SEC REGISTRATION NOS.
811-6525 AND 333-32136
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-EFFECTIVE AMENDMENT NO. 1
CALVERT MUNICIPAL FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
(301) 951-4800
(REGISTRANT'S TELEPHONE NUMBER)
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
WILLIAM M. TARTIKOFF, ESQ.
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective:
___IMMEDIATELY UPON FILING __ ON (DATE)
PURSUANT TO PARAGRAPH (B) PURSUANT TO PARAGRAPH (B)
XX 60 DAYS AFTER FILING ___ ON (DATE)
PURSUANT TO PARAGRAPH (A) PURSUANT TO PARAGRAPH (A)
of Rule 485
No filing fee is due for Registrant because of reliance on section 24(f).
(Title of Securities Being Registered)
<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 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 MARYLAND MUNICIPAL
INTERMEDIATE FUND AND CALVERT VIRGINIA
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, 1999.
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
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[LETTERHEAD]
APRIL __, 2000
DEAR SHAREHOLDER,
I AM WRITING TO INFORM YOU OF THE UPCOMING JOINT SPECIAL MEETING OF SHAREHOLDERS
OF THE CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA
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 CALVERT
NATIONAL MUNICIPAL INTERMEDIATE FUND. THE BOARD OF DIRECTORS OF YOUR FUND,
INCLUDING MYSELF, BELIEVE THIS CHANGE IS IN THE FUNDS' AND YOUR BEST INTEREST.
IN CONSIDERING THE SMALL SIZES OF BOTH FUNDS, WE BELIEVE THAT COMBINING BOTH
FUNDS INTO ONE LARGER FUND WOULD ALLOW THE ASSETS TO BE MORE EFFICIENTLY
MANAGED, AND LEAD TO REDUCED EXPENSES AND 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 NECESSARILY 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
ENCLOSED HEREIN 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
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15
CALVERT MUNICIPAL FUND, INC.
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
4550 MONTGOMERY AVENUE, SUITE 1000N
BETHESDA, MARYLAND 20814
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [June __, 2000]
NOTICE IS HEREBY GIVEN THAT A JOINT SPECIAL MEETING OF SHAREHOLDERS OF CALVERT
MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA MUNICIPAL INTERMEDIATE
FUND, BOTH SERIES OF CALVERT MUNICIPAL FUND, INC., 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 9:00 A.M. ON [DAY], June __, 2000, FOR THE FOLLOWING PURPOSES:
I. TO CONSIDER AND ACT ON AN AGREEMENT AND PLAN OF REORGANIZATION, DATED
MARCH 10, 2000, PROVIDING FOR THE TRANSFER OF SUBSTANTIALLY ALL OF THE ASSETS OF
BOTH THE CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA
MUNICIPAL INTERMEDIATE FUND (COLLECTIVELY, THE "FUNDS") TO AND THE ASSUMPTION OF
CERTAIN IDENTIFIED LIABILITIES OF THE FUNDS BY CALVERT NATIONAL MUNICIPAL
INTERMEDIATE FUND, EACH FUND A SERIES OF CALVERT MUNICIPAL FUND, INC., IN
EXCHANGE FOR SHARES OF 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 March 31, 2000, ARE ENTITLED
TO NOTICE OF AND TO VOTE AT THIS MEETING OR ANY ADJOURNMENT THEREOF.
BY ORDER OF THE BOARD OF DIRECTORS,
WILLIAM M. TARTIKOFF, ESQ.
SECRETARY
APRIL __, 2000
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.
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IMPORTANT NOTICE TO
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
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. CALVERT MUNICIPAL FUND, INC. IS SEEKING YOUR APPROVAL OF A MERGER OF THE
SHARES OF ITS SERIES - CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT
VIRGINIA MUNICIPAL INTERMEDIATE FUND (HEREAFTER, TOGETHER THE "STATE MUNICIPAL
FUNDS") INTO CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND, ALSO A SERIES OF
CALVERT MUNICIPAL FUND, INC. (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 THE 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?
A. THE STATE MUNICIPAL FUNDS' INVESTMENT OBJECTIVE IS "TO EARN THE HIGHEST
LEVEL OF INTEREST INCOME EXEMPT FROM FEDERAL AND SPECIFIC STATE INCOME TAXES"
WHEREAS THE NATIONAL MUNICIPAL FUND'S INVESTMENT OBJECTIVE IS "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 NECESSARILY BE EXEMPT FROM STATE-SPECIFIC INCOME TAX.
Q. ARE THERE DIFFERENCES IN THE TAX TREATMENT OF THE FUNDS?
A. BOTH OF THE STATE MUNICIPAL FUNDS AND THE NATIONAL MUNICIPAL FUND PAY
DIVIDENDS DERIVED FROM INTEREST ON TAX-EXEMPT OBLIGATIONS OF OTHER GOVERNMENTAL
ISSUERS THAT WILL BE EXEMPT FROM FEDERAL INCOME TAX, BUT MAY BE SUBJECT TO STATE
INCOME TAXES; HOWEVER, ONLY THE STATE MUNICIPAL FUNDS PAY DIVIDENDS DERIVED FROM
INTEREST ATTRIBUTABLE TO STATE MUNICIPAL OBLIGATIONS, THAT WILL BE EXEMPT FROM
BOTH FEDERAL AND THE SPECIFIC STATE'S PERSONAL INCOME TAXES.
Q. HOW DO THE EXPENSE STRUCTURES AND FEES OF THE FUNDS COMPARE? IS THERE A
BENEFIT TO ME?
A. THE BOARD EXPECTS 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. 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 $82 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 NOT ENOUGH SHAREHOLDERS 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 AN ADDITIONAL EXPENSE TO THE FUND OF FOLLOW-UP
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 INCLUDING A PROPOSAL TO LIQUIDATE THE FUND.
Q. HOW WILL YOU DETERMINE THE NUMBER OF SHARES OF THE NATIONAL MUNICIPAL
FUND THAT I WILL RECEIVE?
A. THE CLOSING DATE IS JUNE __, 2000. 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 SHAREHOLDER MEETING?
A. BOTH OF THE STATE MUNICIPAL FUNDS WILL PAY A PRO RATA SHARE FOR THOSE
EXPENSES RELATING TO THE SHAREHOLDER MEETING.
Q. HOW DO THE BOARD OF DIRECTORS OF THE STATE MUNICIPAL FUNDS SUGGEST THAT I
VOTE?
A. AFTER CAREFUL CONSIDERATION, THE BOARD OF DIRECTORS OF THE STATE
MUNICIPAL FUNDS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ITEM PROPOSED ON
THE ENCLOSED PROXY CARD.
Q. HOW DO I VOTE MY SHARES?
A. YOU CAN VOTE YOUR SHARES BY ATTENDING THE JOINT SPECIAL MEETING OF
SHAREHOLDERS IN PERSON AND SUBMITTING THE ENCLOSED PROXY CARD AT THAT TIME, OR
BY COMPLETING AND SIGNING THE 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 - APRIL __, 2000
ACQUISITION OF THE ASSETS OF THE
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
BY AND IN EXCHANGE FOR SHARES OF 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 SUBSTANTIALLY ALL OF THE LIABILITIES OF CALVERT MARYLAND MUNICIPAL
INTERMEDIATE FUND AND CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND (TOGETHER,
THE "STATE MUNICIPAL FUNDS") TO 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 CALVERT MUNICIPAL FUND, INC. ("CALVERT")
WHICH IS AN OPEN-END MANAGEMENT INVESTMENT COMPANY. THE NET ASSETS OF NATIONAL
MUNICIPAL FUND WERE $53,187,557 AS OF MARCH 31, 2000. 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 CERTAIN QUALITY AND MATURITY CHARACTERISTICS.
BOTH STATE MUNICIPAL FUNDS ARE ALSO SERIES OF CALVERT MUNICIPAL FUND, INC. AS
OF MARCH 31, 2000, THE NET ASSETS OF THE FUNDS WERE $10,431,102 FOR THE MARYLAND
MUNICIPAL FUND AND $13,629,185 FOR THE VIRGINIA 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 NECESSARILY 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. (THE "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 May __, 2000.
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, 1999 (INSOFAR AS IT RELATES TO THE NATIONAL MUNICIPAL FUND) AND
IS INCORPORATED HEREIN BY REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION DATED
APRIL 30, 1999, 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)
368-2745.
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.
<PAGE>
TABLE OF CONTENTS
PAGE
SUMMARY __
REASONS FOR THE REORGANIZATION __
EXPENSE COMPARISONS __
PERFORMANCE CHARTS __
FINANCIAL HIGHLIGHTS __
COMPARISON OF INVESTMENT POLICIES __
INFORMATION ABOUT THE REORGANIZATION __
ABOUT CALVERT GROUP __
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS __
INFORMATION ABOUT THE FUNDS __
Other Business __
VOTING INFORMATION __
ADJOURNMENT __
EXHIBIT A - AGREEMENT AND PLAN OF REORGANIZATION __
<PAGE>
SUMMARY
REASONS FOR THE REORGANIZATION. THE BOARD OF DIRECTORS OF CALVERT MUNICIPAL
FUND, INC. (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
BOTH OF THE STATE MUNICIPAL FUNDS. BY COMBINING THE FUNDS, THE ASSETS OF THE
STATE MUNICIPAL FUNDS COULD BE MORE EFFICIENTLY MANAGED SO AS TO possibly 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 AT LEAST FOUR (4) TIMES
THE NET ASSETS OF BOTH INDIVIDUAL STATE MUNICIPAL FUNDS. ON MARCH 31,
2000, THE NATIONAL MUNICIPAL FUND HAD NET ASSETS OF $53.2 MILLION COMPARED
TO THE NET ASSETS OF $10.4 MILLION FOR THE MARYLAND MUNICIPAL FUND AND
$13.6 MILLION FOR THE VIRGINIA MUNICIPAL FUND.
TO THIS END, THE DIRECTORS RECOMMEND THAT SHAREHOLDERS OF BOTH STATE MUNICIPAL
FUNDS APPROVE THE PROPOSED MERGER OF THEIR FUNDS 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 PLAN OF REORGANIZATION 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 SUBSTANTIALLY ALL OF THE LIABILITIES OF THE
STATE MUNICIPAL FUNDS TO THE NATIONAL MUNICIPAL FUND IN EXCHANGE FOR LIKE SHARES
OF THE 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 BOTH 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
INVESTMENT OFFERING NET AMOUNT
PRICE INVESTED
LESS THAN $50,000 2.75% 2.83%
$50,000 BUT LESS THAN $100,000 2.25% 2.30%
$100,000 BUT LESS THAN $250,000 1.75% 1.78%
$250,000 BUT LESS THAN $500,000 1.25% 1.27%
$500,000 BUT LESS THAN $1,000,000 1.00% 1.01%
$1,000,000 AND OVER NONE* NONE*
*PURCHASES OF SHARES AT NET ASSET VALUE FOR ACCOUNTS WITH $1,000,000 OR MORE ARE
SUBJECT TO A ONE YEAR CONTINGENT DEFERRED SALES CHARGE OF 1.00%.
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
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.
EXCHANGE REQUESTS WILL NOT BE ACCEPTED ON ANY DAY WHEN CALVERT GROUP IS OPEN BUT
THE FUND'S CUSTODIAN BANK IS CLOSED (I.E., COLUMBUS DAY AND VETERAN'S DAY);
THESE EXCHANGE REQUESTS WILL BE PROCESSED THE NEXT DAY THE FUND'S CUSTODIAN BANK
IS OPEN.
EACH FUND AND THE DISTRIBUTOR RESERVE THE RIGHT AT ANY TIME TO REJECT OR CANCEL
ANY PART OF ANY PURCHASES (INCLUDING EXCHANGE PURCHASES); MODIFY ANY TERMS OR
CONDITIONS OF PURCHASE OF SHARES OF ANY FUND; OR WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THE PROSPECTUS. TO PROTECT THE INTEREST OF INVESTORS, EACH
FUND AND THE DISTRIBUTOR MAY REJECT ANY ORDER CONSIDERED MARKET-TIMING
ACTIVITY.
THE STATE MUNICIPAL FUNDS AND NATIONAL MUNICIPAL FUND RESERVE THE RIGHT TO
TERMINATE OR MODIFY THE 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
NATIONAL MUNICIPAL 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 MAY
IMPOSE A CHARGE OF $5 FOR WIRE TRANSFERS OF LESS THAN $1,000. THE FUNDS MAY,
AFTER 30 DAYS' NOTICE, CLOSE YOUR ACCOUNTS IF THE ACCOUNT FALLS BELOW $1,000 AND
THE BALANCE IS NOT BROUGHT UP TO THE REQUIRED MINIMUM AMOUNT.
VALUATION PRACTICES. A FUND'S ASSETS ARE NORMALLY VALUED UTILIZING THE AVERAGE
BID DEALER MARKET QUOTATION AS FURNISHED BY AN INDEPENDENT PRICING SERVICE.
SECURITIES AND OTHER ASSETS FOR WHICH MARKET QUOTATIONS ARE NOT READILY
AVAILABLE ARE VALUED BASED ON THE CURRENT MARKET FOR SIMILAR SECURITIES OR
ASSETS, AS DETERMINED IN GOOD FAITH BY THE FUND'S ADVISOR UNDER THE SUPERVISION
OF THE BOARD OF DIRECTORS. THE FUND DETERMINES THE NET ASSET VALUE OF ITS SHARES
EVERY BUSINESS DAY AT THE CLOSE OF THE REGULAR SESSION OF THE NEW YORK STOCK
EXCHANGE (GENERALLY, 4:00 P.M. EASTERN TIME), AND AT SUCH OTHER TIMES AS MAY BE
NECESSARY OR APPROPRIATE. THE FUND DOES NOT DETERMINE NET ASSET VALUE ON CERTAIN
NATIONAL HOLIDAYS OR OTHER DAYS ON WHICH THE NEW YORK STOCK EXCHANGE IS CLOSED:
NEW YEAR'S DAY, MARTIN LUTHER KING DAY, PRESIDENTS' DAY, GOOD FRIDAY, MEMORIAL
DAY, INDEPENDENCE DAY, LABOR DAY, THANKSGIVING DAY AND CHRISTMAS DAY.
EXPENSE COMPARISONS
NATIONAL MUNICIPAL FUND
-------------------------
SHAREHOLDER FEES
MAXIMUM SALES CHARGE
(LOAD) IMPOSED ON
PURCHASES (AS A PERCENTAGE OF
OFFERING PRICE) 2.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
ANNUAL FUND OPERATING EXPENSES2
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES 0.23%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.93%
MARYLAND MUNICIPAL FUND
-------------------------
SHAREHOLDER FEES
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE) 2.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
ANNUAL FUND OPERATING EXPENSES2
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES 0.33%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.03%
VIRGINIA MUNICIPAL FUND
-------------------------
SHAREHOLDER FEES
MAXIMUM SALES CHARGE (LOAD) IMPOSED
ON PURCHASES (AS A PERCENTAGE OF
OFFERING PRICE) 2.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
ANNUAL FUND OPERATING EXPENSES2
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES 0.34%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.04%
PRO FORMA
(SURVIVING NATIONAL)
SHAREHOLDER FEES
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE) 2.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
ANNUAL FUND OPERATING EXPENSES2
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES 0.26%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.96%
1 PURCHASES OF SHARES FOR ACCOUNTS WITH $1 MILLION OR MORE ARE NOT SUBJECT TO
FRONT-END SALES CHARGES, BUT MAY BE SUBJECT TO A 1.0% CONTINGENT DEFERRED SALES
CHARGE ON SHARES REDEEMED WITHIN 1 YEAR OF PURCHASE.
