Page 1 of _____
SEC Registration Nos.
811-6525 and 33-44968
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|X| Pre-Effective Amendment No. 1
Calvert Municipal Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
Calvert National Municipal Intermediate Fund
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective on February 6,
1998 pursuant to Rule 488.
No filing fee is due for Registrant because of reliance on section
24(f).
<PAGE>
Form N-14 Cross Reference Sheet
Part A. Information Required in the Prospectus
1. Beginning of Registration
Statement and Outside Front
Cover Page of Prospectus Cover Page
2. Beginning and Outside Back
Cover Page of Prospectus Table of Contents
3. Fee Table, Synopsis
Information and
Risk Factors Synopsis; Fund Expenses
4. Information About the
Transactions Synopsis; Reasons for the Reorganization;
Proposed Transaction; Tax Consequences;
Information about the Reorganization;
Comparative Information on Shareholder
Rights; Information about the Funds
5. Information About the
Registrant Synopsis; Comparison of Investment Policies;
Information about the Funds; Investment
Objectives and Policies; Advisory Fees;
Distribution Fees and Expense Ratios;
Purchases; Exchange Privileges; Distribution
Distribution Procedures; Redemption
Procedures; Prospectus and Statement of
Additional Information of the Calvert
National Municipal Intermediate Fund
(incorporated by reference)
6.Information About the
Company Being Acquired Synopsis; Comparison of Investment Policies;
Information about the Funds; Investment
Objectives and Policies; Advisory Fees,
Distribution Fees and Expense Ratios;
Purchases; Exchange Privileges; Distribution
Procedures; Redemption Procedures Joint
Prospectus and Statement of Additional
Information of the Calvert Arizona Municipal
Intermediate Fund, Calvert Florida Municipal
Intermediate Fund, Calvert Michigan Municipal
Intermediate Fund, Calvert New York Municipal
Intermediate Fund and Calvert Pennsylvania
Municipal Intermediate Fund (incorporated by
reference)
7. Voting Information Voting Information; Adjournment
8. Interest of Certain Persons
and Experts Inapplicable
9. Additional Information
Required for Reoffering
by Persons Deemed to be
Underwriters Inapplicable
Part B. Information Required in Statement of Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. Additional Information
about the Registrant Calvert National Municipal Intermediate Fund
Prospectus and Statement of Additional
Information dated April 30, 1997.
13. Additional Information
about the Company Being
Acquired Inapplicable
14. Financial Statements Financial Statements
Part C. Other Information
15. Indemnification Indemnification
16. Exhibits Exhibits
17. Undertakings Undertakings
SIGNATURES
<PAGE>
[letterhead]
[DATE]
Dear Shareholder,
I am writing to inform you of the upcoming joint special meeting of
shareholders of each Calvert Arizona Municipal Intermediate Fund, Calvert
Florida Municipal Intermediate Fund, Calvert Michigan Municipal
Intermediate Fund, Calvert New York Municipal Intermediate Fund and
Calvert Pennsylvania Municipal Intermediate Fund, and to request that you
take a few minutes to read the enclosed material and mail back the proxy
voting card.
You are being asked to vote on a proposal to merge your Fund into the
Calvert National Municipal Intermediate Fund. The Trustees/Directors of
your Fund, including myself, believe this change is in the Funds' and
your best interest.
In considering the small sizes of the Funds, it is believed that
combining the Funds into one larger fund would allow the assets to be
more efficiently managed and lead to a reduction in expenses as well as
enhanced returns. Accordingly, such a combination would be beneficial to
shareholders. Of course, if the mergers are approved and the transactions
consummated, distributions of the combined Calvert National Municipal
Intermediate Fund will not be exempt from state-specific income tax.
Regardless of the number of shares you own, it is important that you take
the time to read the enclosed proxy, and complete and mail your voting card
as soon as you can. A postage paid envelope is enclosed. If Fund shareholders
do not return their proxies, the Funds may have to incur the expense of
additional solicitations. All shareholders benefit from the speedy return
of proxies.
I appreciate the time you will take to review this important matter. The
Q&A which follows will assist you in understanding the proposal, however,
if we may be of any assistance, please call us at (800) 368-2750.
Sincerely,
Barbara J. Krumsiek
President
<PAGE>
The Calvert Municipal Fund, Inc.
Calvert Arizona Municipal Intermediate Fund
Calvert Michigan Municipal Intermediate Fund
Calvert New York Municipal Intermediate Fund
Calvert Pennsylvania Municipal Intermediate Fund
First Variable Rate Fund for Government Income
Calvert Florida Municipal Intermediate Fund
4550 Montgomery Avenue - Suite 1000N
Bethesda, Maryland 20814
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
To be held on March 27, 1998
NOTICE IS HEREBY GIVEN that a Joint Special Meeting of Shareholders of
Calvert Arizona Municipal Intermediate Fund, Calvert Michigan
Municipal Intermediate Fund, Calvert New York Municipal Intermediate Fund
and Calvert Pennsylvania Municipal Intermediate Fund, each a series of
Calvert Municipal Fund, Inc. and Calvert Florida Municipal
Intermediate Fund, a series of the First Variable Rate Fund for
Government Income, will be held in the Tenth Floor Conference Room of
Calvert Group, Ltd., Air Rights North Tower, 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland at 10:00 a.m. on March 27, 1998,
for the following purposes:
I. To consider and act on an Agreement and Plan of Reorganization,
dated [DATE} providing for the transfer of substantially all of
the assets of each Calvert Arizona Municipal Intermediate Fund,
Calvert Florida Municipal Intermediate Fund, Calvert Michigan
Municipal Intermediate Fund, Calvert New York Municipal
Intermediate Fund and Calvert Pennsylvania Municipal Intermediate
Fund (collectively, the "Funds") to and the assumption of certain
identified liabilities of the Funds by Calvert National
Municipal Intermediate Fund, a series of the Calvert Municipal
Fund, Inc., in exchange for shares of the Calvert National
Municipal Intermediate Fund.
II. To transact any other business that may properly come before the
meeting or any adjournment or adjournments thereof.
Shareholders of record at the close of business on February 11, 1998, are
entitled to notice of and to vote at this meeting or any adjournment
thereof.
By Order of the Directors,
William M. Tartikoff, Esq.
Secretary
[DATE]
Please execute the enclosed proxy and return it promptly in the enclosed
envelope, thus enabling the Funds to avoid unnecessary expense and delay.
Your vote is extremely important, no matter how large or small your
holdings may be. No postage is required if mailed in the United States.
The proxy is revocable and will not affect your right to vote in person
if you attend the Special Meeting.
<PAGE>
IMPORTANT NOTICE TO
CALVERT ARIZONA MUNICIPAL INTERMEDIATE FUND,
CALVERT FLORIDA MUNICIPAL INTERMEDIATE FUND,
CALVERT MICHIGAN MUNICIPAL INTERMEDIATE FUND,
CALVERT NEW YORK MUNICIPAL INTERMEDIATE FUND AND
CALVERT PENNSYLVANIA MUNICIPAL INTERMEDIATE FUND SHAREHOLDERS
QUESTIONS & ANSWERS
Please read the complete text of the enclosed Prospectus/Proxy Statement.
For your convenience, we have provided a brief overview of the matters to
be voted upon. Your vote is important. If you have any questions
regarding the proposal, please call us at 800-368-2745. We appreciate you
investing with Calvert Group, and look forward to a continuing
relationship.
Q. Why am I receiving a proxy statement?
A. The Calvert Municipal Fund, Inc. is seeking your approval of a
merger of the shares of its series - Calvert Arizona Municipal
Intermediate Fund, Calvert Michigan Municipal Intermediate Fund,
Calvert New York Municipal Intermediate Fund and Calvert
Pennsylvania Municipal Intermediate Fund and the First Variable
Rate Fund for Government Income is seeking your approval of a
merger of the shares of its series, Calvert Florida Municipal
Intermediate Fund (hereafter, together the "State Municipal
Funds"), into Calvert National Municipal Intermediate Fund,
another series of the Calvert Municipal Fund, Inc. (hereafter,
the "National Municipal Fund").
Q. What are the effects of this merger?
A. The merger will affect the State Municipal Funds in that all of
the assets of the State Municipal Funds will be transferred to the
National Municipal Fund. In turn, you will receive shares of the
National Municipal Fund.
Through the merger, the surviving National Municipal Fund is
expected to allow the assets of the State Municipal Funds to be
more efficiently managed so as to reduce expenses and enhance
returns while continuing to be managed under similar investment
objectives and policies.
Q. Is there a change in the management of these funds?
A. No. Calvert Asset Management Company, Inc. will continue to manage
the portfolio of the National Municipal Fund just as it has
managed the State Municipal Funds to date.
Q. Are there differences in the investment objective of the funds
being merged?
A. The State Municipal Funds' investment objective is 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 whereas the National Municipal Fund's
investment objective is to seek to earn the highest level of
interest income exempt from federal income taxes.
Accordingly, the main difference between the investment objectives
of the Funds is that the National Municipal Fund's goal is to seek
interest income exempt from only federal income tax so that
distributions of the combined National Municipal Fund will not be
exempt from state-specific income tax.
Q. How do the expense structures and fees of the funds compare? Is
there a benefit to me?
A. The Boards expect that the merger will allow the National
Municipal Fund to achieve certain limited economies of scale from
the combined asset size of the Funds and the potentially lower
operating expenses even though the same expense structure and fees
are in effect for each of the Funds.
Q. What will be the name of the surviving fund after the mergers are
complete?
A. The Calvert National Municipal Intermediate Fund will be the fund
to survive the merger.
Q. What will be the size of the surviving fund after the merger?
A. If the proposal presented in the proxy statement is approved, the
combined National Municipal Fund is expected to have approximately
[$_] million in assets.
Q. What are the federal tax implications of the merger?
A. The merger will not be a taxable event (i.e., no gain or loss will
be recognized) to any Funds or to you as a shareholder of any of
the Funds.
Q. What if there are not enough votes to reach a quorum by the
scheduled special shareholder meeting date?
A. If enough shareholders do not vote, we will need to take further
action. We may contact you by mail, telephone, facsimile, or by
personal interview. Therefore, we encourage you to vote as soon as
you review the enclosed proxy materials in order to avoid
additional mailings, telephone calls or other solicitations.
Q. If the proposal is not approved for a Fund, will Calvert propose
liquidating that Fund?
A. If the proposal to merge a Fund is not approved, the Board will
consider other options such as liquidating that Fund.
Q. How will you determine the number of shares of the National
Municipal Fund that I will receive?
A. The Closing Date is March 30, 1998. As of 4:00 p.m. Eastern Time
on the Closing Date, you will receive that number of full and
fractional National Municipal Fund shares equal in value to the
shares you hold in any of the State Municipal Funds on that date.
Q. What impact will the merger have on the share price of Calvert
National Municipal Intermediate Fund?
A. The net asset value per share of the National Municipal Fund will
not be changed by the merger.
Q. Who is paying for expenses related to the shareholders meeting?
A. Each of the State Municipal Funds will pay a pro rata share for
those expenses relating to the shareholder meeting.
Q. How do the directors of the State Municipal Funds suggest that I
vote?
A. After careful consideration, the directors of the State Municipal
Funds unanimously recommend that you vote "FOR" the item proposed
on the enclosed proxy card.
Q. What are my other investment alternatives?
A. Additional equity funds are available through Calvert Group by
calling (800) 368-2748 for more information.
Q. How do I vote my shares?
A. You can vote your shares by completing and signing the enclosed
proxy card, and mailing it in the enclosed postage paid envelope.
If you need any assistance, or have any questions regarding the
proposal or how to vote your shares, please call us at (800)
368-2745.
Q. Will my vote make a difference?
A. Your vote is needed to ensure that the proposals can be acted
upon. Your immediate response on the enclosed proxy card will help
save on the costs of any further solicitations for a shareholder
vote. We encourage all shareholders to participate in the
governance of the State Municipal Funds.
Q. How will this affect my account?
A. You can expect the same level of management expertise and
high-quality shareholder service you've grown accustomed to.
Q. How do I sign the proxy card?
A. Voting instruction forms must be executed properly. When forms are
not signed as required by law, you and the Fund must undertake the
time and expense to take steps to validate your vote. The
following guide was prepared to help you choose the proper format
for signing your form:
1. Individual Accounts: Your name should be signed exactly
as it appears in the registration on the voting instruction form.
2. Joint Accounts: Either party may sign, but the name of
the party signing should conform exactly to a name shown in the
registration.
3. All other accounts should show the capacity of the
individual signing. This can be shown either in the form of the
account registration itself or by the individual executing the
voting instruction form. For example:
REGISTRATION VALID SIGNATURE
A.
1) Save the Earth Corp. Jane Q. Nature, Treasurer
2) Save the Earth Corp. Jane Q. Nature, Treasurer
c/o Jane Q. Nature, Treasurer
B.
1) Save the Earth Corp. Jon B. Goodhealth, Trustee
Profit Sharing Plan
2) Save the Earth Trust Jon B. Goodhealth, Trustee
3) Jon B. Goodhealth, Trustee Jon B. Goodhealth, Trustee
u/t/d 5/1/78
C.
1) David Smith, Cust. David Smith
f/b/o Jason Smith UGMA
Voting by mail is quick and easy. Everything you need is enclosed.
<PAGE>
PROSPECTUS AND PROXY STATEMENT - [DATE]
Acquisition of the assets of the
Calvert Arizona Municipal Intermediate Fund,
Calvert Florida Municipal Intermediate Fund,
Calvert Michigan Municipal Intermediate Fund,
Calvert New York Municipal Intermediate Fund and
Calvert Pennsylvania Municipal Intermediate Fund
By and in exchange for shares of the Calvert National Municipal
Intermediate Fund
4550 Montgomery Avenue, Bethesda, Maryland 20814 - (800) 368-2745
This Prospectus and Proxy Statement relates to the proposed transfer of all
the assets and the assumption of all liabilities of the Calvert Arizona
Municipal Intermediate Fund, Calvert Florida Municipal Intermediate Fund,
Calvert Michigan Municipal Intermediate Fund, Calvert New York Municipal
Intermediate Fund and Calvert Pennsylvania Municipal Intermediate Fund
(together, the "State Municipal Funds") to the Calvert National Municipal
Intermediate Fund ("National Municipal Fund") (collectively, "the Funds") in
exchange for shares of National Municipal Fund. Following the transfer, National
Municipal Fund shares will be distributed to shareholders of the State Municipal
Funds in liquidation of the State Municipal Funds, and the State Municipal Funds
will be dissolved. As a result of the proposed transaction, each shareholder of
the State Municipal Funds will receive that number of National Municipal Fund
shares equal in value at the date of the exchange to the value of such
shareholder's respective shares of the State Municipal Funds. The transaction
will occur for each State Municipal Fund if shareholders vote in favor of the
proposed transfer.
National Municipal Fund is a series of the Calvert Municipal Fund, Inc.
which is an open-end management investment company. The net assets of
National Municipal Fund were [$___] as of February 11, 1998. Its investment
objective is to seek 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.
Each State Municipal Fund (with the exception of the Calvert Florida
Municipal Intermediate Fund) is a series of the Calvert Municipal Fund,
Inc. while the Calvert Florida Municipal Intermediate Fund is a series
of First Variable Rate Fund for Government Income, which also is an
open-end management investment company, (together, "Calvert"). As of
[RECORD DATE], assets of the Funds were [$_____] for the Arizona
Municipal Fund, [$_____] for the Florida Municipal Fund, [$_____] for the
Michigan Municipal Fund, [$_____] for the New York Municipal Fund and
[$_____]for the Pennsylvania Municipal Fund. The State Municipal Funds'
have the same investment objective of the National Municipal Fund to the
extent that they all seek interest income exempt from federal income tax;
however, the National Municipal Fund will not seek, and its distributions
will not be, exempt from specific state income taxes.
The National Municipal Fund and the State Municipal Funds each have a
2.75% maximum sales charge. The sales charge is added to the purchase
price of shares, but will not be applied to shares issued in the
reorganization (see "Purchase Procedures"). Each of the Funds has a
distribution plan that permits it to pay certain expenses associated with
the distribution of its shares. Calvert Asset Management Company, Inc.
("Advisor") is the investment advisor for the National Municipal Fund and
the State Municipal Funds.
This Prospectus and Proxy Statement is expected to be mailed to
shareholders of record on or about February 20, 1998.
This Prospectus and Proxy Statement, which should be retained for future
reference, sets forth concisely the information about National Municipal
Fund that a prospective investor should know before investing. This
Prospectus and Proxy Statement is accompanied by the Prospectus of the
National Municipal Fund dated April 30, 1997, (insofar as it relates to
the National Municipal Fund) and is incorporated herein by reference. A
Statement of Additional Information dated April 30, 1997, containing
additional information, has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus and
Proxy Statement. A copy of the Statement of Additional Information may be
obtained without charge by writing the Funds at 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814, or by calling (800) 368-2748.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS AND PROXY STATEMENT ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND
ARE NOT FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FDIC, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES OF THE
FUNDS, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
TABLE OF CONTENTS
PAGE
Summary __
Reasons for the Reorganization __
Expense Comparisons __
Financial Highlights __
Comparison of Investment Policies __
Information about the Reorganization __
Comparative Information on
Shareholder Rights __
Information about the Funds __
Voting Information __
Adjournment __
Exhibit A - Agreement and Plan
of Reorganization __
<PAGE>
- ---------------------------------------------------------------------------
SUMMARY
...........................................................................
