset Value and Offering Price Per Share
Net asset value per share
($35,084,976/3,299,751 shares) $10.63
Maximum sales charge
(2.75% of offering price) 0.30
Offering price per share $10.93
CALCULATION OF YIELD AND TOTAL RETURN
The Fund may advertise its "total return." 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 the Fund's dividend yield, plus or minus realized or unrealized capital
appreciation or depreciation, less fees and expenses. 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 Fund's 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 (May 29, 1992) are as follows:
California Municipal California Municipal
With Max. Load W/O Max. Load
One Year 3.63% 6.61%
Five Year 5.00% 5.96%
From Inception 5.44% 5.59%
The 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 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 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[(a-b/cd)+1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily number of
shares outstanding during the period that were entitled to receive dividends;
and d = the maximum offering price per share on the last day of the period.
The 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 taxable
equivalent yield for the federal and state level is computed 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 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, 1997, the Fund's yield
was 3.87% and its federal tax equivalent yield was 6.05% for an investor in
the 36% federal income tax bracket, and 6.41% 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 Fund is compatible with the investor's
goals. The Fund may list portfolio holdings or give examples or securities
that may have been considered for inclusion in the Fund, whether held or not.
The Fund or its affiliates may supply comparative performance data
and rankings from independent sources such as Donoghue's Money Fund Report,
Bank Rate Monitor, Money, Forbes, Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., Wiesenberger Investment Companies Service,
Russell 2000/Small Stock Index, Mutual Fund Values Morningstar Ratings, Mutual
Fund Forecaster, Barron's, The Wall Street Journal, and Schabacker Investment
Management, Inc. Such averages generally do not reflect any front- or back-end
sales charges that may be charged by Funds in that grouping. The Fund may also
cite to any source, whether in print or on-line, such as Bloomberg, in order
to acknowledge origin of information. The Fund may compare itself or its
portfolio holdings to other investments, whether or not issued or regulated by
the securities industry, including, but not limited to, certificates of
deposit and Treasury notes. The Fund, its Advisor, and its affiliates reserve
the right to update performance rankings as new rankings become available.
Calvert Group is the nation's leading family of socially responsible mutual
funds, both in terms of socially responsible mutual fund assets under
management, and number of socially responsible mutual fund portfolios offered
(source: Social Investment Forum, November 30, 1997). Calvert Group was also
the first to offer a family of socially responsible mutual fund portfolios.
DIRECTORS AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice President
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 Calvert Variable Series, Inc., Calvert New World Fund and
Calvert World Values Fund. DOB: 05/09/48. 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. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
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. DOB: 07/23/49. Address: 16 Iliahi Street,
Honolulu, Hawaii, 96817.
*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. DOB: 10/13/22. 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. DOD:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. DOB: 12/08/32. 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, a director of Ariel Funds, 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 Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase, Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek 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. She 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. Prior to joining Calvert
Group, Ms. Krumsiek served as Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings Bank.
DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a Director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*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. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont
05038.
*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
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of GroupServe, an internet company focused on community
building collaborative tools, and 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. DOB: 07/20/48. Address: 1715 18th Street, N.W.,
Washington, D.C. 20009.
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, Inc. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Chief Financial Officer 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.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is 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. DOB: 08/12/47.
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. DOB: 09/09/50.
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. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Associate
General Counsel of Calvert Group 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. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and Compliance
Officer. Ms. Newton is Associate General Counsel of Calvert Group 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. DOB: 12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group 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. Prior to working at
Calvert Group, Ms. Duke was an Associate in the Investment Management Group of
the Business and Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of trustees and officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 Directors and
officers of the Fund as a group own less than 1% of Calvert California
Municipal Intermediate Fund's outstanding shares. Trustees marked with an *,
above, are "interested persons" of the Fund, under the Investment Company Act
of 1940.
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, and Silby and Ms. Krumsiek are among the trustees, Calvert Variable
Series, Inc., of which only Messrs. Blatz, Diehl, and Pugh and Ms. Krumsiek
are among the directors, Calvert World Values Fund, Inc., of which only
Messrs. Guffey, and Silby and Ms. Krumsiek are among the directors, and
Calvert New World Fund, Inc., of which only and Ms. Krumsiek and Mr. Martini
are among the directors.
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, and Silby.
During fiscal 1997, directors of the Fund not affiliated with the
Fund's Advisor were paid $4,654. Directors of the Fund not affiliated with the
Advisor currently receive an annual fee of $20,500 for service as a member of
the Board of Trustees/Directors of the Calvert Group of Funds plus a fee of
$750 to $1,500 for each Board and Committee meeting attended; such fees are
allocated among the Funds on the basis of their net assets.
Directors 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 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 1997 Aggregate Pension Total
(unaudited Compensation or Retirement Compensation
numbers) from Registrant Benefits from
for service Accrued as Registrant
as Director part of and Fund
Registrants Complex
Expenses* paid to
Directors**
Name of Director
Richard L. Baird, Jr. $1,174 $0 $34,450
Frank H. Blatz, Jr. $1,552 $1,552 $46,000
Frederick T. Borts $1,171 $0 $32,500
Charles E. Diehl $1,494 $1,494 $44,500
Douglas E. Feldman $1,122 $0 $32,500
Peter W. Gavian $1,361 $637 $38,500
John G. Guffey, Jr. $1,524 $0 $61,615
M. Charito Kruvant $1,256 $0 $36,250
Arthur J. Pugh $1,573 $53 $48,250
D. Wayne Silby $1,203 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of their
compensation. As of December 31, 1997, total deferred compensation, including
dividends and capital appreciation, was $555,901.79, $545,259.10, $137,436.70
and $187,735.55, for each director, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9) 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 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 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.
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 the Fund 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 (currently, 2.5% of the Fund's first
$30 million of average net assets, decreasing to 1.5% for assets over $100
million). During fiscal years 1995, 1996 and 1997, the Fund paid advisory fees
of $233,024, $217,159 and $204,019, respectively.
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 its 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 Fund's average net assets for providing such
services. The fees paid by the Fund to Calvert Administrative Services
Company. for fiscal years 1995, 1996, and 1997, were $38,837, $36,193 and
$34,003, respectively.
METHOD OF DISTRIBUTION
The Fund has entered into an agreement with Calvert Distributors,
Inc. ("CDI"), whereby CDI, acting as principal underwriter for the Fund, makes
a continuous offering of the Fund's 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 Fund's shares and compensates broker-dealer firms for sales of such shares
(see "Alternative Sales Options" in the Prospectus). CDI is entitled to
receive a distribution fee pursuant to the Distribution Plans (see below). For
the 1995, 1996 and 1997 fiscal periods, the Fund paid no Distribution Plan
expenses. For fiscal 1995, 1996 and 1997, CDI received sales charges in excess
of the dealer reallowance of $5,163, $14,066 and $15,411, respectively. For
Class B shares, CDI receives any CDSC paid.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Fund has adopted a Class A and B Distribution Plan (the
"Plan") 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% and 1.% of the Class A and B daily net assets, 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 Plan, 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 Plan will benefit the Funds and their shareholders.
The Plan may be terminated by vote of a majority of the
non-interested Directors/Trustees who have no direct or indirect financial
interest in the Plan, or by vote of a majority of the outstanding shares of
the Fund. Any change in the Plan that would materially increase the
distribution cost to the Fund requires approval of the shareholders;
otherwise, the Plan may be amended by the Directors/Trustees, including a
majority of the non-interested Directors/Trustees as described above.
The Plan 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 Plan or interested
persons of any such party and who have no direct or indirect financial
interest in the Plan, and (ii) the vote of a majority of the entire Board of
Directors/Trustees.
Apart from the Plan, the Advisor, at its expense, may incur costs and
pay expenses associated with the distribution of shares of the Fund.
Certain broker/dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finders' fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
National Financial Data Services, Inc. ("NFDS"), a subsidiary of State Street
Bank & Trust, has been retained by the Fund to act as transfer agent and
dividend disbursing agent. These responsibilities include: responding to
certain shareholder inquiries and instructions, crediting and debiting
shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions, and daily updating of shareholder accounts to
reflect declaration and payment of dividends.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act as
shareholder servicing agent. Shareholder servicing responsibilities include
responding to shareholder inquiries and instructions concerning their
accounts, entering any telephoned purchases or redemptions into the NFDS
system, maintenance of broker-dealer data, and preparing and distributing
statements to shareholders regarding their accounts. Calvert Shareholder
Services, Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services, Inc.
receive a total fee of $14.00 per shareholder account and $1.60 per
shareholder transaction.
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
1998. 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 Fund'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 the Fund 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 1994, 1995 or 1996 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 1996 and 1997 fiscal periods was 25%
and 48%, 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 Maryland 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.
The Fund offers two separate classes of shares: Class A and Class B. Each
class represents interests in the same portfolio of investments but, as
further described in the prospectus, each class is subject to differing sales
charges and expenses, which differences will result in differing net asset
values and distributions. Upon any liquidation of the Fund, shareholders of
each class are entitled to share pro rata in the net assets belonging to that
series available for distribution.
Each share of the Fund 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 Fund as declared by the
Board. Upon any liquidation of the Fund, shareholders are entitled to share
pro rata in the net assets available for distribution.
FINANCIAL STATEMENTS
The audited financial statements in the Annual Report to
Shareholders, dated December 31, 1997, 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 Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1998, the following shareholder(s) owned of record 5%
of the Class A shares of the Fund:
Name and Address % of Ownership
James J. Bochnowski 5.53%
Janet A. Bochnowski
28 Camino Por Los Arboles
Atherton, CA 94027-5941
Catalyst Productions 10.45%
1431 Center Street
Oakland, CA 94607-2054
National City Bank Kentucky, Trustee 7.37%
Anchorage Trust FBO S. Whaley
P.O. Box 94984
Cleveland, OH 44101-4984
APPENDIX
Municipal Obligations
Municipal obligations are debt obligations issued by states, cities,
municipalities, and their agencies to obtain funds for various public
purposes. Such purposes include the construction of a wide range of public
facilities, the refunding of outstanding obligations, the obtaining of funds
for general operating expenses, and the lending of funds to other public
institutions and facilities. In addition, certain types of industrial
development bonds are issued by or on behalf of public authorities to obtain
funds for many types of local, privately operated facilities. Such debt
instruments are considered municipal obligations if the interest paid on them
is exempt from federal income tax in the opinion of bond counsel to the
issuer. Although the interest paid on the proceeds from private activity bonds
used for the construction, equipment, repair or improvement of privately
operated industrial or commercial facilities may be exempt from federal income
tax, current federal tax law places substantial limitations on the size of
such issues.
Municipal obligations are generally classified as either "general
obligation" or "revenue'' bonds. General obligation bonds are secured by the
issuer's pledge of its faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source, but not
from the general taxing power. Tax-exempt industrial development bonds are in
most cases revenue bonds and do not generally carry the pledge of the credit
of the issuing municipality. There are, of course, variations in the security
of municipal obligations, both within a particular classification and among
classifications.
Municipal obligations are generally traded on the basis of a quoted
yield to maturity, and the price of the security is adjusted so that relative
to the stated rate of interest it will return the quoted rate to the purchaser.
Short-term and limited-term municipal obligations include Tax
Anticipation Notes, Revenue Anticipation Notes, Bond Anticipation Notes,
Construction Loan Notes, and Discount Notes. The maturities of these
instruments at the time of issue generally will range between three months and
one year. Pre-Refunded Bonds with longer nominal maturities that are due to be
retired with the proceeds of an escrowed subsequent issue at a date within one
year and three years of the time of acquisition are also considered short-term
and limited-term municipal obligations.
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This distinction
is in recognition of the differences between short-term credit risk and
long-term risk.
MIG 1: Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with
all security elements accounted for but lacking the undeniable strength of the
preceding grades. Market access for refinancing, in particular, is likely to
be less well established.
MIG4: Notes bearing this designation are of adequate quality,
carrying specific risk but having protection commonly regarded as required of
an investment security and not distinctly or predominantly speculative.