2 EXPENSES ARE BASED ON EACH FUND'S MOST RECENT FISCAL YEAR, UNLESS OTHERWISE
INDICATED. MANAGEMENT FEES INCLUDE THE ADMINISTRATIVE FEE PAID BY THE FUND TO
CALVERT ADMINISTRATIVE SERVICES COMPANY, AN AFFILIATE OF THE ADVISOR.
EXAMPLE. THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN
THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE
ASSUMES THAT:
- - YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS INDICATED;
- - YOUR INVESTMENT HAS A 5% RETURN EACH YEAR; AND
- - THE FUND'S OPERATING EXPENSES REMAIN THE SAME.
ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, UNDER THESE ASSUMPTIONS YOUR
COSTS WOULD BE:
FUND (UNAUDITED) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------
NATIONAL MUNICIPAL FUND $367 $563 $776 $1,387
MARYLAND MUNICIPAL FUND $377 $594 $828 $1,500
VIRGINIA MUNICIPAL FUND $378 $597 $833 $1,511
PRO FORMA
(SURVIVING NATIONAL $370 $572 $791 $1,421
DISTRIBUTION AND SERVICE FEES. THE FUNDS HAVE ADOPTED A PLAN UNDER RULE 12B-1 OF
THE INVESTMENT COMPANY ACT OF 1940 THAT ALLOWS EACH FUND TO PAY DISTRIBUTION
FEES FOR THE SALE AND DISTRIBUTION OF ITS SHARES. THE DISTRIBUTION PLAN
ALSO PAYS SERVICE FEES TO PERSON (SUCH AS YOUR FINANCIAL PROFESSIONAL) FOR
SERVICES PROVIDED TO SHAREHOLDERS. BECAUSE THESE FEES ARE PAID OUT OF A FUND'S
ASSETS ON AN ONGOING BASIS, OVER TIME, THESE FEES WILL INCREASE THE COSTS OF
YOUR INVESTMENT AND MY COST YOU MORE THAN PAYING OTHER TYPES OF SALES CHARGES.
THE MAXIMUM ANNUAL PERCENTAGE PAYABLE UNDER EACH FUND'S DISTRIBUTION PLAN TOTALS
0.25%, BASED ON AVERAGE DAILY NET ASSETS OF EACH FUND.
PERFORMANCE CHARTS
THE BAR CHARTS AND TABLES BELOW SHOW EACH FUND'S ANNUAL RETURNS AND ITS
LONG-TERM PERFORMANCE. THE INFORMATION PROVIDES SOME INDICATION OF THE RISKS OF
INVESTING IN EACH FUND BY SHOWING CHANGES IN EACH FUND'S PERFORMANCE FROM
YEAR-TO-YEAR AND BY SHOWING HOW AVERAGE ANNUAL RETURNS COMPARE WITH THOSE OF A
BROAD MEASURE OF MARKET PERFORMANCE. THE TABLE COMPARES EACH FUND'S PERFORMANCE
OVER TIME TO THAT OF THE LEHMAN MUNICIPAL 10 YEAR BOND INDEX TR. THIS IS A
WIDELY RECOGNIZED, UNMANAGED INDEX OF BOND PRICES. IT ALSO SHOWS EACH FUND'S
RETURNS COMPARED TO COMPARABLE LIPPER MUNICIPAL DEBT FUNDS INDEXES OR AVERAGES,
A COMPOSITE OF THE ANNUAL RETURN OF MUTUAL FUNDS THAT HAVE AN INVESTMENT GOAL
SIMILAR TO THAT OF THE RESPECTIVE FUND. PAST PERFORMANCE DOES NOT NECESSARILY
INDICATE HOW ANY FUND WILL PERFORM IN THE FUTURE.
THE BAR CHART DOES NOT REFLECT ANY SALES CHARGE THAT YOU MAY BE REQUIRED TO PAY
UPON PURCHASE OR REDEMPTION OF THE FUND'S SHARES. ANY SALES CHARGE WILL REDUCE
YOUR RETURN. THE AVERAGE TOTAL RETURN TABLE SHOWS RETURNS WITH THE MAXIMUM
SALES CHARGE DEDUCTED. NO SALES CHARGE HAS BEEN APPLIED TO THE INDEX OR AVERAGE
USED FOR COMPARISON IN THE TABLE.
NATIONAL
YEAR BY YEAR TOTAL RETURN (AT NAV)
[INSERT BAR CHART HERE]
Best Quarter (of periods shown) Q1 '95 5.19%
Worst Quarter (of periods shown) Q1 '94 (2.40%)
Average Annual Total Returns (as of 12.31.99)
(with maximum sales charge deducted)
1 year 5 year Since
Inception
Intermediate (inception 9/30/92) (4.74%) 4.99% 4.75%
Lehman Municipal Bond
10 year Index TR (1.25%) 7.12% 7.10%
Lipper Intermediate Municipal
Fund Index (1.37%) 5.59% 5.90%
MARYLAND
YEAR BY YEAR TOTAL RETURN (AT NAV)
[INSERT BAR CHART HERE]
Best Quarter (of periods shown) Q1 '95 5.40%
Worst Quarter (of periods shown) Q1 '94 -3.51%
Average Annual Total Returns (as of 12.31.99)
(with maximum sales charge deducted)
1 year 5 year Since
Inception
Maryland (inception 9/30/93) (4.57%) 4.97% 3.77%
Lehman Municipal Bond
10 year Index TR (1.25%) 7.12% 7.10%
Lipper Other States Intermediate
Municipal Debt Funds Average (2.06%) 5.19% 5.32%
VIRGINIA
YEAR BY YEAR TOTAL RETURN (AT NAV)
[INSERT BAR CHART HERE]
Best Quarter (of periods shown) Q1 '95 5.80%
Worst Quarter (of periods shown) Q1 '94 -2.95%
Average Annual Total Returns (as of 12.31.99)
(with maximum sales charge deducted)
1 year 5 year Since
Inception
Virginia (inception 9/30/93) (4.56%) 4.78% 3.81%
Lehman Municipal Bond
10 year Index TR (1.25%) 7.12% 7.10%
Lipper Virginia Intermediate
Municipal Debt Funds Average (1.81%) 5.26% 5.61%
<PAGE>
FINANCIAL HIGHLIGHTS
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE FUNDS'
FINANCIAL PERFORMANCE FOR THE PAST FIVE (5) YEARS. THE FUNDS' FISCAL YEAR IS
DECEMBER 31. INFORMATION REFLECTS FINANCIAL RESULTS FOR A SINGLE SHARE, BY FUND.
THE TOTAL RETURNS IN THE TABLE REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE
EARNED (OR LOST) ON AN INVESTMENT IN A FUND (ASSUMING REINVESTMENT OF ALL
DIVIDENDS AND DISTRIBUTIONS), AND DOES NOT REFLECT ANY APPLICABLE FRONT- OR
BACK-END SALES CHARGE. THIS INFORMATION HAS BEEN AUDITED BY
PRICEWATERHOUSECOOPERS LLP, WHOSE REPORT, ALONG WITH A FUND'S FINANCIAL
STATEMENTS, ARE INCLUDED IN THE FUND'S ANNUAL REPORT, WHICH IS AVAILABLE UPON
REQUEST.
NATIONAL PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $10.82 $10.79 $10.56
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .43 .45 .50
NET REALIZED AND UNREALIZED
GAIN (LOSS) (.64) .13 .23
TOTAL FROM INVESTMENT
OPERATIONS (.21) .58 .73
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.43) (.46) (.50)
NET REALIZED GAINS (.06) (.09) -
TOTAL DISTRIBUTIONS (.49) (.55) (.50)
TOTAL INCREASE (DECREASE)
IN NET ASSET VALUE (.70) .03 .23
NET ASSET VALUE, ENDING $10.12 $10.82 $10.79
TOTAL RETURN * (2.01%) 5.46% 7.11%
RATIOS TO AVERAGE NET
ASSETS:
NET INVESTMENT INCOME 4.12% 4.17% 4.71%
TOTAL EXPENSES .93% .97% .97%
EXPENSES BEFORE OFFSETS .93% .97% .97%
NET EXPENSES .90% .94% .94%
PORTFOLIO TURNOVER 38% 44% 29%
NET ASSETS, ENDING (IN THOUSANDS)
$58,093 $71,065 $48,933
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $10.62 $9.81
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .50 .51
NET REALIZED AND UNREALIZED GAIN (LOSS) (.06) .80
TOTAL FROM INVESTMENT OPERATIONS .44 1.31
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.50) (.50)
NET REALIZED GAINS - -
TOTAL DISTRIBUTIONS (.50) (.50)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE (.06) .81
NET ASSET VALUE, ENDING $10.56 $10.62
TOTAL RETURN * 4.32% 13.64%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.83% 4.97%
TOTAL EXPENSES 1.04% .96%
EXPENSES BEFORE OFFSETS 1.04% .96%
NET EXPENSES 1.01% .94%
PORTFOLIO TURNOVER 23% 57%
NET ASSETS, ENDING (IN THOUSANDS) $45,612 $40,146
<PAGE>
MARYLAND PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $5.21 $5.18 $5.03
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .21 .21 .23
NET REALIZED AND UNREALIZED
GAIN (LOSS) (.30) .04 .15
TOTAL FROM INVESTMENT OPERATIONS (.09) .25 .38
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.21) (.22) (.23)
TOTAL INCREASE (DECREASE)
IN NET ASSET VALUE (.30) .03 .15
NET ASSET VALUE, ENDING $4.91 $5.21 $5.18
TOTAL RETURN * (1.82%) 4.88% 7.68%
RATIOS TO AVERAGE NET
ASSETS:
NET INVESTMENT INCOME 4.08% 4.13% 4.48%
TOTAL EXPENSES 1.03% .97% .99%
EXPENSES BEFORE OFFSETS 1.03% .97% .99%
NET EXPENSES .98% .93% .92%
PORTFOLIO TURNOVER 0% 24% 13%
NET ASSETS, ENDING (IN THOUSANDS)
$10,711 $12,165 $12,437
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $5.06 $4.67
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .23 .24
NET REALIZED AND UNREALIZED GAIN (LOSS) (.04) .39
TOTAL FROM INVESTMENT OPERATIONS .19 .63
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.22) (.24)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE (.03) .39
NET ASSET VALUE, ENDING $5.03 $5.06
TOTAL RETURN * 3.96% 13.66%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.59% 4.87%
TOTAL EXPENSES 1.04% .94%
EXPENSES BEFORE OFFSETS 1.00% .51%
NET EXPENSES .94% .48%
PORTFOLIO TURNOVER 8% 11%
NET ASSETS, ENDING (IN THOUSANDS) $12,023 $9,411
<PAGE>
VIRGINIA PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $5.25 $5.21 $5.10
INCOME FROM INVESTMENT
OPERATIONS
NET INVESTMENT INCOME .20 .21 .22
NET REALIZED AND UNREALIZED GAIN (LOSS)
(.29) .04 .11
TOTAL FROM INVESTMENT
OPERATIONS (.09) .25 .33
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.20) (.21) (.22)
TOTAL INCREASE (DECREASE)
IN NET ASSET VALUE (.29) .04 .11
NET ASSET VALUE, ENDING $4.96 $5.25 $5.21
TOTAL RETURN* (1.84%) 4.88% 6.71%
RATIOS TO AVERAGE NET
ASSETS:
NET INVESTMENT INCOME 3.85% 4.03% 4.38%
TOTAL EXPENSES 1.04% .97% .96%
EXPENSES BEFORE OFFSETS 1.04% .97% .96%
NET EXPENSES 1.00% .93% .88%
PORTFOLIO TURNOVER 12% 36% 8%
NET ASSETS, ENDING
(IN THOUSANDS)
$14,317 $14,439 $13,542
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $5.13 $4.74
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .22 .24
NET REALIZED AND UNREALIZED GAIN (LOSS) (.03) .39
TOTAL FROM INVESTMENT OPERATIONS .19 .63
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.22) (.24)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE (.03) .39
NET ASSET VALUE, ENDING $5.10 $5.13
TOTAL RETURN* 3.82% 13.54%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.35% 4.86%
TOTAL EXPENSES 1.03% .92%
EXPENSES BEFORE OFFSETS 1.00% .54%
NET EXPENSES .92% .51%
PORTFOLIO TURNOVER 4% 11%
NET ASSETS, ENDING (IN THOUSANDS) $12,618 $7,295
* TOTAL RETURN DOES NOT REFLECT DEDUCTION OF FRONT-END SALES CHARGE.
<PAGE>
COMPARATIVE PERFORMANCE INFORMATION. TOTAL RETURN FOR EACH FUND'S SHARES FOR THE
PERIODS INDICATED ARE AS FOLLOWS:
TOTAL RETURNS WITH MAXIMUM SALES CHARGE (AVERAGE ANNUAL TOTAL RETURNS)
PERIODS ENDED
DECEMBER 31, 1999 (UNAUDITED) ONE YEAR FIVE YEAR SINCE INCEPTION
- -------------------------------- --------- --------- ---------------
NATIONAL MUNICIPAL FUND (4.74%) 4.99% 4.75% (9/30/92)
MARYLAND MUNICIPAL FUND (4.57%) 4.97% 3.77% (9/30/93)
VIRGINIA MUNICIPAL FUND (4.56%) 4.78% _3.81% (9/30/93)
TOTAL RETURNS WITHOUT MAXIMUM SALES CHARGE
PERIODS ENDED
DECEMBER 31, 1999
(UNAUDITED) ONE YEAR FIVE YEAR SINCE INCEPTION
----------------------------- -------- --------- ---------------
NATIONAL MUNICIPAL FUND (2.01%) 5.59% 5.14% (9/30/92)
MARYLAND MUNICIPAL FUND (1.82%) 5.55% 4.23% (9/30/93)
VIRGINIA MUNICIPAL FUND (1.84%) 5.35% 4.27% (9/30/93)
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 ASSETS
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" HOWEVER,
THE NATIONAL MUNICIPAL FUND WILL NOT SEEK AND ITS DISTRIBUTIONS WILL NOT
NECESSARILY BE, EXEMPT FROM ANY STATE INCOME TAXES. FOR ALL OF THE FUNDS,
THE INTEREST OF CERTAIN OBLIGATIONS MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE
MINIMUM TAX. THE FUNDS INVEST IN NO DIVERSIFIED 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 5% 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 TAX-SUPPORTED DEBT (GENERAL OBLIGATION
BONDS OF STATE AND LOCAL ISSUERS), VARIOUS TYPES OF REVENUE DEBT
(TRANSPORTATION, HOUSING, UTILITIES, HOSPITAL), SPECIAL TAX OBLIGATIONS, AND
QUALIFIED PRIVATE ACTIVITY BONDS AND OTHER STATE AND LOCAL GOVERNMENT
AUTHORITIES, MUNICIPAL LEASE AND CERTIFICATES OF PARTICIPATION IN SUCH
INVESTMENTS.
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. BOTH STATE MUNICIPAL FUNDS INVEST AT LEAST 65% OF THEIR RESPECTIVE
TOTAL ASSETS IN MUNICIPAL OBLIGATIONS WITH INTEREST THAT IS EXEMPT FROM FEDERAL
AND THE RESPECTIVE STATE'S INCOME TAX, INCLUDING THOSE ISSUED BY OR ON BEHALF
OF THE STATE FOR WHICH THE FUND IS NAMED AND ITS POLITICAL SUBDIVISIONS. BOTH
STATE MUNICIPAL FUNDS ALSO ATTEMPT TO INVEST THEIR RESPECTIVE REMAINING 35% OF
IT'S TOTAL ASSETS IN SUCH OBLIGATIONS, BUT MAY INVEST IT IN MUNICIPAL
OBLIGATIONS OF OTHER STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES,
THE DISTRICT OF COLUMBIA AND THEIR RESPECTIVE AUTHORITIES, AGENCIES,
INSTRUMENTALITIES AND POLITICAL SUBDIVISIONS OR IN SHORT-TERM TAXABLE MONEY
MARKET-TYPE INSTRUMENTS.