Reasons for the Reorganization. The Boards of Trustees/Directors of the
Calvert Municipal Fund, Inc. and the First Variable Rate Fund for
Government Income (both Boards' members are collectively referred to as
the "Directors") believe that the proposed Reorganization would be in the
best interests of the shareholders of the State Municipal Funds in
considering various issues connected with the small size of the
portfolios for each of the State Municipal Funds. By combining the Funds,
the assets of the State Municipal Funds could be more efficiently managed
so as to reduce expenses and enhance returns. Accordingly, it has been
determined that it would be beneficial to the State Municipal Funds'
shareholders to combine into a larger municipal fund portfolio with
relatively similar investment objectives and policies. The National
Municipal Fund has [#] times the net assets of each individual State
Municipal Fund. On February 11, 1998, the National Municipal Fund had net
assets of $____ compared to the net assets of $____ for the Arizona
Municipal Fund, $____ for the Florida Municipal Fund, $____ for the
Michigan Municipal Fund, $____ for the New York Municipal Fund and $____
for the Pennsylvania Municipal Fund on that date.
To this end, the Directors recommend that shareholders of each State
Municipal Fund approve the proposed merger of their Fund into the
National Municipal Fund because all portfolios invest solely in municipal
obligations and are managed by the same portfolio manager. The National
Municipal Fund hopes to preserve the assets of the State Municipal Funds
while improving the economies of scale of each portfolio. See "Expense
Comparisons" below.
In determining whether to recommend approval of the Reorganization to
shareholders of the State Municipal Funds, the Directors considered a
number of factors, including, but not limited to: (i) the capabilities
and resources of the National Municipal Fund, the Advisor and other
service providers in the areas of investment, marketing, and shareholder
services; (ii) the expenses and advisory fees applicable to the State
Municipal Funds and the National Municipal Fund before the Reorganization
and the estimated expense ratios of the National Municipal Fund after the
Reorganization; (iii) the comparative investment performance of each
State Municipal Fund and the National Municipal Fund; (iv) the terms and
conditions of the Agreement and whether the Reorganization would result
in dilution of a State Municipal Fund's shareholder interests; (v) the
economies of scale potentially realizable through the combination of the
Funds; (vi) the identical service features available to shareholders of
the Funds; (vii) the costs estimated to be incurred to complete the
Reorganization; (viii) the future growth prospects of the State Municipal
Funds; and (ix) the anticipated tax consequences of the Reorganization.
In this regard, the Directors reviewed information provided by the
Advisor relating to the anticipated impact to the shareholders of the
State Municipal Funds as a result of the Reorganization. The Directors
considered the probability that the increase in asset levels of the
combined fund after the Reorganization is expected to result in reduced
per share expenses and achievement of economies of scale, although there
can, of course, be no assurances in this regard. Combining the net assets
of the State Municipal Funds with the assets of the National Municipal
Fund should lead to a modest reduction at first of total operating
expenses for shareholders of the State Municipal Funds on a per share
basis, by allowing fixed and relatively fixed costs, such as accounting,
legal and printing expenses, and service fees to be spread over a larger
asset base. Management anticipates that the reorganization would have a
de minimis yet similarly beneficial effect upon current shareholders of
the National Municipal Fund.
In evaluating the benefits of the proposed transaction, the Directors
also considered the effect of the loss of a portion of the capital loss
carryforwards that might be available to each of the State Municipal
Funds. Management has determined that the benefits of the proposed
reorganization outweigh the uncertain potential detriment resulting from
possible constraints in the use of capital loss carryforwards. See
"Information about the Reorganization."
...........................................................................
Proposed Transaction. The Directors have authorized the Funds to enter into
an Agreement and Plan of Reorganization (the "Agreement" or "Plan") providing
for the transfer of all the assets and liabilities of the State Municipal Funds
to National Municipal Fund in exchange for like shares of National Municipal
Fund. Following the transfer, National Municipal Fund shares will be distributed
to the respective shareholders of the State Municipal Funds in liquidation of
each of the State Municipal Funds, and each of the State Municipal Funds will be
dissolved. As a result of the proposed transaction, each shareholder of the
State Municipal Funds will receive that number of full and fractional National
Municipal Fund shares equal in value at the date of the exchange to the value of
such shareholder's shares of the respective State Municipal Fund. For the
reasons stated above, the Directors, including the independent Directors, have
concluded that the reorganization would be in the best interests of the
shareholders of the State Municipal Funds and recommend shareholder approval.
...........................................................................
Tax Consequences. The Plan is conditioned upon receipt by the State
Municipal Funds of an opinion of counsel that no gain or loss will be
recognized by the State Municipal Funds or the State Municipal Funds'
shareholders as a result of the reorganization. The tax basis of National
Municipal Fund shares received by a shareholder will be the same as the
tax basis of the shareholder's State Municipal Fund shares. In addition,
the tax basis of the State Municipal Funds' assets in the hands of
National Municipal Fund as a result of the reorganization will be the
same as the tax basis of such assets in the hands of the State Municipal
Funds prior to the reorganization. See "Information about the
Reorganization."
...........................................................................
Investment Policies. Shareholders should consider the differences in
investment policies between the State Municipal Funds and National
Municipal Fund. While all of the Funds seek 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 Municipal Funds also seek
interest income exempt from specific state income taxes. Thus, the focus
of each investment portfolio and the portfolio composition of each Fund
is different, and in fact, the resulting tax treatment may differ based
upon the extent that interest dividends are no longer solely derived from
earnings attributable to municipal obligations of a particular state.
...........................................................................
Purchases. Shares of the State Municipal Funds and National Municipal
Fund are sold on a continuous basis at net asset value plus the
appropriate sales charge which is subject to reduction by right of
accumulation, group purchase, and letter of intent. Employee purchases
and certain plans qualified under the of the Internal Revenue Code of
1986, as amended (the "Code") may purchase shares with no sales charge,
and all Fund shareholders may reinvest dividends without paying a sales
charge. Shares issued in the reorganization will not be assessed any
sales charge.
...........................................................................
Sales Charges. The Funds' shares are offered at net asset value plus a
front-end sales charge as follows:
Amount of As a % of As a % of Allowed to Dealers
Investment offering net amount as a % of offering
price invested 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% 0.10%*
* Calvert Distributors, Inc. ("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 form the Fund within twelve months of the time of
purchase.
The minimum initial investment in each fund is $2,000 and the minimum
subsequent investment is $250 (except in the case of certain retirement
plans).
...........................................................................
Exchange Privileges. Shareholders of the State Municipal Funds and
National Municipal Fund may exchange Fund shares for shares of a variety
of other Calvert Group Funds. Each such exchange represents a sale of
Fund shares, which may produce a gain or loss for tax purposes. There is
no additional charge for exchanges. Calvert Group discourages frequent
exchanges and may prohibit additional purchases of shares by persons who
have previously been advised that their frequent use of the exchange
privilege is inconsistent with the orderly management of the investment
portfolio. The State Municipal Funds and National Municipal Fund reserve
the right to modify or eliminate this exchange privilege with 60 days'
written notice.
...........................................................................
Distribution Procedures. The State Municipal Funds and National Municipal
Fund distribute dividends monthly and pay out their net realized capital
gains (if any) once each year. Shareholders of the Funds may reinvest
distributions. Your existing election in the State Municipal Funds with
respect to dividends and/or capital gains will be continued with respect
to the shares of National Municipal Fund you acquire in connection with
the reorganization unless you notify the Fund of a new election.
...........................................................................
Redemption Procedures. At any time and in any amount, shares of the State
Municipal Funds and National Municipal Fund may be redeemed by sending a
letter of instruction, including your name, account and Fund number, the
number of shares or dollar amount, and where you want the money to be
sent. This letter of instruction must be signed by all required
authorized signers. Further documentation may be required from
corporations, fiduciaries, pension plans and institutional investors.
Shares may also be redeemed by telephone or through brokers. The Funds
impose a charge of $5 for wire transfers of less than $1,000. The Funds
may, after 30 days' notice, close accounts if, due to redemptions, the
account falls below $1,000 and the balance is not brought up to the
required minimum amount.
- ---------------------------------------------------------------------------
EXPENSE COMPARISONS
...........................................................................
National Arizona
Municipal Fund Municipal Fund
A. Shareholder Transaction Costs
Maximum Sales Charge on
Purchases 2.75% 2.75%
(as a percentage of offering
price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating Expenses -
Fiscal Year 1997 (unaudited)
(as a percentage of average net
assets)
Management Fees 0.70% 0.70%
Rule 12b -1 Service and
Distribution Fees 0.00% 0.00%
Other Expenses 0.27% 0.53%
Total Fund Operating Expenses* 0.97% 1.23%
* Net Fund Operating Expenses after reduction for fees paid indirectly were:
National 0.94%, Arizona 1.01%
Florida Michigan
Municipal Fund Municipal Fund
A. Shareholder Transaction Costs
Maximum Sales Charge on Purchases 2.75% 2.75%
(as a percentage of offering price)
Contingent Deferred Sales Charge None None
B. Annual Fund Operating
Expenses - Fiscal Year 1997 (unaudited)
(as a percentage of average net
assets)
Management Fees 0.70% 0.70%
Rule 12b -1 Service and
Distribution Fees 0.00% 0.00%
Other Expenses 0.20 % 0.30%
Total Fund Operating Expenses* 0.90% 1.00%
* Net Fund Operating Expenses after reduction for fees paid indirectly were:
Florida 0.79%, Michigan 0.91%
New York Pennsylvania
Municipal Fund Municipal Fund
A. Shareholder Transaction Costs
Maximum Sales Charge on Purchases 2.75% 2.75%
(as a percentage of offering price)
Contingent Deferred Sales Charge
None None
B. Annual Fund Operating Expenses -
Fiscal Year 1997 (unaudited)
(as a percentage of average net
assets)
Management Fees 0.70% 0.70%
Rule 12b -1 Service and Distribution
Fees 0.00% 0.00%
Other Expenses 0.35% 0.38%
Total Fund Operating Expenses* 1.05% 1.08%
* Net Fund Operating Expenses after reduction for fees paid indirectly were:
New York 0.94%, Pennsylvania 0.90%
PRO FORMA
A. Shareholder Transaction Costs
Maximum Sales Charge on Purchases 2.75%
(as a percentage of offering price)
Contingent Deferred Sales Charge
None
B. Annual Fund Operating Expenses -
Fiscal Year 1997 (unaudited)
(as a percentage of average net assets)
Management Fees 0.70%
Rule 12b -1 Service and Distribution
Fees 0.00%
Other Expenses 0.29%
Total Fund Operating Expenses 0.99%
C. Example: You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return; (2) redemption at the end of each period; and
(3) payment of maximum initial sales charge at time of purchase:
Fund (unaudited) 1 Year 3 Years 5 Years 10 Years
National Municipal Fund $37 $58 $80 $143
Arizona Municipal Fund $40 $65 $93 $172
Florida Municipal Fund $36 $55 $76 $135
Michigan Municipal Fund $37 $58 $81 $147
New York Municipal Fund $38 $60 $84 $152
Pennsylvania Municipal $38 $61 $85 $156
Fund
PRO FORMA $37 $58 $81 $145
The example, which is hypothetical, should not be considered a
representation of past or future expenses. Actual expenses and return 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 in the
Funds may bear directly (shareholder transaction costs) or indirectly
(annual fund operating expenses).
A. Shareholder Transaction Costs are charges you pay when you buy or
sell shares of your Fund.
...........................................................................
B. Annual Fund Operating Expenses. Management Fees are paid by the
Funds to Calvert Asset Management Company, Inc. for managing the
investments and business affairs of each Fund and paid to Calvert
Administrative Services Company, Inc. 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.
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
Funds.
Each Fund has adopted 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 shares, to pay expenses associated with the distribution
and servicing of Fund shares. Amounts paid by the Funds to CDI under the
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 Distribution Plan expenses.
- ---------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
...........................................................................
The following table provides information about the Funds' financial
history. It expresses the information in terms of a single share
outstanding throughout 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.
<PAGE>
<TABLE>
<CAPTION>
National Municipal Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $10.56
Income from investment operations
Net investment income .50
Net realized and unrealized gain (loss) .23
Total from investment operations .73
Distributions from
Net investment income (.50)
Total distributions (.50)
Total increase (decrease) in net asset value .23
Net asset value, ending $10.79
Total return <F6> 7.11%
Ratios to average net assets:
Net investment income 4.71%
Total expenses <F7> .97%
Net expenses .94%
Expenses reimbursed -
Portfolio turnover 29%
Net assets, ending (in thousands) $48,933
Number of shares outstanding,
ending (in thousands) 4,535
<FN>
<F6>Total return does not reflect deduction of front-end sales charge.
<F7>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
National Municipal Shares
Year Ended December 31, 1996
<S> <C>
Net asset value, beginning $10.62
Income from investment operations
Net investment income .50
Net realized and unrealized gain (loss)
on investments (.06)
Total from investment operations .44
Distributions from
Net investment income (.50)
Net realized gains --
Total distributions (.50)
Total increase (decrease) in net asset value (.06)
Net asset value, ending $10.56
Total return<F6> 4.32%
Ratio to average net assets
Net investment income 4.83%
Total expenses<F7> 1.04%
Net expenses 1.01%
Expenses reimbursed --
Portfolio turnover 23%
Net assets, ending (in thousands) $45,612
Number of shares outstanding,
ending (in thousands) 4,319
<FN>
<F6>Total return does not reflect deduction of front-end sales charge.
<F7>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
National Municipal Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $9.81 $10.42
Income from investment operations
Net investment income .51 .50
Net realized and unrealized gain (loss)
on investments .80 (.62)
Total from investment operations 1.31 (.12)
Distributions from
Net investment income (.50) (.49)
Net realized gains -- --
Total distributions (.50) (.49)
Total increase (decrease) in net asset value .81 (.61)
Net asset value, ending $10.62 $9.81
Total return<F8> 13.64% (1.18%)
Ratio to average net assets
Net investment income 4.97% 4.88%
Total expenses<F9> .96% --
Net expenses .94% .69%
Expenses reimbursed -- .32%
Portfolio turnover 57% 122%
Net assets, ending (in thousands) $40,146 $36,159
Number of shares outstanding,
ending (in thousands) 3,780 3,686
<FN>
<F8>Total return does not reflect deduction of front-end sales charge.
<F9>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
Year Ended (Sept. 30, 1992)
December 31, through Dec. 31,
National Municipal Shares 1993 1992
<S> <C> <C>
Net asset value, beginning $10.01 $10.00
Income from investment operations
Net investment income .48 .13
Net realized and unrealized gain (loss)
on investments .45 .01
Total from investment operations .93 .14
Distributions from
Net investment income (.48) (.13)
Net realized gains (.04) --
Total distributions (.52) (.13)
Total increase (decrease) in net asset value .41 .01
Net asset value, ending $10.42 $10.01
Total return<F10> 9.47% 5.40%
Ratio to average net assets
Net investment income 5.01% 5.36%(a)
Total expenses<F11> -- --
Net expenses .10% --
Expenses reimbursed .45% 4.34%(a)
Portfolio turnover 162% 12%
Net assets, ending (in thousands) $37,467 $1,542
Number of shares outstanding,
ending (in thousands) 3,596 154
(a) Annualized
<FN>
<F10>Total return does not reflect deduction of front-end sales charge.
<F11>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Arizona Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $5.03
Income from investment operations
Net investment income .19
Net realized and unrealized gain (loss) . .11
Total from investment operations .30
Distributions from
Net investment income (.20)
Total increase (decrease) in net asset value .10
Net asset value, ending $5.13
Total return <F18> 6.04%
Ratios to average net assets:
Net investment income 3.86%
Total expenses <F19> 1.23%
Net expenses 1.01%
Expenses reimbursed -
Portfolio turnover 18%
Net assets, ending (in thousands) $2,704
Number of shares outstanding,
ending (in thousands) 528
<FN>
<F18>Total return does not reflect deduction of front-end sales charge.
<F19>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio o
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Arizona Shares
Net asset value, ending $5.03
Total return<F18> 3.17%
Ratio to average net assets
Net investment income 3.96%
Total expenses<F19> 1.31%
Net expenses 1.00%
Expenses reimbursed .06%
Portfolio turnover 18%
Net assets, ending (in thousands) $2,635
Number of shares outstanding,
ending (in thousands) 524
<FN>
<F18>Total return does not reflect deduction of front-end sales charge.
<F19>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Arizona Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.00
Income from investment operations
Net investment income .22 .19
Net realized and unrealized gain (loss)
on investments .36 (.29)
Total from investment operations .58 (.10)
Distributions from
Net investment income (.22) (.19)
Total increase (decrease) in net asset value .36 (.29)
Net asset value, ending $5.07 $4.71
Total return<F20> 12.44% (1.84%)
Ratio to average net assets
Net investment income 4.43% 4.13%
Total expenses<F21> .53% --
Net expenses .41% .38%
Expenses reimbursed .54% .97%
Portfolio turnover 10% 22%
Net assets, ending (in thousands) $2,045 $2,004
Number of shares outstanding,
ending (in thousands) 403 426
<FN>
<F20>Total return does not reflect deduction of front-end sales charge.
<F21>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $5.02
Income from investment operations
Net investment income .21
Net realized and unrealized gain (loss) .14
Total from investment operations .35
Distributions from
Net investment income (.22)
Total increase (decrease) in net asset value .13
Net asset value, ending $5.15
Total return <F22> 7.06%
Ratios to average net assets:
Net investment income 4.31%
Total expenses <F23> .90%
Net expenses .79%
Expenses reimbursed -
Portfolio turnover 4%
Net assets, ending (in thousands) $7,799
Number of shares outstanding,
ending (in thousands) 1,514
<FN>
<F22>Total return does not reflect deduction of front-end sales charge.