Description of Moody's Investors Service Inc.'s/Standard & Poor's municipal
bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. This rating indicates an extremely strong capacity to pay
principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities, fluctuation of protective elements may be of greater
amplitude, or there may be other elements present which make long-term risks
appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal
and interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead
to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay interest
and repay principal. There may be some large uncertainties and major risk
exposure to adverse conditions. The higher the degree of speculation, the
lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
LETTER OF INTENT
Date
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, MD 20814
Ladies and Gentlemen:
By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by
the terms and conditions applicable to Letters of Intent appearing in the
Prospectus and the Statement of Additional Information for the Fund and the
provisions described below as they may be amended from time to time by the
Fund. Such amendments will apply automatically to existing Letters of Intent.
I intend to invest in the shares of: (Fund or
Portfolio name) during the thirteen (13) month period from the date of my
first purchase pursuant to this Letter (which cannot be more than ninety (90)
days prior to the date of this Letter or my Fund Account Application Form,
whichever is applicable), an aggregate amount (excluding any reinvestments of
distributions) of at least fifty thousand dollars ($50,000) which, together
with my current holdings of the Fund (at public offering price on date of this
Letter or my Fund Account Application Form, whichever is applicable), will
equal or exceed the amount checked below:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of
this Letter will be made at the public offering price applicable to a single
transaction of the dollar amount specified above, as described in the Fund's
prospectus. "Fund" in this Letter of Intent shall refer to the Fund or
Portfolio, as the case may be, here indicated. 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, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data Services, Inc.
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Kansas City, Missouri 64105
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 5
Purchases and Redemptions of Shares 6
Dividends and Distributions 7
Tax Matters 7
Valuation of Shares 8
Calculation of Yield and Total Return 8
Advertising 9
Directors and Officers 9
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 13
Financial Statements 14
Control Persons and Principal Holders of Securities 14
Appendix 14
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1998
CALVERT MUNICIPAL INTERMEDIATE FUNDS:
MARYLAND 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, 1998, 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 Board of Directors has 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 Board of 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 a
Fund's limit on illiquid securities. The Board of Directors has directed the
Advisor to treat a municipal lease as a liquid security if it satisfies the
following conditions: (A) such treatment must be consistent with the 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 Restriction
Each Fund has adopted the following operating (i.e., nonfundamental)
investment policy/restriction which may be changed by the Board of Directors
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.
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.
Amounts of more than $50 and less than $300,000 may be transferred
electronically to the investor. Amounts of $1,000 or more will be transmitted
by wire, 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.
Certain Class B shares may be subject to a contingent deferred sales
charge which is subtracted from the redemption proceeds (see Prospectus,
"Calculation of Contingent Deferred Sales Charges and Waiver of Sales
Charges").
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
Each Fund imposes reduced sales charges for Fund 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 will differ between 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.
Each Fund determines the net asset value for 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, Martin Luther King 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 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.
Net Asset Value and Offering Price Per Share
Maryland
Net asset value per share
($5,207,473/994,135 shares) $5.24
Maximum sales charge
(2.75% of offering price) 0.15
Offering price per share $5.39
Virginia
Net asset value per share
($13,541,611/2,601,610 shares) $5.21
Maximum sales charge
(2.75% of offering price) 0.15
Offering price per share $5.36
CALCULATION OF YIELD AND TOTAL RETURN
Each Fund may advertise its "total return." Total return is
calculated separately for each series. 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. 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 returns) are as
follows:
Periods Ended
December 31, 1997 One Year Since Inception
Maryland 4.77% 4.76% (9/30/93)
Virginia 3.86% 4.83% (9/30/93)
Returns without maximum load are as follows:
Periods Ended
December 31, 1997 One Year Since Inception
Maryland 7.68% 5.45% (9/30/93)
Virginia 6.71% 5.51% (9/30/93)
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 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 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[(a-b/cd +1)6 - 1]
where a = dividends and interest earned during the period; b = expenses
accrued for the period (net of reimbursement); c = the average daily number of
shares outstanding during the period that were entitled to receive dividends;
and d = the maximum offering price per share on the last day of the period.
The 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 shares for the
thirty days ending December 31, 1997 is as follows:
SEC Tax Equivalent Yield at Tax Equivalent Yield at
Yield 36% Federal Tax Rate 39.6% Federal Tax Rate
Maryland 3.76% 5.88% 6.23%
Virginia 3.70% 5.78% 6.13%
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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.
Calvert Group is the nation's leading family of socially responsible mutual
funds, both in terms of socially responsible mutual fund assets under
management, and number of socially responsible mutual fund portfolios offered
(source: Social Investment Forum, November 30, 1997). Calvert Group was also
the first to offer a family of socially responsible mutual fund portfolios.
DIRECTORS AND OFFICERS
RICHARD L. BAIRD, JR., Trustee. Mr. Baird is Executive Vice President
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 Calvert Variable Series, Inc., Calvert New World Fund and
Calvert World Values Fund. DOB: 05/09/48. 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. He is also a director of
Calvert Variable Series, Inc. DOB: 10/29/35. Address: 308 East Broad Street,
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. DOB: 07/23/49. Address: 16 Iliahi Street,
Honolulu, Hawaii, 96817.
*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. DOB: 10/13/22. 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. DOD:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.
PETER W. GAVIAN, CFA, Trustee. Mr. Gavian is President of Corporate
Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux
Associates, an investment banking firm. DOB: 12/08/32. 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, a director of Ariel Funds, 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 Calvert Variable Series, Inc. and Calvert New World
Fund. DOB: 05/15/48. Address: 7205 Pomander Lane, Chevy Chase, Maryland 20815.
*BARBARA J. KRUMSIEK, President and Trustee. Ms. Krumsiek 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. She 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. Prior to joining Calvert
Group, Ms. Krumsiek served as Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
M. CHARITO KRUVANT, Trustee. Ms. Kruvant is President and CEO of
Creative Associates International, Inc., a firm that specializes in human
resources development, information management, public affairs and private
enterprise development. She is also a director of Acacia Federal Savings Bank.
DOB: 12/08/45. Address: 5301 Wisconsin Avenue, N.W., Washington, D.C. 20015.
ARTHUR J. PUGH, Trustee. Mr. Pugh is a director of Calvert Variable
Series, Inc., and serves as a director of Acacia Federal Savings Bank. DOB:
09/24/37. Address: 4823 Prestwick Drive, Fairfax, Virginia 22030.
*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. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont
05038.
*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
Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is
Executive Chairman of GroupServe, an internet company focused on community
building collaborative tools, and 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. DOB: 07/20/48. Address: 1715 18th Street, N.W.,
Washington, D.C. 20009.
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, Inc. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr. Wolfsheimer is Senior Vice
President and Chief Financial Officer 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.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is an officer of each of the investment companies in the Calvert
Group of Funds, and is Senior Vice President, Secretary, and General Counsel
of Calvert Group, Ltd., and each of its subsidiaries. Mr. Tartikoff is 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. DOB: 08/12/47.
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. DOB: 09/09/50.
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. DOB: 01/29/59.
KATHERINE STONER, Esq., Assistant Secretary. Ms. Stoner is Associate
General Counsel of Calvert Group 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. DOB: 10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant Secretary and Compliance
Officer. Ms. Newton is Associate General Counsel of Calvert Group 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. DOB: 12/31/61.
IVY WAFFORD DUKE, Esq., Assistant Secretary. Ms. Duke is Assistant
Counsel of Calvert Group 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. Prior to working at
Calvert Group, Ms. Duke was an Associate in the Investment Management Group of
the Business and Finance Department at Drinker Biddle & Reath. DOB: 09/07/68.
The address of directors and officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and
officers of the Fund as a group own less than 1% of the Fund's outstanding
shares. Trustees marked with an *, above, are "interested persons" of the
Fund, under the Investment Company Act of 1940.
Each of the above directors and officers is a 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 and Silby and Ms. Krumsiek are among the trustees, Calvert Variable
Series, Inc., of which only Messrs. Blatz, Diehl and Pugh and Ms. Krumsiek are
among the directors, Calvert World Values Fund, Inc., of which only Messrs.
Guffey and Silby and Ms. Krumsiek are among the directors, and Calvert New
World Fund, Inc., of which only Ms. Krumsiek and Mr. Martini are among the
directors.
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 and Silby.
Directors of the Fund not affiliated with the Advisor currently
receive an annual fee of $20,500 for service as a member of the Board of
Directors of the Calvert Group of Funds plus a fee of $750 to $1,500 for each
Board and Committee meeting attended; such fees are allocated among the Funds
on the basis of their net assets. For the 1997 fiscal period, the Funds paid
director fees of $1,603 and $1,800 for the Maryland and Virginia Portfolios,
respectively.
Directors 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 of Funds through the Directors 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 1997 Aggregate Pension or Total
(unaudited Compensation Retirement Compensation
numbers) from Benefits from
Registrant Accrued as Registrant
for service part of and Fund
as Director Registrant Complex paid
Expenses* to Director**
Name of Director
Richard L. Baird, Jr. $1,174 $0 $34,450
Frank H. Blatz, Jr. $1,552 $1,552 $46,000
Frederick T. Borts $1,171 $0 $32,500
Charles E. Diehl $1,494 $1,494 $44,500
Douglas E. Feldman $1,122 $0 $32,500
Peter W. Gavian $1,361 $637 $38,500
John G. Guffey, Jr. $1,524 $0 $61,615
M. Charito Kruvant $1,256 $0 $36,250
Arthur J. Pugh $1,573 $53 $48,250
D. Wayne Silby $1,203 $0 $62,830
*Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of their
compensation. As of December 31, 1997, total deferred compensation, including
dividends and capital appreciation, was $555,901.79, $545,259.10, $137,436.70
and $187,735.55, for each director, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9) 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 of the Funds; and further provided that such
continuance is also approved annually by the vote of a majority of the
directors 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' Board of Directors. 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. For the 1995 fiscal
period, the Advisor received advisory fees of $270,912 and $59,769, for the
Maryland and Virginia Portfolios, respectively, and, for the same period,
waived advisory fees of $38,349 and $29,520, for the Maryland and Virginia
Portfolios, respectively. For the 1996 fiscal period, the Advisor received
advisory fees of $72,423 and $72,322, for the Maryland and Virginia
Portfolios, respectively. For the 1997 fiscal period, the Advisor received
advisory fees of $70,899 and $79,695 for the Maryland and Virginia Portfolios,
respectively.
The Advisor provides each 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 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 1995 fiscal period.
For the 1996 fiscal period, Calvert Administrative Services Company received
an annual fee of $12,071 and $12,054 for the Maryland and Virginia Portfolios,
respectively. For the 1997 fiscal period, Calvert Administrative Services
Company received an annual fee of $11,816 and $13,283 for the Maryland and
Virginia Portfolios, respectively.
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 a distribution fee pursuant to the Distribution Plans (see
below). For the 1995, 1996 and 1997 fiscal periods, the Fund paid no
Distribution Plan expenses. For fiscal 1995, CDI received sales charges in
excess of the dealer reallowance of $6,482 and $6,479 for the Maryland and
Virginia Portfolios, respectively. For fiscal 1996, CDI received sales charges
in excess of the dealer reallowance of $4,214 and $9,039 for Maryland and
Virginia Portfolios, respectively. For fiscal 1997, CDI received sales charges
in excess of the dealer reallowance of $7,100 and $7,697 for the Maryland and
Virginia Portfolios, respectively. For Class B shares, CDI receives any CDSC
paid.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940
("1940 Act"), the Funds have adopted a Class A and B Distribution Plan (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% and 1.00% of the Class A and B average daily net assets, respectively.
The Plans were approved by the Board of Directors, including the
Directors 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 who are not interested persons of
the Fund is committed to the discretion of such disinterested Directors. In
establishing the Plans, the Directors considered various factors including the
amount of the distribution fee. The Directors 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 who have no direct or indirect financial interest in
the Plans, or by vote of a majority of the outstanding shares. Any change in
the Plans that would materially increase the distribution cost to the Funds
requires approval of the shareholders; otherwise, the Plans may be amended by
the Directors, including a majority of the non-interested Directors 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 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.