FOR LIQUIDITY PURPOSES OR PENDING THE INVESTMENT OF THE PROCEEDS OF THE SALE OF
ITS SHARES, BOTH STATE MUNICIPAL FUNDS INVEST IN AND DERIVE UP TO 35% OF THEIR
RESPECTIVE INCOME FROM TAXABLE SHORT-TERM MONEY MARKET TYPE INVESTMENTS WHEREAS
THE NATIONAL MUNICIPAL FUND IS LIMITED IN MAKING SUCH TEMPORARY INVESTMENTS UP
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 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. FURTHER, 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. ACCORDINGLY, THE
NATIONAL MUNICIPAL FUND MAY LEND ITS PORTFOLIO SECURITIES TO MEMBER FIRMS OF THE
NEW YORK STOCK EXCHANGE AND COMMERCIAL BANKS WITH ASSETS OF ONE BILLION DOLLARS
OR MORE, PROVIDED THE VALUE OF THE SECURITIES LOANED FROM THE FUND WILL NOT
EXCEED ONE-THIRD OF THE FUND'S ASSETS. LOANS MUST BE SECURED CONTINUOUSLY IN THE
FORM OF CASH OR CASH EQUIVALENTS SUCH AS U.S. TREASURY BILLS; THE AMOUNT OF THE
COLLATERAL MUST ON A CURRENT BASIS EQUAL OR EXCEED THE MARKET VALUE OF THE
LOANED SECURITIES, AND THE FUND MUST BE ABLE TO TERMINATE SUCH LOANS UPON NOTICE
AT ANY TIME. THE ADVANTAGE OF SUCH LOANS IS THAT THE FUND CONTINUES TO RECEIVE
THE EQUIVALENT OF THE INTEREST EARNED OR DIVIDENDS PAID BY THE ISSUERS ON THE
LOANED SECURITIES WHILE AT THE SAME TIME EARNING INTEREST ON THE CASH OR
EQUIVALENT COLLATERAL WHICH MAY BE INVESTED IN ACCORDANCE WITH THE NATIONAL
MUNICIPAL FUND'S INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS. THE NATIONAL
MUNICIPAL FUND MAY ALSO PURCHASE DEBT SECURITIES SUBJECT TO REPURCHASE
AGREEMENTS WHICH ARE ARRANGEMENTS UNDER WHICH THE FUND BUYS A SECURITY AND THE
SELLER SIMULTANEOUSLY AGREES TO REPURCHASE THE SECURITY AT A SPECIFIED TIME AND
PRICE REFLECTING A MARKET RATE OF INTEREST. THE FUND ENGAGES IN REPURCHASE
AGREEMENTS IN ORDER TO EARN A HIGHER RATE OF RETURN THAN IT COULD EARN SIMPLY BY
INVESTING IN THE OBLIGATION WHICH IS THE SUBJECT OF THE REPURCHASE AGREEMENT.
NONE OF THE FUNDS MAY INVEST 25% OR MORE OF ITS ASSETS IN ANY PARTICULAR
INDUSTRY OR INDUSTRIES, HOWEVER, BOTH STATE MUNICIPAL FUNDS MAY INVEST MORE THAN
25% OF THEIR RESPECTIVE ASSETS IN OBLIGATIONS ISSUED OR GUARANTEED BY THE U.S.
GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES BUT WILL INVEST IN MORE THAN 20%
OF THEIR RESPECTIVE NET ASSETS IN SUCH OBLIGATIONS ONLY DURING ABNORMAL MARKET
CONDITIONS. FURTHER, BOTH STATE MUNICIPAL FUNDS MAY NOT INVEST 25% OR MORE OF
THEIR RESPECTIVE ASSETS IN THE SECURITIES OF ANY ONE ISSUER.
THE NONFUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS ARE IDENTICAL EXCEPT
THAT THE NATIONAL MUNICIPAL FUND MAY NOT: PURCHASE OR SELL A FUTURES CONTRACT OR
AN OPTION THEREON IF IMMEDIATELY THEREAFTER, THE SUM OF THE AMOUNT OF INITIAL
MARGIN DEPOSITS ON 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.
ABOUT CALVERT GROUP
CALVERT ASSET MANAGEMENT COMPANY, INC., 4550 MONTGOMERY AVENUE, SUITE 1000N,
BETHESDA, MD 20814, IS THE FUNDS' INVESTMENT ADVISOR. THE ADVISOR PROVIDES
THE FUNDS WITH INVESTMENT SUPERVISION AND MANAGEMENT AND OFFICE SPACE; FURNISHES
EXECUTIVE AND OTHER PERSONNEL TO THE FUNDS, AND PAYS THE SALARIES AND FEES OF
ALL DIRECTORS WHO ARE AFFILIATED PERSONS OF THE ADVISOR. IT HAS BEEN
MANAGING MUTUAL FUNDS SINCE 1976. IT IS THE INVESTMENT ADVISOR FOR OVER 25
MUTUAL FUND PORTFOLIOS, INCLUDING THE FIRST AND LARGEST FAMILY OF SOCIALLY
SCREENED FUNDS. AS OF DECEMBER 31, 1999, CALVERT HAD OVER $6.5 BILLION IN ASSETS
UNDER MANAGEMENT.
THE ADVISOR USES A TEAM APPROACH TO ITS MANAGEMENT OF OF THE FUNDS. SINCE
INCEPTION, INVESTMENT SELECTIONS FOR THE FUNDS HAVE BEEN MADE BY RENO J. MARTINI
AND DANIEL K. HAYES. MR. MARTINI, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT
OFFICER OF THE ADVISOR, OVERSEES THE INVESTMENT MANAGEMENT OF ALL CALVERT FUNDS
FOR THE ADVISOR. MR. MARTINI HAS OVER 15 YEARS OF EXPERIENCE IN EVALUATING AND
PURCHASING MUNICIPAL SECURITIES AND HAS BEEN THE HEAD OF THE ADVISOR'S ASSET
MANAGEMENT TEAM SINCE 1985.
ADVISORY FEES. THE AGGREGATE ANNUAL ADVISORY FEE PAID TO THE ADVISOR BY THE
FUNDS FOR THE MOST RECENT FISCAL YEAR AS A PERCENTAGE OF EACH FUND'S AVERAGE
DAILY NET ASSETS WAS 0.60%.
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 DISCUSSED
HEREIN AT THE TIME OF THE REORGANIZATION, NATIONAL MUNICIPAL FUND WILL ASSUME
AND PAY ALL OF BOTH STATE MUNICIPAL FUNDS' 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 FOLLOWING CONDITIONS SET FORTH
THEREIN:
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.
REPRESENTATIONS, WARRANTIES AND, AGREEMENTS. EACH FUND SHALL HAVE COMPLIED WITH
EACH OF ITS RESPONSIBILITIES UNDER THE PLAN, EACH OF THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS PLAN 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 FUND SINCE
DECEMBER 31, 1999. EACH FUND SHALL PRODUCE CERTIFICATES SATISFACTORY IN FORM AND
SUBSTANCE INDICATING THAT IT HAS MET THE TERMS OF THE PLAN.
REGULATORY APPROVAL. THE REGISTRATION STATEMENT FOR THE NATIONAL MUNICIPAL FUND
SHALL HAVE BEEN DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION AND
NO STOP ORDERS UNDER THE SECURITIES ACT OF 1933 PERTAINING THERETO SHALL HAVE
BEEN ISSUED; ALL NECESSARY ORDERS OF EXEMPTION UNDER THIS ACT WITH RESPECT TO
THE TRANSACTIONS CONTEMPLATED BY THE PLAN SHALL HAVE BEEN GRANTED BY THE
SECURITIES AND EXCHANGE COMMISSION; AND ALL APPROVALS, REGISTRATIONS, AND
EXEMPTIONS UNDER FEDERAL AND STATE LAWS CONSIDERED TO BE NECESSARY SHALL HAVE
BEEN OBTAINED.
TAX OPINION. EACH FUND SHALL HAVE RECEIVED OPINIONS OF COUNSEL, ADDRESSED TO AND
IN FORM AND SUBSTANCE SATISFACTORY, 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, THIS PROXY STATEMENT, AND ON SUCH
OTHER WRITTEN REPRESENTATIONS AS THE STATE MUNICIPAL FUNDS AND NATIONAL
MUNICIPAL FUND, RESPECTIVELY, WILL HAVE VERIFIED. 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
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.
THE PLAN MAY BE TERMINATED AND THE REORGANIZATION ABANDONED AS TO EITHER STATE
MUNICIPAL FUND AT ANY TIME BEFORE OR AFTER APPROVAL BY EITHER 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, BOTH STATE
MUNICIPAL FUNDS 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 FUND'S 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 FUND'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, AGAIN, 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 TABLE
PROVIDES COMPARATIVE INFORMATION REGARDING REALIZED CAPITAL GAINS AND LOSSES AND
NET UNREALIZED APPRECIATION OR DEPRECIATION OF PORTFOLIO SECURITIES AND THE
CAPITAL LOSS CARRYFORWARDS OF NATIONAL MUNICIPAL FUND AND THE STATE MUNICIPAL
FUNDS AS OF DECEMBER 31, 1999.
NATIONAL MUNICIPAL FUND
CAPITAL LOSS CARRYFORWARD $607,240
REALIZED GAINS (LOSSES) ($607,240)
NET UNREALIZED depreciation ($802,144)
MARYLAND MUNICIPAL FUND
CAPITAL LOSS CARRYFORWARD $135,440
REALIZED GAINS (LOSSES) ($135,440)
NET UNREALIZED depreciation ($57,286)
VIRGINIA MUNICIPAL FUND
CAPITAL LOSS CARRYFORWARD $88,301
REALIZED GAINS (LOSSES) ($88,299)
NET UNREALIZED depreciation ($158,938)
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 their respective expiration
dates (raging from 2002 to 2007). 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
BOTH 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 2000, 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
June __, 2000.
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
MARCH 31, 2000, AND ON A PRO FORMA BASIS AS OF THE DATE OF THE PROPOSED
ACQUISITION OF ASSETS AT NET ASSET VALUE:
PRO FORMA
(SURVIVING
MARYLAND VIRGINIA NATIONAL NATIONAL
NET ASSET VALUE PER SHARE $4.95 $4.99 $10.25 $10.25
SHARES OUTSTANDING $2,108,468 $2,729,850 $5,189,198 $7,536,404
TOTAL ASSETS $10,451,713 $13,885,642 $55,367,370 $79,704,725
*THE PRO FORMA COMBINED NET ASSETS DOES NOT REFLECT ADJUSTMENTS WITH RESPECT TO
DISTRIBUTIONS PRIOR TO THE REORGANIZATION. 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
EACH OF THE FUNDS IS SERIES OF THE SAME OPEN-END MANAGEMENT INVESTMENT COMPANY
THAT IS ORGANIZED AS A MARYLAND CORPORATION, AND AS SUCH, SHARE COMMON ARTICLES
OF INCORPORATION AND BYLAWS. AFTER THE MERGER, THE OPERATIONS OF THE NATIONAL
MUNICIPAL FUND WILL CONTINUE TO BE GOVERNED BY THE ARTICLES OF INCORPORATION AND
BYLAWS AS THEY NOW EXIST.
INFORMATION ABOUT THE FUNDS
INFORMATION ABOUT THE STATE MUNICIPAL FUNDS AND THE NATIONAL MUNICIPAL FUND IS
INCLUDED IN SEPARATE PROSPECTUSES DATED APRIL 30, 2000. COPIES OF THE
PROSPECTUSES 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 A JOINT STATEMENT OF
ADDITIONAL INFORMATION DATED APRIL 30, 2000, WHICH HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS AND PROXY STATEMENT. THE AUDITED JOINT ANNUAL REPORT TO SHAREHOLDERS
OF EACH FUND IS ALSO INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT. COPIES
OF THE STATEMENT OF ADDITIONAL INFORMATION AND ANNUAL REPORT 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 ROOM OF 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 BOARD OF 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 BOARD OF DIRECTORS 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 9:00 A.M. ON [DAY],
June __, 2000, OR AT SUCH LATER TIME OR DATE MADE NECESSARY BY ADJOURNMENT.
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, WHICH ARE EXPECTED TO BE APPROXIMATELY $______.
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., 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.
THE PLAN MUST BE APPROVED BY A MAJORITY OF THE OUTSTANDING SHARES, WHICH IS
DEFINED AS THE LESSER OF: (1) THE VOTE OF 67% OR MORE OF THE SHARES OF EACH FUND
AT THE SPECIAL MEETING IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES
OF THE FUND ARE PRESENT IN PERSON OR BY PROXY, OR (2) THE VOTE OF MORE THAN 50%
OF THE OUTSTANDING SHARES OF THE FUND.
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. A BROKER NON-VOTE IS WHEN A BROKER HOLDS THE SHARES
AND THE ACTUAL OWNER DOES NOT VOTE AND THE BROKER HOLDING THE SHARES DOES NOT
HAVE THE AUTHORITY TO VOTE THE SHARES. 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.
SHAREHOLDERS OF THE STATE MUNICIPAL FUNDS OF RECORD AT THE CLOSE OF BUSINESS ON
March 31 , 2000, ("RECORD DATE") 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 MARCH 31, 2000, AS SHOWN ON THE BOOKS OF THE
STATE MUNICIPAL FUNDS, THERE WERE ISSUED AND OUTSTANDING 2,108,468 SHARES OF
THE MARYLAND MUNICIPAL FUND AND 2,729,850 SHARES OF THE VIRGINIA 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 MARCH 31, 2000, 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 MARCH 31, 2000, THE FOLLOWING SHAREHOLDERS OWNED OF RECORD 5% OR MORE OF
THE SHARES OF THE RESPECTIVE FUND(s):
FUND/NAME AND ADDRESS % OF OWNERSHIP
NATIONAL MUNICIPAL FUND
John A. Swanson 11.23%
113 Rivers Edge Lane
Moneta, VA 24121
The Lawrence B. Taishoff Flint trust 8.98%
Robert P. Taishoff, Trustee
1321 Washington Drive
Annapolis, MD 21403
APPROVAL OF BOTH REORGANIZATIONS WILL BE DETERMINED SOLELY BY APPROVAL OF THE
SHAREHOLDERS OF THE RESPECTIVE STATE MUNICIPAL FUND. IT WILL NOT BE NECESSARY
FOR BOTH REORGANIZATIONS TO BE APPROVED FOR EITHER OF THEM TO TAKE PLACE.
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 BOARD OF DIRECTORS
WILLIAM M. TARTIKOFF, ESQ.
SECRETARY
THE BOARD OF DIRECTORS OF CALVERT MUNICIPAL FUND, INC., INCLUDING THE
INDEPENDENT DIRECTORS, RECOMMEND A VOTE FOR APPROVAL OF THE PLAN.
<PAGE>
PROXY CARD
THE CALVERT MUNICIPAL FUND, INC.:
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
THIS PROXY IS SOLICITED BY THE BOARD OF 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 THE CALVERT MARYLAND MUNICIPAL INTERMEDIATE
FUND AND CALVERT VIRGINIA 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, LTD., AIR RIGHTS NORTH TOWER, 4550
MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND 20814 ON MONDAY, JUNE 12,
2000 AT 9:00 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: ______, 2000
__________________________________
__________________________________
SIGNATURE(S) (TITLE(S), IF APPLICABLE)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
- --------------------------------------------------------------------------
PLEASE REFER TO THE PROXY STATEMENT DISCUSSION ON THIS MATTER.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL.
AS TO ANY OTHER MATTER, SAID ATTORNEYS SHALL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
THE BOARD OF 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 MARYLAND
MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA 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>
CALVERT MUNICIPAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 2000
ACQUISITION OF THE ASSETS OF THE
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
(SERIES OF THE CALVERT MUNICIPAL FUND, INC.)