<F23>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Shares
Year Ended December 31, 1996
<S> <C>
Net asset value, beginning $5.06
Income from investment operations
Net investment income .21
Net realized and unrealized gain (loss)
on investments (.04)
Total from investment operations .17
Distributions from
Net investment income (.21)
Total increase (decrease) in net asset value (.04)
Net asset value, ending $5.02
Total return<F22> 3.53%
Ratio to average net assets
Net investment income 4.28%
Total expenses<F23> .94%
Net expenses .81%
Expenses reimbursed .01%
Portfolio turnover 19%
Net assets, ending (in thousands) $5,516
Number of shares outstanding,
ending (in thousands) 1,098
<FN>
<F22>Total return does not reflect deduction of front-end sales charge.
<F23>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Florida Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.67 $5.00
Income from investment operations
Net investment income .24 .21
Net realized and unrealized gain (loss)
on investments .38 (.33)
Total from investment operations .62 (.12)
Distributions from
Net investment income (.23) (.21)
Total increase (decrease) in net asset value .39 (.33)
Net asset value, ending $5.06 $4.67
Total return<F24> 13.48% (2.44%)
Ratio to average net assets
Net investment income 4.73% 4.64%
Total expenses<F25> .43% --
Net expenses .35% .21%
Expenses reimbursed .43% .80%
Portfolio turnover 44% 93%
Net assets, ending (in thousands) $3,892 $3,387
Number of shares outstanding,
ending (in thousands) 769 725
<FN>
<F24>Total return does not reflect deduction of front-end sales charge.
<F25>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Michigan Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $5.10
Income from investment operations
Net investment income .23
Net realized and unrealized gain (loss) .14
Total from investment operations .37
Distributions from
Net investment income (.23)
Total increase (decrease) in net asset value (.14)
Net asset value, ending $5.24
Total return <F32> 7.41%
Ratios to average net assets:
Net investment income 4.44%
Total expenses <F33> 1.00%
Net expenses .91%
Expenses reimbursed -
Portfolio turnover 16%
Net assets, ending (in thousands) $5,207
Number of shares outstanding,
ending (in thousands) 994
<FN>
<F32>Total return does not reflect deduction of front-end sales charge.
<F33>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Michigan Shares
Year Ended December 31, 1996
<S> <C>
Net asset value, beginning $5.12
Income from investment operations
Net investment income .22
Net realized and unrealized gain (loss)
on investments (.01)
Total from investment operations .21
Distributions from
Net investment income (.23)
Total increase (decrease) in net asset value (.02)
Net asset value, ending $5.10
Total return<F32> 4.19%
Ratio to average net assets
Net investment income 4.37%
Total expenses<F33> 1.02%
Net expenses .93%
Expenses reimbursed .02%
Portfolio turnover 18%
Net assets, ending (in thousands) $5,804
Number of shares outstanding,
ending (in thousands) 1,137
<FN>
<F32>Total return does not reflect deduction of front-end sales charge.
<F33>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Michigan Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.74 $5.09
Income from investment operations
Net investment income .24 .23
Net realized and unrealized gain (loss)
on investments .37 (.35)
Total from investment operations .61 (.12)
Distributions from
Net investment income (.23) (.23)
Total increase (decrease) in net asset value .38 (.35)
Net asset value, ending $5.12 $4.74
Total return<F34> 13.08% (2.42%)
Ratio to average net assets
Net investment income 4.76% 4.76%
Total expenses<F35> .52% --
Net expenses .48% .18%
Expenses reimbursed .39% .84%
Portfolio turnover 22% 65%
Net assets, ending (in thousands) $4,556 $5,255
Number of shares outstanding,
ending (in thousands) 890 1,109
<FN>
<F34>Total return does not reflect deduction of front-end sales charge.
<F35>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
(October 1, 1993)
Michigan Shares through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss)
on investments .09
Total from investment operations .13
Distributions from
Net investment income (.04)
Total increase (decrease) in net asset value .09
Net asset value, ending $5.09
Total return<F36> 10.28%
Ratio to average net assets
Net investment income 4.27%(a)
Total expenses<F37> --
Net expenses --
Expenses reimbursed .89%(a)
Portfolio turnover --
Net assets, ending (in thousands) $4,287
Number of shares outstanding,
ending (in thousands) 842
(a) Annualized
<FN>
<F36>Total return does not reflect deduction of front-end sales charge.
<F37>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $5.09
Income from investment operations
Net investment income .22
Net realized and unrealized gain (loss) .14
Total from investment operations .36
Distributions from
Net investment income (.22)
Total increase (decrease) in net asset value .14
Net asset value, ending $5.23
Total return <F38> 7.31%
Ratios to average net assets:
Net investment income 4.35%
Total expenses <F39> 1.05%
Net expenses .94%
Expenses reimbursed -
Portfolio turnover 10%
Net assets, ending (in thousands) $7,059
Number of shares outstanding,
ending (in thousands) 1,349
<FN>
<F38>Total return does not reflect deduction of front-end sales charge.
<F39>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Shares
Year Ended December 31, 1996
<S> <C>
Net asset value, beginning $5.12
Income from investment operations
Net investment income .21
Net realized and unrealized gain (loss)
on investments (.02)
Total from investment operations .19
Distributions from
Net investment income (.22)
Net realized gain --
Total distributions (.22)
Total increase (decrease) in net asset value (.03)
Net asset value, ending $5.09
Total return<F38> 3.79%
Ratio to average net assets
Net investment income 4.20%
Total expenses<F39> 1.13%
Net expenses .98%
Expenses reimbursed .03%
Portfolio turnover 19%
Net assets, ending (in thousands) $6,218
Number of shares outstanding,
ending (in thousands) 1,222
<FN>
<F38>Total return does not reflect deduction of front-end sales charge.
<F39>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
New York Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.05
Income from investment operations
Net investment income .22 .23
Net realized and unrealized gain (loss)
on investments .41 (.34)
Total from investment operations .63 (.11)
Distributions from
Net investment income (.22) (.23)
Total increase (decrease) in net asset value .41 (.34)
Net asset value, ending $5.12 $4.71
Total return<F40> 13.72% (2.26%)
Ratio to average net assets
Net investment income 4.47% 4.77%
Total expenses<F41> .58% --
Net expenses .50% .18%
Expenses reimbursed .49% 1.13%
Portfolio turnover 13% 56%
Net assets, ending (in thousands) $3,573 $2,648
Number of shares outstanding,
ending (in thousands) 698 562
<FN>
<F40>Total return does not reflect deduction of front-end sales charge.
<F41>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
(October 1, 1993)
New York Shares through Dec. 31, 1993
<S> <C>
Net asset value, beginning $5.00
Income from investment operations
Net investment income .04
Net realized and unrealized gain (loss)
on investments .05
Total from investment operations .09
Distributions from
Net investment income (.04)
Total increase (decrease) in net asset value .05
Net asset value, ending $5.05
Total return<F42> 7.22%
Ratio to average net assets
Net investment income 3.81%(a)
Total expenses<F43> --
Net expenses --
Expenses reimbursed 2.00%(a)
Portfolio turnover --
Net assets, ending (in thousands) $2,236
Number of shares outstanding,
ending (in thousands) 433
(a) Annualized
<FN>
<F42>Total return does not reflect deduction of front-end sales charge.
<F43>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Shares
Year Ended December 31, 1997 (unaudited)
<S> <C>
Net asset value, beginning $5.08
Income from investment operations
Net investment income .23
Net realized and unrealized gain (loss) .13
Total from investment operations .36
Distributions from
Net investment income (.22)
Total increase (decrease) in net asset value .14
Net asset value, ending $5.22
Total return <F44> 7.24%
Ratios to average net assets:
Net investment income 4.50%
Total expenses <F45> 1.08%
Net expenses .90%
Expenses reimbursed -
Portfolio turnover 15%
Net assets, ending (in thousands) $5,060
Number of shares outstanding,
ending (in thousands) 970
<FN>
<F44>Total return does not reflect deduction of front-end sales charge.
<F45>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Shares
Year Ended December 31, 1996
<S> <C>
Net asset value, beginning $5.10
Income from investment operations
Net investment income .21
Net realized and unrealized gain (loss)
on investments (.02)
Total from investment operations .19
Distributions from
Net investment income (.21)
Total increase (decrease) in net asset value (.02)
Net asset value, ending $5.08
Total return<F44> 3.92%
Ratio to average net assets
Net investment income 4.45%
Total expenses<F45> 1.11%
Net expenses .93%
Expenses reimbursed .05%
Portfolio turnover 9%
Net assets, ending (in thousands) $4,486
Number of shares outstanding,
ending (in thousands) 883
<FN>
<F44>Total return does not reflect deduction of front-end sales charge.
<F45>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pennsylvania Shares
Year Ended December 31, 1995 1994
<S> <C> <C>
Net asset value, beginning $4.71 $5.00
Income from investment operations
Net investment income .25 .22
Net realized and unrealized gain (loss)
on investments .37 (.29)
Total from investment operations .62 (.07)
Distributions from
Net investment income (.23) (.22)
Total increase (decrease) in net asset value .39 (.29)
Net asset value, ending $5.10 $4.71
Total return<F46> 13.51% (1.29%)
Ratio to average net assets
Net investment income 5.10% 4.94%
Total expenses<F47> .49% --
Net expenses .41% .26%
Expenses reimbursed .54% .94%
Portfolio turnover 17% 96%
Net assets, ending (in thousands) $2,522 $1,872
Number of shares outstanding,
ending (in thousands) 495 398
<FN>
<F46>Total return does not reflect deduction of front-end sales charge.
<F47>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.
</FN>
</TABLE>
<PAGE>
Comparative Performance Information. Total return for the Funds' shares
for the periods indicated are as follows:
Total returns with maximum sales charge (average annual total returns)
are as follows:
Periods Ended
December 31, 1997 One Year Since
Inception
National Municipal Fund 4.15% 34.96% (9/30/92)
Arizona Municipal Fund 2.97% 16.55%(12/31/93)
Florida Municipal Fund 4.16% 18.96%(12/31/93)
Michigan Municipal Fund 4.54% 22.73% (9/30/93)
New York Municipal Fund 4.44% 22.13% (9/30/93)
Pennsylvania Municipal Fund 4.36% 20.95% (12/31/93)
Returns without maximum sales charge are as follows:
Periods Ended
December 31, 1997 One Year Since
Inception
National Municipal Fund 7.11% 38.74% (9/30/92)
Arizona Municipal Fund 6.04% 19.81% (12/31/93)
Florida Municipal Fund 7.06% 22.29%(12/31/93)
Michigan Municipal Fund 7.41% 26.16% (9/30/93)
New York Municipal Fund 7.31% 25.54% (9/30/93)
Pennsylvania Municipal Fund 7.24% 24.33% (12/31/93)
The total return figures shown above include the effect of the maximum
sales charge of 2.75%, changes in share price, and reinvestment of
dividends and distributions. Total return is based on historical earnings
and asset value fluctuations and is not intended to indicate future
performance. No adjustments are made to reflect any income taxes payable
by shareholders.
- ---------------------------------------------------------------------------
COMPARISON OF INVESTMENT POLICIES
...........................................................................
As noted in the "Summary" above, the investment objectives of the Funds
are similar. The National Municipal Fund and the State Municipal Funds
"seek 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;" however, the National Municipal Fund will not seek and
its distributions will not be, exempt from any state income taxes. The
Funds invest in nondiversified portfolios of municipal obligations.
Nonetheless, there are certain differences in addition to the differences
in state income taxation.
The National Municipal Fund invests at least 65% of its total assets in
municipal obligations with interest that, for most investors, is exempt
from federal income tax. Municipal obligations in which the National
Municipal Fund 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 (i.e., 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.
The State Municipal Funds invest in state-specific municipal obligations
with interest that, for most investors, is exempt from federal and that
state's income tax. Each State Municipal Fund invests 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 Municipal Fund also attempts to invest its
remaining assets in these obligations, but may invest its 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.
For liquidity purposes or pending the investment of the proceeds of the
sale of its shares, each State Municipal Fund invests in and derives up
to 35% of its income from taxable short-term money market type
investments whereas the National Municipal Fund is limited in making such
temporary investments to 20% of its income.
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 whereas the National Municipal Fund, investing in
various states, does not expose itself to the risks inherent in investing
in a single state.
The fundamental investment restrictions of the Funds are identical except
that the State Municipal Funds may not make any loans whereas the
National Municipal Fund may make loans through the purchase of money
market instruments and repurchase agreements or by the purchase of bonds,
debentures or other debt securities. The National Municipal Fund may not
purchase or sell physical commodities except that it may enter into
futures contracts and options thereon whereas the State Municipal Funds
are not so restricted.
None of the Funds may invest 25% or more of its assets in any particular
industry or industries, however, each State Municipal 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.
Further, the State Municipal Funds may not invest 25% or more of its
assets in the securities of any one issuer.
The nonfundamental investment restrictions of the Funds are identical
except that the State Municipal Funds are not restricted as to the
following where the National Municipal Funds 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 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; or purchase securities on margin, except that it may make
margin deposits in connection with futures contacts or options on futures.
- ---------------------------------------------------------------------------
INFORMATION ABOUT THE REORGANIZATION
...........................................................................
Plan of Reorganization. The proposed Agreement and Plan of Reorganization
(the "Agreement" or "Plan") provides that National Municipal Fund will
acquire all the assets and substantially all of the liabilities of the
State Municipal Funds in exchange for shares of National Municipal Fund
on the Closing Date (as defined in Section 2(b) of the Plan). A copy of
the Plan is attached as Exhibit A to this Proxy Statement. Discussion of
the Plan herein is qualified in its entirety by reference to the Plan in
Exhibit A. The number of full and fractional National Municipal Fund
shares to be issued to shareholders of the State Municipal Funds will
equal the value of the shares of the State Municipal Funds outstanding
immediately prior to the reorganization. Portfolio securities of the
State Municipal Funds and National Municipal Fund will be valued in
accordance with the valuation practices of National Municipal Fund which
are described on page 23 of the National Municipal Fund prospectus and on
page 9 of its Statement of Additional Information. At the time of the
reorganization, National Municipal Fund will assume and pay all of each
State Municipal Fund's then current obligations and liabilities. The
reorganization will be accounted for by the method of accounting for
tax-free reorganizations of investment companies, sometimes referred to
as the "pooling without restatement" method.
As soon as practicable after the Closing Date, the State Municipal Funds
will liquidate and distribute pro rata to their shareholders of record as
of the close of business on the Closing Date the full and fractional
shares of National Municipal Fund at an aggregate net asset value equal
to the value of the shareholder's investment in the State Municipal Funds
next determined after the effective time of the transaction. This method
of valuation is also consistent with interpretations of Rule 22c-1 under
the Investment Company Act of 1940 by the Securities and Exchange
Commission's Division of Investment Management. Such liquidation and
distribution will be accomplished by the establishment of accounts on the
share records of National Municipal Fund in the name of such State
Municipal Funds' shareholders, each representing the respective pro rata
number of full and fractional shares of National Municipal Fund due the
shareholder.
The consummation of the Plan is subject to the conditions set forth
therein. The Plan may be terminated and the reorganization abandoned as
to any State Municipal Fund at any time before or after approval by any
State Municipal Fund's shareholders, prior to the Closing Date by mutual
consent of the respective State Municipal Fund and the National Municipal
Fund, or by either if any condition set forth in the Plan has not been
fulfilled or is waived by the party entitled to its benefits. In
accordance with the Plan, each State Municipal Fund and the National
Municipal Fund will be responsible for payment of their pro rata expenses
incurred in connection with the reorganization.
...........................................................................
Description of National Municipal Fund Shares. Full and fractional shares
of National Municipal Fund will be issued to each State Municipal Fund
shareholder in accordance with the procedures under the Plan as described
above. Each share will be fully paid and nonassessable when issued and
transferable without restrictions and will have no preemptive or
conversion rights.
...........................................................................
Federal Income Tax Consequences. The Plan is a tax-free reorganization
pursuant to Section 368(a)(1)(C) of the Code. The Plan is conditioned
upon the issuance of an opinion by outside counsel to the Funds, to the
effect that, on the basis of the existing provisions of the Code, current
administrative rules and court decisions, for federal income tax
purposes: (1) no gain or loss will be recognized by the State Municipal
Funds or National Municipal Fund upon the transfer of the State Municipal
Funds assets to, and the assumption of substantially all of its
liabilities by, National Municipal Fund in exchange for National
Municipal Fund shares (Section 1032(a)); (2) no gain or loss will be
recognized by shareholders of a State Municipal Fund upon the exchange of
the State Municipal Fund's shares for National Municipal Fund shares
(Section 361(a)); (3) the basis and holding period immediately after the
reorganization for National Municipal Fund shares received by each State
Municipal Fun's shareholders pursuant to the reorganization will be the
same as the basis and holding period of the State Municipal Fund's shares
held immediately prior to the exchange (Section 354, 356); and (4) the
basis and holding period immediately after the reorganization of each
State Municipal Fund's assets acquired by National Municipal Fund will be
the same as the basis and holding period of such assets of each State
Municipal Fund immediately prior to the reorganization (Section 362(b),
1223(2)).
Opinions of counsel are not binding on the Internal Revenue Service or
the courts. If the reorganization is consummated but does not qualify as
a tax-free reorganization under the Code, the consequences described
above would not be applicable. Shareholders of the State Municipal Funds
should consult their tax advisors regarding the effect, if any, of the
proposed reorganization in light of their individual circumstances. Since
the foregoing discussion relates only to the federal income tax
consequences of the reorganization, shareholders of the State Municipal
Funds should also consult their tax advisors as to the state and local
tax consequences, if any, of the reorganization.