Apart from the Plans, the Advisor, at its expense, may incur costs
and pay expenses associated with the distribution of shares of the Funds.
Certain broker/dealers, and/or other persons may receive compensation
from the investment advisor, underwriter, or their affiliates for the sale and
distribution of the securities or for services to the Fund. Such compensation
may include additional compensation based on assets held through that firm
beyond the regularly scheduled rates, and finders' fee payments to firms whose
representatives are responsible for soliciting a new account where the
accountholder does not choose to purchase through that firm.
TRANSFER AND SHAREHOLDER SERVICING AGENT
National Financial Data Services, Inc. ("NFDS"), a subsidiary of State Street
Bank & Trust, has been retained by the Fund to act as transfer agent and
dividend disbursing agent. These responsibilities include: responding to
certain shareholder inquiries and instructions, crediting and debiting
shareholder accounts for purchases and redemptions of Fund shares and
confirming such transactions, and daily updating of shareholder accounts to
reflect declaration and payment of dividends.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert
Group, Ltd., and Acacia Mutual, has been retained by the Fund to act as
shareholder servicing agent. Shareholder servicing responsibilities include
responding to shareholder inquiries and instructions concerning their
accounts, entering any telephoned purchases or redemptions into the NFDS
system, maintenance of broker-dealer data, and preparing and distributing
statements to shareholders regarding their accounts. Calvert Shareholder
Services, Inc. was the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert Shareholder Services, Inc.
receive a total fee of $14.00 per shareholder account and $1.60 per
shareholder transaction.
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 1998. State Street Bank & Trust Company, N.A., 225 Franklin
Street, Boston, MA 02110, serves as custodian of the Series' investments.
First National Bank of Maryland, 25 South Charles Street, Baltimore, Maryland
21203 acts as custodian of certain of the Series' 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.
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.
For the 1996 fiscal period, the portfolio turnover was 8% and 4%, for the
Maryland and Virginia Portfolios, respectively. For the 1997 fiscal period,
the portfolio turnover was 13% and 8% for the Maryland 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: Calvert National Municipal Intermediate
Fund and Calvert California Municipal Intermediate Fund. Prior to March 1,
1994, Calvert National Municipal Intermediate Fund was known as Calvert
Intermediate Municipal Fund.
The Fund offers two separate classes of shares: Class A and Class B.
Each class represents interests in the same portfolio of investments but, as
further described in the prospectus, each class is subject to differing sales
charges and expenses, which differences will result in differing net asset
values and distributions. Upon any liquidation of the Fund, shareholders of
each class are entitled to share pro rata in the net assets belonging to that
series available for distribution.
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. Upon any liquidation of the Funds, shareholders are entitled to share
pro rata in the net assets belonging to that Fund available for distribution.
FINANCIAL STATEMENTS
The audited financial statements in the Funds' Annual Report to
Shareholders, dated December 31, 1997, 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:
__ $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. "Fund" in this Letter of Intent shall refer to the Fund or
Portfolio, as the case may be, here indicated. 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 MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
Statement of Additional Information
April 30, 1998
INVESTMENT ADVISOR
Calvert Asset Management Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
SHAREHOLDER SERVICE TRANSFER AGENT
Calvert Shareholder Services, Inc. National Financial Data Services, Inc
4550 Montgomery Avenue 1004 Baltimore
Suite 1000N 6th Floor
Bethesda, Maryland 20814 Bethesda, Maryland 20814
PRINCIPAL UNDERWRITER INDEPENDENT ACCOUNTANTS
Calvert Distributors, Inc. Coopers & Lybrand, L.L.P.
4550 Montgomery Avenue 250 West Pratt Street
Suite 1000N Baltimore, Maryland 21201
Bethesda, Maryland 20814
TABLE OF CONTENTS
Investment Objective 1
Investment Policies 1
Investment Restrictions 6
Purchases and Redemptions of Shares7
Dividends and Distributions 8
Tax Matters 8
Valuation of Shares 9
Calculation of Yield and Total Return 10
Advertising 11
Directors and Officers 12
Investment Advisor 14
Administrative Services 15
Method of Distribution 15
Transfer and Shareholder Servicing Agent 16
Independent Accountants and Custodians 16
Portfolio Transactions 16
General Information 17
Financial Statements 17
Appendix 17
<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., dated December 31, 1997, and filed March 9, 1998.
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 and Shareholder Servicing Contract,
filed herewith.
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 (filed herewith).
11. Consent of Independent Auditors to Use of Report (filed
herewith).
15. Plan of Distribution for Class A Shares, incorporated by
reference to Registrant's Post-Effective Amendment No. 13, January 25, 1996;
for Class B and C Shares, filed herewith.
16. Schedule for Computation of Performance Quotation,
(incorporated by reference to Registrant's Post-Effective Amendment No. 4,
August 2, 1993).
17. Rule 414 Statement of Successor Entity (incorporated by
reference to Registrant's Pre-Effective Amendment No. 3, May 21, 1992).
(i) Financial Data Schedules (filed herewith).
(ii) Multiple-class Plan pursuant to Investment Company Act of 1940 Rule
18f-3, 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
Not applicable.
Item 26. Number of Holders of Securities
As of March 31, 1998, there were 915 holders of record of
Registrant's common stock for the Class A Shares of Calvert California
Municipal Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1998, there were 1,586 holders of record of
Registrant's common stock for the Class A Shares of Calvert National Municipal
Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1998, there were 394 holders of record of
Registrant's common stock for the Class A Shares of Calvert Maryland Municipal
Intermediate Fund series of Calvert Municipal Fund, Inc.
As of March 31, 1998, there were 382 holders of record of
Registrant's common stock for the Class A Shares of Calvert Virginia 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 $8 million Investment
Company Blanket Bond issued by ICI Mutual Insurance Company, P.O. Box 730,
Burlington, Vermont, 05402.
Item 28. Business and Other Connections of Investment Adviser
Name of Company, Principal
Name Business and Address Capacity
Barbara J. Krumsiek
Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Alliance Capital Mgmt. L.P. Sr. Vice President
Mutual Fund Division Director
1345 Avenue of the Americas
New York, NY 10105
--------------
Ronald M. Wolfsheimer
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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 Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co Officer
Service Company and
4550 Montgomery Avenue Director
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, Maryland 20814
---------------
David R. Rochat
First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Cash Reserves
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 Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
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
---------------
Reno J. Martini
Calvert Asset Management Co., Inc. Officer
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
Calvert Cash Reserves
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, Maryland 20814
---------------
Charles T. Nason
Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and Director
Insurance Companies
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Director
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Robert-John H.Sands
Acacia National Life Insurance Officer
Insurance Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Corporation Officer
Real Estate Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Officer
Tax Return and
Preparation Services Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management, Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff
Acacia National Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co. Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
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, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Susan Walker Bender
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
---------------
Katherine Stoner
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
---------------
Lisa Crossley Newton
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
---------------
Ivy Wafford Duke Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
---------------
Daniel K. Hayes
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
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
------------------
Annette Krakovitz
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
John Nichols
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
David Leach
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Matthew D. Gelfand
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Strategic Investment Management Officer
Investment Advisor
1001 19th Street North
Arlington, Virginia 20009
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites shares
of Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves, The Calvert Fund, Calvert Municipal Fund, Inc., Calvert World
Values Fund, Inc., Calvert New World Fund, Inc., and Acacia Capital
Corporation.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Barbara J. Krumsiek Director and President President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Chief Financial Officer
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Craig Cloyed Senior Vice President None
Karen Becker Vice President,Operations None
Steve Cohen Vice President None
Geoffrey Ashton Regional Vice President None
Martin Brown Regional Vice President None
Janet Haley Regional Vice President None
Ben Ogbogu Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary Assistant Secretary
Lisa Crossley Newton Assistant Secretary Assistant Secretary
and Compliance Officer
Ivy Wafford Duke Assistant Secretary Assistant Secretary
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Assistant 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 30th day of April, 1998.
CALVERT MUNICIPAL FUND, INC.
By:
_______________**__________________
Barbara J. Krumsiek
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
__________**____________ President and 4/30/98
Barbara J. Krumsiek Director (Principal Executive Officer)
__________**____________ Principal Accounting 04/30/98
Ronald M. Wolfsheimer Officer
__________**____________ Director 04/30/98
Richard L. Baird, Jr.
__________**____________ Director 04/30/98
Frank H. Blatz, Jr., Esq.
__________**____________ Director 04/30/98
Frederick T. Borts, M.D.
__________**____________ Director 04/30/98
Charles E. Diehl
__________**____________ Director 04/30/98
Douglas E. Feldman
__________**____________ Director 04/30/98
Peter W. Gavian
__________**____________ Director 04/30/98
John G. Guffey, Jr.
__________**____________ Director 04/30/98
M. Charito Kruvant
__________**____________ Director 04/30/98
Arthur J. Pugh
__________**____________ Director 04/30/98
David R. Rochat
__________**____________ Director 04/30/98
D. Wayne Silby
** Signed by Susan Walker Bender pursuant to power of attorney, attached
hereto.
<PAGE>
Exhibit 10
April 30, 1998
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. 15 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. 15 to its Registration Statement.
Sincerely,
Susan Walker Bender
Associate General Counsel
Exhibit 23A
Coopers & Lybrand L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Calvert Group
Calvert Municipal Intermediate Funds
We consent to the incorporation by reference in Post-Effective Amendment No.
14 to the Registration Statement of Calvert Municipal Intermediate Funds:
California, Maryland, Virginia and National Municipal Intermediate Funds (the
"Funds") on Form N-1A (File Numbers 33-44968 and 811-6525) of our reports
dated February 6, 1998, on our audit of the financial statements and financial
highlights of the Funds, which report is included in the Annual Report to
Shareholders for the year ended December 31, 1997, which is 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 23, 1998
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, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix Barbara Krumsiek
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix Richard L. Baird, Jr.
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix Douglas E. Feldman
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Frank H. Blatz, Jr. Charles E. Diehl
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix Peter W. Gavian
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
M. Charito Kruvant John G. Guffey, Jr.
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix M. Charito Kruvant
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Charles E. Diehl Arthur J. Pugh
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Katherine Stoner David R. Rochat
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned Trustee/Director of First Variable Rate Fund for
Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund, and Calvert Municipal Fund, Inc. (collectively, the "Funds"),
hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan Walker
Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke 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 7, 1997
Date /Signature/
Edwidge Saint-Felix D. Wayne Silby
Witness Name of Trustee/Director
POWER OF ATTORNEY
I, the undersigned officer of Calvert Social Investment Fund, Calvert
World Values Fund, Acacia Capital Corporation, Calvert New World Fund, First
Variable Rate Fund, Calvert Tax-Free Reserves, Calvert Cash Reserves, The
Calvert Fund and Calvert Municipal Fund (each, respectively, the "Fund"),
hereby constitute William M. Tartikoff, Susan Walker Bender, Katherine Stoner,
Lisa Crossley, and Ivy Wafford Duke 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 Fund 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 Fund 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.