4550 MONTGOMERY AVENUE, SUITE 1000N
BETHESDA, MARYLAND 20814
BY AND IN EXCHANGE FOR SHARES OF
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
(A SERIES OF THE CALVERT MUNICIPAL FUND, INC.)
4550 MONTGOMERY AVENUE, SUITE 1000N
BETHESDA, MARYLAND 20814
THIS STATEMENT OF ADDITIONAL INFORMATION, RELATING SPECIFICALLY TO THE
PROPOSED TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE CALVERT
MARYLAND MUNICIPAL INTERMEDIATE FUND AND VIRGINIA MUNICIPAL INTERMEDIATE FUND IN
EXCHANGE FOR SHARES OF THE CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND,
CONSISTS OF THIS COVER PAGE, THE PRO FORMA FINANCIAL INFORMATION, AND THE JOINT
STATEMENT OF ADDITIONAL INFORMATION FOR THE CALVERT MARYLAND MUNICIPAL
INTERMEDIATE FUND, VIRGINIA MUNICIPAL INTERMEDIATE FUND AND CALVERT MUNICIPAL
INTERMEDIATE FUND, DATED APRIL 30, 2000, ATTACHED HERETO AND INCORPORATED BY
REFERENCE.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. A
PROSPECTUS/PROXY STATEMENT DATED APRIL 30, 2000, RELATING TO THE
ABOVE-REFERENCED MATTER MAY BE OBTAINED FROM CALVERT GROUP, 4550 MONTGOMERY
AVENUE, SUITE 1000N, BETHESDA, MARYLAND 20814. THIS STATEMENT OF ADDITIONAL
INFORMATION RELATES TO, AND SHOULD BE READ IN CONJUNCTION WITH, SUCH
PROSPECTUS/PROXY STATEMENT.
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS APRIL 30, 2000.
<PAGE>
TABLE OF CONTENTS
INVESTMENT POLICIES AND RISKS 2
INVESTMENT RESTRICTIONS 10
PURCHASES AND REDEMPTIONS OF SHARES 10
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS 11
VALUATION OF SHARES 12
CALCULATION OF YIELD AND TOTAL RETURN 13
ADVERTISING 14
TRUSTEES/DIRECTORS AND OFFICERS 15
INVESTMENT ADVISOR 19
ADMINISTRATIVE SERVICES AGENT 19
TRANSFER AND SHAREHOLDER SERVICING
AGENTS 20
INDEPENDENT ACCOUNTANTS AND CUSTODIANS 20
METHOD OF DISTRIBUTION 20
PORTFOLIO TRANSACTIONS 22
PERSONAL SECURITIES TRANSACTIONS 23
GENERAL INFORMATION 23
CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES 24
APPENDIX 24
<PAGE>
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
REGISTRANT'S BYLAWS, EXHIBIT 2 TO THIS REGISTRATION STATEMENT, PROVIDE, IN
SUMMARY, THAT OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS SHALL BE INDEMNIFIED BY
REGISTRANT AGAINST LIABILITIES AND EXPENSES INCURRED BY SUCH PERSONS IN
CONNECTION WITH ACTIONS, SUITS, OR PROCEEDINGS ARISING OUT OF THEIR OFFICES OR
DUTIES OF EMPLOYMENT, EXCEPT THAT NO INDEMNIFICATION CAN BE MADE TO SUCH A
PERSON IF HE HAS BEEN ADJUDGED LIABLE OF WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE, OR RECKLESS DISREGARD OF DUTIES. IN THE ABSENCE OF SUCH AN
ADJUDICATION, THE DETERMINATION OF ELIGIBILITY FOR INDEMNIFICATION SHALL BE MADE
BY INDEPENDENT COUNSEL IN A WRITTEN OPINION OR BY THE VOTE OF A MAJORITY OF A
QUORUM OF DIRECTORS WHO ARE NEITHER "INTERESTED PERSONS" OF REGISTRANT, AS THAT
TERM IS DEFINED IN SECTION 2(A)(19) OF THE INVESTMENT COMPANY ACT OF 1940, NOR
PARTIES TO THE PROCEEDING.
REGISTRANT'S ARTICLES OF INCORPORATION ALSO PROVIDE THAT REGISTRANT MAY PURCHASE
AND MAINTAIN LIABILITY INSURANCE ON BEHALF OF ANY OFFICER, TRUSTEE, EMPLOYEE OR
AGENT AGAINST ANY LIABILITIES ARISING FROM SUCH STATUS. IN THIS REGARD,
REGISTRANT MAINTAINS A DIRECTORS & OFFICERS (PARTNERS) LIABILITY INSURANCE
POLICY WITH CHUBB GROUP OF INSURANCE COMPANIES, 15 MOUNTAIN VIEW ROAD, WARREN,
NEW JERSEY 07061, PROVIDING REGISTRANT WITH $5 MILLION IN DIRECTORS AND OFFICERS
LIABILITY COVERAGE, PLUS $5 MILLION IN EXCESS DIRECTORS AND OFFICERS LIABILITY
COVERAGE FOR THE INDEPENDENT TRUSTEES/DIRECTORS ONLY. REGISTRANT ALSO MAINTAINS
A $9 MILLION INVESTMENT COMPANY BLANKET BOND ISSUED BY ICI MUTUAL INSURANCE
COMPANY, P.O. BOX 730, BURLINGTON, VERMONT, 05402.
ITEM 16.
1. ARTICLES OF SUPPLEMENTARY OF CALVERT MUNICIPAL FUND, INC. FILED HEREWITH.
2. BY-LAWS INCORPORATED BY REFERENCE TO REGISTRANT'S PRE-EFFECTIVE AMENDMENT
NO. 2, APRIL 27, 1992 FILED HEREWITH.
3. INAPPLICABLE.
4. AGREEMENT AND PLAN OF REORGANIZATION FILED HEREWITH.
5. Inapplicable.
6. INVESTMENT ADVISORY AGREEMENT INCORPORATED BY REFERENCE TO REGISTRANT'S
PRE-EFFECTIVE AMENDMENT NO. 2, APRIL 27, 1992 FILED HEREWITH.
7. UNDERWRITING AGREEMENT, INCORPORATED BY REFERENCE TO REGISTRANT'S
POST-EFFECTIVE AMENDMENT NO. 15, FILED APRIL 30, 1998, ACCESSION NUMBER
0000882671-98-000012.
8. DEFERRED COMPENSATION AGREEMENT FILED HEREWITH.
9. CUSTODIAL CONTRACT FILED HEREWITH.
10. PLAN OF DISTRIBUTION FOR CLASS A SHARES, INCORPORATED BY REFERENCE TO
REGISTRANT'S POST-EFFECTIVE AMENDMENT NO. 13, APRIL 30, 1996 ACCESSION NUMBER
0000882671-98-000010; FOR CLASS B AND C SHARES, INCORPORATED BY REFERENCE TO
REGISTRANT'S POST-EFFECTIVE AMENDMENT NO. 15, FILED APRIL 30, 1998, ACCESSION
NUMBER 0000882671-98-000012.
11. OPINION AND CONSENT OF COUNSEL AS TO LEGALITY OF SHARES BEING REGISTERED
FILED HEREWITH.
12. OPINION AND CONSENT OF COUNSEL ON TAX MATTERS FILED HEREWITH.
13. (A) TRANSFER AGENCY CONTRACT AND SHAREHOLDER SERVICING CONTRACT,
INCORPORATED BY REFERENCE TO REGISTRANT'S POST-EFFECTIVE AMENDMENT NO. 15, FILED
APRIL 30, 1998, ACCESSION NUMBER 0000882671-98-000012.
(B) ADMINISTRATIVE SERVICES AGREEMENT FILED HEREWITH.
(C) MULTIPLE-CLASS PLAN PURSUANT TO INVESTMENT COMPANY ACT OF 1940 RULE 18F-3,
INCORPORATED BY REFERENCE TO REGISTRANT'S POST-EFFECTIVE AMENDMENT NO. 15, FILED
APRIL 30, 1998, ACCESSION NUMBER 0000882671-98-000012.
14. CONSENT OF PRICEWATERHOUSECOOPERS LLP FILED HEREWITH.
15. INAPPLICABLE.
16. COPIES OF POWER OF ATTORNEY FORMS FILED HEREWITH.
17. (A) CURRENT CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND, CALVERT
VIRGINIA MUNICIPAL INTERMEDIATE FUND AND CALVERT NATIONAL MUNICIPAL INTERMEDIATE
FUND PROSPECTUS FILED HEREWITH.
(B) CURRENT CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA
MUNICIPAL INTERMEDIATE FUND STATEMENT OF ADDITIONAL INFORMATION FILED HEREWITH.
ITEM 17. UNDERTAKINGS
(1) THE UNDERSIGNED REGISTRANT AGREES THAT PRIOR TO ANY PUBLIC REOFFERING OF
THE SECURITIES REGISTERED THROUGH THE USE OF A PROSPECTUS WHICH IS A PART OF
THIS REGISTRATION STATEMENT BY ANY PERSON OR PARTY WHO IS DEEMED TO BE AN
UNDERWRITER
WITHIN THE MEANING OF RULE 145(C) OF THE SECURITIES ACT, THE REOFFERING
PROSPECTUS WILL CONTAIN THE INFORMATION CALLED FOR BY THE APPLICABLE
REGISTRATION FORM FOR REOFFERINGS
BY PERSONS WHO MAY BE DEEMED UNDERWRITERS, IN ADDITION TO THE INFORMATION CALLED
FOR BY THE OTHER ITEMS OF THE APPLICABLE FORM.
(2) THE UNDERSIGNED REGISTRANT AGREES THAT EVERY PROSPECTUS THAT IS FILED
UNDER PARAGRAPH (1) ABOVE WILL BE FILED AS A PART OF AN AMENDMENT TO THE
REGISTRATION STATEMENT AND WILL NOT BE USED UNTIL THE AMENDMENT IS EFFECTIVE,
AND THAT, IN DETERMINING ANY LIABILITY UNDER THE 1933 ACT, EACH POST-EFFECTIVE
AMENDMENT
SHALL BE DEEMED TO BE A NEW REGISTRATION STATEMENT FOR THE SECURITIES OFFERED
THEREIN, AND THE OFFERING OF THE SECURITIES AT THAT TIME SHALL BE DEEMED TO BE
THE INITIAL BONA FIDE OFFERING OF THEM.
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED ON BEHALF OF THE REGISTRANT IN THE CITY OF BETHESDA, AND THE STATE OF
MARYLAND ON THE 10TH DAY OF MARCH, 2000.
CALVERT MUNICIPAL FUND, INC.
BY: _________________________________
BARBARA KRUMSIEK, PRESIDENT
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
_________**_____________ DIRECTOR AND PRESIDENT 03/10/00
BARBARA KRUMSIEK. (PRINCIPAL EXECUTIVE OFFICER)
_________**_____________ PRINCIPAL ACCOUNTING 03/10/00
RONALD M. WOLFSHEIMER OFFICER
__________**____________ DIRECTOR 03/10/00
DAVID R. ROCHAT AND SENIOR VICE PRESIDENT
__________**____________ DIRECTOR 03/10/00
RICHARD L. BAIRD, JR.
__________**____________ DIRECTOR 03/10/00
FRANK H. BLATZ, JR., ESQ.
__________**____________ DIRECTOR 03/10/00
FREDERICK T. BORTS, M.D.
__________**____________ DIRECTOR 03/10/00
CHARLES E. DIEHL
__________**____________ DIRECTOR 03/10/00
DOUGLAS E. FELDMAN, M.D.
__________**____________ DIRECTOR 03/10/00
PETER W. GAVIAN
__________**____________ DIRECTOR 03/10/00
JOHN G. GUFFEY, JR.
________________________ DIRECTOR 03/10/00
M. CHARITO KRUVANT
__________**____________ DIRECTOR 03/10/00
ARTHUR JAMES PUGH
__________**____________ DIRECTOR 03/10/00
D. WAYNE SILBY
**BY IVY WAFFORD DUKE, PURSUANT TO POWER OF ATTORNEY FORMS ON FILE.
<PAGE>
EXHIBIT INDEX
FORM N-14 ITEM NO.
EXHIBIT - 1 ARTICLES OF INCORPORATION
ARTICLES OF AMENDMENT
ARTICLES SUPPLEMENTARY
EXHIBIT - 2 By-Laws
EXHIBIT - 4 AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT - 6 INVESTMENT ADVISORY AGREEMENT
EXHIBIT - 8 DEFERRED COMPENSATION AGREEMENT
EXHIBIT - 9 CUSTODIAL CONTRACT
EXHIBIT - 11 FORM OF OPINION AND CONSENT OF COUNSEL
EXHIBIT - 12 Opinion and Consent of Counsel on Tax Matters
EXHIBIT - 13 ADMINISTRATIVE AGREEMENT
EXHIBIT - 14 CONSENT OF INDEPENDENT AUDITORS
EXHIBIT - 16 POWERS OF ATTORNEY
EXHIBIT - 17 CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND, CALVERT VIRGINIA
MUNICIPAL INTERMEDIATE FUND AND NATIONAL MUNICIPAL INTERMEDIATE FUND
PROSPECTUSES, STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
ARTICLES OF INCORPORATION
OF
CALVERT MUNICIPAL BOND FUND, INC.
ARTICLE I
THE UNDERSIGNED, WILLIAM M. TARTIKOFF, ESQ., WHOSE BUSINESS ADDRESS IS
4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND, 20814, AND WHO IS
AT LEAST 18 YEARS OF AGE, HEREBY ACTS AS AN INCORPORATOR UNDER
AND BY VIRTUE OF THE GENERAL CORPORATION LAW OF THE STATE OF MARYLAND
AUTHORIZING THE FORMATION OF CORPORATIONS.
ARTICLE II
NAME
THE NAME OF THE CORPORATION IS CALVERT MUNICIPAL BOND FUND, INC. (THE
"FUND" OR "CORPORATION").
ARTICLE III
PURPOSE AND POWERS
THE PURPOSE FOR WHICH THE CORPORATION IS FORMED AND THE BUSINESS TO BE
TRANSACTED, CARRIED ON AND PROMOTED BY IT ARE AS FOLLOWS:
1. TO CONDUCT AND CARRY ON THE BUSINESS OF AN INVESTMENT COMPANY OF THE
MANAGEMENT TYPE.
2. TO HOLD, INVEST AND REINVEST ITS ASSETS IN SECURITIES OR OTHER INVESTMENTS,
AND IN CONNECTION WITH THOSE INVESTMENTS TO HOLD PART OR ALL OF ITS
ASSETS IN CASH.
3. TO ISSUE AND SELL SHARES OF ITS OWN CAPITAL STOCK IN SUCH AMOUNTS AND ON SUCH
TERMS AND CONDITIONS, FOR SUCH PURPOSES AND FOR SUCH AMOUNT OR KIND OF
CONSIDERATION PERMITTED BY THE MARYLAND GENERAL CORPORATION LAW AND BY
THESE ARTICLES OF INCORPORATION, AS ITS BOARD OF DIRECTORS MAY DETERMINE.
4. TO REDEEM, PURCHASE OR OTHERWISE ACQUIRE, HOLD, DISPOSE OF, RESELL, TRANSFER,
REISSUE OR CANCEL (ALL WITHOUT THE VOTE OR CONSENT OF THE SHAREHOLDERS
OF THE CORPORATION) SHARES OF ITS CAPITAL STOCK, IN ANY MANNER AND TO THE
EXTENT PERMITTED BY THE MARYLAND GENERAL CORPORATION LAW AND BY THESE
ARTICLES OF
INCORPORATION.
5. TO ENGAGE IN ANY OR ALL OTHER LAWFUL BUSINESS FOR WHICH CORPORATIONS MAY BE
INCORPORATED UNDER THE MARYLAND
GENERAL CORPORATION LAW.