...........................................................................
Effect of the Reorganization on Capital Loss Carryforwards. The following
tables provide comparative information regarding realized capital gains
and losses and net unrealized appreciation or depreciation of portfolio
securities of National Municipal Fund and the State Municipal Funds as of
December 31, 1997, and the capital loss carryforwards as of this same period.
National Municipal Fund
Capital Loss Carryforward $923,112
Realized Gains (losses) ($925,397)
Net Unrealized appreciation $3,132,407
Florida Municipal Fund
Capital Loss Carryforward $166,213
Realized Gains (losses) ($166,212)
Net Unrealized appreciation $339,513
New York Municipal Fund
Capital Loss Carryforward $38,128
Realized Gains (losses) ($39,663)
Net Unrealized appreciation $361,960
Arizona Municipal Fund
Capital Loss Carryforward $27,555
Realized Gains (losses) ($27,556)
Net Unrealized appreciation $127,908
Michigan Municipal Fund
Capital Loss Carryforward $248,396
Realized Gains (losses) ($248,430)
Net Unrealized appreciation $364,742
Pennsylvania Municipal Fund
Capital Loss Carryforward $72,750
Realized Gains (losses) ($78,710)
Net Unrealized appreciation $278,242
If the reorganization does not occur, the respective State Municipal
Funds' loss carryforwards should be available to offset any net realized
capital gains of the respective State Municipal Funds through 2005. It is
anticipated that no distributions of net realized capital gains would be
made by the State Municipal Funds until the capital loss carryforwards
expire or are offset by net realized capital gains.
If the reorganization is consummated, National Municipal Fund will be
constrained in the extent to which it can use the capital loss
carryforwards of the respective State Municipal Funds because of
limitations imposed by the Code on the occurrence of an ownership change.
National Municipal Fund should be able to use in each year a capital loss
carryforward in an amount equal to the value of the respective State
Municipal Fund's loss carryforward on the date of the reorganization
multiplied by a long-term tax-exempt rate calculated by the Internal
Revenue Service. If the amount of such a loss is not used in one year, it
may be added to the amount available for use in the next year. For 1998,
the amount of capital loss carryforward that may be used under the
formula will be further reduced to reflect the number of days remaining
in the year following the date of the reorganization, currently
anticipated to close on or about March 30, 1998.
The Advisor believes that the anticipated benefits outweigh the uncertain
potential detriment resulting from the partial loss of capital loss
carryforwards, and the differing consequences of federal and various
other income taxation on a distribution received by each shareholder
whose tax liabilities (if any) are determined by the net effect of a
multitude of considerations that are individual to the shareholder. State
Municipal Fund shareholders who need information as to state and local
tax consequences, if any, should consult their tax advisors.
...........................................................................
Capitalization. The following table shows the capitalization of the Funds
as of February 11, 1998, on a pro forma basis as of the date of the
proposed acquisition of assets at net asset value:
Net Assets Arizona Florida Michigan
Net Asset Value Per Share [$_____] [$_____] [$_____]
Shares Outstanding [#] [#] [#]
Net Assets New York Pennsylvania Pro Forma Combined*
Net Asset Value Per Share [$_____] [$_____] [$_____]
Shares Outstanding [#] [#] [#]
*The Pro Forma combined net assets does not reflect adjustments with
respect to distributions prior to the reorganization. Total National
Municipal Fund shares issued pro forma to State Municipal Fund
shareholders would be [#] for the Arizona Municipal Fund, [#] for the
Florida Municipal Fund, [#] for the Michigan Municipal Fund, [#] for the
New York Municipal Fund and [#] for the Pennsylvania Municipal Fund. The
actual exchange ratio will be determined based on the relative net asset
value per share on the acquisition date.
- ---------------------------------------------------------------------------
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS
...........................................................................
All of the Funds (with the exception of the Calvert Florida Municipal
Intermediate Fund which is a series of First Variable Rate Fund for
Government Income, a Massachusetts business trust) are series of the same
open-end management investment company that is organized as a Maryland
corporation, and as such share a common Articles of Incorporation and
Bylaws. There are no significant differences between the Declaration of
Trust and the Articles of Incorporation and the Bylaws of the State
Municipal Funds. After the merger, the operations of the National
Municipal Fund will continue to be governed by the Articles of
Incorporation and Bylaws of Calvert as they now exist.
- ---------------------------------------------------------------------------
INFORMATION ABOUT THE FUNDS
...........................................................................
Information about the State Municipal Funds and the National Municipal
Fund is included in a joint prospectus dated April 30, 1997. Copies of
the Prospectus are included with this Prospectus and Proxy Statement and
are incorporated by reference into it. Additional information about
National Municipal Fund and the State Municipal Funds is included in
separate Statements of Additional Information, both dated April 30, 1997,
which have been filed with the Securities and Exchange Commission and are
incorporated by reference into this Prospectus and Proxy Statement. The
audited Annual Reports to Shareholders of each Fund are also incorporated
by reference into this proxy statement. Copies of the Statements of
Additional Information and Annual Reports may be obtained without charge
by writing to the Funds at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814 or by calling (800) 368-2748. The Funds are subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended (the "1940
Act"), and in accordance therewith, file proxy material, reports and other
information with the Securities and Exchange Commission. These reports
may be inspected and copied at the Public Reference facilities maintained
by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of the material may also be obtained from
the Office of Consumer Affairs and Information Services of the Securities
and Exchange Commission at prescribed rates. In addition, the Securities
and Exchange Commission maintains a Web site (http://www.sec.gov) that
contains reports, other information and proxy statements filed by Calvert
on behalf of the Funds, which file such information electronically with
Securities and Exchange Commission.
- ---------------------------------------------------------------------------
OTHER BUSINESS
...........................................................................
The Directors of the State Municipal Funds do not intend to present any
other business at the meeting. If, however, any other matters are
properly brought before the meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their
judgment.
- ---------------------------------------------------------------------------
VOTING INFORMATION
...........................................................................
Proxies from the shareholders of the State Municipal Funds are being
solicited by the Directors of Calvert for the Special Meeting of
Shareholders to be held in the Tenth Floor Conference Room of Calvert
Group Ltd., Air Rights North Tower, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland at 10:00 a.m. on Friday, March 27, 1998, or at such
later time or date made necessary by adjournment. A proxy may be revoked
at any time before the meeting or during the meeting by oral or written
notice to William M. Tartikoff, Esq., Secretary, 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814. Unless revoked, all valid proxies
will be voted in accordance with the specification thereon or, in the
absence of specification, for approval of the Plan. Abstentions and broker
non-votes will be counted as Shares present for purposes of determining
whether a quorum is present but will not be voted for or against any
adjournment or proposal. Accordingly, abstentions and broker non-votes
effectively will be a vote against adjournment or against any proposal
where the required vote is a percentage of the shares present.
Proxies are solicited by mail. Additional solicitations may be made by
telephone, computer communications, facsimile or other such means, or by
personal contact by officers or employees of Calvert Group and its
affiliates or by proxy soliciting firms retained for this purpose. The
State Municipal Funds will bear solicitation costs.
Shareholders of the State Municipal Funds of record at the close of
business on February 11, 1998, ("February 11, 1998") are entitled to notice of
and to vote at the Special Meeting or any adjournment thereof. Shareholders
are entitled to one vote for each share held. As of February 11, 1998, as
shown on the books of the State Municipal Funds, there were issued and
outstanding [#] shares of the Arizona Municipal Fund, [#] shares of the
Florida Municipal Fund, [#] shares of the Michigan Municipal Fund, [#] shares
of the New York Municipal Fund and [#] shares of the Pennsylvania Municipal
Fund. The votes of the shareholders of National Municipal Fund are not being
solicited since their approval or consent is not necessary for this
transaction. As of [DATE], the officers and directors of the respective
State Municipal Funds as a group beneficially owned less than 1% of the
outstanding shares of the respective State Municipal Funds.
As of February 11, 1998, no shareholders owned of record 5% or more of the
shares of the respective State Municipal Funds.
- ---------------------------------------------------------------------------
ADJOURNMENT
...........................................................................
In the event that sufficient votes in favor of the proposals set forth in
the Notice of Meeting and Proxy Statement are not received by the time
scheduled for the meeting, the persons named as proxies may move one or
more adjournments of the meeting to permit further solicitation of
proxies with respect to any such proposals. Any such adjournment will
require the affirmative vote of a majority of the shares present at the
meeting. The persons named as proxies will vote in favor of such
adjournment those shares that they are entitled to vote which have voted
in favor of such proposals. They will vote against any such adjournment
those proxies that have voted against any such proposals.
By Order of the Directors
William M. Tartikoff, Esq.
Secretary
The Directors of Calvert Municipal Fund, Inc. and First Variable Rate
Fund for Government Income, including the Independent Directors,
recommend a Vote FOR Approval of the Plan.
<PAGE>
THE CALVERT MUNICIPAL FUND, INC. :
CALVERT ARIZONA MUNICIPAL INTERMEDIATE FUND
CALVERT MICHIGAN MUNICIPAL INTERMEDIATE FUND
CALVERT NEW YORK MUNICIPAL INTERMEDIATE FUND
CALVERT PENNSYLVANIA MUNICIPAL INTERMEDIATE FUND
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME:
CALVERT FLORIDA MUNICIPAL INTERMEDIATE FUND
THIS PROXY IS SOLICITED BY THE BOARDS OF TRUSTEES/DIRECTORS
The undersigned, revoking previous proxies, hereby appoint(s) William M.
Tartikoff, Esq. and Barbara J. Krumsiek, attorneys, with full power of
substitution, to vote all shares of Calvert Arizona Municipal
Intermediate Fund, Calvert Florida Municipal Intermediate Fund, Calvert
Michigan Municipal Intermediate Fund, Calvert New York Municipal
Intermediate Fund, and Calvert Pennsylvania Municipal Intermediate Fund,
that the undersigned is entitled to vote at the Special Meeting of
Shareholders to be held in the Tenth Floor Conference Room of Calvert
Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 on
Friday, March 27, 1998, at 10:00 a.m. and at any adjournment thereof. All
powers may be exercised by a majority of the proxy holders or substitutes
voting or acting or, if only one votes and acts, then by that one. This
Proxy shall be voted on the proposal described in the Proxy Statement.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement
is hereby acknowledged.
NOTE: Please sign
exactly as your name
appears on this Proxy.
When signing in a
fiduciary capacity, such
as executor,
administrator, trustee,
guardian, etc., please
so indicate. Corporate
and partnership proxies
should be signed by an
authorized person
indicating the person's
title.
Date: ________________________, 1998
__________________________________
__________________________________
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
- --------------------------------------------------------------------------
Please refer to the Proxy Statement discussion on this matter.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said attorneys shall vote in accordance with
their best judgment.
THE BOARDS OF TRUSTEES/DIRECTORS RECOMMEND A VOTE FOR THE FOLLOWING:
1. To act upon a proposal to approve an Agreement and Plan of
Reorganization whereby Calvert National Municipal Intermediate Fund,
a series of the Calvert Municipal Fund, Inc., will (i) acquire all of
the assets of the Calvert Arizona Municipal Intermediate Fund,
Calvert Florida Municipal Intermediate Fund, Calvert Michigan
Municipal Intermediate Fund, Calvert New York Municipal Intermediate
Fund and Calvert Pennsylvania Municipal Intermediate Fund; and (ii)
assume certain identified liabilities of each of the above-named
Funds as substantially discussed in the accompanying Prospectus and
Proxy Statement.
[ ] For [ ] Against [ ] Abstain
2. To transact any other business that may properly come before the
Special Meeting or any adjournment or adjournments thereof.
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, dated as of [DATE], is among
Calvert National Municipal Intermediate Fund ("National Municipal Fund"),
Calvert Arizona Municipal Intermediate Fund, Calvert Florida Municipal
Intermediate Fund, Calvert Michigan Municipal Intermediate Fund, Calvert New
York Municipal Intermediate Fund and Calvert Pennsylvania Municipal
Intermediate Fund (together, the "State Municipal Funds"). The National
Municipal Fund and the State Municipal Funds (with the exception of the
Calvert Florida Municipal Intermediate Fund) are series of the Calvert
Municipal Fund, Inc. while the Calvert Florida Municipal Intermediate Fund is
a series of First Variable Rate Fund for Government Income (together,
"Calvert").
In consideration of the mutual promises contained in this Agreement, the
parties agree as follows:
1. SHAREHOLDER APPROVAL
Approval by Shareholders. A meeting of the shareholders of the State Municipal
Funds shall be called and held for the purpose of acting on and authorizing
the transactions contemplated in this Agreement and Plan of Reorganization
(the "Agreement" or "Plan"). National Municipal Fund shall furnish to the
State Municipal Funds such data and information as shall be reasonably
requested by the State Municipal Funds for inclusion in the information to be
furnished to their shareholders in connection with the meeting.
2. REORGANIZATION
(a) Plan of Reorganization. The State Municipal Funds will convey, transfer,
and deliver to National Municipal Fund all of the then-existing assets of
the State Municipal Funds at the closing provided for in Section 2(b) of
this Agreement (the "Closing"). In consideration thereof, National
Municipal Fund agrees at the Closing:
(i) to assume and pay, to the extent that they exist on or after the
Effective Time of the Reorganization (as defined in Section 2(b)),
all of the State Municipal Funds' obligations and liabilities,
whether absolute, accrued, contingent, or otherwise; and
(ii) to deliver to the State Municipal Funds in exchange for the
assets the number of full and fractional shares of common stock of
National Municipal Fund ("National Municipal Fund Shares") to be
determined as follows: In accordance with Section 3 of this
Agreement, the number of shares shall be determined by dividing the
per share net asset value of the State Municipal Funds Shares
(rounded to the nearest million) by the net asset value per share of
National Municipal Fund (rounded to the nearest million) and
multiplying the quotient by the number of outstanding shares of the
State Municipal Funds as of the close of business on the closing
date. It is expressly agreed that there will be no sales charge to
State Municipal Funds, or to any of the shareholders of the State
Municipal Funds upon distribution of National Municipal Fund Shares
to them.
(b) Closing and Effective Time of the Reorganization. The Closing shall
occur at the Effective Time of the Reorganization, which shall be either:
(i) the later of receipt of all necessary regulatory approvals and the
final adjournment of the meeting of shareholders of the State
Municipal Funds at which the Plan will be considered, or
(ii) such later date as the parties may mutually agree.
3. VALUATION OF NET ASSETS
(a) The value of State Municipal Funds' net assets to be transferred to
National Municipal Fund under this Agreement shall be computed as of the
close of business on the business day immediately preceding the Closing
Date (hereinafter the "Valuation Date") using the valuation procedures as
set forth in National Municipal Fund 's prospectus.
(b) The net asset value per share of National Municipal Fund Shares for
purposes of Section 2 of this Agreement shall be determined as of the
close of business on the Valuation Date by National Municipal Fund 's
Controller using the same valuation procedures as set forth in National
Municipal Fund 's prospectus.
(c) A copy of the computation showing in reasonable detail the valuation of
State Municipal Funds' net assets to be transferred to National Municipal
Fund pursuant to paragraph 2 of this Agreement, certified by the
Controller of State Municipal Funds, shall be furnished by the State
Municipal Funds to National Municipal Fund at the Closing. A copy of the
computation showing in reasonable detail the determination of the net
asset value per share of National Municipal Fund Shares pursuant to
paragraph 2 of this Agreement, certified by the Controller of National
Municipal Fund, shall be furnished by National Municipal Fund to the
State Municipal Funds at the Closing.
4. LIQUIDATION AND DISSOLUTION
(a) As soon as practicable after the Closing Date, the State Municipal Funds
will distribute pro rata to the State Municipal Funds' shareholders of
record as of the close of business on the Closing Date the shares of
National Municipal Fund received by the State Municipal Funds pursuant to
this Section. Such liquidation and distribution will be accompanied by
the establishment of shareholder accounts on the share records of
National Municipal Fund in the names of each such shareholder of State
Municipal Funds, representing the respective pro rata number of full
shares and fractional interests in shares of National Municipal Fund due
to each. No such shareholder accounts shall be established by National
Municipal Fund or its transfer agent for National Municipal Fund except
pursuant to written instructions from State Municipal Funds, and the
State Municipal Funds agree to provide on the Closing Date instructions
to transfer to a shareholder account for each former the State Municipal
Funds shareholder a pro rata share of the number of shares of National
Municipal Fund received pursuant to Section 2(a) of this Agreement.
(b) Promptly after the distribution described in Section 4(a) above,
appropriate notification will be mailed by National Municipal Fund or its
transfer agent to each shareholder of the State Municipal Funds receiving
such distribution of shares of National Municipal Fund informing such
shareholder of the number of such shares distributed to such shareholder
and confirming the registration thereof in such shareholder's name.
(c) Following the Closing Date and until surrendered, each outstanding share
certificate representing shares of the State Municipal Funds shall be
deemed for all purposes to evidence ownership of shares of National
Municipal Fund that the holder is entitled to receive in exchange for the
certificate. The shares of National Municipal Fund that the holder is
entitled to receive with respect to State Municipal Funds' share
certificates not yet surrendered will be held by National Municipal Fund
's transfer agent on behalf of the shareholder, but may not be
transferred or redeemed until surrender of State Municipal Funds' share
certificates in proper form for transfer to National Municipal Fund 's
transfer agent or, in lieu thereof, the posting of a lost certificate
bond or other surety instrument deemed acceptable to National Municipal
Fund 's transfer agent. All of National Municipal Fund 's distributions
attributable to the shares represented by the share certificates of the
State Municipal Funds retained by shareholders will be paid to the
shareholder in cash or invested in additional shares of National
Municipal Fund at the net asset value in effect on the respective payment
dates in accordance with instructions previously given by the shareholder
to State Municipal Funds' transfer agent.