December 16, 1997
Date /Signature/
William M. Tartikoff Ronald M. Wolfsheimer
Witness Name of Officer
<PAGE>
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of February 25, 1998
by and between EACH CALVERT FUND LISTED IN THE SCHEDULE OF FUNDS
ATTACHED HERETO AS SCHEDULE I (each a "Fund" and together the
"Funds"), as such schedule may, from time to time be amended, and
CALVERT DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
WHEREAS, each Fund is registered as an open-end investment
company under the Investment Company Act of 1940 (the "1940 Act") and
has registered its shares, including shares of its series portfolios
(the "Series"), for sale to the public under the Securities Act of
1933 (the "1933 Act") and various state securities laws;
WHEREAS, each Fund wishes to retain the Distributor as the
principal underwriter in connection with the offer and sale of shares
of the Series (the "Shares") and to furnish certain other services to
the Series as specified in this Agreement;
WHEREAS, this contract has been approved by the
Trustees/Directors of each Fund in anticipation of the Distributor's
transfer of its rights to receive the Class B Distribution Fees ( as
defined in the Distribution Plan for Class B and C Shares (the
"Distribution Plan")) and/or Class B contingent deferred sales
charges to a financing party in order to raise funds to cover
distribution expenditures; and
WHEREAS, the Distributor is willing to act as principal
underwriter and to furnish such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1. Each Fund hereby appoints the Distributor as
principal underwriter in connection with the offer and sale of its
Shares. The Distributor shall, as agent for each Fund, subject to
applicable federal and state law and the Declaration of Trust or
Articles of Incorporation, and By-laws of the applicable Fund and in
accordance with the representations in the applicable Fund's
Registration Statement and Prospectus, as such documents may be
amended from time to time: (a) promote the Series; (b) enter into
appropriate dealer agreements with other registered broker-dealers to
further distribution of the Shares; (c) solicit orders for the
purchase of the Shares subject to such terms and conditions as the
applicable Fund may specify; (d) transmit promptly orders and
payments for the purchase of Shares and orders for redemption of
Shares to the applicable Fund's transfer agent; and (e) provide
services agreed upon by the applicable Fund to Series shareholders;
provided, however, that the Distributor may sell no Shares pursuant
to this Agreement until the Distributor is notified that a Fund's
Registration Statement under the 1933 Act, authorizing the sale of
such Shares through the Distributor, has become effective. The
Distributor shall comply with all applicable federal and state laws
and offer the Shares on an agency or "best efforts" basis under which
a Fund shall only issue such Shares as are actually sold.
2. The public offering price of the Shares shall be
the net asset value ("NAV") per share (as determined by the
applicable Fund) of the outstanding Shares of the Series, plus the
applicable sales charge, if any, as set forth in the Fund's then
current Prospectus. Each Fund shall furnish the Distributor with a
statement of each computation of NAV and of the details entering into
such computation.
3. Compensation.
a. Distribution Fee.
i. Class A. In consideration of the Distributor's services
as distributor for the Class A Shares of a Fund, each Fund may pay to
the Distributor the Distribution Fee as set forth in Schedule II to
this Agreement that is payable pursuant to the Fund's Distribution
Plan.
ii. Class B. In consideration of the Distributor's services
as distributor for the Class B Shares of a Fund, each Fund shall pay
to the Distributor (or its designee or transferee) the Distributor's
Allocable Portion of the Distribution Fee; (as set forth in Schedule
II to this Agreement) that is payable pursuant to the Fund's
Distribution Plan in respect of the Class B Shares of a Fund. For
purposes of this Agreement, the Distributor's "Allocable Portion" of
the Distribution Fee shall be 100% of such Distribution Fee unless or
until the Fund uses a principal underwriter other than the
Distributor and thereafter the Allocable Portion shall be the portion
of the Distribution Fee attributable to (i) Class B Shares of a Fund
sold by the Distributor ("Commission Shares"), (ii) Class B Shares of
the Fund issued in connection with the exchange of Commission Shares
of another Fund, and (iii) Class B Shares of the Fund issued in
connection with the reinvestment of dividends and capital gains.
The Distributor's Allocable Portion of the Distribution Fee
and the contingent deferred sales charges arising in respect of Class
B Shares taken into account in computing the Distributor's Allocable
Portion shall be limited under Rule 2830 of the Conduct Rules or
other applicable regulations of the NASD as if the Class B Shares
taken into account in computing the Distributor's Allocable Portion
themselves constituted a separate class of shares of a Fund.
The services rendered by the Distributor for which the
Distributor is entitled to receive the Distributor's Allocable
Portion of the Distribution Fee shall be deemed to have been
completed at the time of the initial purchase of the Commission
Shares (whether of the Fund or another Fund in the Calvert Group of
Funds) taken into account in computing the Distributor's Allocable
Portion. Notwithstanding anything to the contrary in this Agreement,
the Distributor shall be paid its Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B Shares of a Fund, or any
termination of this Agreement other than in connection with a
Complete Termination (as defined in the Distribution Plan) of the
Class B Distribution Plan as in effect on the date of this Agreement.
Except as provided in the preceding sentence, a Fund's obligation to
pay the Distribution Fee to the Distributor shall be absolute and
unconditional and shall not be subject to any dispute, offset,
counterclaim or defense whatsoever, (it being understood that nothing
in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against the Distributor
and to enforce such claims against any assets (other than its rights
to be paid its Allocable Portion of the Distribution Fee and to be
paid the contingent deferred sales charges) of the Distributor.
iii. Class C. In consideration of the Distributor's services
as distributor for the Class C Shares of a Fund, each Fund shall pay
to the Distributor the Distribution Fee as set forth in Schedule II
to this Agreement that is payable pursuant to the Fund's Distribution
Plan.
b. Service Fee. As additional compensation, for Class
A, Class B and Class C Shares of each Series, applicable Funds shall
pay the Distributor a service fee (as that term is defined by the
National Association of Securities Dealers, Inc. ("NASD")) as set
forth in Schedule III to this Agreement that is payable pursuant to
the Fund's Distribution Plan.
c. Front-end Sales Charges. As additional compensation
for the services performed and the expenses assumed by the
Distributor under this Agreement, the Distributor may, in conformity
with the terms and conditions set forth in the then current
Prospectus of each Fund, impose and retain for its own account the
amount of the front-end sales charge, if any, and may reallow a
portion of any front-end sales charge to other broker-dealers, all in
accordance with NASD rules.
d. Contingent Deferred Sales Charge. Each Fund will
pay to the Distributor (or its designee or transferee) in addition to
the fees set forth in Section 3 hereof any contingent deferred sales
charge imposed on redemptions of that Fund's Class B and Class C
Shares upon the terms and conditions set forth in the then current
Prospectus of that Fund. Notwithstanding anything to the contrary in
this Agreement, the Distributor shall be paid such contingent
deferred sales charges in respect of Class B Shares taken into
account in computing the Distributor's Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B shares of a Fund or any
termination of this Agreement other than in connection with a
Complete Termination of the Class B Distribution Plan as in effect on
the date of this Agreement. Except as provided in the preceding
sentence, a Fund's obligation to remit such contingent deferred sales
charges to the Distributor shall not be subject to any dispute,
offset, counterclaim or defense whatsoever, it being understood that
nothing in this sentence shall be deemed a waiver by a Fund of its
right separately to pursue any claims it may have against the
Distributor and to enforce such claims against any assets (other than
the Distributor's right to be paid its Allocable Portion of the
Distribution Fee and to be paid the contingent deferred sales
charges) of the Distributor. No Fund will waive any contingent
deferred sales charge except under the circumstances set forth in the
Fund's current Prospectus without the consent of the Distributor (or,
if rights to payment have been transferred, the transferee), which
consent shall not be unreasonably withheld.
4. Payments to Distributor's Transferees. The
Distributor may transfer the right to payments hereunder (but not its
obligations hereunder) in order to raise funds to cover distribution
expenditures, and any such transfer shall be effective upon written
notice from the Distributor to the Fund. In connection with the
foregoing, the Fund is authorized to pay all or a part of the
Distribution Fee and/or contingent deferred sales charges in respect
of Class B Shares directly to such transferee as directed by the
Distributor.
5. Changes in Computation of Fee, etc. As long as the
Class B Distribution Plan is in effect, a Fund shall not change the
manner in which the Class B Distribution Fee is computed (except as
may be required by a change in applicable law or a change in
accounting policy adopted by the Investment Companies Committee of
the AICPA and approved by FASB that results in a determination by a
Fund's independent accountants that any of the sales charges in
respect of such Fund, which are not contingent deferred sales charges
and which are not yet due and payable, must be accounted for by such
Fund as a liability in accordance with GAAP).
6. As used in this Agreement, the term "Registration
Statement" shall mean the registration statement most recently filed
by a Fund with the Securities and Exchange Commission and effective
under the 1933 Act, as such Registration Statement is amended by any
amendments thereto at the time in effect, and the term "Prospectus"
shall mean the form of prospectus filed by a Fund as part of the
Registration Statement.
7. The Distributor shall print and distribute to
prospective investors Prospectuses, and may print and distribute such
other sales literature, reports, forms, and advertisements in
connection with the sale of the Shares as comply with the applicable
provisions of federal and state law. In connection with such sales
and offers of sale, the Distributor shall give only such information
and make only such statements or representations, and require
broker-dealers with whom it enters into dealer agreements to give
only such information and make only such statements or
representations, as are contained in the Prospectus or in information
furnished in writing to the Distributor by a Fund. The Funds shall
not be responsible in any way for any other information, statements
or representations given or made by the Distributor, other
broker-dealers, or the representatives or agents of the Distributor
or such broker-dealers. Except as specifically permitted under the
Distribution Plan under Rule 12b-1 under the 1940 Act, as provided in
paragraph 3 of this Agreement, the Funds shall bear none of the
expenses of the Distributor in connection with its offer and sale of
the Shares.
8. Each Fund agrees at its own expense to register the
Shares with the Securities and Exchange Commission, state and other
regulatory bodies, and to prepare and file from time to time such
Prospectuses, amendments, reports and other documents as may be
necessary to maintain the Registration Statement. Each Fund shall
bear all expenses related to preparing and typesetting its
Prospectus(es) and other materials required by law and such other
expenses, including printing and mailing expenses related to the
Fund's communications with persons who are shareholders of such Fund.
9. Each Fund agrees to indemnify, defend and hold the
Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Distributor, its officers
or directors, or any such controlling person may incur, under the
1933 Act or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in its
Registration Statement or Prospectus or arising out of or based upon
any alleged omission to state a material fact required to be stated
in either thereof or necessary to make the statements in either
thereof not misleading, provided that in no event shall anything
contained in this Agreement be construed so as to protect the
Distributor against any liability to a Fund or its shareholders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of
its duties, or by reason of its reckless disregard of its obligations
and duties under this Agreement.
10. The Distributor agrees to indemnify, defend and
hold each Fund, their several officers and directors, and any person
who controls a Fund within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which a Fund, its officers or
directors, or any such controlling person may incur, under the 1933
Act or under common law or otherwise, arising out of or based upon
any alleged untrue statement or a material fact contained in
information furnished in writing by the Distributor to the Funds for
use in the Registration Statement or Prospectus(es) or arising out of
or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the
Registration Statement or Prospectus(es) or necessary to make such
information not misleading.
11. Each Fund reserves the right at any time to
withdraw all offerings of the Shares by written notice to the
Distributor at its principal office.
12. The Distributor is an independent contractor and
shall be agent for a Fund only in respect to the offer, sale and
redemption of that Fund's Shares.
13. The services of the Distributor to a Fund under
this Agreement are not to be deemed exclusive, and the Distributor
shall be free to render similar services or other services to others
so long as its services hereunder are not impaired thereby.
14. The Distributor acknowledges that it has received
notice of and accepts the limitations upon the liability of any Fund
organized as a business trust set forth in such Fund's Declaration of
Trust. The Distributor agrees that the obligations of such Funds
hereunder in any case shall be limited to such Funds and to their
assets and that the Distributor shall not seek satisfaction of any
such obligation from the shareholders of such a Fund nor from any
Trustee, officer, employee or agent of such Fund.
15. The Funds shall not use the name of the Distributor
in any Prospectus, sales literature or other material relating to the
Funds in any manner not approved prior thereto by the Distributor;
provided, however, that the Distributor shall approve all uses of its
name which merely refer in accurate terms to its appointment
hereunder or which are required by the Securities and Exchange
Commission or a State Securities Commission; and, provided further,
that in no event shall such approval be unreasonably withheld. The
Distributor shall not use the name of any Fund in any material
relating to the Distributor in any manner not approved prior thereto
by the Fund; provided, however that the Funds shall approve all uses
of their names which merely refer in accurate terms to the
appointment of the Distributor hereunder or which are required by the
Securities and Exchange Commission or a State Securities Commission;
and, provided further, that in no event shall such approval be
unreasonably withheld.