6. TO DO ANY AND ALL SUCH FURTHER ACTS OR THINGS TO EXERCISE ANY AND AIL SUCH
FURTHER POWERS OR RIGHTS AS MAY BE NECESSARY, INCIDENTAL, RELATIVE,
CONDUCIVE, APPROPRIATE OR DESIRABLE FOR, THE ACCOMPLISHMENT, CARRYING OUT OR
ATTAINMENT OF ANY OF THE FOREGOING PURPOSES OR OBJECTS.
THE CORPORATION IS AUTHORIZED TO EXERCISE AND ENJOY ALL THE POWERS, RIGHTS
AND PRIVILEGES GRANTED TO, OR CONFERRED ON, CORPORATIONS BY THE MARYLAND
GENERAL CORPORATION LAW, AND THE ENUMERATION OF THE FOREGOING DOES NOT
EXCLUDE ANY POWERS, RIGHTS OR PRIVILEGES SO GRANTED OR CONFERRED.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
THE ADDRESS OF THE PRINCIPAL OFFICE OF THE CORPORATION IN THE STATE OF
MARYLAND IS 4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND, 20814.
THE RESIDENT AGENT OF THE CORPORATION IS WILLIAM M. TARTIKOFF, ESQ.,
AT THE SAME ADDRESS.
ARTICLE V
CAPITAL STOCK
THE TOTAL NUMBER OF SHARES OF CAPITAL STOCK THAT THE CORPORATION HAS
AUTHORITY TO ISSUE IS TWO BILLION SHARES OF THE PAR VALUE OF ONE CENT
($0.01) PER SHARE AND OF THE AGGREGATE PAR VALUE OF TWENTY MILLION DOLLARS
($20,000,000). TWO HUNDRED FIFTY MILLION (250,000,000) OF SUCH SHARES WILL BE
ISSUED AS COMMON STOCK OF THE SERIES DESIGNATED CALVERT CALIFORNIA
MUNICIPAL INTERMEDIATE PORTFOLIO. THE BALANCE OF ONE BILLION SEVEN
HUNDRED FIFTY MILLION (1,750,000,000) SHARES MAY BE ISSUED IN ANY
SERIES OR CLASS, EACH COMPRISING SUCH NUMBER OF SHARES AND HAVING SUCH
PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS AND TERMS AND CONDITIONS OF
REDEMPTION AS WILL BE DETERMINED FROM TIME TO TIME BY RESOLUTION OF THE
BOARD OF DIRECTORS, TO WHOM AUTHORITY TO TAKE SUCH ACTION IS HEREBY
EXPRESSLY GRANTED (ALL WITHOUT THE VOTE OR CONSENT OF THE SHAREHOLDERS OF THE
CORPORATION).
1. THE BOARD OF DIRECTORS IS HEREBY AUTHORIZED (SUBJECT TO APPLICABLE LAW) TO
CHANGE THE DESIGNATION OF ANY SERIES, AND TO INCREASE OR DECREASE THE
NUMBER OF SHARES OF ANY SERIES, EXCEPT THAT THE NUMBER OF SHARES MAY NOT BE
DECREASED BELOW THE NUMBER OF SHARES THEN OUTSTANDING. THE BOARD MAY CLASSIFY
OR RECLASSIFY ANY SERIES INTO ONE OR MORE CLASSES. AUTHORITY GRANTED TO
THE BOARD BY THESE ARTICLES TO ACT WITH RESPECT TO ANY SERIES OF THE FUND
SHALL BE EQUALLY APPLICABLE TO ANY CLASS OF SHARES OF ANY SERIES.
2. THE HOLDERS OF EACH SHARE OF STOCK OF THE CORPORATION ARE ENTITLED TO ONE
VOTE FOR EACH FULL SHARE, AND A FRACTIONAL VOTE FOR EACH FRACTIONAL
SHARE OF STOCK, IRRESPECTIVE OF SERIES, THEN RECORDED IN THE SHAREHOLDER'S NAME
ON THE BOOKS OF THE CORPORATION. ON ANY MATTER SUBMITTED TO A VOTE OF
THE SHAREHOLDERS, ALL SHARES OF THE CORPORATION THEN ISSUED AND
OUTSTANDING AND ENTITLED TO VOTE WILL BE VOTED IN THE AGGREGATE AND NOT BY
SERIES EXCEPT (I) WHEN OTHERWISE REQUIRED BY LAW; AND (II) IF THE BOARD OF
DIRECTORS, IN ITS SOLE DISCRETION, DETERMINES THAT ANY MATTER CONCERNS ONLY
ONE OR MORE PARTICULAR SERIES OR CLASS, IT MAY DIRECT THAT ONLY HOLDERS OF
THAT OR THOSE SERIES OR CLASSES MAY VOTE ON THE MATTER.
3. THE CORPORATION MAY ISSUE SHARES OF STOCK IN FRACTIONAL DENOMINATIONS TO THE
SAME EXTENT AS ITS WHOLE SHARES. FRACTIONAL SHARES HAVE PROPORTIONATE
RIGHTS INCLUDING, WITHOUT LIMITATION, THE RIGHT TO VOTE, RECEIVE DIVIDENDS
AND DISTRIBUTIONS AND THE RIGHT TO PARTICIPATE UPON LIQUIDATION OF THE
CORPORATION. NO STOCK CERTIFICATES WILL BE ISSUED TO
REPRESENT FRACTIONAL SHARES.
4. EACH SERIES HAS THE FOLLOWING POWERS, PREFERENCES OR OTHER SPECIAL RIGHTS,
WITH THE QUALIFICATIONS, RESTRICTIONS, AND LIMITATIONS THEREOF AS NOTED:
(A) EXCEPT AS MAY BE OTHERWISE PROVIDED IN THESE ARTICLES, ALL
CONSIDERATION THE CORPORATION RECEIVES FOR THE ISSUE OR
SALE OF SHARES OF A PARTICULAR
SERIES BELONGS TO THAT SERIES ALONE, SUBJECT ONLY TO THE RIGHTS OF CREDITORS.
CONSIDERATION INCLUDES ALL ASSETS IN WHICH THE CONSIDERATION IS INVESTED
OR REINVESTED, ALL INCOME, EARNINGS, PROFITS, AND PROCEEDS THEREOF, INCLUDING
ANY PROCEEDS DERIVED FROM THE SALE, EXCHANGE OR LIQUIDATION OF THE ASSETS, AND
ANY FUNDS OR PAYMENTS DERIVED FROM ANY REINVESTMENT OF THE PROCEEDS IN
WHATEVER FORM.
(B) THE BOARD OF DIRECTORS IN ITS DISCRETION MAY PERIODICALLY DECLARE AND
PAY DIVIDENDS OR DISTRIBUTIONS, IN STOCK OR IN CASH, ON ANY OR ALL SERIES
OR CLASSES OF SHARES. THE BOARD WILL DETERMINE WHETHER TO MAKE A
DISTRIBUTION AND, IF SO, THE AMOUNT OF THE DISTRIBUTION, GIVING DUE
CONSIDERATION TO THE INTERESTS OF EACH SERIES AND THE CORPORATION
AS A WHOLE.
(I) DIVIDENDS OR DISTRIBUTIONS ON SHARES OF ANY SERIES OF STOCK WILL
BE PAID ONLY OUT OF SURPLUS OR OTHER LAWFULLY AVAILABLE ASSETS
DETERMINED BY THE BOARD OF DIRECTORS AS BELONGING TO THAT
SERIES.
(II) THE BOARD OF DIRECTORS HAS THE POWER IN ITS DISCRETION TO
DISTRIBUTE DIVIDENDS, INCLUDING DIVIDENDS IN AMOUNTS SUFFICIENT IN THE
BOARD'S OPINION TO ENABLE THE CORPORATION TO QUALIFY AS A "REGULATED
INVESTMENT COMPANY" UNDER THE FEDERAL TAX LAWS, AND ACCORDINGLY TO AVOID
LIABILITY FOR THE CORPORATION FOR FEDERAL INCOME TAX IN THAT YEAR.
THE DISTRIBUTION OF DIVIDENDS INCLUDES DIVIDENDS DESIGNATED IN WHOLE OR IN PART
AS CAPITAL GAINS DISTRIBUTIONS.
(C) THE ALLOCATION OF ASSETS AND LIABILITIES TO A GIVEN SERIES IS
DETERMINED BY THE BOARD OF DIRECTORS. ANY DECISION OF THE BOARD AS TO THE
ALLOCATION OF ASSETS AND LIABILITIES IS FINAL. THE ASSETS BELONGING TO ANY
SERIES OF STOCK WILL GENERALLY BE CHARGED WITH THE LIABILITIES OF THAT
SERIES AND WITH ITS ALLOCABLE PORTION OF THE OVERALL LIABILITIES
OF THE CORPORATION.
(D) IN THE EVENT OF THE LIQUIDATION OF THE CORPORATION, THE SHAREHOLDERS OF
EACH SERIES WILL BE ENTITLED TO RECEIVE, AS
A SERIES, THE NET EXCESS OF ASSETS OVER LIABILITIES AS ALLOCABLE TO THAT SERIES.
SUCH ASSETS WILL BE DISTRIBUTED
TO
SHAREHOLDERS IN PROPORTION TO THE NUMBER OF SHARES HELD AND RECORDED ON THE
BOOKS OF THE CORPORATION. ASSETS NOT READILY IDENTIFIABLE AS BELONGING TO
ANY PARTICULAR SERIES WILL BE ALLOCATED BY OR UNDER THE SUPERVISION OF
THE BOARD OF DIRECTORS, AND THE DECISION WITH REGARD TO THE ALLOCATION WILL
BE CONCLUSIVE AND BINDING FOR ALL PURPOSES.
(E) THE CORPORATION'S SHARES OF STOCK ARE ISSUED AND SOLD SUBJECT TO THE
PROVISIONS OF THESE ARTICLES OF INCORPORATION AND THE FUND'S BYLAWS.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING, AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND SHAREHOLDERS
1. THE CORPORATION WILL HAVE ONE DIRECTOR. THIS NUMBER MAY BE INCREASED PURSUANT
TO THE BYLAWS OF THE CORPORATION BUT WILL NEVER BE LESS THAN THE
MINIMUM NUMBER REQUIRED BY THE MARYLAND GENERAL CORPORATION LAW. CLIFTON S.
SORRELL, JR. WILL ACT AS DIRECTOR UNTIL THE FIRST MEETING OR UNTIL HIS
SUCCESSORS ARE DULY ELECTED AND QUALIFY.
2. THE BOARD OF DIRECTORS OF THE CORPORATION IS HEREBY EMPOWERED TO AUTHORIZE
THE PERIODIC ISSUANCE OF SHARES OF CAPITAL STOCK FOR CONSIDERATION IT
DEEMS ADVISABLE (WITHOUT THE VOTE OR CONSENT OF THE SHAREHOLDERS OF THE
CORPORATION).
3. NO HOLDER OF SHARES OF THE CORPORATION HAS ANY RIGHT TO PURCHASE OR SUBSCRIBE
FOR SHARES OF THE CAPITAL STOCK OF THE CORPORATION OR ANY OTHER SECURITY OF THE
CORPORATION WHICH IT MAY ISSUE OR SELL OTHER THAN WHAT THE BOARD OF DIRECTORS IN
ITS DISCRETION DETERMINES TO OFFER.
4. THE BOARD OF DIRECTORS WILL MANAGE THE BUSINESS AND AFFAIRS OF THE
CORPORATION, AND MAY EXERCISE ALL POWERS OF THE CORPORATION EXCEPT
THOSE POWERS WHICH ARE BY LAW, BY THESE ARTICLES OF INCORPORATION OR
BY THE BYLAWS CONFERRED ON OR RESERVED TO THE SHAREHOLDERS. IN
FURTHERANCE AND NOT IN LIMITATION OF THE POWERS CONFERRED BY LAW, THE BOARD
OF DIRECTORS HAS THE POWER:
(A) TO MAKE, ALTER AND REPEAL BYLAWS OF THE CORPORATION.
(B) TO SET APART, OUT OF ASSETS OF THE CORPORATION AVAILABLE FOR DIVIDENDS,
RESERVES FOR WORKING CAPITAL OR FOR ANY OTHER PROPER PURPOSE, AND TO
REDUCE, ABOLISH OR ADD TO ANY RESERVE AS THE BOARD OF DIRECTORS DEEMS IN
THE BEST INTEREST OF THE CORPORATION. THE BOARD WILL DETERMINE IN ITS
DISCRETION WHAT PART OF THE ASSETS OF THE CORPORATION, AVAILABLE FOR
DIVIDENDS IN EXCESS OF ANY RESERVE, WILL BE DECLARED IN DIVIDENDS AND
PAID TO THE SHAREHOLDERS OF THE CORPORATION.
5. NOTWITHSTANDING ANY PROVISION OF THE MARYLAND GENERAL CORPORATION LAW
REQUIRING A GREATER PROPORTION THAN A MAJORITY OF THE VOTES OF ALL
SERIES OR CLASS OF ANY SERIES OF THE CORPORATION'S STOCK ENTITLED TO
BE CAST IN ORDER TO TAKE OR AUTHORIZE ANY ACTION, ANY ACTION MAY BE TAKEN OR
AUTHORIZED UPON THE CONCURRENCE OF A MAJORITY OF THE AGGREGATE NUMBER OF
VOTES ENTITLED TO BE CAST SUBJECT TO APPLICABLE LAWS AND REGULATIONS, OR RULES
OR ORDERS OF THE SECURITIES AND EXCHANGE COMMISSION OR ANY SUCCESSOR
REGULATOR.
6. REGARDING THE FOLLOWING ITEMS, ANY DETERMINATION MADE BY OR PURSUANT TO THE
DIRECTION OF THE BOARD OF DIRECTORS WILL BE FINAL AND CONCLUSIVE AS LONG AS
IT IS MADE IN GOOD FAITH AND, SO FAR AS ACCOUNTING MATTERS ARE
INVOLVED, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. SUCH
DETERMINATIONS INCLUDE:
- THE AMOUNT AND VALUE OF THE ASSETS, DEBTS, OBLIGATIONS, OR LIABILITIES
OF THE CORPORATION;
- THE AMOUNT OF ANY RESERVES OR CHARGES SET UP AND THE PROPRIETY
THEREOF;
- THE TIME OF OR PURPOSE FOR CREATING SUCH RESERVES OR CHARGES;
- THE USE, ALTERATION OR CANCELLATION OF ANY RESERVES OR CHARGES
(WHETHER OR NOT ANY DEBT, OBLIGATION OR LIABILITY FOR WHICH SUCH RESERVES
OR CHARGES WILL HAVE BEEN CREATED HAVE BEEN PAID OR DISCHARGED OR WILL BE THEN
OR THEREAFTER REQUIRED TO BE PAID OR DISCHARGED);
- THE ESTABLISHMENT OR DESIGNATION OF PROCEDURES OR METHODS TO BE
EMPLOYED FOR VALUING ANY ASSET OF THE CORPORATION;
- THE ALLOCATION OF ANY ASSET OF THE CORPORATION TO A PARTICULAR
SERIES OR CLASS OF THE CORPORATION'S STOCK;
- THE FUNDS AVAILABLE FOR THE DECLARATION OF DIVIDENDS AND THE
DECLARATION OF DIVIDENDS;
- THE CHARGING OF ANY LIABILITY OF THE CORPORATION TO A PARTICULAR
SERIES OR CLASS OF THE CORPORATION'S STOCK;
- THE NUMBER OF SHARES OF ANY SERIES OR CLASS OF THE CORPORATION'S
OUTSTANDING STOCK;
- THE ESTIMATED EXPENSE TO THE CORPORATION IN CONNECTION WITH PURCHASES
OR REDEMPTIONS OF ITS SHARES;
- THE ABILITY TO LIQUIDATE INVESTMENTS IN AN ORDERLY FASHION; OR ANY
OTHER MATTERS RELATING TO THE ISSUE, SALE, PURCHASE OR REDEMPTION OR
OTHER ACQUISITION OR DISPOSITION OF INVESTMENTS OR SHARES OF THE CORPORATION,
OR THE DETERMINATION OF NET ASSET VALUE PER SHARE OF SHARES OF ANY SERIES OR
CLASS OF THE CORPORATION'S STOCK.