Share certificates representing holdings of shares of National Municipal
Fund shall not be issued unless requested by the shareholder and, if such
a request is made, share certificates of National Municipal Fund will be
issued only for full shares of National Municipal Fund and any fractional
interests in shares shall be credited in the shareholder's account with
National Municipal Fund.
(d) As promptly as is practicable after the liquidation of State Municipal
Funds, and in no event later than 12 months from the date of this
Agreement, the State Municipal Funds shall be terminated pursuant to the
provisions of the Plan and Calvert's Articles of Incorporation.
(e) Immediately after the Closing Date, the share transfer books of the
State Municipal Funds shall be closed and no transfer of shares shall
thereafter be made on those books.
5. ARTICLES OF INCORPORATION AND BY-LAWS
(a) Articles of Incorporation. The Articles of Incorporation of Calvert,
which governs its series National Municipal Fund, as in effect
immediately prior to the Effective Time of the Reorganization shall
continue to be the Articles of Incorporation until amended as provided by
law.
(b) By-laws. The By-laws of Calvert, which govern its series National
Municipal Fund, in effect at the Effective Time of the Reorganization
shall continue to be the By-laws until the same shall thereafter be
altered, amended, or repealed in accordance with the Trust Indenture or
said By-laws.
6. REPRESENTATIONS AND WARRANTIES OF NATIONAL MUNICIPAL FUND
(a) Organization, Existence, etc. National Municipal Fund is a duly
organized series of Calvert, validly existing and in good standing under
the laws of the State of Maryland, and has the power to carry on its
business as it is now being conducted. Currently, National Municipal Fund
is not qualified to do business as a foreign corporation under the laws
of any jurisdiction. National Municipal Fund has all necessary federal,
state and local authorization to own all of its properties and assets and
to carry on its business as now being conducted.
(b) Registration as Investment Company. Calvert, of which National Municipal
Fund is a series, is registered under the Investment Company Act of 1940
(the "Act") as an open-end nondiversified management investment company.
Its registration has not been revoked or rescinded and is in full force
and effect.
(c) Capitalization. National Municipal Fund has an unlimited number of
shares of beneficial interest, no par value, of which as of [DATE], [#]
shares were outstanding, and no shares were held in the treasury of
National Municipal Fund. All of the outstanding shares of National
Municipal Fund have been duly authorized and are validly issued, fully
paid, and non-assessable. Since National Municipal Fund is a series of an
open-end investment company engaged in the continuous offering and
redemption of its shares, the number of outstanding shares may change
prior to the Effective Time of the Reorganization.
(d) Financial Statements. The financial statements of National Municipal
Fund for the year ended December 31, 1997 ("National Municipal Fund
Financial Statements"), previously delivered to State Municipal Funds,
fairly present the financial position of National Municipal Fund as of
December 31, 1997 and the results of its operations and changes in its
net assets for the year then ended.
(e) Shares to be Issued Upon Reorganization. National Municipal Fund Shares
to be issued in connection with the Reorganization have been duly
authorized and upon consummation of the Reorganization will be validly
issued, fully paid and non-assessable.
(f) Authority Relative to this Agreement. Calvert has the power to enter
into the Plan on behalf of its series National Municipal Fund and to
carry out its obligations under this Agreement. The execution and
delivery of the Plan and the consummation of the transactions
contemplated have been duly authorized by the Boards of
Trustees/Directors of Calvert and no other proceedings by Calvert are
necessary to authorize its officers to effectuate the Plan and the
transactions contemplated. National Municipal Fund is not a party to or
obligated under any charter, by-law, indenture, or contract provision or
any other commitment or obligation, or subject to any order or decree
which would be violated by its executing and carrying out the Plan.
(g) Liabilities. There are no liabilities of Calvert on behalf of its series
National Municipal Fund, whether or not determined or determinable, other
than liabilities disclosed or provided for in National Municipal Fund
Financial Statements and liabilities incurred in the ordinary course of
business subsequent to December 31, 1997 or otherwise previously
disclosed to State Municipal Funds, none of which has been materially
adverse to the business, assets or results of operations of National
Municipal Fund.
(h) Litigation. To the knowledge of National Municipal Fund there are no
claims, actions, suits, or proceedings, pending or threatened, which
would adversely affect National Municipal Fund or its assets or business,
or which would prevent or hinder consummation of the transactions
contemplated by this Agreement.
(i) Contracts. Except for contracts and agreements previously disclosed to
the State Municipal Funds under which no default exists, National
Municipal Fund is not a party to or subject to any material contract,
debt instrument, plan, lease, franchise, license, or permit of any kind
or nature whatsoever.
(j) Taxes. The federal income tax returns of National Municipal Fund have
been filed for all taxable years to and including December 31, 1997, and
all taxes payable pursuant to such returns have been paid. National
Municipal Fund has qualified as a regulated investment company under the
Internal Revenue Code in respect to each taxable year of National
Municipal Fund since commencement of its operations.
(k) Registration Statement. National Municipal Fund shall have filed with
the Securities and Exchange Commission (the "Commission") a Registration
Statement under the Securities Act of 1933 ("Securities Act") relating to
the shares of capital stock of National Municipal Fund issuable under
this Agreement. At the time the Registration Statement becomes effective,
the Registration Statement:
(i) will comply in all material respects with the provisions of the
Securities Act and the rules and regulations of the Commission
thereunder (the "Regulations"), and
(ii) will not contain an untrue statement of material fact or
omit to state a material act required to be stated therein or
necessary to make the Statements therein not misleading.
Further, at the time the Registration Statement becomes effective, at the time
of the shareholders' meeting referred to in Section 1, and at the Effective
Time of the Reorganization, the Prospectus and Statement of Additional
Information included therein, as amended or supplemented by any amendments or
supplements filed by National Municipal Fund, will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the Statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that none of the
representations and warranties in this subsection shall apply to statements in
or omissions from the Registration Statement or Prospectus and Statement of
Additional Information made in reliance upon and in conformity with
information furnished by the State Municipal Funds for use in the Registration
Statement or Prospectus and Statement of Additional Information as provided in
Section 7(k).
7. REPRESENTATIONS AND WARRANTIES OF STATE MUNICIPAL FUNDS
(a) Organization, Existence, etc. The State Municipal Funds (with the
exception of the Calvert Florida Municipal Intermediate Fund) are duly
organized series of Calvert, validly existing and in good standing under
the laws of the State of Maryland, and has power to carry on their
business as it is now being conducted. The Calvert Florida Municipal
Intermediate Fund is a duly organized series of Calvert, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has power to carry on its business as it is now being conducted.
Currently, the State Municipal Funds are not qualified to do business as
a foreign corporation under the laws of any jurisdiction. The State
Municipal Funds have all necessary federal, state and local authorization
to own all of their properties and assets and to carry on their business
as now being conducted.
(b) Registration as Investment Company. Calvert, of which the State
Municipal Funds are series, is registered under the Act as an open-end
nondiversified management investment company. Its registration has not
been revoked or rescinded and is in full force and effect.
(c) Capitalization. The State Municipal Funds have an unlimited number of
shares of beneficial interest, no par value, of which as of [DATE], [#]
shares were outstanding, and no shares were held in the treasury of State
Municipal Funds. All of the outstanding shares of the State Municipal
Funds have been duly authorized and are validly issued, fully paid, and
non-assessable. Since the State Municipal Funds are series of open-end
investment companies engaged in the continuous offering and redemption of
their shares, the number of outstanding shares of the State Municipal
Funds may change prior to the Effective Date of the Reorganization.
(d) Financial Statements. The financial statements of the State Municipal
Funds for the year ended December 31, 1997 ("the State Municipal Funds
Financial Statements"), previously delivered to National Municipal Fund,
fairly present the financial position of the State Municipal Funds as of
December 31, 1997 and the results of their operations and changes in
their net assets for the year then ended.
(e) Authority Relative to the Plan. Calvert has the power to enter into the
Plan on behalf of the State Municipal Funds and to carry out their
obligations under this Agreement. The execution and delivery of the Plan
and the consummation of the transactions contemplated have been duly
authorized by the Directors of Calvert and, except for approval by the
holders of their capital stock, no other proceedings by Calvert are
necessary to authorize their officers to effectuate the Plan and the
transactions contemplated. the State Municipal Funds are not a party to
or obligated under any charter, by-law, indenture, or contract provision
or any other commitment or obligation, or subject to any order or decree,
which would be violated by their executing and carrying out the Plan.
(f) Liabilities. There are no liabilities of the State Municipal Funds
whether or not determined or determinable, other than liabilities
disclosed or provided for in the State Municipal Funds Financial
Statements and liabilities incurred in the ordinary course of business
subsequent to December 31, 1997 or otherwise previously disclosed to
National Municipal Fund, none of which has been materially adverse to the
business, assets, or results of operations of State Municipal Funds.
(g) Litigation. To the knowledge of the State Municipal Funds, there are no
claims, actions, suits, or proceedings, pending or threatened, which
would adversely affect the State Municipal Funds or their assets or
business, or which would prevent or hinder consummation of the
transactions contemplated by this Agreement.
(h) Contracts. Except for contracts and agreements previously disclosed to
National Municipal Fund under which no default exists, Calvert, on behalf
of the State Municipal Funds, is not a party to or subject to any
material contract, debt instrument, plan, lease, franchise, license, or
permit of any kind or nature whatsoever.
(i) Taxes. The federal income tax returns of the State Municipal Funds have
been filed for all taxable years to and including the taxable year ended
December 31, 1997 and all taxes payable pursuant to such returns have
been paid. The State Municipal Funds have qualified as a regulated
investment company under the Internal Revenue Code with respect to each
past taxable year of the State Municipal Funds since commencement of
their operations.
(j) Portfolio Securities. All securities to be listed in the schedule of
investments of the State Municipal Funds as of the Effective Time of the
Reorganization will be owned by Calvert on behalf of the State Municipal
Funds free and clear of any liens, claims, charges, options, and
encumbrances, except as indicated in the schedule. Except as so
indicated, none of the securities is, or after the Reorganization as
contemplated by this Agreement will be, subject to any legal or
contractual restrictions on disposition (including restrictions as to the
public offering or sale of the securities under the Securities Act), and
all the securities are or will be readily marketable.
(k) Registration Statement. The State Municipal Funds will cooperate with
National Municipal Fund in connection with the Registration Statement
referred to in Section 6(k) of this Agreement, and will furnish to
National Municipal Fund the information relating to the State Municipal
Funds required by the Securities Act and its Regulations to be set forth
in the Registration Statement (including the Prospectus and Statement of
Additional Information). At the time the Registration Statement becomes
effective, the Registration Statement, insofar as it relates to State
Municipal Funds:
(i) will comply in all material respects with the provisions of the
Securities Act and its regulations, and
(ii) will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the Statements therein not misleading.
Further, at the time the Registration Statement becomes effective,
at the time of the shareholders' meeting referred to in Section I and at the
Effective Time of the Reorganization, the Prospectus and Statement of
Additional Information, as amended or supplemented by any amendments or
supplements filed by National Municipal Fund, insofar as it relates to State
Municipal Funds, will not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the Statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this subsection
shall apply only to statements in or omissions from the Registration Statement
or Prospectus and Statement of Additional Information made in reliance upon
and in conformity with information furnished by the State Municipal Funds for
use in the Registration Statement or Prospectus and Statement of Additional
Information as provided in this Section 7(k).
8. CONDITIONS TO OBLIGATIONS OF STATE MUNICIPAL FUNDS
The obligations of the State Municipal Funds under this Agreement with respect
to the consummation of the Reorganization are subject to the satisfaction of
the following conditions:
(a) Shareholder Approval. The Plan shall have been approved by the
affirmative vote of the holders of a majority of the outstanding shares
of capital stock of State Municipal Funds.
(b) Representations, Warranties and, Agreements. As of the Effective Time of
the Reorganization, National Municipal Fund shall have complied with each
of its responsibilities under this Agreement, each of the representations
and warranties contained in this Agreement shall be true in all material
respects, and there shall have been no material adverse change in the
financial condition, results of operations, business, properties, or
assets of National Municipal Fund since December 31, 1997. As of the
Effective Time of the Reorganization, the State Municipal Funds shall
have received a certificate from National Municipal Fund satisfactory in
form and substance to the State Municipal Funds indicating that it has
met the terms stated in this Section.
(c) Regulatory Approval. The Registration Statement referred to in Section
6(k) shall have been declared effective by the Commission and no stop
orders under the Securities Act pertaining thereto shall have been
issued; all necessary orders of exemption under the Act with respect to
the transactions contemplated by this Agreement shall have been granted
by the Commission; and all approvals, registrations, and exemptions under
federal and state laws considered to be necessary shall have been
obtained.
(d) Tax Opinion. The State Municipal Funds shall have received the opinion
of counsel, dated the Effective Time of the Reorganization, addressed to
and in form and substance satisfactory to State Municipal Funds, as to
certain of the federal income tax consequences of the Reorganization
under the Internal Revenue Code to the State Municipal Funds and their
shareholders. For purposes of rendering its opinion, counsel may rely
exclusively and without independent verification, as to factual matters,
on the Statements made in the Plan, the proxy statement which will be
distributed to the shareholders of the State Municipal Funds in
connection with the Reorganization, and on such other written
representations as the State Municipal Funds and National Municipal Fund,
respectively, will have verified as of the Effective Time of the
Reorganization. The opinion of counsel will be to the effect that, based
on the facts and assumptions stated therein, for federal income tax
purposes:
(i) neither the State Municipal Funds nor National Municipal Fund
will recognize any gain or loss upon the transfer of the assets
of the State Municipal Funds to and the assumption of their
liabilities by National Municipal Fund in exchange for National
Municipal Fund Shares and upon the distribution (whether actual
or constructive) of National Municipal Fund Shares to its
shareholders in exchange for their shares of capital stock of
State Municipal Funds;
(ii) the shareholders of the State Municipal Funds who receive
National Municipal Fund Shares pursuant to the Reorganization
will not recognize any gain or loss upon the exchange (whether
actual or constructive) of their shares of capital stock of the
State Municipal Funds for National Municipal Fund Shares
(including any fractional share interests they are deemed to
have received) pursuant to the Reorganization;
(iii) the basis of National Municipal Fund Shares received by
State Municipal Funds' shareholders will be the same as the
basis of the shares of capital stock of the State Municipal
Funds surrendered in the exchange; and
(iv) the basis of the State Municipal Funds' assets acquired by
National Municipal Fund will be the same as the basis of such
assets to the State Municipal Funds immediately prior to the
Reorganization.
9. CONDITIONS TO OBLIGATIONS OF NATIONAL MUNICIPAL FUND
The obligations of National Municipal Fund under this Agreement with respect
to the consummation of the Reorganization are subject to the satisfaction of
the following conditions:
(a) Representations, Warranties, and Agreements. As of the Effective Time of
the Reorganization, the State Municipal Funds shall have complied with
each of their obligations under this Agreement, each of the
representations and warranties contained in this Agreement shall be true
in all material respects, and there shall have been no material adverse
change in the financial condition, results of operations, business,
properties or assets of the State Municipal Funds since December 31,
1997. National Municipal Fund shall have received a certificate from the
State Municipal Funds satisfactory in form and substance to National
Municipal Fund indicating that they have met the terms stated in this
Section.
(b) Regulatory Approval. All necessary orders of exemption under the Act
with respect to the transactions contemplated by this Agreement shall
have been granted by the Commission, and all approvals, registrations,
and exemptions under state securities laws considered to be necessary
shall have been obtained.
(c) Tax Opinion. National Municipal Fund shall have received the opinion of
counsel, dated the Effective Time of the Reorganization, addressed to and
in form and substance satisfactory to National Municipal Fund, as to
certain of the federal income tax consequences of the Reorganization
under the Internal Revenue Code to the State Municipal Funds and the
shareholders of State Municipal Funds. For purposes of rendering its
opinion, counsel may rely exclusively and without independent
verification, as to factual matters, on the Statements made in the Plan,
the proxy statement which will be distributed to the shareholders of the
State Municipal Funds in connection with the Reorganization, and on such
other written representations as the State Municipal Funds and National
Municipal Fund, respectively, will have verified as of the Effective Time
of the Reorganization. The opinion of counsel will be to the effect that,
based on the facts and assumptions stated therein, for federal income tax
purposes:
(i) neither the State Municipal Funds nor National Municipal Fund will
recognize any gain or loss upon the transfer of the assets of the
State Municipal Funds to, and the assumption of their liabilities by,
National Municipal Fund in exchange for National Municipal Fund
Shares and upon the distribution (whether actual or constructive) of
National Municipal Fund Shares to its shareholders in exchange for
their shares of beneficial interest of State Municipal Funds;
(ii) the shareholders of the State Municipal Funds who receive National
Municipal Fund Shares pursuant to the Reorganization will not
recognize any gain or loss upon the exchange (whether actual or
constructive) of their shares of capital stock of the State Municipal
Funds for National Municipal Fund Shares (including any fractional
share interests they are deemed to have received) pursuant to the
Reorganization;
(iii) the basis of National Municipal Fund Shares received by
State Municipal Funds' shareholders will be the same as the basis of
the shares of capital stock of the State Municipal Funds surrendered
in the exchange; and
(iv) the basis of the State Municipal Funds assets acquired by National
Municipal Fund will be the same as the basis of such assets to the
State Municipal Funds immediately prior to the Reorganization.