16. The Distributor shall prepare written reports for
the Board of Trustees/Directors of each Fund on a quarterly basis
showing information concerning services provided and expenses
incurred which are related to this Agreement and such other
information as from time to time shall be reasonably requested by a
Fund's Board of Trustees/Directors.
17. As used in this Agreement, the terms "assignment,"
"interested person," and "majority of the outstanding voting
securities" shall have the meaning given to them by Section 2(a) of
the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order;
provided, however that, in order to obtain financing, the Distributor
may assign to a lending institution the payments due to the
Distributor under this Agreement without it constituting an
assignment of the Agreement.
18. Subject to the provisions of sections 19 and 20
below, this Agreement will remain in effect for two years from the
date of is execution and from year to year thereafter, provided that
the Distributor does not notify a Fund in writing at least sixty (60)
days prior to the expiration date in any year that it does not wish
continuance of the Agreement as to such Fund for an additional year.
19. Termination. As to any particular Fund (or Series
thereof), this Agreement shall automatically terminate in the event
of its assignment and may be terminated at any time without the
payment of any penalty by a Fund or by the Distributor on sixty (60)
days' written notice to the other party. A Fund may effect such
termination by a vote of (i) a majority of the Board of
Trustees/Directors of the Fund, (ii) a majority of the
Trustees/Directors who are not interested persons of the Fund, who
are not parties to this Agreement or interested persons of such
parties, and who have no direct or indirect financial interest in the
operation of the Distribution Plan, in this Agreement or in any
agreement related to such Fund's Distribution Plan (the "Rule 12b-1
Trustees/Directors"), or (iii) a majority of the outstanding voting
securities of the relevant Series.
20. This Agreement shall be submitted for renewal to
the Board of Trustees/Directors of each Fund at least annually and
shall continue in effect only so long as specifically approved at
least annually (i) by a majority vote of the Fund's Board of
Trustees/Directors, and (ii) by the vote of the majority of the Rule
12b-1 Trustees/Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written by their
officers thereunto duly authorized.
Attest: EACH FUND LISTED IN THE
ATTACHED SCHEDULE I
By: /s/ Edwidge Saint-Felix By: /s/ William M.Tartikoff
Vice President
Attest: CALVERT DISTRIBUTORS, INC.
By: /s/ Edwidge Saint-Felix By: /s/ Ronald M. Wolfsheimer
Senior Vice President
<PAGE>
SCHEDULE I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
<PAGE>
SCHEDULE II
Fees are expressed as a percentage of average annual daily net
assets, and are payable monthly.
Distribution Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund N/A 0.75 0.75 N/A
Calvert Income Fund 0.25 0.75 0.75 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.10 0.75 0.75 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.75 0.75 N/A
Calvert Municipal Fund
National Intermediate Fund N/A 0.75 N/A N/A
California Intermediate Fund N/A 0.75 N/A N/A
Maryland Intermediate Fund N/A 0.75 N/A N/A
Virginia Intermediate Fund N/A 0.75 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.10 0.75 0.75 N/A
Equity Portfolio 0.10 0.75 0.75 N/A
Bond Portfolio 0.10 0.75 0.75 N/A
Managed Index Portfolio N/A 0.75 0.75 N/A
Money Market Portfolio N/A N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.10 0.75 0.75 N/A
International Equity Fund 0.10 0.75 0.75 N/A
Calvert New World Fund
Calvert New Africa Fund N/A 0.75 0.75 N/A
First Variable Rate Fund
Calvert First Gov't
Money Mkt N/A 0.75 N/A N/A
*Distributor reserves the right to waive all or a portion of the
distribution fee from time to time.
DATED: February 1998
<PAGE>
SCHEDULE III
Fees are expressed as a percentage of average annual daily net assets
and are payable monthly.
Service Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund 0.25 0.25 0.25 N/A
Calvert Income Fund 0.25 0.25 0.25 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.25 0.25 0.25 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.25 0.25 N/A
Calvert Municipal Fund
National Intermediate Fund 0.25 0.25 N/A N/A
California Intermediate Fund 0.25 0.25 N/A N/A
Maryland Intermediate Fund 0.25 0.25 N/A N/A
Virginia Intermediate Fund 0.25 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.25** 0.25 0.25 N/A
Equity Portfolio 0.25 0.25 0.25 N/A
Bond Portfolio 0.25 0.25 0.25 N/A
Managed Index Portfolio 0.25 0.25 0.25 N/A
Money Market Portfolio 0.25 N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.25 0.25 0.25 N/A
International Equity Fund 0.25 0.25 0.25 N/A
Calvert New World Fund
Calvert New Africa Fund 0.25 0.25 0.25 N/A
First Variable Rate Fund
Calvert First Gov't Money Mkt N/A 0.25 N/A N/A
DATED: February 1998
- -------
* Distributor reserves the right to waive all or a portion of the
service fees from time to time. For money market portfolios, Class A
shall refer to Class O, or if the portfolio does not have multiple
classes, then to the portfolio itself.
** Distributor charges the service fee only on assets in excess of $30
million.
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Duties of the Bank 1
2. Fees and Expenses 3
3. Wire Transfer Operating Guidelines 4
4. Data Access and Proprietary Information 5
5. Indemnification 6
6. Standard of Care 8
7. Covenants of the Transfer Agent and the Bank 8
8. Representations and Warranties of the Bank 9
9. Representations and Warranties of the Transfer Agent 9
10. Termination of Agreement 10
11. Assignment 10
12. Amendment 10
13. Massachusetts Law to Apply 10
14. Force Majeure 11
15. Consequential Damages 11
16. Limitation of Shareholder Liability 11
17. Merger of Agreement 11
18. Survival 11
19. Severability 11
20. Counterparts 12
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of August, 1996, by and
between, Calvert Shareholder Services, Inc. a corporation, having its
principal office and place of business at 4550 Montgomery Ave. Suite
1000N, Bethesda, Maryland, 20814 (the "Transfer Agent"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the
investment companies (including each series thereof) listed on Schedule
A (the "Fund(s)"), each an open-end management investment company
registered under the Investment Company Act of 1940, as amended, as
transfer agent, dividend disbursing agent and shareholder servicing
agent in connection with certain activities, and the Transfer Agent has
accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency
and Service Agreement with each of the Funds (including each series
thereof) listed on Schedule A pursuant to which the Transfer Agent is
responsible for certain transfer agency and dividend disbursing
functions for each Fund's authorized and issued shares of common stock
or shares of beneficial interest as the case may be ("Shares") and each
Fund's shareholders ("Shareholders") and the Transfer Agent is
authorized to subcontract for the performance of its obligations and
duties thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as its
sub-transfer agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein
contained, the parties hereto agree as follows:
1. Duties of the Bank
1.1 Subject to the terms and conditions set forth in this
Agreement, the Bank shall act as the Transfer Agent's sub-transfer
agent for Shares in connection with any accumulation plan, open
account, dividend reinvestment plan, retirement plan or similar plan
provided to Shareholders and set out in each Fund's currently effective
prospectus and statement of additional information ("Prospectus"),
including without limitation any periodic investment plan or periodic
withdrawal program. As used herein the term '"Shares" means the
authorized and issued shares of common stock, or shares of beneficial
interest, as the case may be, for each Fund listed in Schedule A. In
accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank shall provide the
services listed in this Section 1.
(a) The Bank shall:
(i) receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation thereof to the Custodian of
each Fund authorized pursuant to the Articles of
Incorporation or organization of each Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares in
the appropriate Shareholder account;
(iii) receive for acceptance redemption requests
and redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) in respect to the transactions in items (i),
(ii) and (iii) above, the Bank shall execute
transactions directly with broker-dealers authorized
by each Fund;
(v) at the appropriate time as and when it
receives monies paid to it by the Custodian with
respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(vii) prepare and transmit payments for dividends
and distributions declared by each Fund;
(viii) issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of indemnification
satisfactory to the Bank and protecting the Bank and
each Fund, and the Bank at its option, may issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without
such indemnity;
(ix) maintain records of account for and advise
the Transfer Agent and its Shareholders as to the
foregoing; and
(x) Record the issuance of Shares of each Fund
and maintain pursuant to Rule 17Ad-10(e) of the
Securities Exchange Act of 1934 as amended (the
"Exchange Act of 1934") a record of the total number
of Shares of each Fund which are authorized, based
upon data provided to it by each Fund or the Transfer
Agent, and issued and outstanding. The Bank shall
also provide each Fund on a regular basis with the
total number of Shares which are authorized and
issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of
each Fund or the Transfer Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare
meeting, proxy, and mailing lists, withhold taxes on
US resident and non-resident alien accounts, prepare
and file US Treasury Department reports required with
respect to interest, dividends and distributions by
federal authorities for all Shareholders, prepare
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in
Shareholder account information.
(b) For blue sky reporting the Bank shall provide a
system that will enable each Fund or the Transfer Agent to
monitor the total number of Shares sold in each State, and
each Fund or the Transfer Agent shall:
(i) identify to the Bank in writing those
transactions and assets to be treated as exempt from
blue sky reporting for each State; and
(ii) verify the establishment of transactions for
each State on the System prior to the activity for
each State, the responsibility of the Bank for each
Fund's blue sky state registration status is solely
limited to the initial establishment of transactions
subject to blue sky compliance by the Fund or the
Transfer Agent and the reporting of such transactions
to the Fund as provided above.
1.3 Per the attached service responsibility schedule procedures as
to who shall provide certain of these services in Section 1 may be
established from time to time by agreement between the Transfer Agent
and the Bank. The Bank may at times perform only a portion of these
services and the Transfer Agent may perform these services on each
Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the
Transfer Agent (i.e., escheat services) that may be agreed upon in
writing between the Bank and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement,
the Transfer Agent agrees to pay the Bank an annual maintenance fee for
each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time
subject to mutual written agreement between the Transfer Agent and the
Bank.
2.2 In addition to the fee paid under Section 2.1 above, the
Transfer Agent agrees to reimburse the Bank for out-of-pocket expenses,
including, but not limited to confirmation production, postage, forms,
telephone, microfilm, microfiche, tabulating proxies, records storage,
or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by
the Bank at the request or with the consent of the Transfer Agent, will
be reimbursed by the Transfer Agent.
2.3 The Transfer Agent agrees to pay all fees and reimbursable
expenses within fifteen days following the receipt of the respective
billing notice. Postage for mailing of dividends, proxies, Fund reports
and other mailings to all shareholder accounts shall be advanced to the
Bank by the Transfer Agent at least seven (7) days prior to the mailing
date of such materials.
3. Wire Transfer Operating Guidelines/Articles 4A of the Uniform
Commercial Code
3.1 The Bank is authorized to promptly debit the appropriate
Transfer Agent account(s) upon the receipt of a payment order in
compliance with the selected security procedure (the "Security
Procedure") chosen for funds transfer and in the amount of money that
the Bank has been instructed to transfer. The Bank shall execute
payment orders in compliance with the Security Procedure and with the
Transfer Agent's instructions on the execution date provided that such
payment order is received by the customary deadline for processing such
a request, unless the payment order specifies a later time. All payment
orders and communications received after this time frame will be deemed
to have been received the next business day.
3.2 The Transfer Agent acknowledges that the Security Procedure it
has designated on the Transfer Agent Selection Form was selected by the
Transfer Agent from security procedures offered by the Bank. The
Transfer Agent shall restrict access to confidential information
relating to the Security Procedure to authorized persons as
communicated to the Bank in writing. The Transfer Agent must notify the
Bank immediately if it has reason to believe unauthorized persons may
have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the
authenticity of all such instructions according to the Security
Procedure.
3.3 The Bank shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
3.4 When a Transfer Agent initiates or receives Automated Clearing
House ("ACH") credit and debit entries pursuant to these guidelines and
the rules of the National Automated Clearing House Association and the
New England Clearing House Association, the Bank will act as an
Originating Depository Financial Institution and/or receiving
Depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Bank with respect to an ACH credit
entry are provisional until the Bank receives final settlement for such
entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive
a refund of the amount credited to the Transfer Agent in connection
with such entry, and the party making payment to the Transfer Agent via
such entry shall not be deemed to have paid the amount of the entry.