ARTICLE VII
REDEMPTION OF SHARES
1.EACH HOLDER OF SHARES OF CAPITAL STOCK OF THE CORPORATION WILL BE ENTITLED TO
REQUIRE THE CORPORATION TO REDEEM ALL OR ANY PART OF THE SHARES OF
CAPITAL STOCK OF THE CORPORATION STANDING IN THE NAME OF SUCH HOLDER ON THE
BOOKS OF THE CORPORATION, AT THE REDEMPTION PRICE OF SUCH SHARES AS IN EFFECT,
SUBJECT TO THE RIGHT OF THE BOARD OF DIRECTORS OF THE CORPORATION TO
SUSPEND THE RIGHT OF REDEMPTION OF SHARES OF CAPITAL STOCK OF THE CORPORATION
OR POSTPONE THE TIME OF PAYMENT OF THE REDEMPTION PRICE IN ACCORDANCE WITH
PROVISIONS OF APPLICABLE LAW. THE REDEMPTION PRICE OF SHARES OF
CAPITAL STOCK OF THE CORPORATION WILL BE ITS NET ASSET VALUE AS DETERMINED BY,
OR PURSUANT TO THE DIRECTION OF, THE BOARD OF DIRECTORS OF THE
CORPORATION IN ACCORDANCE WITH THE PROVISIONS OF APPLICABLE LAW, LESS ANY
REDEMPTION FEE OR OTHER CHARGE, IF ANY, AS FIXED BY RESOLUTION OF THE
BOARD. REDEMPTION IS CONDITIONED ON THE CORPORATION HAVING FUNDS LEGALLY
AVAILABLE FOR THAT PURPOSE. PAYMENT OF THE REDEMPTION PRICE WILL BE MADE BY THE
CORPORATION IN CASH OR BY CHECK ON CURRENT FUNDS, OR IN ASSETS OTHER THAN
CASH, AT SUCH TIME AND IN SUCH MANNER AS DETERMINED BY THE BOARD OF
DIRECTORS OF THE CORPORATION.
2. IF THE BOARD OF DIRECTORS DETERMINES THAT THE NET ASSET VALUE PER SHARE OF
ANY SERIES OR CLASS OF THE CORPORATION'S STOCK SHOULD REMAIN CONSTANT,
THE CORPORATION MAY DECLARE, PAY AND CREDIT AS DIVIDENDS DAILY THE NET
INCOME (WHICH MAY INCLUDE
OR GIVE EFFECT TO REALIZED AND UNREALIZED GAINS AND LOSSES, AS DETERMINED IN
ACCORDANCE WITH THE CORPORATION'S ACCOUNTING AND PORTFOLIO VALUATION
POLICIES) OF THE CORPORATION ALLOCATED TO THAT SERIES OR CLASS. IF THE
AMOUNT SO DETERMINED FOR ANY DAY IS NEGATIVE, THE CORPORATION MAY, WITHOUT THE
PAYMENT OF MONETARY COMPENSATION BUT IN CONSIDERATION OF THE INTEREST OF THE
CORPORATION AND ITS SHAREHOLDERS IN MAINTAINING A CONSTANT NET ASSET
VALUE PER SHARE OF THE SERIES, REDEEM PRO RATA FROM ALL THE SHAREHOLDERS OF
RECORD OF SHARES OF THE SERIES OR CLASS AT THE TIME OF THE REDEMPTION
(IN PROPORTION TO THEIR RESPECTIVE HOLDINGS) THE NUMBER OF OUTSTANDING SHARES
OF THE SERIES OR CLASS, OR FRACTIONS THEREOF, AS IS REQUIRED TO PERMIT THE
NET ASSET VALUE PER SHARE OF THE SERIES TO REMAIN CONSTANT.
3. IF, IN THE SOLE DETERMINATION OF THE BOARD OF DIRECTORS, THE CONTINUATION OF
THE OFFERING OF SHARES OF ANY ONE OR MORE SERIES OR CLASSES IS NO
LONGER IN THE BEST INTEREST OF THE CORPORATION, E.G., BECAUSE MARKET
CONDITIONS HAVE CHANGED, REGULATORY PROBLEMS HAVE DEVELOPED OR
PARTICIPATION IN THE SERIES OR CLASS IS LOW, THE CORPORATION MAY CEASE THE
OFFERING OF SHARES OF THE SERIES OR CLASS AND MAY, BY MAJORITY VOTE OF THE
BOARD OF DIRECTORS, REQUIRE THE REDEMPTION OF ALL OUTSTANDING SHARES OF
THE SERIES OR CLASS WITH THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO THE
SHAREHOLDERS, ALL SUBJECT TO THE REQUIREMENTS OF APPLICABLE SECURITIES
LAWS AND REGULATIONS AND THE MARYLAND GENERAL CORPORATION LAW.
ARTICLE VIII
AMENDMENT
THE CORPORATION RESERVES THE RIGHT AT ANY TIME TO ALTER, AMEND OR REPEAL ANY
PROVISIONS CONTAINED IN THESE ARTICLES OF INCORPORATION, INCLUDING ANY
AMENDMENT THAT ALTERS THE CONTRACT RIGHTS OF ANY OUTSTANDING STOCK, AT ANY
TIME IN THE MANNER NOW OR HEREAFTER PRESCRIBED BY THE LAWS OF THE STATE OF
MARYLAND, AND ALL RIGHTS CONFERRED ON THE CORPORATION'S SHAREHOLDERS,
DIRECTORS AND OFFICERS BY THESE ARTICLES ARE GRANTED
SUBJECT TO THIS RESERVATION.
IN WITNESS WHEREOF, CALVERT MUNICIPAL BOND FUND HAS CAUSED THESE ARTICLES OF
INCORPORATION TO BE SIGNED IN ITS NAME AND ON ITS BEHALF BY ITS
SECRETARY ON THIS 23RD DAY OF JANUARY,
1992.
CALVERT MUNICIPAL BOND FUND
BY:_________________________
WILLIAM
M. TARTIKOFF
SECRETARY
ATTEST:
<PAGE>
CALVERT MUNICIPAL FUND, INC.
ARTICLES OF AMENDMENT
CALVERT MUNICIPAL FUND, INC. (FORMERLY KNOWN AS CALVERT MUNICIPAL BOND FUND,
INC.), A CORPORATION ESTABLISHED UNDER THE GENERAL CORPORATION LAW OF THE
STATE OF MARYLAND (THE "CORPORATION"), HEREBY CERTIFIES TO THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION THAT:
FIRST: THE CHARTER OF THE CORPORATION IS HEREBY AMENDED BY
STRIKING THE WORD "BOND" FROM THE CORPORATION'S NAME, SO THAT THE
CORPORATION'S NAME IS NOW "CALVERT MUNICIPAL FUND, INC."
SECOND: THE BOARD OF DIRECTORS OF THE CORPORATION, BY UNANIMOUS
CONSENT, ADOPTED A RESOLUTION IN WHICH WAS SET FORTH THE AMENDMENT
TO THE CHARTER, DECLARING THAT THE AMENDMENT WAS ADVISABLE AND
DIRECTING THAT IT BE SUBMITTED TO THE SOLE SHAREHOLDER FOR ITS WRITTEN
CONSENT.
THIRD: THE SOLE SHAREHOLDER HAS CONSENTED IN WRITING TO THE
AMENDMENT, AND HAS WAIVED ANY RIGHTS IT MAY HAVE TO DISSENT FROM THE
AMENDMENT. THE CONSENT AND WAIVER ARE FILED WITH THE RECORDS OF
THE CORPORATION.
IN WITNESS WHEREOF, CALVERT MUNICIPAL FUND, INC. HAS CAUSED THESE
ARTICLES OF AMENDMENT TO BE SIGNED IN ITS NAME AND ON ITS BEHALF BY ITS VICE
PRESIDENT AND SECRETARY, AND ITS CORPORATE SEAL TO BE AFFIXED BELOW AND ATTESTED
BY ITS ASSISTANT SECRETARY, ON MAY 21, 1992.
CALVERT MUNICIPAL FUND, INC.
BY:
WILLIAM M. TARTIKOFF
VICE PRESIDENT AND SECRETARY
ATTEST:
SUSAN WALKER BENDER
ASSISTANT SECRETARY
<PAGE>
ARTICLES SUPPLEMENTARY
CALVERT MUNICIPAL FUND, INC.
FIRST: CALVERT MUNICIPAL FUND, INC. (THE "CORPORATION"), WHOSE MAILING
ADDRESS IS 4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MD 20814, DOES HEREBY
INCREASE/DECREASE THE NUMBER OF AUTHORIZED SHARES OF STOCK OF THE CORPORATION'S
VARIOUS CLASSES IN ACCORDANCE WITH SECTIONS 2-105(C) AND 2-208.1 OF THE
CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE LAWS OF THE STATE OF MARYLAND.
SECOND: THE CORPORATION IS REGISTERED AS AN OPEN-END COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940.
THIRD: THE TOTAL NUMBER OF SHARES OF STOCK OF ALL CLASSES WHICH THE
CORPORATION IS AUTHORIZED TO ISSUE IS TWO BILLION (2,000,000,000) SHARES OF
STOCK. THE PAR VALUE OF EACH SHARE IS ONE CENT ($0.01). THE AGGREGATE PAR
VALUE OF ALL THE SHARES OF ALL THE CLASSES IS $20,000,000. IMMEDIATELY PRIOR TO
THE INCREASE/DECREASE, SHARES OF STOCK WERE ALLOCATED TO ONLY ONE CLASS,
REFERRED TO IN THESE ARTICLES AS "SERIES." THE SERIES DESIGNATED AS CALVERT
CALIFORNIA MUNICIPAL INTERMEDIATE PORTFOLIO WAS ALLOCATED 250,000,000 AUTHORIZED
SHARES.
FOURTH: THE BOARD OF DIRECTORS HAS EXPRESSLY AUTHORIZED THE REALLOCATION OF
SHARES AMONG THE CORPORATION'S CURRENT SERIES IN ACCORDANCE WITH SECTION
2-105(C) AND 2-208.1 OF THE CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE LAWS OF
THE STATE OF MARYLAND. THE PAR VALUE OF EACH SHARE IS $0.01. AFTER THE
RESPECTIVE INCREASE/DECREASE OF SHARES, EACH OF THE SERIES BELOW HAS BEEN
ALLOCATED SHARES AS FOLLOWS:
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT MICHIGAN MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT NEW YORK MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT ARIZONA MUNICIPAL INTERMEDIATE FUND 250,000,000
CALVERT PENNSYLVANIA MUNICIPAL INTERMEDIATE FUND 250,000,000
TOTAL SHARES AUTHORIZED 2,000,000,000
IN WITNESS WHEREOF, CALVERT MUNICIPAL FUND, INC. HAS CAUSED THESE ARTICLES
SUPPLEMENTARY TO BE SIGNED IN ITS NAME AND ON ITS BEHALF BY ITS CHAIRMAN OF THE
BOARD OF DIRECTORS ON THIS 7TH DAY OF AUGUST, 1996. UNDER PENALTIES OF PERJURY,
THE MATTERS AND FACTS SET FORTH HEREIN ARE TRUE IN ALL MATERIAL RESPECTS.
CALVERT MUNICIPAL FUND, INC.
ACKNOWLEDGMENT:
CLIFTON S. SORRELL, JR.
CHAIRMAN OF THE BOARD OF DIRECTORS
ATTEST:
WILLIAM M. TARTIKOFF
SECRETARY
BY-LAWS
OF
CALVERT MUNICIPAL FUND, INC
MARCH 9, 2000
ARTICLE 1
ARTICLES OF INCORPORATION AND PRINCIPAL OFFICE
1.1 ARTICLES OF INCORPORATION. THESE BY-LAWS ARE SUBJECT TO THE
ARTICLES OF INCORPORATION, AS FROM TIME TO TIME IN EFFECT, OF CALVERT MUNICIPAL
FUND, INC. A CORPORATION ESTABLISHED UNDER THE GENERAL CORPORATION LAW OF THE
STATE OF MARYLAND.
1.2 PRINCIPAL OFFICE OF THE FUND. THE PRINCIPAL OFFICE OF THE FUND WILL
BE 4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND, 20814.
ARTICLE 2
MEETINGS OF DIRECTORS
2.1 REGULAR MEETINGS. REGULAR MEETINGS OF THE DIRECTORS MAY BE HELD
WITHOUT CALL OR NOTICE AT SUCH PLACES AND AT SUCH TIMES AS THE DIRECTORS MAY
FROM TIME TO TIME DETERMINE, PROVIDED THAT NOTICE OF THE FIRST REGULAR MEETING
FOLLOWING ANY SUCH DETERMINATION WILL BE GIVEN TO ABSENT DIRECTORS.
2.2 SPECIAL MEETINGS. SPECIAL MEETINGS OF THE DIRECTORS MAY BE HELD AT
ANY TIME AND AT ANY PLACE DESIGNATED IN THE CALL OF THE MEETING WHEN CALLED BY
THE CHAIRMAN OF THE DIRECTORS, THE PRESIDENT OR THE CONTROLLER OR BY TWO OR MORE
DIRECTORS, SUFFICIENT NOTICE THEREOF BEING GIVEN TO EACH DIRECTOR BY THE
SECRETARY OR AN ASSISTANT SECRETARY OR BY THE OFFICER OF THE DIRECTORS CALLING
THE MEETING.
2.3 NOTICE. IT WILL BE SUFFICIENT NOTICE TO A DIRECTOR OF A SPECIAL
MEETING TO SEND NOTICE BY MAIL AT LEAST FORTY-EIGHT HOURS OR BY TELEGRAM OR
FACSIMILE AT LEAST TWENTY-FOUR HOURS BEFORE THE MEETING ADDRESSED TO THE
DIRECTOR AT HIS OR HER USUAL OR LAST KNOWN BUSINESS OR RESIDENCE ADDRESS OR TO
GIVE NOTICE TO HIM OR HER IN PERSON OR BY TELEPHONE AT LEAST TWENTY-FOUR HOURS
BEFORE THE MEETING. NOTICE OF A MEETING NEED NOT BE GIVEN TO ANY DIRECTOR IF A
WRITTEN WAIVER OF NOTICE, EXECUTED BY HIM OR HER BEFORE OR AFTER THE MEETING, IS
FILED WITH THE RECORDS OF THE MEETING, OR TO ANY DIRECTOR WHO ATTENDS THE
MEETING WITHOUT PROTESTING PRIOR THERETO OR AT ITS COMMENCEMENT THE LACK OF
NOTICE TO HIM OR HER. NEITHER NOTICE OF A MEETING NOR A WAIVER OF A NOTICE NEED
SPECIFY THE PURPOSES OF THE MEETING.
2.4 QUORUM. AT ANY MEETING OF THE DIRECTORS A MAJORITY OF THE DIRECTORS
THEN IN OFFICE WILL CONSTITUTE A QUORUM. ANY MEETING MAY BE ADJOURNED FROM TIME
TO TIME BY A MAJORITY OF THE VOTES CAST UPON THE QUESTION, WHETHER OR NOT A
QUORUM IS PRESENT, AND THE MEETING MAY BE HELD AS ADJOURNED WITHOUT FURTHER
NOTICE.