10. AMENDMENTS, TERMINATIONS, NON-SURVIVAL OF COVENANTS, WARRANTIES
AND REPRESENTATIONS
(a) The parties hereto may, by agreement in writing authorized by the Boards
of Trustees/Directors of Calvert, amend the Plan at any time before or
after approval of the Plan by shareholders of State Municipal Funds, but
after such approval, no amendment shall be made that substantially
changes the terms of this Agreement.
(b) At any time prior to the Effective Time of the Reorganization, any of
the parties may by written instrument signed by it: (i) waive any
inaccuracies in the representations and warranties made pursuant to this
Agreement, and (ii) waive compliance with any of the covenants or
conditions made for its benefit pursuant to this Agreement.
(c) The State Municipal Funds may terminate the Plan at any time prior to
the Effective Time of the Reorganization by notice to National Municipal
Fund if: (i) a material condition to their performance under this
Agreement or a material covenant of National Municipal Fund contained in
this Agreement is not fulfilled on or before the date specified for the
fulfillment thereof, or (ii) a material default or material breach of the
Plan is made by National Municipal Fund.
(d) National Municipal Fund may terminate the Plan at any time prior to the
Effective Time of the Reorganization by notice to the State Municipal
Funds if: (i) a material condition to its performance under this
Agreement or a material covenant of the State Municipal Funds contained
in this Agreement is not fulfilled on or before the date specified for
the fulfillment thereof, or (ii) a material default or material breach of
the Plan is made by State Municipal Funds.
(e) The Plan may be terminated by either party at any time prior to the
Effective Time of the Reorganization upon notice to the other party,
whether before or after approval by the shareholders of State Municipal
Funds, without liability on the part of either party hereto or their
respective trustees, officers, or shareholders, and shall be terminated
without liability as of the close of business on December 31, 1997 if the
Effective Time of the Reorganization is not on or prior to such date.
(f) No representations, warranties, or covenants in or pursuant to the Plan
shall survive the Reorganization.
11. EXPENSES
The State Municipal Funds and National Municipal Fund will bear their own
expenses incurred in connection with this Reorganization.
12. GENERAL
This Plan supersedes all prior agreements between the parties (written or
oral), is intended as a complete and exclusive statement of the terms of the
Plan between the parties and may not be changed or terminated orally. The Plan
may be executed in one or more counterparts, all of which shall be considered
one and the same agreement, and shall become effective when one or more
counterparts have been executed by each party and delivered to each of the
parties hereto. The headings contained in the Plan are for reference purposes
only and shall not affect in any way the meaning or interpretation of the
Plan. Nothing in the Plan, expressed or implied, is intended to confer upon
any other person any rights or remedies by reason of the Plan.
IN WITNESS WHEREOF, the State Municipal Funds and National Municipal Fund have
caused the Plan to be executed on their behalf by their Chairman, President,
or a Vice President, and their seals to be affixed hereto and attested by
their respective Secretary or Assistant Secretary, all as of the day and year
first above written, and to be delivered as required.
(SEAL) ARIZONA MUNICIPAL INTERMEDIATE FUND
Attest:
By: _________________________ By: _______________________________
Barbara J. Krumsiek, President
<PAGE>
(SEAL) FLORIDA MUNICIPAL INTERMEDIATE FUND
By: _________________________ By: _______________________________
Barbara J. Krumsiek, President
(SEAL) MICHIGAN MUNICIPAL INTERMEDIATE
FUND
By: _________________________ By: _______________________________
Barbara J. Krumsiek, President
(SEAL) NEW YORK MUNICIPAL INTERMEDIATE
FUND
By: _________________________ By: _______________________________
Barbara J. Krumsiek, President
(SEAL) PENNSYLVANIA MUNICIPAL INTERMEDIATE
FUND
By: _________________________ By: _______________________________
Barbara J. Krumsiek, President
(SEAL) NATIONAL MUNICIPAL INTERMEDIATE
FUND
By: _________________________ By: _______________________________
William M. Tartikoff
Senior Vice President
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
PRINCIPAL AMOUNT VALUE
Municipal Obligations - 98.5%
Arizona - 5.0%
Apache County IDA VRDN, 3.80%, 12/15/18, LOC: Bank of New York $80,000 $80,000
Arizona State Transportation Board Highway Revenue Bonds:
6.00%, 7/1/08 200,000 226,318
5.00%, 7/1/09 150,000 156,676
7.00%, 7/1/09, (Pre-refunded 7/1/00 @ 101) 75,000 80,982
Casa Grande Excise Tax Revenue Bonds, 5.70%, 4/1/06, FGIC Insured 100,000 107,623
Cochise County School District GO Bonds, 7.50%, 7/1/09, FGIC Insured 100,000 126,601
Glendale GO Bonds, 5.15%, 7/1/03, FGIC Insured 100,000 104,823
Glendale IDA Revenue VRDN, 4.20%, 1/1/20, LOC: Sumitomo Bank 100,000 100,000
Maricopa County Creighton School District #14 GO Bonds, 6.90%, 7/1/03, FGIC Insured 50,000 54,020
Maricopa County School District #6 GO Bonds, 6.75%, 7/1/02, AMBAC Insured 200,000 221,752
Maricopa County GO Bonds, Series A, 5.80%, 7/1/04 150,000 162,793
Maricopa County Glendale School District #40 GO Bonds, 6.30%, 7/1/03, FGIC Insured,
(Pre-refunded 7/1/01@101) 50,000 56,673
Maricopa County Peoria School District #11 GO Bonds, 7.50%, 7/1/07, AMBAC Insured 100,000 123,947
Maricopa County School District GO Bonds, 7.50%, 7/1/07, AMBAC Insured 1,000,000 1,239,470
Maricopa County Tempe Elementary School District #3 GO Capital Appreciation Bonds,
Zero Coupon, 7/1/04, AMBAC Insured 105,000 78,976
Maricopa County Tolleson School District #214 GO Bonds, 5.35%, 7/1/03, FGIC Insured 70,000 72,590
Mesa GO Bonds, 5.70%, 7/1/03, FGIC Insured 25,000 26,875
Peoria Municipal Development Authority Revenue Bonds, 7.00%, 7/1/00, AMBAC Insured 95,000 101,857
Phoenix Street and Highway User Revenue Bonds, 6.10%, 7/1/00, MBIA Insured 50,000 52,547
Pima County GO Bonds, 6.00%, 7/1/06, MBIA Insured 245,000 274,392
Prescott Valley Property Corp. Municipal Facilities Revenue Bonds, 5.55%, 1/1/06,
FGIC Insured 125,000 134,580
Scottsdale GO Bonds, Series D, 6.50%, 7/1/01 120,000 129,789
Tucson Street and Highway Revenue Bonds, Series A, 7.00%, 7/1/11, MBIA Insured 100,000 123,144
California - 11.4%
Los Angeles MFH Revenue Bonds, 5.85%, 12/1/27 1,625,000 1,739,757
Orange County Local Transportation Authority Sales Tax Revenue Bonds, 6.00%, 2/15/09 2,000,000 2,256,400
Regents of the University of California, Los Angeles Lease Revenue Bonds, 6.00%, 5/15/02 633,066 666,176
San Francisco International Airport Series-2 #5 Municipal Transportation Revenue Bonds:
5.90%, 5/1/05, FGIC Insured 500,000 546,870
6.00%, 5/1/06, FGIC Insured 750,000 825,285
Santa Clara Financing Authority Lease Revenue Bonds, 6.00%, 11/15/12, AMBAC Insured 2,000,000 2,248,360
Tahoe City Public Utility District COP, Series B, 6.30%, 6/1/04 400,000 438,092
Colorado - 1.6%
Denver City and County Airport Revenue Bonds, Series A, 7.10%, 11/15/01 1,100,000 1,204,445
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Connecticut - 1.5%
Connecticut Special Tax Obligation Revenue Bonds, Transportation Infrastructure
Project, 6.00%, 9/1/06 1,000,000 1,118,550
Florida - 13.0%
Boca Raton Beach Acquisition Revenue Bonds, 4.60%, 1/1/05, MBIA Insured 150,000 153,150
Brevard County Sales Tax Revenue Bonds, 5.40%, 12/1/06, MBIA Insured 195,000 208,944
Brevard County School Board COP, 5.40%, 7/1/10, AMBAC Insured 410,000 442,541
Broward County School District GO Bonds, 7.20%, 2/15/00 100,000 102,401
Broward County Solid Waste System Revenue Bonds, 5.80%, 7/1/07, MBIA Insured 150,000 162,460
City of Miami GO Bonds, 5.90%, 12/1/06, FGIC Insured 260,000 289,471
Dade County Aviation Revenue Bonds, 5.60%, 10/1/05, AMBAC Insured 150,000 163,086
Dade County Educational Facilities Authority Revenue Bonds, 6.00%, 4/1/08, MBIA Insured 1,300,000 1,464,879
Dade County MFH Revenue Bonds, 5.90%, 6/1/26 1,500,000 1,592,265
Duval County MFH Revenue VRDN, 4.75%, 7/1/25, LOC: Household Financial Corp. 550,000 550,000
East County Water Control District Water Revenue Bonds, Series 1994, 5.45%, 11/1/02,
Asset Guaranty Insured 150,000 157,914
Florida Board of Education GO Bonds, 5.00%, 6/10/10 350,000 358,729
Florida Board of Regents Parking System Revenue Bonds, 5.00%, 7/1/08, FSA Insured 175,000 181,249
Florida Department of Transportation Alligator Alley Revenue Bonds, 6.25%, 7/1/07,
FGIC Insured 300,000 343,218
Florida Department of Transportation GO Bonds, 5.00%, 7/1/07 250,000 261,545
Florida State MFH Revenue Bonds, Cypress Lake, 5.75%, 12/1/07, LOC: Heller Financial 300,000 307,584
Hillsborough County Port District Special Refunding Revenue Bonds, 5.75%, 6/1/13,
FSA Insured 500,000 533,285
Hillsborough County Solid Waste Revenue Bonds, 5.40%, 10/1/05, MBIA Insured 150,000 160,647
Hollywood Water and Sewer Revenue Bonds, 6.75%, 10/1/11, FGIC Insured (Prerefunded
10/1/01 @ 102) 125,000 138,727
Jacksonville Electric Authority Revenue Bonds, 5.00%, 10/1/10, FGIC Insured 300,000 307,260
Jacksonville Excise Tax Revenue Bonds, 6.25%, 10/1/05, AMBAC Insured 100,000 109,606
Jacksonville Water and Sewer Revenue Bonds, 5.20%, 10/1/02, MBIA Insured 100,000 104,693
Lee County Transportation Facilities Revenue Bonds, 5.625%, 10/1/08, MBIA Insured 150,000 163,464
Palm Beach County GO Bonds, 6.75%, 7/1/11 135,000 163,340
Palm Beach Housing Finance Revenue VRDN, 5.525%, 3/1/22, INSUR: Firemans Insurance Co. 420,000 420,000
Pinellas County Resource Recovery Revenue Bonds, 5.125%, 10/1/04 350,000 364,654
St. Petersburg Professional Sports Facility Revenue Bonds, 5.10%, 10/1/04, MBIA Insured 150,000 157,719
Tallahassee Consolidated Utility System Revenue Bonds, 4.60%, 10/1/02 200,000 204,264
Tampa Capital Improvement Revenue Bonds, 8.375%, 10/1/18, IA: Multi-Bank 200,000 204,988
University South Florida Revenue Bonds, 6.25%, 7/1/05 180,000 202,795
Georgia - 2.3%
Atlanta Airport Authority Facility Revenue Bonds, 6.50%, 1/1/07, AMBAC Insured 1,500,000 1,732,020
Illinois - 1.5%
Chicago Water Revenue Bonds, 6.50%, 11/1/10, FGIC Insured 1,000,000 1,177,210
Indiana - 3.1%
Indianapolis Local Public Improvement Bond Bank Revenue Bonds, 6.75%, 2/1/14 2,000,000 2,398,400
Kentucky - 2.5%
Glasgow Industrial Building Revenue VRDN, 5.95%, 6/1/20, LOC: Bank Tokyo Mitsubishi 1,900,000 1,900,000
Louisiana - 0.5%
Louisiana Public Facility Authority Student Loan Revenue Bonds, 6.50%, 3/1/02 330,000 349,272
Maryland - 6.3%
Cambridge Economic Development Authority Revenue Bonds, Dorchester Hospital, 7.25%,
4/1/04 930,000 1,022,562
Cecil County Health Department COP, 7.875%, 7/1/14 1,200,000 1,300,428
Maryland State Economic Development Authority Revenue Bonds, Series A, 6.375%, 11/1/09,
LOC: First National Bank of Maryland, (Optional Tender 10/31/99 @100) 650,000 655,304
Prince Georges County Economic Development Authority Revenue Bonds, 5.68%, 8/1/11,
LOC: First National Bank of Maryland, (Tender 1/1/01 @100) 1,797,800 1,851,123
Massachusetts - 1.4%
Massachusetts Special Obligation Revenue Bonds, 5.50%, 6/1/13 1,000,000 1,072,210
Michigan - 9.6%
Cedar Springs Public School District GO Bonds, 7.65%, 5/1/03 150,000 174,174
Clarkston Community School GO Bonds, 5.25%, 5/1/07, FGIC Insured 250,000 263,605
Detroit Water Supply System Revenue Bonds, 5.30%, 7/1/09, MBIA Insured 175,000 186,006
Detroit Water Supply System Revenue Bonds, 6.00%, 7/1/14 1,000,000 1,121,070
Greenville Public School District GO Bonds, 5.75%, 5/1/06, MBIA Insured 250,000 270,835
Jenison Public School GO Bonds, 5.40%, 5/1/08, FGIC Insured 250,000 266,427
Michigan Higher Education Facility Authority Revenue Bonds:
6.00%, 11/1/03 1,545,000 1,650,384
7.00%, 11/1/05 610,000 712,132
Michigan State Housing Development Authority Revenue VRDN, River Place Plaza Apts.,
5.00%, 10/1/11 455,000 455,946
Michigan State Building Authority Facilities Revenue Bonds, Series II, 6.25%, 10/1/01,
AMBAC Insured 250,000 268,937
Milan Area Schools GO Bonds, 5.00%, 5/1/13 300,000 300,528
Morely Stanwood Community School GO Bonds, 5.15%, 5/1/07, FGIC Insured 100,000 104,823
Mount Pleasant School District GO Bonds, 5.65%, 5/1/05 250,000 271,978
Oakland County Economic Development Corp. Limited Obligation Revenue Bonds, 5.00%,
6/1/07, LOC: First America Bank 250,000 255,070
Oakland County Economic Development Corp. Limited Obligation Revenue Bonds, Cranbrook Educational Community, 6.375%,
11/1/14 500,000 553,350
Southfield Economic Development Authority Corp. VRDN, 5.95%, 5/15/11, INSUR: Fireman's
Insurance Co. 50,000 50,000
University of Michigan Revenue Bonds, 5.60%, 11/15/11 235,000 251,548
Zeeland Public Schools GO Bonds, 5.70%, 5/1/07, MBIA Insured 205,000 224,015
New Mexico - 0.0%
New Mexico Educational Assistance Foundation Student Loan Revenue Bonds, 6.30%, 12/1/02 40,000 42,062
New Jersey - 3.1%
New Jersey Transportation Authority Revenue Bonds, 6.50%, 6/15/11, MBIA Insured 2,000,000 2,358,140
New York - 11.7%
Buffalo GO Bonds, Series B, 5.20%, 2/1/10, AMBAC Insured 300,000 312,594
Dundee Central School District GO Bonds, 5.70%, 6/15/07, AMBAC Insured 150,000 163,206
Glen Cove GO Bonds:
5.50%, 1/15/03 225,000 237,424
5.60%, 1/15/04 215,000 229,015
5.70%, 1/15/05 215,000 231,084
Lancaster School District GO Bonds, 5.125%, 6/1/14, FGIC Insured 300,000 303,216
Metropolitan Transit Authority Commuter Facility Revenue Bonds, Series A, 5.70%, 7/1/02,
MBIA Insured 180,000 191,345
New York City GO Bonds:
Series D, 5.70%, 8/15/06 200,000 211,064
Series E, 5.75%, 2/15/09 1,000,000 1,051,450
New York City Industrial Development Agency Civil Facility Revenue Bonds, USTA National Tennis Center, 7.75%,
11/15/02, FSA Insured 100,000 115,607
New York State COP, 5.45%, 2/1/00 200,000 205,210
New York State Environmental Pollution Control Revenue Bonds, 5.70%, 1/15/12 500,000 540,305