3.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected
balance in the account to be charged at the time of the Bank's receipt
of such payment order, or (b) if the Bank, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
3.6 The Bank shall use reasonable efforts to act on all authorized
requests to cancel or amend payment orders received if requests are
received in a timely manner affording the Bank reasonable opportunity
to act. However, the Bank assumes no liability if the request for
amendment or cancellation cannot be satisfied.
3.7 The Bank shall assume no responsibility for failure to detect
any erroneous payment order provided that the Bank complies with the
payment order instructions as received and the Bank complies with the
Security Procedure. The Security Procedure is established for the
purpose of authenticating payment orders only and not for the detection
of errors in payment orders.
3.8 The Bank shall assume no responsibility for lost interest with
respect to the retransfer Agentable amount of any unauthorized payment
order unless the Bank is notified of the unauthorized payment order
within thirty (30) days of notification by the Bank of the acceptance
of such payment order. In no event (including failure to execute a
payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such
damages.
3.9 Confirmation of Bank's execution of payment orders shall
ordinarily be provided within 24 hours notice of which may be delivered
through the Bank's proprietary information systems, or by facsimile or
call-back. Client must report any objections to the execution of an
order within 30 days.
4. Data Access and Proprietary Information
The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and
other information furnished to the Transfer Agent by the Bank are
provided solely in connection with the services rendered under this
Agreement and constitute copyrighted trade secrets or proprietary
information of substantial value to the Bank. Such databases, programs,
formats, designs, techniques and other information are collectively
referred to below as "Proprietary Information". The Transfer Agent
agrees that it shall treat all Proprietary Information as proprietary
to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as
expressly permitted hereunder. The Transfer Agent agrees for itself and
its employees and Agents:
(a) to use such programs and databases (i) solely on the
Transfer Agent's computers, or (ii) solely from equipment at
the locations agreed to between the Transfer Agent and the
Bank and (iii) in accordance with the Bank's applicable user
documentation;
(b) to refrain from copying or duplicating in any way
(other than in the normal course of performing processing on
the Transfer Agent's computers) any part of any Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any
programs, data or other information not owned by the Transfer
Agent, and if such access is accidentally obtained, to respect
and safeguard the same Proprietary Information;
(d) to refrain from causing or allowing proprietary
information transmitted from the Bank's computer to the
Transfer Agent's terminal to be retransmitted to any other
computer terminal or other device except as expressly
permitted by the Bank, such permission not to be unreasonably
withheld;
(e) that the Transfer Agent shall have access only to
those authorized transactions as agreed to between the
Transfer Agent and the Bank; and
(f) to honor reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law and under
applicable statutes.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 4.
5. Indemnification
5.1 Except as provided in Section 6, herein, the Bank shall not be
responsible for, and the Transfer Agent shall indemnify and hold the
Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of
or attributable to:
(a) all actions of the Bank or its agent or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct;
(b) the Transfer Agent's lack of good faith, negligence
or willful misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are given to the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Transfer Agent or any other person or firm on
behalf of the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or
its agents or subcontractors of any instructions or requests
of the Transfer Agent; and
(e) the offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities laws or regulations of any state that such
Shares be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such Shares
in such state.
5.2 At any time the Bank may apply to any officer of the Transfer
Agent for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed
by the Bank under this Agreement, and the Bank and its Agents or
subcontractors shall not be liable and shall be indemnified by the
Transfer Agent for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on
behalf of the Transfer Agent, reasonably believed by the Batik as being
in good order and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents
provided the Bank or its Agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from
the Transfer Agent. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Transfer Agent, and the proper
countersignature of the Transfer Agent or any former transfer agent or
former registrar, or of a co-transfer agent or co-registrar.
5.3 In order that the indemnification provisions contained in this
Section 5 shall apply, upon the assertion of a claim for which the
Transfer Agent may be required to indemnify the Bank, the Bank shall
promptly notify the Transfer Agent of such assertion, and shall keep
the Transfer Agent advised with respect to all developments concerning
such claim. The Transfer Agent shall have the option to participate
with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no
case confess any claim or make any compromise in any case in which the
Transfer Agent may be required to indemnify the Bank except with the
Transfer Agent's prior written consent.
6. Standard of Care
6.1 The Bank shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
6.2 The Bank shall work with the Transfer Agent to ensure that a
Fund is made whole by the responsible party for any material losses or
damages resulting from errors, material unreconciled items,
carelessness, negligence, bad faith, or willful misconduct by the Bank
or its agents or subcontractors, or that of their employees. Neither
the Bank, its agents or subcontractors, nor the Transfer Agent may
waive full liability for losses or damages based on the above.
6.3 Errors identified as caused by the sub-transfer agent will not
be charged to the Funds in the monthly billing.
7. Covenants of the Transfer Agent and the Bank
7.1 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Transfer Agent for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
7.2 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Bank agrees that all
such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of the
Transfer Agent and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered
promptly to the Transfer Agent on and in accordance with its request.
7.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not
be voluntarily disclosed to any other person, except as may be required
by law.
7.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to
notify the Transfer Agent and to secure instructions from an authorized
officer of the Transfer Agent as to such inspection. The Bank reserves
the right, however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable for
the failure to exhibit the Shareholder records to such person.
8. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
(b) it is duly qualified to carry on its business in The
Commonwealth of Massachusetts;
(c) it is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform this Agreement;
(d) all requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement;
(e) it has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement; and
(f) it is registered as a transfer agent undo Section
17A(c)(2) of the Exchange Act.
9. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a corporation duly organized and existing and
in good standing under the laws of the State of Delaware;
(b) it is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and
perform this Agreement;
(c) all corporate proceedings required by said Articles
of Incorporation and By-Laws have been taken to authorize it
to enter into and perform this Agreement.
(d) it is registered as a transfer agent under Section
17A(c)(2) of the Exchange Act.
10. Termination of Agreement
10.1 This Agreement shall continue for a period of five years (the
"Initial Term") and be renewed or terminated as stated below.
10.2 This Agreement shall terminate upon the termination of the
Transfer Agency Agreement between the Funds and the Transfer Agent.
10.3 This Agreement may be terminated or renewed after the Initial
Term by either party upon ninety (90) days written notice to the other.
10.4 Should the Transfer Agent exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be borne by the Transfer Agent. Additionally,
the Bank reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the
average of three (3) months' fees.
11. Assignment
11.1 Except as provided in Section 11.3 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
11.3 The Bank will, without further consent on the part of the
Transfer Agent, subcontract for the performance hereof with National
Financial Data Services, Inc., a subsidiary of BFDS duly registered as
a transfer agent pursuant to Section 17A(c)(2) provided, however, that
the Bank shall be as fully responsible to the Transfer Agent for the
acts and omissions of any subcontractor as it is for its own acts and
omissions.
12. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
14. Force Majeure
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act
hereunder.
16. Limitations of Shareholder Liability
Each party hereby expressly acknowledges that recourse against the
Funds shall be subject to those limitations provided by governing law
and the Declaration of Trust or Articles of Incorporation of the Funds,
as applicable, and agrees that obligations assumed by the Funds
pursuant to the Transfer Agency Agreement shall be limited in all cases
to the Funds and their respective assets. Each party shall not seek
satisfaction from the Shareholders or any individual Shareholder of the
Funds, nor shall any party seek satisfaction of any obligations from
the Directors\Trustees or any individual Director\Trustee of the Funds.
17. Merger of Agreement
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
18. Survival
All provisions regarding indemnification, warranty, liability, and
limits thereon, and confidentiality and/or protection of proprietary
rights and trade secrets shall survive the termination of this
Agreement.
19. Severability
If any provision or provisions of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or
impaired.
20. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day first written above.
CALVERT SHAREHOLDER SERVICES, INC.
BY: /s/ Karen Becker
TITLE: Vice President
ATTEST: Katherine Stoner
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
TITLE: Executive Vice President
ATTEST: Francine Hayes
<PAGE>
AMENDMENT TO SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
General Background:
Calvert Shareholder Services, Inc. ("CSSI"), and State Street Bank and
Trust Company ("State Street") entered into a sub-transfer agency and
service agreement ("Agreement") dated August 15, 1996.
For accounting reasons, CSSI desires to amend the Agreement by
assigning the contract for the transfer agent functions (except for
shareholder servicing) to each Calvert Group Fund. CSSI will continue
to be responsible for the shareholder servicing and for any
responsibilities currently shown as Transfer Agent responsibilities in
Fund Service Responsibilities attachment to the Agreement.
The Agreement must be assigned to the Calvert Group Funds for
accounting purposes.
CSSI and State Street must each consent to this assignment.
Changes caused by this assignment:
The current subtransfer agent, National Financial Data Services, Inc.
("NFDS"), will bill each Calvert Group Fund, rather than CSSI, and each
Calvert Group Fund shall pay State Street or its billing agent, NFDS,
all fees and expenses incurred under the Agreement on behalf of each
respective Calvert Group Fund.
NFDS will be shown in each Calvert Group Fund prospectus and statement
of additional information as the Transfer Agent, while CSSI will be
shown as the shareholder servicing agent.
State Street (NFDS) will continue to perform those functions shown in
the Agreement as Bank responsibilities.
CSSI will continue to perform the Transfer Agent responsibilities, as
shown in the Fund Service Responsibilities attachment to the Agreement.
The Assignment:
This Amendment, dated as of the first day of January, 1998, by and
among CSSI and State Street:
Now, Therefore, CSSI and State Street each hereby agree that the
Agreement will be between each Calvert Group Fund and State Street, and
each hereby agrees that the Agreement is so assigned.
In Witness Whereof, CSSI and State Street have caused this Amendment to
be executed by their duly authorized officers, effective as of January
1, 1998.
Calvert Shareholder Services, Inc. State
Street Bank and Trust Company
By: /s/ By: /s/
Name: Karen Becker Name: Ronald E. Logue
Title: Vice President, Operations Title: Executive Vice President
Date: February 18, 1998 Date: February 20, 1998
Acacia Capital Corporation
First Variable Rate Fund
Calvert Tax-Free Reserves
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund By: /s/
Calvert Municipal Fund, Inc. Name: William M. Tartikoff
Calvert World Values Fund, Inc. Title: Senior Vice President and Secretary
Calvert New World Fund, Inc. Date: February 18, 1998
<PAGE>
SERVICING AGREEMENT
This Agency Agreement, effective January 1, 1998, by and
between Calvert Shareholder Services, Inc., a Delaware corporation
having its principal place of business in Bethesda, Maryland
("CSS"), and registered investment companies sponsored by Calvert
Group, Ltd. and its subsidiaries and set forth on Schedule A
("Calvert Group Funds" or "Funds"). The Funds have entered into a
transfer agency and service agreement with the State Street Bank and
Trust of Boston, Massachusetts ("State Street") ("State Street
Agreement").
1. Appointments. The Funds hereby appoints CSS as
servicing agent, agent and shareholder servicing agent for the
Funds, and CSS hereby accepts such appointment and agrees to perform
those duties in accordance with the terms and conditions set forth
in this Agreement.
2. Documentation. The Funds will furnish CSS with all
documents, certificates, contracts, forms, and opinions which CSS,
in its discretion, deems necessary or appropriate in connection with
the proper performance of its duties under this Agreement.
3. Services to be Performed. CSS will be responsible
for telephone servicing functions, system interface with State
Street and oversight of State Street's administering and performing
their duties pursuant to the State Street Agreement. The details of
the operating standards and procedures to be followed will be
determined from time to time by agreement between CSS and the Funds.
4. Recordkeeping and Other Information. CSS will,
commencing on the effective date of this Agreement, to the extent
necessary create and maintain all necessary shareholder accounting
records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules thereunder, as amended from time to time.
All such records will be the property of the Fund and will be
available for inspection and use by such Fund.