2.5 PARTICIPATION BY TELEPHONE. ONE OR MORE OF THE DIRECTORS MAY
PARTICIPATE IN A MEETING BY MEANS OF A CONFERENCE TELEPHONE OR SIMILAR
COMMUNICATIONS EQUIPMENT ALLOWING ALL PERSONS PARTICIPATING IN THE MEETING TO
HEAR EACH OTHER AT THE SAME TIME. PARTICIPATION BY SUCH MEANS WILL CONSTITUTE
PRESENCE IN PERSON AT A MEETING TO THE EXTENT PERMITTED BY THE INVESTMENT
COMPANY ACT OF 1940.
2.6 SPECIAL ACTION. WHEN ALL THE DIRECTORS WILL BE PRESENT AT ANY
MEETING, HOWEVER CALLED, OR FOR WHATEVER PURPOSE HELD, OR WILL ASSENT TO THE
HOLDING OF THE MEETING WITHOUT NOTICE, OR AFTER THE MEETING WILL SIGN A WRITTEN
ASSENT THERETO ON THE RECORD OF SUCH MEETING, THE ACTS OF SUCH MEETING WILL BE
VALID AS IF THE MEETING HAD BEEN REGULARLY HELD.
2.7 ACTION BY CONSENT. ANY ACTION BY THE DIRECTORS MAY BE TAKEN WITHOUT
A MEETING IF A WRITTEN CONSENT THERETO IS SIGNED BY ALL THE DIRECTORS AND FILED
WITH THE RECORDS OF THE DIRECTORS' MEETING, OR BY TELEPHONE CONSENT PROVIDED A
QUORUM OF DIRECTORS PARTICIPATE IN ANY SUCH TELEPHONE MEETING. SUCH CONSENT WILL
BE TREATED AS A VOTE OF THE DIRECTORS FOR ALL PURPOSES.
ARTICLE 3
OFFICERS
3.1 ENUMERATION; QUALIFICATION. THE OFFICERS OF THE FUND WILL BE A
CHAIRMAN OF THE DIRECTORS, A PRESIDENT, A CONTROLLER, A SECRETARY AND SUCH OTHER
OFFICERS, INCLUDING VICE PRESIDENTS AND ASSISTANT SECRETARIES, IF ANY, AS THE
DIRECTORS FROM TIME TO TIME MAY IN THEIR DISCRETION ELECT. THE FUND MAY ALSO
HAVE SUCH AGENTS AS THE DIRECTORS FROM TIME TO TIME IN THEIR DISCRETION MAY
APPOINT. THE CHAIRMAN OF THE DIRECTORS WILL BE A DIRECTOR AND MAY BUT NEED NOT
BE A SHAREHOLDER; AND ANY OTHER OFFICER MAY BE BUT NONE NEED BE A DIRECTOR OR
SHAREHOLDER. ANY TWO OR MORE OFFICES MAY BE HELD BY THE SAME PERSON.
3.2 ELECTION. THE CHAIRMAN OF THE DIRECTORS, THE PRESIDENT, THE
CONTROLLER AND THE SECRETARY WILL BE ELECTED ANNUALLY BY THE DIRECTORS. OTHER
OFFICERS, IF ANY, MAY BE ELECTED OR APPOINTED BY THE DIRECTORS AT ANY TIME.
VACANCIES IN ANY OFFICE MAY BE FILLED AT ANY TIME.
3.3 TENURE. THE CHAIRMAN OF THE DIRECTORS, THE PRESIDENT, THE
CONTROLLER AND THE SECRETARY WILL HOLD OFFICE UNTIL THEIR RESPECTIVE SUCCESSORS
ARE CHOSEN AND QUALIFIED, OR IN EACH CASE UNTIL HE OR SHE SOONER DIES, RESIGNS,
IS REMOVED OR BECOMES DISQUALIFIED. EACH OTHER OFFICER WILL HOLD OFFICE AND EACH
AGENT WILL RETAIN AUTHORITY AT THE PLEASURE OF THE DIRECTORS.
3.4 POWERS. SUBJECT TO THE OTHER PROVISIONS OF THESE BY-LAWS, EACH
OFFICER WILL HAVE, IN ADDITION TO THE DUTIES AND POWERS HEREIN AND IN THE
ARTICLES OF INCORPORATION SET FORTH, SUCH DUTIES AND POWERS AS ARE COMMONLY
INCIDENT TO THE OFFICE OCCUPIED BY HIM OR HER UNDER THE GENERAL CORPORATION LAW
OF THE STATE OF MARYLAND, AND SUCH OTHER DUTIES AND POWERS AS THE DIRECTORS MAY
FROM TIME TO TIME DESIGNATE.
3.5 CHAIRMAN; PRESIDENT. UNLESS THE DIRECTORS OTHERWISE PROVIDE, THE
CHAIRMAN OF THE DIRECTORS, OR, IF THERE IS NONE, OR IN THE ABSENCE OF THE
CHAIRMAN, THE PRESIDENT WILL PRESIDE AT ALL MEETINGS OF THE SHAREHOLDERS AND OF
THE DIRECTORS. THE PRESIDENT WILL BE THE CHIEF EXECUTIVE OFFICER OF THE FUND
AND, SUBJECT TO THE DIRECTORS, WILL HAVE GENERAL SUPERVISION OVER THE BUSINESS
AND POLICIES OF THE FUND.
3.6 CONTROLLER. THE CONTROLLER WILL BE THE CHIEF FINANCIAL AND
ACCOUNTING OFFICER OF THE FUND, AND WILL, SUBJECT TO THE PROVISIONS OF THE
ARTICLES OF INCORPORATION AND TO ANY ARRANGEMENT MADE BY THE DIRECTORS WITH A
CUSTODIAN, INVESTMENT ADVISOR OR MANAGER, OR TRANSFER, SHAREHOLDER SERVICING OR
SIMILAR AGENT, BE IN CHARGE OF THE VALUABLE PAPERS, BOOKS OF ACCOUNT AND
ACCOUNTING RECORDS OF THE FUND, AND WILL HAVE SUCH OTHER DUTIES AND POWERS AS
MAY BE DESIGNATED FROM TIME TO TIME BY THE DIRECTORS OR BY THE PRESIDENT.
3.7 SECRETARY. THE SECRETARY WILL RECORD ALL PROCEEDINGS OF THE
SHAREHOLDERS AND THE DIRECTORS IN BOOKS TO BE KEPT FOR THAT PURPOSE; THE BOOKS
OR COPIES OF THE BOOKS WILL BE KEPT AT THE PRINCIPAL OFFICE OF THE FUND. IN THE
ABSENCE OF THE SECRETARY FROM ANY MEETING OF THE SHAREHOLDERS OR DIRECTORS, AN
ASSISTANT SECRETARY, OR IF THERE IS NONE OR IF HE OR SHE IS ABSENT, A TEMPORARY
SECRETARY CHOSEN AT SUCH MEETING WILL RECORD THE PROCEEDINGS THEREOF IN THE
AFORESAID BOOKS.
3.8 RESIGNATIONS AND REMOVALS. ANY DIRECTOR OR OFFICER MAY RESIGN AT
ANY TIME BY WRITTEN INSTRUMENT SIGNED BY HIM OR HER AND DELIVERED TO THE
CHAIRMAN, THE PRESIDENT OR THE SECRETARY OR TO A MEETING OF THE DIRECTORS. THE
RESIGNATION WILL BE EFFECTIVE UPON RECEIPT UNLESS SPECIFIED TO BE EFFECTIVE AT
SOME OTHER TIME. THE DIRECTORS MAY REMOVE ANY OFFICER ELECTED BY THEM WITH OR
WITHOUT CAUSE. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN A WRITTEN AGREEMENT
WITH THE FUND, NO DIRECTOR OR OFFICER RESIGNING AND NO OFFICER REMOVED WILL HAVE
ANY RIGHT TO ANY COMPENSATION FOR ANY PERIOD FOLLOWING HIS OR HER RESIGNATION OR
REMOVAL.
ARTICLE 4
COMMITTEES
4.1 GENERAL. THE DIRECTORS, BY VOTE OF A MAJORITY OF THE DIRECTORS THEN
IN OFFICE, MAY ELECT FROM THEIR NUMBER AN EXECUTIVE COMMITTEE OR OTHER
COMMITTEES AND MAY DELEGATE THERETO SOME OR ALL OF THEIR POWERS EXCEPT THOSE
WHICH BY LAW, BY THE ARTICLES OF INCORPORATION, OR BY THESE BY-LAWS MAY NOT BE
DELEGATED. EXCEPT AS THE DIRECTORS MAY OTHERWISE DETERMINE, ANY SUCH COMMITTEE
MAY MAKE RULES FOR THE CONDUCT OF ITS BUSINESS, BUT UNLESS OTHERWISE PROVIDED BY
THE DIRECTORS OR IN SUCH RULES, ITS BUSINESS WILL BE CONDUCTED SO FAR AS
POSSIBLE IN THE SAME MANNER AS IS PROVIDED BY THESE BY-LAWS FOR THE DIRECTORS
THEMSELVES. ALL MEMBERS OF SUCH COMMITTEES WILL HOLD THEIR OFFICES AT THE
DISCRETION OF THE DIRECTORS. THE DIRECTORS MAY ABOLISH ANY COMMITTEE AT ANY
TIME. ANY COMMITTEE TO WHICH THE DIRECTORS DELEGATE ANY OF THEIR POWERS OR
DUTIES WILL KEEP RECORDS OF ITS MEETINGS AND WILL REPORT ITS ACTION TO THE
DIRECTORS. THE DIRECTORS WILL HAVE POWER TO RESCIND ANY ACTION OF ANY COMMITTEE,
BUT NO SUCH RESCISSION WILL HAVE RETROACTIVE EFFECT.
ARTICLE 5
REPORTS
5.1 GENERAL. THE DIRECTORS AND OFFICERS WILL RENDER REPORTS AT THE TIME
AND IN THE MANNER REQUIRED BY THE ARTICLES OF INCORPORATION OR ANY APPLICABLE
LAW. OFFICERS AND COMMITTEES WILL RENDER SUCH ADDITIONAL REPORTS AS THEY MAY
DEEM DESIRABLE OR AS MAY FROM TIME TO TIME BE REQUIRED BY THE DIRECTORS.
ARTICLE 6
SEAL
6.1 GENERAL. THE SEAL OF THE FUND WILL CONSIST OF A FLAT-FACED DIE WITH
THE WORD "MARYLAND," TOGETHER WITH THE NAME OF THE FUND AND THE YEAR OF ITS
ORGANIZATION CUT OR ENGRAVED THEREON, BUT, UNLESS OTHERWISE REQUIRED BY THE
DIRECTORS, THE SEAL WILL NOT BE NECESSARY TO BE PLACED ON, AND ITS ABSENCE WILL
NOT IMPAIR THE VALIDITY OF, ANY DOCUMENT, INSTRUMENT OR OTHER PAPER EXECUTED AND
DELIVERED BY OR ON BEHALF OF THE FUND.
ARTICLE 7
EXECUTION OF PAPERS
7.1 GENERAL. EXCEPT AS THE DIRECTORS MAY GENERALLY OR IN PARTICULAR
CASES AUTHORIZE THE EXECUTION THEREOF IN SOME OTHER MANNER, ALL DEEDS, LEASES,
CONTRACTS, NOTES AND OTHER OBLIGATIONS MADE BY THE DIRECTORS WILL BE SIGNED BY
THE PRESIDENT, ANY VICE PRESIDENT OR ASSISTANT VICE PRESIDENT, OR BY THE
CONTROLLER, SECRETARY OR ASSISTANT SECRETARY AND NEED NOT BEAR THE SEAL OF THE
FUND.
ARTICLE 8
ISSUANCE OF SHARE CERTIFICATES
8.1 SHARE CERTIFICATES. IN LIEU OF ISSUING CERTIFICATES FOR SHARES, THE
DIRECTORS OR THE TRANSFER AGENT MAY EITHER ISSUE RECEIPTS THEREFOR OR MAY KEEP
ACCOUNTS UPON THE BOOKS OF THE FUND FOR THE RECORD HOLDERS OF SUCH SHARES, WHO
WILL IN EITHER CASE BE DEEMED, FOR ALL PURPOSES HEREUNDER, TO BE THE HOLDERS OF
CERTIFICATES FOR SUCH SHARES AS IF THEY HAD ACCEPTED SUCH CERTIFICATES AND WILL
BE HELD TO HAVE EXPRESSLY ASSENTED AND AGREED TO THE TERMS HEREOF.
THE DIRECTORS MAY AT ANY TIME AUTHORIZE THE ISSUANCE OF SHARE CERTIFICATES.
IN THAT EVENT, EACH SHAREHOLDER OF ANY SERIES WILL BE ENTITLED TO A CERTIFICATE
STATING THE NUMBER OF SHARES OF ANY SERIES OWNED BY HIM OR HER, IN SUCH FORM AS
WILL BE PRESCRIBED FROM TIME TO TIME BY THE DIRECTORS. SUCH CERTIFICATES WILL BE
SIGNED BY THE PRESIDENT OR A VICE PRESIDENT AND BY THE CONTROLLER OR ASSISTANT
CONTROLLER OF THE FUND. SUCH SIGNATURES MAY BE FACSIMILES IF THE CERTIFICATE IS
SIGNED BY A TRANSFER AGENT, OR BY A REGISTRAR, OTHER THAN A DIRECTOR, OFFICER OR
EMPLOYEE OF THE FUND. IN CASE ANY OFFICER WHO HAS SIGNED OR WHOSE FACSIMILE
SIGNATURE HAS BEEN PLACED ON SUCH CERTIFICATE WILL CEASE TO BE SUCH OFFICER
BEFORE SUCH CERTIFICATE IS ISSUED, IT MAY BE ISSUED BY THE FUND WITH THE SAME
EFFECT AS IF HE WERE SUCH OFFICER AT THE TIME OF ITS ISSUE.
8.2 LOSS OF CERTIFICATES. IN CASE OF THE ALLEGED LOSS OR DESTRUCTION OR
THE MUTILATION OF A SHARE CERTIFICATE, A DUPLICATE CERTIFICATE MAY BE ISSUED IN
PLACE THEREOF, UPON SUCH TERMS AS THE DIRECTORS WILL PRESCRIBE.
8.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A PLEDGEE OF SHARES
TRANSFERRED AS COLLATERAL SECURITY WILL BE ENTITLED TO A NEW CERTIFICATE IF THE
INSTRUMENT OF TRANSFER SUBSTANTIALLY DESCRIBES THE DEBT OR DUTY THAT IS INTENDED
TO BE SECURED THEREBY. SUCH NEW CERTIFICATE WILL EXPRESS ON ITS FACE THAT IT IS
HELD AS COLLATERAL SECURITY, AND THE NAME OF THE PLEDGOR WILL BE STATED THEREON,
WHO ALONE WILL BE LIABLE AS A SHAREHOLDER, AND ENTITLED TO VOTE THEREON.
8.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. THE DIRECTORS MAY AT
ANY TIME DISCONTINUE THE ISSUANCE OF SHARE CERTIFICATES AND MAY, BY WRITTEN
NOTICE TO EACH SHAREHOLDER, REQUIRE THE SURRENDER OF SHARE CERTIFICATES TO THE
FUND FOR CANCELLATION. SUCH SURRENDER AND CANCELLATION WILL NOT AFFECT THE
OWNERSHIP OF SHARES IN THE FUND.
ARTICLE 9
CUSTODY OF SECURITIES AND CASH
9.1 EMPLOYMENT OF A CUSTODIAN. THE FUND WILL PLACE AND AT ALL TIMES
MAINTAIN IN THE CUSTODY OF A CUSTODIAN (INCLUDING ANY SUBCUSTODIAN FOR THE
CUSTODIAN) ALL FUNDS, SECURITIES, AND SIMILAR INVESTMENTS OWNED BY THE FUND FOR
THE BENEFIT OF ANY OF ITS SERIES. THE CUSTODIAN WILL BE A BANK HAVING AN
AGGREGATE CAPITAL, SURPLUS, AND UNDIVIDED PROFITS OF NOT LESS THAN $10,000,000.