New York State Dormitory Authority Revenue Bonds, 5.50%, 5/15/07 200,000 214,354
New York State Dormitory Authority Revenue Bonds for City University, 5.625%, 7/1/16 200,000 211,984
New York State GO Bonds, 5.75%, 9/15/01 75,000 79,314
New York State GO Bonds, Series B, 6.25%, 8/15/05 210,000 235,464
New York State Local Assistance Corp. Revenue Bonds, Series E, 6.00%, 4/1/14 100,000 112,458
New York State Local Government Assistance Corp. Revenue Bonds, 6.00%, 4/1/14 1,000,000 1,124,580
New York State Power Authority Revenue Bonds, 6.50%, 1/1/08 100,000 116,226
New York State Thruway Authority Highway Revenue Bonds, Series B, 5.375%, 4/1/02,
FGIC Insured 240,000 251,426
New York State Urban Development Corp. Revenue Bonds, 5.60%, 1/1/07 110,000 116,452
Oneida County GO Bonds, 5.70%, 3/15/01 150,000 156,790
Orange County Industrial Development Agency VRDN, 4.45%, 6/1/98, LOC: Sakura Bank 200,000 200,000
Orange County IDA VRDN, 5.61%, 12/1/05, LOC: Summit Bank 725,000 725,000
Oyster Bay GO Bonds, 5.00%, 2/15/10 500,000 519,345
Suffolk County Industrial Development Agency Bonds, 6.00%, 2/1/08, FGIC Insured 150,000 168,445
Triborough Building and Tunnel Revenue Bonds, Series A, 5.00%, 1/1/07 275,000 286,531
Westchester County GO Bonds, 6.70%, 2/1/01 140,000 151,236
Westchester County Industrial Development Agency Civic Facility Revenue Bonds, 6.25%,
4/1/05 500,000 529,690
Pennsylvania - 7.7%
Allegheny County Airport Revenue Bonds, 5.75%, 1/1/13, MBIA Insured 300,000 324,207
Allegheny County GO Bonds, Series C-42, 5.00%, 10/1/07 170,000 176,173
Allegheny County Higher Education Building Authority Revenue Bonds, Duquesne University Project, 6.50%, 3/1/10, AMBAC
Insured 100,000 117,442
Allegheny County Higher Education Building Authority Revenue Bonds, Series A, 6.00%,
2/15/08 230,000 250,037
Allegheny County Hospital Development Authority Revenue Bonds, 5.35%, 12/1/15 , MBIA
Insured 200,000 203,518
Bucks County GO Bonds, Series A, 6.00%, 3/1/01 165,000 174,713
Cambria Township Water Authority Industrial User Revenue Bonds, 6.00%, 12/1/12,
LOC: Banque Paribas 250,000 259,565
Central Bucks County School District GO Bonds, 6.40%, 2/1/01 130,000 139,000
Chester County GO Bonds, 5.50%,12/15/07 175,000 185,080
Delaware County Memorial Hospital Revenue Bonds, 5.25%, 8/15/07, MBIA Insured 180,000 190,584
Erie County GO Bonds, Series B, 6.75%, 9/1/16, (Pre-refunded 9/1/01 @100) 90,000 98,036
Jim Thorpe Area School District GO Bonds, 5.05%, 3/15/09, MBIA Insured 210,000 216,785
Latrobe IDA Revenue Bonds, St. Vincent College, 6.40%, 5/1/06 100,000 110,353
Montgomery County Higher Education & Health Authority Revenue Bonds, 5.50%, 10/1/08,
MBIA Insured 220,000 237,054
Montgomery County Industrial Development Revenue VRDN, 4.10%, 12/1/13, LOC: PNC Bank 150,000 150,000
Pennsylvania Infrastructure Investment Authority Revenue Bonds, 5.75%, 9/1/99 75,000 77,135
Pennsylvania Intergovernmental Co-op Revenue Bonds, 5.25%, 6/15/06, FGIC Insured 120,000 124,962
Pennsylvania State GO Bonds, Series I, 5.30%, 5/1/06 100,000 106,249
Pennsylvania State IDA Revenue Bonds, 6.00%, 1/1/05, AMBAC Insured 75,000 82,637
Peters Township School District GO Bonds, 6.00%, 5/15/04, FGIC Insured 65,000 69,160
Philadelphia Airport Revenue Bonds:
5.25%, 6/15/98, FGIC Insured 100,000 100,335
5.75%, 6/15/08, AMBAC Insured 300,000 325,536
Philadelphia Hospitals & Higher Education Facilities Authority Revenue Bonds, 5.85%, 7/1/021,000,000 1,052,780
Philadelphia Hospital and Higher Education Revenue Bonds, Belmont Center, 5.75%, 10/1/07 195,000 208,092
Philadelphia MFH Revenue VRDN, 4.05%, 12/1/09, LOC: Marine Midland Bank 175,000 175,000
Philadelphia Water and Wastewater Revenue Bonds, 5.50%, 6/15/15, FSA Insured 150,000 153,819
Pittsburgh GO Bonds, Series A, 5.70%, 9/1/08, MBIA Insured 100,000 106,519
Pittsburgh Urban Redevelopment Authority Revenue Bonds, 6.00%, 8/1/08 175,000 180,519
Ridley Park Hospital Authority Revenue Bonds, Tayler Hospital, 5.125%, 12/1/98 20,000 20,176
Seneca Valley School District GO Bonds, 5.80%, 2/15/11, FGIC Insured 110,000 118,289
State Public School Building Authority Revenue Bonds, Harrisburg Area Community College,
6.70%, 10/01/00, MBIA Insured 75,000 79,175
Wilkes Barre Area School District GO Bonds, 5.75%, 4/1/06, FGIC Insured 125,000 135,398
South Dakota - 3.1%
Heartland Consumers Power District Revenue Bonds, FSA Insured:
6.00%, 1/1/09 1,125,000 1,265,985
6.00%, 1/1/12 1,000,000 1,122,400
Texas - 4.9%
Harris County GO Bonds, 5.75%, 10/1/14 2,000,000 2,197,380
North Texas Higher Education Student Loan Revenue Bonds, Series B, 5.55%, 4/1/03 1,500,000 1,562,835
Virginia - 6.7%
Arlington County Community Housing Finance Revenue Bonds, 6.00%, 6/1/09 300,000 312,828
Chesapeake IDA Revenue Bonds, 6.00%, 6/1/07, MBIA Insured 1,000,000 1,121,410
Virginia State Housing Development Authority Revenue Bonds:
Series A, 6.90%, 7/1/07 300,000 328,200
Series I, 6.00%, 7/1/03 1,120,000 1,179,875
Virginia College Building Authority Revenue Bonds, Twenty First Century College
Project, 5.00%, 8/1/09 1,000,000 1,033,520
West Point Industrial Development Authority Pollution Control Revenue Bonds, Chesapeake
Corp. Project, 6.375%, 5/1/03
1,200,000 1,206,877
Other - 1.6%
Fort Mojave Indian Tribe of Arizona, California and Nevada Public Facilities
Combined Limited Obligation and Revenue Bonds Adjustable Rate and Tender Series
of 1993, 11.50%, 12/1/18 455,020 455,020
Pitney Bowes Corp. Leasetops VRDN, 4.10%, 4/1/98 700,000 700,000
Puerto Rico Commonwealth Highway and Transportation Revenue Bonds, 5.00%, 7/1/02 105,000 108,546
Total Municipal Obligations (Cost $71,003,238) 75,628,819
</TABLE>
CONTRACTS VALUE
Options Purchased - 0.0%
Put Options on June U.S. Treasury Bond Futures, Expiration 5/15/98,
Strike Price 112 50 19,531
Total Options (Premium $40,340) 19,531
TOTAL INVESTMENTS (Cost $71,043,578) - 98.5% 75,648,350
Other assets and liabilities, net - 1.5% 1,114,448
NET ASSETS - 100% $76,762,798
Abbreviations:
AMBAC - American Municipal Bond Assurance Corp.
COP - Certificates of Participation
FGIC - Financial Guaranty Insurance Company
FSA - Financial Security Advisor
GO - General Obligation
IDA - Industrial Development Authority
MBIA - Municipal Bond Insurance Association
MFH - Multi-Family Housing
VRDN - Variable Rate Damand Notes
Explanation of Guarantees:
GA - Guaranty Agreement
IA - Investment Agreement
INSUR - Insurance
LOC - Letter of Credit
See Notes to Proforma Financial Statements.
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997 (UNAUDITED)
National Arizona
Portfolio Portfolio
ASSETS
Investments in securities, at value -
(Cost $45,165,009, $2,469,050,
$4,778,737, $6,457,905 $4,725,852
and $7,447,025, respectively). $48,297,416 $2,596,958
Cash 62,451 39,442
Receivable for shares sold - -
Interest receivable 758,133 71,804
Other assets 10,368 113
Total assets 49,128,368 2,708,317
LIABILITIES
Payable for securities purchased -
Payable for shares redeemed 133,865 -
Payable to Calvert Asset Management
Co., Inc. 27,033 1,585
Payable to Calvert Administrative
Services Co. 4,171 231
Payable to Calvert Shareholder
Services, Inc. 1,905 156
Accrued expenses and other liabilities 28,030 1,880
Total liabilities 195,004 3,852
Net assets $48,933,364 $2,704,465
<PAGE>
National Arizona
Portfolio Portfolio
NET ASSETS
Paid-in-capital applicable to the
following shares of common
stock, $0.01 par value with
250,000,000 shares
authorized for each portfolio:
National Portfolio , 4,535,479
shares outstanding 46,654,767
Arizona Portfolio, 527,700
shares outstanding $2,595,260
Michigan Portfolio, 994,135
shares outstanding
New York Portfolio, 1,348,661
shares outstanding
Pennsylvania Portfolio, 969,755
shares outstanding
Paid-in-capital applicable to 1,513,922
shares of beneficial interest, unlimited
number of no par shares authorized for
the Florida Portfolio.
Undistributed net investment income 71,587 8,853
Accumulated realized gains (losses)
on investments (925,397) (27,556)
Net unrealized appreciation
(depreciation) on investments 3,132,407 127,908
Net assets $48,933,364 $2,704,465
NET ASSETS $48,933,364 $2,704,465
SHARES OUTSTANDING 4,535,479 527,700
NET ASSET VALUE $10.79 $5.13
MAXIMUM SALES CHARGE 0.31 0.15
OFFERING PRICE $11.10 $5.28
<PAGE>
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997 (UNAUDITED), Cont'd.
Michigan New York
Portfolio Portfolio
ASSETS
Investments in securities, at value -
(Cost $45,165,009, $2,469,050,
$4,778,737, $6,457,90, $4,725,852
and $7,447,025, respectively). $5,143,479 $6,819,865
Cash 5,253 105,535
Receivable for shares sold 13,066 17,011
Interest receivable 51,702 124,480
Other assets 963 719
Total assets 5,214,463 7,067,610
LIABILITIES
Payable for securities purchased - -
Payable for shares redeemed - -
Payable to Calvert Asset Management
Co., Inc. 2,964 3,884
Payable to Calvert Administrative
Services Co. 440 595
Payable to Calvert Shareholder
Services, Inc. 206 348
Accrued expenses and other
liabilities 3,380 4,160
Total liabilities 6,990 8,987
Net assets $5,207,473 $7,058,623
<PAGE>
Michigan New York
Portfolio Portfolio
NET ASSETS
Paid-in-capital applicable to
the following shares of common
stock, $0.01 par value with
250,000,000 shares
authorized for each portfolio:
National Portfolio ,
4,535,479 shares outstanding
Arizona Portfolio, 527,700
shares outstanding
Michigan Portfolio, 994,135
shares outstanding $5,087,601
New York Portfolio, 1,348,661
shares outstanding 6,727,798
Pennsylvania Portfolio, 969,755
shares outstanding
Paid-in-capital applicable to
1,513,922 shares of beneficial
interest, unlimited number of no
par shares authorized for
the Florida Portfolio.
Undistributed net investment income 3,560 8,528
Accumulated realized gains (losses)
on investments (248,430) (39,663)
Net unrealized appreciation
(depreciation) on investments 364,742 361,960
Net assets $5,207,473 $7,058,623
NET ASSETS $5,207,473 $7,058,623
SHARES OUTSTANDING 994,135 1,348,661
NET ASSET VALUE $5.24 $5.23
MAXIMUM SALES CHARGE 0.15 0.15
OFFERING PRICE $5.39 $5.38
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997 (UNAUDITED), Cont'd
Pennsylvania Florida
Portfolio Portfolio
ASSETS
Investments in securities, at value -
(Cost $45,165,009, $2,469,050,
$4,778,737, $6,457,905, $4,725,852
and $7,447,025, respectively). $5,004,094 $7,786,538
Cash 97,758 82,786
Receivable for shares sold - -
Interest receivable 63,968 98,103
Other assets 196 289
Total assets 5,166,016 7,967,716
LIABILITIES
Payable for securities purchased 99,791 162,303
Payable for shares redeemed - -
Payable to Calvert Asset Management
Co., Inc. 2,772 4,160
Payable to Calvert Administrative
Services Co. 422 639
Payable to Calvert Shareholder
Services, Inc. 225 157
Accrued expenses and other liabilities 3,010 1,380
Total liabilities 106,220 168,639
Net assets $5,059,796 $7,799,077
<PAGE>
Pennsylvania Florida
Portfolio Portfolio
NET ASSETS
Paid-in-capital applicable to
the following shares of common
stock, $0.01 par value with
250,000,000 shares
authorized for each portfolio:
National Portfolio , 4,535,479
shares outstanding
Arizona Portfolio, 527,700
shares outstanding
Michigan Portfolio, 994,135
shares outstanding
New York Portfolio, 1,348,661
shares outstanding
Pennsylvania Portfolio, 969,755
shares outstanding 4,825,292
Paid-in-capital applicable to
1,513,922 shares of beneficial
interest, unlimited number of no
par shares authorized for
the Florida Portfolio. 7,620,285
Undistributed net investment income 34,972 5,491
Accumulated realized gains (losses)
on investments (78,710) (166,212)
Net unrealized appreciation
(depreciation) on investments 278,242 339,513
Net assets $5,059,796 $7,799,077
NET ASSETS $5,059,796 $7,799,077
SHARES OUTSTANDING 969,755 1,513,922
NET ASSET VALUE $5.22 $5.15
MAXIMUM SALES CHARGE 0.15 0.15
OFFERING PRICE $5.37 $5.30
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997 (UNAUDITED)
Proforma Proforma
Adjustments Combined
ASSETS
Investments in securities, at value -
(Cost $45,165,009, $2,469,050,
$4,778,737, $6,457,905, $4,725,852
and $7,447,025, respectively). - $75,648,350
Cash - 393,225
Receivable for shares sold - 30,077
Interest receivable - 1,168,190
Other assets - 12,648
Total assets - 77,252,490
LIABILITIES
Payable for securities purchased - 262,094
Payable for shares redeemed - 133,865
Payable to Calvert Asset Management
Co., Inc. - 42,398
Payable to Calvert Administrative
Services Co. - 6,498
Payable to Calvert Shareholder Services, Inc. - 2,997
Accrued expenses and other liabilities - 41,840
Total liabilities - 489,692
Net assets - $76,762,798
NET ASSETS
Paid-in-capital applicable to the
following shares of common
stock, $0.01 par value with
250,000,000 shares
authorized for each portfolio:
National Portfolio , 4,535,479
shares outstanding - $46,654,767
Arizona Portfolio, 527,700
shares outstanding - 2,595,260
Michigan Portfolio, 994,135
shares outstanding - 5,087,601
New York Portfolio, 1,348,661
shares outstanding - 6,727,798
Pennsylvania Portfolio, 969,755
shares outstanding - 4,825,292
Paid-in-capital applicable to
1,513,922 shares of beneficial
interest, unlimited number of
no par shares authorized for
the Florida Portfolio. 7,620,285
Undistributed net investment income - 132,991
Accumulated realized gains (losses)
on investments - (1,485,968)
Net unrealized appreciation
(depreciation) on investments - 4,604,772
Net assets - $76,762,798
<PAGE>
Proforma Proforma
Adjustments Combined
NET ASSETS $76,762,798
SHARES OUTSTANDING (2,775,054) 7,114,598
NET ASSET VALUE $10.79
MAXIMUM SALES CHARGE 0.31
OFFERING PRICE $11.10
(1) The proforma combined shares outstanding consists of 4,535,479 shares
of National Portfolio, 250,890 shares issued to shareholders of Arizona
Portfolio, 482,787 shares issued to shareholders of Michigan Portfolio, 653,707
shares issued to shareholders of New York Portfolio, 469,149 shares issued to
shareholders of Pennsylvania Portfolio and 722,586 shares issued to shareholders
of Florida Portfolio.
(2) The maximum sale charge for the Calvert Municipal Fund is 2.75%
See notes to Proforma Financial Statements.