5. Audit, Inspection and Visitation. CSS will make
available during regular business hours all records and other data
created and maintained pursuant to this Agreement for reasonable
audit and inspection by the SEC, a Fund or any person retained by a
Fund.
6. Compensation. The Funds will compensate CSS on a
monthly basis for the services performed pursuant to this Agreement,
at the rate of compensation set forth in Schedule A. Out of pocket
expenses incurred by CSS and not included in Schedule A will be
reimbursed to CSS by the Fund, as appropriate; such expenses may
include, but are not limited to, special forms and postage for
mailing the forms. These charges will be payable in full upon
receipt of a billing invoice. In lieu of reimbursing CSS for these
expenses, any Fund may, in its discretion, directly pay the expenses.
7. Use of Names. No Fund will not use the name of CSS
in any prospectus, sales literature or other material relating to
the Fund in any manner without prior approval by CSS; provided,
however, that CSS will approve all uses of its name that merely
refer in accurate terms to its appointment under this Agreement or
that are required by the SEC or a State Securities Commission; and,
provided, further, that in no event will approval be unreasonably
withheld.
8. Security. CSS represents and warrants that, to the
best of its knowledge, the various procedures and systems that CSS
proposes to implement with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause (including
provision for twenty-four hour a day restricted access) the Fund's,
records and other data and CSS's records, data, equipment,
facilities and other property used in the performance of its
obligations under this Agreement are adequate and that it will
implement them in the manner proposed and make such changes from
time to time as in its judgment are required for the secure
performance of obligations under this Agreement.
9. Limitation of Liability. Each Fund will indemnify
and hold CSS harmless against any losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit brought
by any person (including a shareholder naming such Fund as a party)
other than such Fund not resulting from CSS's bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
negligence arising out of, or in connection with, CSS's performance
of its obligations under this Agreement.
To the extent CSS has not acted with bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
gross negligence, each Fund will also indemnify and hold CSS
harmless against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit resulting from the negligence
of such Fund, or CSS's acting upon any instructions reasonably
believed by it to have been executed or communicated by any person
duly authorized by such Fund, or as a result of CSS's acting in
reliance upon advice reasonably believed by CSS to have been given
by counsel for the Fund, or as a result of CSS's acting in reliance
upon any instrument reasonably believed by it to have been genuine
and signed, countersigned or executed by the proper person.
CSS's liability for any and all claims of any kind,
including negligence, for any loss or damage arising out of,
connected with, or resulting from this Agreement, or from the
performance or breach thereof, or from the design, development,
lease, repair, maintenance, operation or use of data processing
systems and the maintenance of a Funds' shareholder account records
as provided for by this Agreement will in the aggregate not exceed
the total of CSS's compensation hereunder for the six months
immediately preceding the discovery of the circumstances giving rise
to such liability.
In no event will CSS be liable for indirect, special, or
consequential damages (even if CSS has been advised of the
possibility of such damages) arising from the obligations assumed
hereunder and the services provided for by this Agreement, including
but not limited to lost profits, loss of use of the shareholder
accounting system, cost of capital, cost of substitute facilities,
programs or services, downtime costs, or claims of shareholders for
such damage.
10. Limitation of Liability of the Fund. CSS
acknowledges that it accepts the limitations upon the liability of
the Funds. CSS agrees that each Fund's obligations under this
Agreement in any case will be limited to such Fund and to its assets
and that CSS will not seek satisfaction of any obligation from the
shareholders of the Fund nor from any director, trustee, officer,
employee or agent of such Fund.
11. Force Majeure. CSS will not be liable for delays or
errors occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military authority,
national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot, or failure of communication or
power supply. In the event of equipment breakdowns beyond its
control, CSS will take reasonable steps to minimize service
interruptions but will have no liability with respect thereto.
12. Amendments. CSS and each Fund will regularly
consult with each other regarding CSS's performance of its
obligations under this Agreement. Any change in a Fund's
registration statements under the Securities Act of 1933, as
amended, or the 1940 Act or in the forms relating to any plan,
program or service offered by the current prospectus which would
require a change in CSS's obligations under this Agreement will be
subject to CSS's approval, which will not be unreasonably withheld.
Neither this Agreement nor any of its provisions may be changed,
waived, discharged, or terminated orally, but only by written
instrument which will make specific reference to this Agreement and
which will be signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
13. Termination. This Agreement will continue in effect
until January 1, 1999, and thereafter as the parties may mutually
agree; provided, however, that this Agreement may be terminated at
any time by either party upon at least sixty days' prior written
notice to the other party; and provided further that this Agreement
may be terminated immediately at any time for cause either by any
Fund or CSS in the event that such cause remains unremedied for no
less than ninety days after receipt of written specification of such
cause. Any such termination will not affect the rights and
obligations of the parties under Paragraphs 9 and 10 hereof. In the
event that a Fund designates a successor to any of CSS's obligations
hereunder, CSS will, at the expense and direction of such Fund,
transfer to such successor all relevant books, records and other
data of such Fund established or maintained by CSS under this
Agreement.
15. Miscellaneous. Each party agrees to perform such
further acts and execute such further documents as are necessary to
effectuate the purposes of this Agreement. This Agreement will be
construed and enforced in accordance with and governed by the laws
of the State of Maryland. The captions in this Agreement are
included for convenience only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
CALVERT GROUP FUNDS
By:/s/ William M. Tartikoff
CALVERT SHAREHOLDER SERVICES, INC.
By:/s/ Ronald M. Wolfsheimer
<PAGE>
SERVICING AGREEMENT
SCHEDULE A
For its services under this Servicing Agreement, Calvert
Shareholder Services, Inc., is entitled to receive from the Calvert
Funds (Except Acacia Capital Corporation) fees as set forth below:
Annual
Transaction
Fund and Portfolio Account Fee* Fee
FIRST VARIABLE RATE FUND
First Variable Rate Fund (d/b/a Calvert First $11.59 $.84
Government Money Market)
Calvert Florida Municipal Intermediate Fund 2.23 .26
CALVERT TAX-FREE RESERVES
Money Market 13.35 .97
Limited-Term 3.37 .42
Long-Term 2.67 .31
California Money Market 12.74 .93
Vermont Municipal 3.40 .39
CALVERT MUNICIPAL FUND, INC
California Intermediate 3.48 .40
National Intermediate 3.31 .38
Maryland Intermediate 4.64 .53
Michigan Intermediate 3.88 .44
New York Intermediate 4.23 .48
Virginia Intermediate 3.35 .38
Arizona Intermediate 2.10 .24
Pennsylvania Intermediate 2.82 .32
THE CALVERT FUND
Income 4.22 .48
New Vision Small Cap 5.90 .67
CALVERT SOCIAL INVESTMENT FUND
Money Market 11.92 .87
Bond 4.85 .55
Managed Growth 4.63 .72
Equity 5.24 .60
CALVERT WORLD VALUES FUND, INC.
International Equity 5.36 .61
Capital Accumulation 6.26 .72
CALVERT NEW WORLD FUND
New Africa Fund 3.91 .45
* Account fees are charged monthly based on the highest number of
non-zero balance accounts outstanding during the month.
Acacia Capital Corporation fee is as follows:
.03% (three basis points) on the first $500 million of average
net assets and .02% (two basis points) over $500 million of average
net assets, minus the fees paid by Acacia Capital Corporation to
State Street Bank and Trust pursuant to the State Street Agreement
(except for out of pocket expenses).
<PAGE>
-3-
THE CALVERT GROUP OF FUNDS
CLASS B and CLASS C DISTRIBUTION PLAN
As approved by the Boards in November 1993
Amended and restated February 1998 Pursuant to Rule 12b-1
Under the Investment Company Act of 1940
This Distribution Plan applies to Class B and Class C in each portfolio of the
Calvert Funds listed in Schedule A (each a "Fund" and together, the "Funds")
and to any future class for which this Distribution Plan has been approved in
accordance with paragraph 2(a) below. For purposes of this Distribution Plan
each series portfolio of a Fund is referred to herein as a "Series" and
together, as the "Series".
As permitted by Rule 12b-1 under the Investment Company Act of 1940 and in
accordance with the terms and conditions of this Plan, as hereinafter set
forth, a Fund may incur certain expenditures to promote itself and further the
distribution of its shares.
1. Payment of Fee
(a) As compensation for certain services performed and expenses assumed
by each Fund's distributor and principal underwriter ("Distributor") each Fund
may pay the Distributor a distribution fee (the "Distribution Fee"). The
Distribution Fee is intended to compensate the Distributor for its marketing
efforts, which include, but are not limited to the following costs:
commissions and other payments advanced to sales personnel and third parties
and related interest costs as permitted by the rules of the National
Association of Securities Dealers, Inc. ("NASD"), printing and mailing
prospectuses, sales literature and other relevant material to other than
current shareholders, advertising and public relations, telemarketing,
marketing-related overhead expenses and other distribution costs. Such
Distribution Fee is in addition to any NASD service fee that may be paid
hereunder and as described at Section 3(b) of the Distribution Agreement
between the respective Funds and the Distributor, or any front-end or deferred
sales charges the Distributor receives from a Fund with respect to sales or
redemption of Fund shares. Total fees paid pursuant to this Plan, including
the Distribution Fee described above, and the NASD service fee, shall not
exceed the rate set forth in the attached Schedule B to this Plan. All
agreements with any person relating to the implementation of this Plan shall
be in writing, and such agreements shall be subject to termination, without
penalty, pursuant to the provisions of paragraph 2(c) of this Plan.
(b) A Fund will pay each person which has acted as principal underwriter
of its Class B shares its Allocable Portion (as such term is defined in the
Distribution Agreement pursuant to which such person acts or acted as
principal underwriter of the Class B Shares (the "Applicable Distribution
Agreement")) of the Distribution Fee in respect of Class B Shares of the
Fund. Such person shall be paid its Allocable Portion of such Distribution
Fees notwithstanding such person's termination as Distributor of the Class B
Shares of the Fund, such payments to be changed or terminated only: (i) as
required by a change in applicable law or a change in accounting policy
adopted by the Investment Companies Committee of the AICPA and approved by
FASB that results in a determination by the Fund's independent accountants
that any asset based sales charges (as that term is defined by the NASD) in
respect of such Fund, and which are not yet due and payable, must be accounted
for by such Fund as a liability in accordance with GAAP, each after the
effective date of this restated Distribution Plan; (ii) if in the sole
discretion of the Board of Trustees/Directors, after due consideration of the
relevant factors considered when adopting and/or amending this Distribution
Plan including the transactions contemplated in that certain Purchase and Sale
Agreement entered into between a Fund's Distributor and the commission
financing entity, the Board of Trustees/Directors determines, subject to its
fiduciary duty, that this Distribution Plan and the payments thereunder must
be changed or terminated, notwithstanding the effect this action might have on
the Fund's ability to offer and sell Class B shares; or (iii) in connection
with a Complete Termination of this Distribution Plan, it being understood
that for this purpose a Complete Termination of this Distribution Plan occurs
only if, as to a Fund or Series, this Distribution Plan is terminated and the
Fund has not adopted any other distribution plan with respect to its Class B
or other substantially similar class of shares. The services rendered by a
Distributor for which that Distributor is entitled to receive its Allocable
Portion of the Distribution Fee shall be deemed to have been completed at the
time of the initial purchase of the Commission Shares (as defined in the
Distribution Agreement) taken into account in computing that Distributor's
Allocable Portion of the Distribution Fee.
The obligation of a Fund to pay the Distribution Fee shall terminate upon the
termination of this Distribution Plan as to such Fund in accordance with the
terms hereof. Except as provided in the preceding paragraph, a Fund's
obligation to pay the Distribution Fee to a Distributor of the Class B Shares
of the Fund shall be absolute and unconditional and shall not be subject to
any dispute, offset, counterclaim or defense whatsoever (it being understood
that nothing in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against such Distributor and
enforce such claims against any assets (other than its right to be paid its
Allocable Portion of the Distribution Fee and to be paid the contingent
deferred sales charges) of such Distributor).
The right of a Distributor to receive the Distribution Fee, but not the
relevant Distribution Agreement or that Distributor's obligations thereunder,
may be transferred by that Distributor in order to raise funds which may be
useful or necessary to perform its duties as principal underwriter, and any
such transfer shall be effective upon written notice from that Distributor to
the Fund. In connection with the foregoing, each Fund is authorized to pay
all or part of the Distribution Fee directly to such transferee as directed by
that Distributor.
(c) Nothing in this Distribution Plan shall operate or be construed to
limit the extent to which the Fund's Investment Advisor or any other person,
other than the Fund, at its expense apart from the Distribution Plan, may
incur costs and pay expenses associated with the distribution of Fund shares.
2. Effective Date and Term
(a) This Distribution Plan shall become effective as to any Class of any
Series upon approval by majority votes of (i) the Board of the Fund and the
members thereof who are not interested persons within the meaning of Section
2(a)(19) of the Investment Company Act of 1940 and have no direct or indirect
financial interest in the operation of the Distribution Plan or in any
agreements related to the Distribution Plan ("Qualified Trustees/Directors"),
cast in person at a meeting called for the purpose of voting on this
Distribution Plan, and (ii) the outstanding voting securities of the Fund.
(b) This Distribution Plan shall remain in effect for one year from its
adoption date and may continue in effect thereafter if this Distribution Plan
is approved at least annually by a majority vote of the Board of the Fund,
including a majority of the Qualified Trustees/Directors, cast in person at a
meeting called for the purpose of voting on the Distribution Plan.
(c) Subject to paragraph 1(b) above, this Distribution Plan may be
terminated at any time without payment of any penalty by a majority vote of
the Qualified Trustees/Directors or by vote of a majority of the outstanding
voting securities of the Fund, or, with respect to the termination of this
Distribution Plan as to a particular Class of a Portfolio, by a vote of a
majority of the outstanding voting securities of that Class.
(d) The provisions of this Distribution Plan are severable for
each Series or Class, and whenever action is to be taken with respect to this
Distribution Plan, that action must be taken separately for each Series or
Class affected by the matter.
3. Reports
The person authorized to direct the disposition of monies paid or payable by
the Fund pursuant to the Distribution Plan shall provide, on at least a
quarterly basis, a written report to each Fund's Board of the amounts expended
pursuant to this Distribution Plan or any related agreements and the purposes
for which such expenditures were made.
4. Selection of Disinterested Trustees/Directors
While this Distribution Plan is in effect, the selection and nomination of
those Trustees/Directors who are not interested persons of a Fund within the
meaning of Section 2(a)(19) of the Investment Company Act of 1940 shall be
committed to the discretion of the Trustees/Directors then in office who are
not interested persons of the Fund.
5. Effect of Plan
This Distribution Plan shall not obligate the Fund or any other party to enter
into an agreement with any particular person.
6. Amendment
This Distribution Plan may not be amended to increase materially the amount
authorized in paragraph 1 hereof to be spent by a Fund for distribution
without approval by a vote of the majority of the outstanding shares of such
Fund, except that if the amendment relates only to a particular Class of a
Fund, such approval need only be by a vote of the majority of the outstanding
shares of that Class. All material amendments to this Distribution Plan must
be approved by a majority vote of the Board of the Fund, and of the Qualified
Trustees/Directors, cast in person at a meeting called for the purpose of
voting thereon.
SCHEDULE A
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
SCHEDULE B
The total fees paid by the respective Class of each Series
of a Fund pursuant to this Distribution Plan shall not exceed the
rate, as a percentage of that Class' average annual net assets, set
forth below:
Fund/Series Class B Class C
Distribution Service Distribution Service
Fee Fee Fee Fee
The Calvert Fund
Calvert New Vision
Small Cap Fund 0.75 0.25 0.75 0.25
Calvert Income Fund 0.75 0.25 0.75 0.25
Calvert Tax-Free Reserves
Long-Term 0.75 0.25 0.75 0.25
Vermont Municipal 0.75 0.25 0.75 0.25
Calvert Municipal Fund
National 0.75 0.25 N/A N/A
California 0.75 0.25 N/A N/A
Maryland 0.75 0.25 N/A N/A
Virginia 0.75 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth 0.75 0.25 0.75 0.25
Equity 0.75 0.25 0.75 0.25
Bond 0.75 0.25 0.75 0.25
Managed Index 0.75 0.25 0.75 0.25
Calvert World Values Fund
International Equity 0.75 0.25 0.75 0.25
Capital Accumulation 0.75 0.25 0.75 0.25
Calvert World Values Fund
Calvert New Africa 0.75 0.25 0.75 0.25
First Variable Rate Fund
Calvert First Gov.
Money Market 0.75 0.25 N/A N/A
Restated Feb. 1998
<PAGE>
THE CALVERT GROUP OF FUNDS
Rule 18f-3 Multiple Class Plan
Approved by the Boards in January 1996
Amended and restated February 1998 Pursuant to Rule 18f-3
Under the Investment Company Act of 1940
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.
This Rule 18f-3 Multiple Class Plan ("Plan") shall apply to
those funds in the Calvert Group of Funds listed in Exhibit I (each a
"Fund" and collectively, "Funds") and to any future fund for which
this Plan has been approved in accordance with the above paragraph.
The provisions of this Plan are severable for each Fund or
Series thereof ("Series") or Class, and whenever action is to be
taken with respect to this Plan, that action must be taken separately
for each Fund, Series or Class affected by the matter.
1. Class Designation. A Fund may offer shares
designated Class A, Class B, Class C , Class I, and for certain money
market portfolios, Class O.
2. Differences in Availability. Class A, Class B,
Class C, and Class O shares shall each be available through the same
distribution channels, except that (a) Class B shares may not be
available through some dealers and are not available for purchases of
$500,000 or more, (b) Class B shares of Calvert First Government
Money Market Fund are available only through exchange from Class B or
Class C shares of another Calvert Fund, and (c) Class C shares may
not be available through some dealers and are not available for
purchases of $1 million or more. Class I shares are generally
available only directly from Calvert Group and not through dealers,
and each Class I shareholder must maintain a $1 million minimum
account balance.
3. Differences in Services. The services offered to
shareholders of each Class shall be substantially the same, except
that the Rights of Accumulation, Letters of Intent and Reinvestment
Privileges shall be available only to holders of Class A shares.
Class I purchases and redemptions may only be made by bank wire.
4. Differences in Distribution Arrangements. Class A
shares shall be offered with a front-end sales charge, as such term
is defined in Rule 2830 of the Conduct Rules of the National
Association of Securities Dealers, Inc. The amount of the sales
charge on Class A shares is set forth at Exhibit II. 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 II, are used to
pay the Fund's principal underwriter for distributing and or
providing services to 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 B shares shall be offered with a contingent deferred
sales charge ("CDSC") and no front-end sales charge. The amount of
the CDSC on Class B shares is set forth at Exhibit II. Class B 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 B shares, as set forth at Exhibit II, are used to
pay each Fund's principal underwriter for distributing and or
providing services to the Fund's Class B 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 B.
Class C shares shall not be subject to a front-end sales
charge, but shall be subject to a 1.00% CDSC if the shares are
redeemed within one year of purchase. 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
are set forth at Exhibit II. The Class C Distribution Plan pays each
applicable Fund's principal underwriter for distributing and or
providing services to such 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.
Class I and Class O shares shall be subject to neither a
front-end sales charge, nor a CDSC, nor are they subject to a
Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act.
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; (c) administrative
service fees; (d) printing and postage expenses payable by a Fund
relating to preparing and distributing materials, such as proxies,
reports and prospectuses to current shareholders of a specific class;
(e) class specific state notification fees; (f) class specific
litigation or other legal expenses; (g) certain class specific
reimbursement from the Advisor; and (h) certain class specific
contract services (e.g., proxy solicitation).
6. Conversion Features. Class B shares shall be
subject to an automatic conversion feature into Class A shares after
they have been held for that number of years set forth in Exhibit II.
Class A, Class C ,Class I, and Class O are not subject to automatic
conversion.
7. Exchange Privileges. Class A shares shall be
exchangeable only for: (a) Class A shares of other funds managed or
administered by the Calvert Group; (b) shares of funds managed or
administered by the Calvert Group which do not have separate share
classes; and (c) shares of certain other funds specified from time to
time.
Class B shares shall be exchangeable only for: (a) Class B
shares of other funds managed or administered by the Calvert Group;
(b) Class A shares of other funds managed or administered by the
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.
Class C shares shall be exchangeable only for: (a) Class C
shares of other funds managed or administered by the Calvert Group
and Class B shares of Calvert First Government Money Market Fund; (b)
Class A shares of other funds managed or administered by the 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.
Class I shares shall be exchangeable only for: (a) Class I
shares of other funds managed or administered by the Calvert Group;
(b) Class A shares of other funds managed or administered by the
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.
<PAGE>
Exhibit I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
<PAGE>
Exhibit II
Calvert Social Investment Fund (CSIF)
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
CSIF Managed Growth 4.75% 0.35% 1.00%
CSIF Equity 4.75% 0.35% 1.00%
CSIF Managed Index 4.75% 0.25% 1.00%
CSIF Bond 3.75% 0.35% 1.00%
Class B
Managed Growth,
Equity, and Maximum
Contingent Deferred Sales Charge Managed Index Bond 12b-1 Fee
Shares held less than one year after purchase 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6yrs.
<PAGE>
Exhibit II
Calvert Tax-Free Reserves (CTFR)
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
CTFR Long-Term 3.75% 0.35% 1.00%
CTFR Vermont 3.75% N/A 1.00%
Class B
Long-Term and Maximum
Contingent Deferred Sales Charge Vermont 12b-1 Fee
Shares held less than one year after purchase 4% 1.00%
More than one year but less than two 3%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 6yrs.
<PAGE>
Exhibit II
Calvert Municipal Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
National Intermediate 2.75% 0.25% N/A
California Intermediate 2.75% 0.25% N/A
Maryland Intermediate 2.75% 0.25% N/A
Virginia Intermediate 2.75% 0.25% N/A
Class B Maximum
Contingent Deferred Sales Charge CMF 12b-1 Fee
Shares held less than one year after purchase 3% 1.00%
More than one year but less than two 2%
More than two years but less than three 2%
More than three years but less than four 1%
Converts to Class A after 4 yrs.
<PAGE>
Exhibit II
The Calvert Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
New Vision Small Cap 4.75% 0.25% 1.00%
Calvert Income Fund 3.75% 0.50% 1.00%
Class B Maximum
Contingent Deferred Sales Charge New Vision Income 12b-1 Fee
Shares held less than one year 5% 4% 1.00%
More than one year but less than two 4% 3%
More than two years but less than three 4% 2%
More than three years but less than four 3% 1%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs. 6yrs.
<PAGE>
Exhibit II
Calvert World Values Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
International Equity 4.75% 0.35% 1.00%
Capital Accumulation 4.75% 0.35% 1.00%
Class B
Maximum
Contingent Deferred Sales Charge CWVF 12b-1 Fee
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
February 1998
Lgl Shr/Agreements/New UW/Rule 18f-3 Plan
<PAGE>
Exhibit II
Calvert New World Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
Calvert New Africa 4.75% 0.25% 1.00%
Class B Maximum
Contingent Deferred Sales Charge New Africa 12b-1 Fee
Shares held less than one year after purchase 5% 1.00%
More than one year but less than two 4%
More than two years but less than three 4%
More than three years but less than four 3%
More than four years but less than five 2%
More than five years but less than six 1%
Converts to Class A after 8 yrs.
<PAGE>
Exhibit II
First Variable Rate Fund
Maximum Class A Maximum Maximum
Front-End Sales Class A Class C
Charge 12b-1 Fee 12b-1 Fee
First Gov. Money Market N/A N/A N/A
Class B Maximum
Contingent Deferred Sales Charge 12b-1 Fee
CDSC of original Class B Fund purchased is applied upon
redemption from Class B of First Government Money Market 1.00%
Conversion period of original Class B Fund purchased is applied.
<PAGE>
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