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
National Arizona
Portfolio Portfolio
NET INVESTMENT INCOME
Investment Income
Interest income $2,680,450 $126,495
Total investment income 2,680,450 126,495
Expenses
Investment advisory fee 285,023 15,607
Transfer agency fee and expenses 24,357 1,650
Directors' fees and expenses 6,389 360
Administrative fees 47,504 2,601
Custodian fees 14,527 5,865
Registration fees 31,941 1,782
Reports to shareholders 17,086 1,951
Professional fees 26,790 1,462
Miscellaneous 5,724 736
Total expenses 459,341 32,014
Fees paid indirectly (14,527) (5,865)
Net expenses 444,814 26,149
NET INVESTMENT INCOME 2,235,636 100,346
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gains (losses) on:
Securities 69,155 (593)
Futures (82,775) (2,075)
(13,620) (2,668)
Change in unrealized appreciation
or depreciation 1,075,751 51,083
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 1,062,131 48,415
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $3,297,767 $148,761
AVERAGE NET ASSETS $47,503,877 $2,601,159
RATIO OF TOTAL EXP TO AVG N/A 0.97% 1.23%
RATIO OF NET EXP TO AVG N/A 0.94% 1.01%
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
Michigan New York
Portfolio Portfolio
NET INVESTMENT INCOME
Investment Income
Interest income $288,081 $346,331
Total investment income 288,081 346,331
Expenses
Investment advisory fee 32,281 39,300
Transfer agency fee and expenses 2,571 4,636
Directors' fees and expenses 734 890
Administrative fees 5,380 6,550
Custodian fees 4,963 7,297
Registration fees 1,356 1,817
Reports to shareholders 2,748 3,308
Professional fees 3,028 3,683
Miscellaneous 930 1,105
Total expenses 53,991 68,586
Fees paid indirectly (4,963) (7,297)
Net expenses 49,028 61,289
NET INVESTMENT INCOME 239,053 285,042
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gains (losses) on:
Securities 7,876 (15,654)
Futures (3,112) (2,075)
4,764 (17,729)
Change in unrealized appreciation
or depreciation 127,486 213,929
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 132,250 196,200
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $371,303 $481,242
AVERAGE NET ASSETS $5,380,241 $6,550,073
RATIO OF TOTAL EXP TO AVG N/A 1.00% 1.05%
RATIO OF NET EXP TO AVG N/A 0.91% 0.94%
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
Pennsylvania Florida
Portfolio Portfolio
NET INVESTMENT INCOME
Investment Income
Interest income $248,644 $343,569
Total investment income 248,644 343,569
Expenses
Investment advisory fee 27,612 40,391
Transfer agency fee and expenses 2,483 1,498
Directors' fees and expenses 582 896
Administrative fees 4,602 6,732
Custodian fees 8,153 6,992
Registration fees 399 179
Reports to shareholders 2,491 1,876
Professional fees 2,590 761
Miscellaneous 774 966
Total expenses 49,686 60,291
Fees paid indirectly (8,153) (6,992)
Net expenses 41,533 53,299
NET INVESTMENT INCOME 207,111 290,270
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gains (losses) on:
Securities 10,066 (12,361)
Futures - -
10,066 (12,361)
Change in unrealized appreciation
or depreciation 108,804 188,130
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 118,870 175,769
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $325,981 $466,039
AVERAGE NET ASSETS $6,731,759
RATIO OF TOTAL EXP TO AVG N/A 1.08% 0.90%
RATIO OF NET EXP TO AVG N/A 0.90% 0.79%
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
PROFORMA STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997 (UNAUDITED)
Proforma Proforma
Adjustments Combined
NET INVESTMENT INCOME
Investment Income
Interest income $4,033,570
Total investment income 4,033,570
Expenses
Investment advisory fee 440,214
Transfer agency fee and expenses - 37,195
Directors' fees and expenses 9,851
Administrative fees 73,369
Custodian fees 47,797
Registration fees 37,474
Reports to shareholders 29,460
Professional fees 38,314
Miscellaneous 10,235
Total expenses 723,909
Fees paid indirectly (47,797)
Net expenses 676,112
NET INVESTMENT INCOME - 3,357,458
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gains (losses) on:
Securities 58,489
Futures (90,037)
(31,548)
Change in unrealized appreciation or depreciation -1,765,183
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS - 1,733,635
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS - $5,091,093
AVERAGE NET ASSETS $73,369,151
RATIO OF TOTAL EXP TO AVG N/A 0.99%
RATIO OF NET EXP TO AVG N/A 0.92%
The proforma combined statements of operations presented above does
not necessarily reflect what the results of operations would
have been if the entities had been merged on January 1, 1997. In
addition, the expenses do not include the cost of merging the funds.
See Notes to Proforma Financial Statements.
<PAGE>
CALVERT MUNICIPAL FUND - NATIONAL MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - ARIZONA MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - MICHIGAN MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - NEW YORK MUNICIPAL INTERMEDIATE PORTFOLIO
CALVERT MUNICIPAL FUND - PENNSYLVANIA MUNICIPAL INTERMEDIATE PORTFOLIO
FIRST VARIABLE RATE FUND - FLORIDA MUNICIPAL INTERMEDIATE PORTFOLIO
NOTES TO PROFORMA FINANCIAL STATEMENTS
December 31, 1997 (UNAUDITED)
General: The proforma schedule of statements of assets and liabilities
gives the effect of the proposed combination of the Funds assuming it occurred
December 31, 1997 and reflects operations as if the merger were consummated on
January 1, 1998. The combination is accounted for as a tax-free merger of
investment companies. The proforma statement of operations presents the
operations of Funds on a combined basis and is presented for information
purposes only: however it is not necessarily representative of what the combined
result of the Funds would have been had the combination occurred at the
beginning of the fiscal year. The combination would be accomplished by an
exchange of shares of five portfolios, four Municipal Intermediate Portfolios of
the Calvert Municipal Fund (Arizona, Michigan, New York, Pennsylvania), and by
an exchange of shares of the Florida Municipal Intermediate Portfolio of the
First Variable Rate Fund, for shares of the National Municipal Intermediate
Portfolio of the Calvert Municipal Fund, at net asset value. Each of the
Portfolios, collectively the "Fund", are registered under the Investment Company
Act of 1940 as open-end management investment companies. The operations of each
Portfolio are accounted for separately. Shares of each Portfolio are sold with a
maximum sales charge of 2.75%.
Security Valuation: Municipal securities are valued utilizing the average bid
prices or at bid prices based on a matrix system (which considers such factors
as security prices, yields, maturities and ratings) furnished by dealers
through an independent pricing service. Securities listed or traded on a
national securities exchange are valued at the last reported sales price.
Other securities and assets for which market quotations
are not available or deemed inappropriate are valued in good faith under
the direction of the Board of Directors.
Security Transactions and Investment Income: Securities transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income, accretion of discount and amortization of premium are
recorded on an accrual basis. Expense Offset Arrangement: The Series
has an arrangement with its custodian bank whereby the custodian's
fees are paid indirectly by credits earned on the Series' cash on deposit with
the bank. Such deposit arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Series intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
NOTE B - RELATED PARTY TRANSACTIONS
The combined Fund's Investment Advisor would be Calvert Asset Management
Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd.
("Calvert"), which is indirectly wholly-owned by Acacia Mutual Life Insurance
Company. The Advisor provides investment advisory services and pays the
salaries and fees of officers and affiliated Directors of the Fund. For its
services, the Advisor receives a monthly fee based on the following annual
rates of average daily net assets of each Portfolio: .60% on the first
$500 million, .50% on the next $500 million and .40% on the excess of
$1 billion.
Calvert Administrative Services Company, an affiliate of the Advisor, provides
administrative services to the Fund for
an annual fee, payable monthly, of .10% of the average daily net assets of
each Portfolio.
For additional information on management fees and other transactions with
affiliates see the Prospectus/Proxy
Statement.
<PAGE>
January 28, 1998
Calvert Arizona Municipal Intermediate Fund
Calvert Florida Municipal Intermediate Fund
Calvert Michigan Municipal Intermediate Fund
Calvert New York Municipal Intermediate Fund
Calvert Pennsylvania Municipal Intermediate Fund
Calvert National Municipal Intermediate Fund
4550 Montgomery Avenue
Bethesda, Maryland 20814
Acquisition of Assets of
Calvert Arizona Municipal Intermediate Fund, Calvert Florida
Municipal Intermediate Fund,
Calvert Michigan Municipal Intermediate Fund, Calvert New York
Municipal Intermediate Fund, and Calvert Pennsylvania Municipal
Intermediate Fund
Ladies and Gentlemen:
You have asked for our opinion as to certain tax consequences of the
proposed acquisition of assets of each of Calvert Arizona Municipal
Intermediate Fund, Calvert Florida Municipal Intermediate Fund,
Calvert Michigan Municipal Intermediate Fund, Calvert New York
Municipal Intermediate Fund, and Calvert Pennsylvania Municipal
Intermediate Fund (each a "Selling Fund" and together the "Selling
Funds"), each of which (other than Calvert Florida Municipal
Intermediate Fund) is a series of Calvert Municipal Fund, Inc., a
Maryland corporation (the "Company"), by Calvert National Municipal
Intermediate Fund (the "Acquiring Fund"), also a series of the
Company, in exchange for voting shares of the Acquiring Fund (the
"Reorganization"). Calvert Florida Municipal Intermediate Fund is a
series of First Variable Rate Fund for Government Income, a
Massachusetts business trust ("First Variable").
In rendering our opinion, we have reviewed and relied upon the draft
Prospectus/Proxy Statement dated as of January 7, 1998 and the
Agreement and Plan of Reorganization (the "Agreement") dated as of
January 7, 1998. We have relied, without independent verification,
upon the factual statements made therein, and assume that there will
be no change in material facts disclosed therein between the date of
this letter and the date of closing of the Reorganization. We
further assume that the Reorganization will be carried out in
accordance with the Agreement. We have also relied upon the
following representations, each of which has been made to us by
officers of the Company, on behalf of its Selling Funds and the
Acquiring Fund and First Variable on behalf of its Selling Fund.
The Reorganization will be consummated substantially as described in
the Agreement.
Acquiring Fund will acquire from each Selling Fund at least 90% of
the fair market value of the net assets and at least 70% of the fair
market value of the gross assets held by each Selling Fund
immediately prior to the Reorganization. For purposes of this
representation, assets of Selling Fund used to pay reorganization
expenses, cash retained to pay liabilities, and redemptions and
distributions (except for regular and normal distributions) made by a
Selling Fund immediately preceding the transfer which are part of the
plan of reorganization, will be considered as assets held by Selling
Funds immediately prior to the transfer.
To the best of the knowledge of management of each Selling Fund,
there is no plan or intention on the part of the shareholders of any
Selling Fund to sell, exchange, or otherwise dispose of a number of
Acquiring Fund shares received in the Reorganization that would
reduce the ownership of Acquiring Fund shares by former shareholders
of any Selling Fund to a number of shares having a value, as of the
date of the Reorganization (the "Closing Date"), of less than 50
percent of the value of all the formerly outstanding shares of such
Selling Funds as of the same date. For purposes of this
representation, shares of any Selling Fund exchanged for cash or
other property will be treated as outstanding shares of such Selling
Fund on the Closing Date. There are no dissenters' rights in the
Reorganization, and no cash will be exchanged for any Selling Fund's
shares in lieu of fractional shares of Acquiring Fund. Moreover,
shares of any Selling Fund and shares of Acquiring Fund held by any
Selling Fund's shareholders and otherwise sold, redeemed, or disposed
of prior or subsequent to the Reorganization will be considered in
making this representation, except for shares of any Selling Fund or
Acquiring Fund redeemed in the ordinary course of business of a
Selling Fund or Acquiring Fund in accordance with the requirements of
section 22(e) of the Investment Company Act of 1940.
No Selling Fund has redeemed and no Selling Fund will redeem the
shares of any of its shareholders in connection with the
Reorganization except to the extent necessary to comply with its
legal obligation to redeem its shares.
The management of Acquiring Fund has no plan or intention to redeem
or reacquire any of the Acquiring Fund shares to be received by
Selling Funds' shareholders in connection with the Reorganization,
except to the extent necessary to comply with its legal obligation to
redeem its shares.
The management of Acquiring Fund has no plan or intention to sell or
dispose of any of the assets of Selling Funds which will be acquired
by Acquiring Fund in the Reorganization, except for dispositions made
in the ordinary course of business, and to the extent necessary to
enable Acquiring Fund to comply with its legal obligation to redeem
its shares.
Following the Reorganization, Acquiring Fund will continue the
historic business of Selling Funds in a substantially unchanged
manner as part of the regulated investment company business of
Acquiring Fund, or will use a significant portion of Selling Funds'
historic business assets in a business.
There is no intercorporate indebtedness between Acquiring Fund and
any Selling Fund.
Acquiring Fund does not own, directly or indirectly, and has not
owned in the last five years, directly or indirectly, any shares of
Selling Funds. Acquiring Fund will not acquire any shares of Selling
Funds prior to the Closing Date.
Acquiring Fund will not make any payment of cash or of property other
than shares to Selling Funds or to any shareholder of Selling Funds
in connection with the Reorganization.
Pursuant to the Agreement, the shareholders of Selling Funds will
receive solely Acquiring Fund voting shares in exchange for their
voting shares of Selling Funds.
The fair market value of the Acquiring Fund shares to be received by
the Selling Funds' shareholders will be approximately equal to the
fair market value of the Selling Funds' shares surrendered in
exchange therefor.
Subsequent to the transfer of Selling Funds' assets to Acquiring Fund
pursuant to the Agreement, Selling Funds will distribute the shares
of Acquiring Fund, together with other assets each Selling Fund may
have, in final liquidation as expeditiously as possible.
No Selling Fund is under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
Each Selling Fund is treated as a corporation for federal income tax
purposes and at all times in its existence has qualified as a
regulated investment company, as defined in Section 851 of the Code.
Acquiring Fund is treated as a corporation for federal income tax
purposes and at all times in its existence has qualified as a
regulated investment company, as defined in Section 851 of the Code.
The sum of the liabilities of each Selling Fund to be assumed by
Acquiring Fund and the expenses of the Reorganization does not exceed
twenty percent of the fair market value of the assets of such Selling
Fund.
The foregoing representations are true on the date of this letter and
will be true on the date of closing of the Reorganization.
Based on and subject to the foregoing, and our examination of the
legal authority we have deemed to be relevant, it is our opinion that
for federal income tax purposes:
The acquisition by Acquiring Fund of substantially all of the assets
of Selling Funds solely in exchange for voting shares of Acquiring
Fund followed by the distribution by Selling Funds of said Acquiring
Fund shares to the shareholders of Selling Funds in exchange for
their Selling Funds' shares will constitute a reorganization within
the meaning of Section 368(a)(1)(C) of the Code, and Acquiring Fund
and each Selling Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
No gain or loss will be recognized by a Selling Fund upon the
transfer of substantially all of its assets to Acquiring Fund solely
in exchange for Acquiring Fund voting shares and assumption by
Acquiring Fund of certain identified liabilities of Selling Fund, or
upon the distribution of such Acquiring Fund voting shares to the
shareholders of such Selling Fund in exchange for all of their shares
in such Selling Fund.
No gain or loss will be recognized by Acquiring Fund upon the receipt
of the assets of Selling Funds (including any cash retained initially
by a Selling Fund to pay liabilities but later transferred) solely in
exchange for Acquiring Fund voting shares and assumption by Acquiring
Fund of certain identified liabilities of each Selling Fund.
The basis of the assets of each Selling Fund acquired by Acquiring
Fund will be the same as the basis of those assets in the hands of
Selling Fund immediately prior to the transfer, and the holding
period of the assets of a Selling Fund in the hands of Acquiring Fund
will include the period during which those assets were held by such
Selling Fund.
The shareholders of Selling Funds will recognize no gain or loss upon
the exchange of all of their Selling Fund shares solely for Acquiring
Fund voting shares. Gain, if any, will be realized by Selling Fund
shareholders who in exchange for their Selling Fund shares receive
other property or money in addition to Acquiring Fund shares, and
will be recognized, but not in excess of the amount of cash and the
value of such other property received. If the exchange has the
effect of the distribution of a dividend, then the amount of gain
recognized that is not in excess of the ratable share of
undistributed earnings and profits of a Selling Fund will be treated
as a dividend.
The basis of the Acquiring Fund voting shares to be received by the
Selling Funds' shareholders will be the same as the basis of the
Selling Funds' shares surrendered in exchange therefor.
The holding period of the Acquiring Fund voting shares to be received
by the Selling Funds' shareholders will include the period during
which the Selling Funds' shares surrendered in exchange therefor were
held, provided the Selling Funds' shares were held as a capital asset
on the date of the exchange.
This opinion letter is delivered to you in satisfaction of the
requirements of sections 8.D. and 9.D. of the Agreement. We hereby
consent to the filing of this opinion as an exhibit to the
Registration Statement on Form N-14 and to use of our name and any
reference to our firm in the Registration Statement or in the
Prospectus/Proxy Statement constituting a part thereof. In giving
such consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & WORCESTER LLP
<PAGE>
Exhibit 14
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors of
Calvert Municipal Fund, Inc.
We consent to the following with respect to the Registration
Statement of Calvert Municipal Fund on Form N-14 under the Securities
Act of 1933, relative to the transfer of all the assets and
liabilities of Calvert Arizona Municipal Intermediate Fund, Calvert
Florida Municipal Intermediate Fund, Calvert Michigan Municipal
Intermediate Fund, Calvert New York Municipal Intermediate Fund and
Calvert Pennsylvania Municipal Intermediate Fund to the Calvert
National Municipal Intermediate Fund in exchange for shares of the
Calvert National Municipal Intermediate Fund:
1. The incorporation by reference of our report dated February
7, 1997 on our audit of the financial statements and
financial highlights of Calvert Arizona Municipal Intermediate
Fund, Calvert Florida Municipal Intermediate Fund, Calvert
Michigan Municipal Intermediate Fund, Calvert New York Municipal
Intermediate Fund and Calvert Pennsylvania Municipal
Intermediate Fund, which report is included in the Annual Report
to Shareholders for the year ended in the Statement of
Additional Information dated April 30, 1997.
2. The incorporation by reference of our report dated February
7, 1997 on our audit of the financial statements and financial
highlights of the Calvert National Municipal Intermediate Fund,
which report is included in the Annual Report to Shareholders
for the year ended December 31, 1996, in the Statement of
Additional Information dated April 30, 1997.
3. The reference to our Firm under the heading "Independent
Accountants and Custodians" in the Statements of Additional
Information dated April 30, 1997 of the Calvert Arizona
Municipal Intermediate Fund, Calvert Florida Municipal
Intermediate Fund, Calvert Michigan Municipal Intermediate Fund,
Calvert New York Municipal Intermediate Fund, Calvert
Pennsylvania Municipal Intermediate Fund and the Calvert
National Municipal Intermediate Fund.
COOPERS & LYBRAND, L.L.P.
Baltimore, Maryland
February 4, 1998