SUBJECT TO SUCH RULES, REGULATIONS, AND ORDERS AS THE SECURITIES AND EXCHANGE
COMMISSION MAY ADOPT AS NECESSARY OR APPROPRIATE FOR THE PROTECTION OF
INVESTORS, THE FUND'S CUSTODIAN MAY DEPOSIT ALL OR A PART OF THE SECURITIES
OWNED BY THE FUND FOR THE BENEFIT OF ANY OF ITS SERIES IN A SUBCUSTODIAN OR
SUBCUSTODIANS SITUATED WITHIN OR WITHOUT THE UNITED STATES. THE CUSTODIAN WILL
BE APPOINTED AND ITS REMUNERATION FIXED BY THE BOARD OF DIRECTORS. [INVESTMENT
COMPANY ACT, SECTION 17(F)]
9.2 CENTRAL CERTIFICATE SERVICE. SUBJECT TO SUCH RULES, REGULATIONS,
AND ORDERS AS THE SECURITIES AND EXCHANGE COMMISSION MAY ADOPT AS NECESSARY OR
APPROPRIATE FOR THE PROTECTION OF INVESTORS, THE FUND'S CUSTODIAN MAY DEPOSIT
ALL OR ANY PART OF THE SECURITIES OWNED BY THE FUND FOR THE BENEFIT OF ANY OF
ITS SERIES IN A SYSTEM FOR THE CENTRAL HANDLING OF SECURITIES ESTABLISHED BY A
NATIONAL SECURITIES EXCHANGE OR NATIONAL SECURITIES ASSOCIATION REGISTERED WITH
THE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, OR SUCH OTHER PERSON
AS MAY BE PERMITTED BY THE COMMISSION, PURSUANT TO WHICH SYSTEM ALL SECURITIES
OF ANY PARTICULAR CLASS OR SERIES OF ANY ISSUER DEPOSITED WITHIN THE SYSTEM ARE
TREATED AS FUNGIBLE AND MAY BE TRANSFERRED OR PLEDGED BY BOOKKEEPING ENTRY
WITHOUT PHYSICAL DELIVERY OF SUCH SECURITIES. [INVESTMENT COMPANY ACT, SECTION
17(F) ]
9.3 CASH ASSETS. THE CASH PROCEEDS FROM THE SALE OF SECURITIES AND
SIMILAR INVESTMENTS AND OTHER CASH ASSETS OF THE FUND FOR THE BENEFIT OF ANY OF
ITS SERIES WILL BE KEPT IN THE CUSTODY OF A BANK OR BANKS APPOINTED PURSUANT TO
SECTION 9.1 HEREOF, OR IN ACCORDANCE WITH SUCH RULES AND REGULATIONS OR ORDERS
AS THE SECURITIES AND EXCHANGE COMMISSION MAY FROM TIME TO TIME PRESCRIBE FOR
THE PROTECTION OF INVESTORS, EXCEPT THAT THE FUND MAY MAINTAIN A CHECKING
ACCOUNT OR ACCOUNTS IN A BANK OR BANKS, EACH HAVING AN AGGREGATE CAPITAL,
SURPLUS, AND UNDIVIDED PROFITS OF NOT LESS THAN $10,000,000, PROVIDED THAT THE
BALANCE OF SUCH ACCOUNT OR THE AGGREGATE BALANCES OF SUCH ACCOUNTS WILL AT NO
TIME EXCEED THE AMOUNT OF THE FIDELITY BOND, MAINTAINED PURSUANT TO THE
REQUIREMENTS OF THE INVESTMENT COMPANY ACT AND RULES AND REGULATIONS THEREUNDER,
COVERING THE OFFICERS OR EMPLOYEES AUTHORIZED TO DRAW ON SUCH ACCOUNT OR
ACCOUNTS. [INVESTMENT COMPANY ACT, SECTION 17(F) ]
9.4 FREE CASH ACCOUNTS. THE FUND MAY, UPON RESOLUTION OF ITS BOARD OF
DIRECTORS, MAINTAIN A PETTY CASH ACCOUNT FREE OF THE FOREGOING REQUIREMENTS OF
THIS ARTICLE 9 IN AN AMOUNT NOT TO EXCEED $500, PROVIDED THAT SUCH ACCOUNT IS
OPERATED UNDER THE IMPREST SYSTEM AND IS MAINTAINED SUBJECT TO ADEQUATE CONTROLS
APPROVED BY THE BOARD OF DIRECTORS OVER DISBURSEMENTS AND REIMBURSEMENTS
INCLUDING, BUT NOT LIMITED TO, FIDELITY BOND COVERAGE FOR PERSONS HAVING ACCESS
TO SUCH FUNDS. [INVESTMENT COMPANY ACT, RULE 17F-3 ]
9.5 ACTION UPON TERMINATION OF CUSTODIAN AGREEMENT. UPON RESIGNATION OF
A CUSTODIAN OF THE FUND OR INABILITY OF A CUSTODIAN TO CONTINUE TO SERVE, THE
BOARD OF DIRECTORS WILL PROMPTLY APPOINT A SUCCESSOR CUSTODIAN, BUT IN THE EVENT
THAT NO SUCCESSOR CUSTODIAN CAN BE FOUND WHO HAS THE REQUIRED QUALIFICATIONS AND
IS WILLING TO SERVE, THE BOARD OF DIRECTORS WILL CALL AS PROMPTLY AS POSSIBLE A
SPECIAL MEETING OF THE SHAREHOLDERS TO DETERMINE WHETHER THE FUND WILL FUNCTION
WITHOUT A CUSTODIAN OR WILL BE LIQUIDATED. IF SO DIRECTED BY VOTE OF THE HOLDERS
OF A MAJORITY OF THE OUTSTANDING SHARES OF STOCK OF THE FUND, THE CUSTODIAN WILL
DELIVER AND PAY OVER ALL PROPERTY OF THE FUND HELD BY IT AS SPECIFIED IN SUCH
VOTE.
ARTICLE 10
DEALINGS WITH DIRECTORS AND OFFICERS
ANY DIRECTOR, OFFICER OR OTHER AGENT OF THE FUND MAY ACQUIRE, OWN AND
DISPOSE OF SHARES OF THE FUND TO THE SAME EXTENT AS IF HE WERE NOT A DIRECTOR,
OFFICER OR AGENT; AND THE DIRECTORS MAY ACCEPT SUBSCRIPTIONS TO SHARES OR
REPURCHASE SHARES FROM ANY FIRM OR COMPANY IN WHICH HE OR SHE IS INTERESTED.
ARTICLE 11
SHAREHOLDERS
11.1 MEETINGS. A MEETING OF THE SHAREHOLDERS OF THE FUND FOR THE
BENEFIT OF ANY OF ITS SERIES WILL BE HELD WHENEVER CALLED BY THE DIRECTORS AND
WHENEVER ELECTION OF A DIRECTOR OR DIRECTORS BY SHAREHOLDERS IS REQUIRED BY THE
PROVISIONS OF SECTION 16(A) OF THE INVESTMENT COMPANY ACT OF 1940 FOR THAT
PURPOSE. THE DIRECTORS WILL PROMPTLY CALL AND GIVE NOTICE OF A MEETING OF
SHAREHOLDERS FOR THE PURPOSE OF VOTING UPON REMOVAL OF ANY DIRECTOR OF THE FUND
WHEN REQUESTED TO DO SO IN WRITING BY SHAREHOLDERS HOLDING NOT LESS THAN 10% OF
THE SHARES THEN OUTSTANDING OF THE FUND PERTAINING TO ANY SERIES. MEETINGS OF
SHAREHOLDERS FOR ANY OTHER PURPOSE WILL ALSO BE CALLED BY THE DIRECTORS WHEN
REQUESTED IN WRITING BY SHAREHOLDERS HOLDING AT LEAST 10% OF THE SHARES THEN
OUTSTANDING OF THE FUND PERTAINING TO ANY SERIES, OR IF THE DIRECTORS WILL FAIL
TO CALL OR GIVE NOTICE OF ANY MEETING OF SHAREHOLDERS FOR A PERIOD OF 30 DAYS
AFTER SUCH APPLICATION, THEN SHAREHOLDERS HOLDING AT LEAST 10% OF THE SHARES
THEN OUTSTANDING OF THE FUND PERTAINING TO ANY SERIES MAY CALL AND GIVE NOTICE
OF SUCH MEETING. NOTICES OF ANY MEETING OF THE SHAREHOLDERS WILL BE GIVEN BY
DELIVERING OR MAILING, POSTAGE PREPAID, TO EACH SHAREHOLDER ENTITLED TO VOTE AT
SAID MEETING, A WRITTEN OR PRINTED NOTIFICATION OF SUCH MEETING, AT LEAST 15
DAYS BEFORE THE MEETING, TO SUCH ADDRESS AS MAY BE REGISTERED WITH THE FUND BY
THE SHAREHOLDER.
11.2 RECORD DATES. FOR THE PURPOSE OF DETERMINING THE SHAREHOLDERS WHO
ARE ENTITLED TO VOTE OR ACT AT ANY MEETING OR ANY ADJOURNMENT THEREOF, OR WHO
ARE ENTITLED TO RECEIVE PAYMENT OF ANY DIVIDEND OR OF ANY OTHER DISTRIBUTION,
THE DIRECTORS MAY FROM TIME TO TIME FIX A TIME, WHICH WILL NOT BE MORE THAN 90
DAYS BEFORE THE DATE OF ANY MEETING OF SHAREHOLDERS OR THE DATE FOR THE PAYMENT
OF ANY DIVIDEND OR OF ANY OTHER DISTRIBUTION, AS THE RECORD DATE FOR DETERMINING
THE SHAREHOLDERS HAVING THE RIGHT TO NOTICE OF AND TO VOTE AT SUCH MEETING AND
ANY ADJOURNMENT THEREOF OR THE RIGHT TO RECEIVE SUCH DIVIDEND OR DISTRIBUTION,
AND IN SUCH CASE ONLY SHAREHOLDERS OF RECORD ON SUCH RECORD DATE WILL HAVE SUCH
RIGHT, NOTWITHSTANDING ANY TRANSFER OF SHARES ON THE BOOKS OF THE FUND AFTER THE
RECORD DATE; OR WITHOUT FIXING SUCH RECORD DATE THE DIRECTORS MAY FOR ANY SUCH
PURPOSES CLOSE THE REGISTER OR TRANSFER BOOKS FOR ALL OR ANY PART OF SUCH
PERIOD.
ARTICLE 12
AMENDMENTS TO THE BY-LAWS
12.1 GENERAL. THESE BY-LAWS MAY BE AMENDED OR REPEALED, IN WHOLE OR IN
PART, BY A MAJORITY OF THE DIRECTORS THEN IN OFFICE AT ANY MEETING OF THE
DIRECTORS, OR BY ONE OR MORE WRITINGS SIGNED BY SUCH A MAJORITY.
ARTICLE 13
INDEMNIFICATION
13.1 THE FUND SHALL INDEMNIFY OR ADVANCE ANY EXPENSES TO DIRECTORS AND
OFFICERS TO THE EXTENT PERMITTED OR REQUIRED BY THE MARYLAND GENERAL CORPORATION
LAW, PROVIDED, HOWEVER, THAT THE FUND SHALL ONLY BE REQUIRED TO INDEMNIFY OR
ADVANCE EXPENSES TO ANY PERSON OTHER THAN A DIRECTOR, TO THE EXTENT SPECIFICALLY
APPROVED BY RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH
APPLICABLE LAW.
13.2 THE INDEMNIFICATION PROVIDED HEREUNDER SHALL CONTINUE AS TO A
PERSON WHO HAS CEASED TO BE A DIRECTOR OR OFFICER, AND SHALL INURE TO THE
BENEFIT OF THE HEIRS, EXECUTORS AND ADMINISTRATORS OF SUCH A PERSON.
13.3 NOTHING CONTAINED IN THE ARTICLES OF INCORPORATION OR THESE
BY-LAWS SHALL BE CONSTRUED TO PROTECT ANY DIRECTOR OR OFFICER OF THE FUND
AGAINST ANY LIABILITY TO THE FUND OR ITS SECURITY HOLDERS TO WHICH HE OR SHE
WOULD OTHERWISE BE SUBJECT BY REASON OF WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE OR RECKLESS DISREGARD OF DUTIES INVOLVED IN THE CONDUCT OF HIS OR HER
OFFICE ("DISABLING CONDUCT"). THE MEANS FOR DETERMINING WHETHER INDEMNIFICATION
SHALL BE MADE SHALL BE:
(I) A FINAL DECISION ON THE MERITS BY A COURT OR OTHER BODY BEFORE
WHOM THE PROCEEDING WAS BROUGHT THAT THE PERSON TO BE INDEMNIFIED ("INDEMNITEE")
WAS NOT LIABLE BY REASON OF DISABLING CONDUCT, OR
(II) IN THE ABSENCE OF SUCH A DECISION, A REASONABLE
DETERMINATION, BASED UPON A REVIEW OF THE FACTS, THAT THE INDEMNITEE WAS NOT
LIABLE BY REASON OF DISABLING CONDUCT, BY (A) THE VOTE OF A MAJORITY OF A QUORUM
OF DIRECTORS WHO ARE NEITHER "INTERESTED PERSONS" OF THE FUND NOR PARTIES TO THE
PROCEEDING ("DISINTERESTED NON-PARTY DIRECTORS"), OR (B) AN INDEPENDENT LEGAL
COUNSEL IN A WRITTEN OPINION.
13.4 NOTHING CONTAINED IN THE ARTICLE OF INCORPORATION OR THESE BY-LAWS
SHALL BE CONSTRUED TO PERMIT THE ADVANCEMENT OF LEGAL EXPENSES FOR THE DEFENSE
OF A PROCEEDING BROUGHT BY THE FUND OR ITS SECURITY HOLDERS AGAINST A DIRECTOR
OR OFFICER OF THE FUND UNLESS AN UNDERTAKING IS FURNISHED BY OR ON BEHALF OF THE
INDEMNITEE TO REPAY THE ADVANCE UNLESS IT IS ULTIMATELY DETERMINED THAT HE OR
SHE IS ENTITLED TO INDEMNIFICATION, AND THE INDEMNITEE COMPLIES WITH AT LEAST
ONE OF THE FOLLOWING CONDITIONS:
(I) THE INDEMNITEE SHALL PROVIDE A SECURITY FOR HIS OR HER
UNDERTAKING,
(II) THE FUND SHALL BE INSURED AGAINST LOSSES ARISING BY REASON OF
ANY LAWFUL ADVANCES, OR
(III) A MAJORITY OF A QUORUM OF THE DISINTERESTED NON-PARTY
DIRECTORS, OR AN INDEPENDENT LEGAL COUNSEL IN A WRITTEN OPINION, SHALL
DETERMINE, BASED ON A REVIEW OF READILY AVAILABLE FACTS (AS OPPOSED TO A FULL
TRIAL-TYPE INQUIRY), THAT THERE IS REASON TO BELIEVE THAT THE INDEMNITEE
ULTIMATELY WILL BE FOUND ENTITLED TO INDEMNIFICATION.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, DATED AS OF MARCH 10, 2000 IS AMONG
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND ("NATIONAL MUNICIPAL FUND"),
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA MUNICIPAL
INTERMEDIATE FUND (TOGETHER, THE "STATE MUNICIPAL FUNDS"). THE NATIONAL
MUNICIPAL FUND AND THE STATE MUNICIPAL FUNDS ARE SERIES OF THE CALVERT MUNICIPAL
FUND, INC. ("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 MARCH 31, 2000, [#]
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, 1999 ("NATIONAL MUNICIPAL FUND FINANCIAL
STATEMENTS"), PREVIOUSLY DELIVERED TO STATE MUNICIPAL FUNDS, FAIRLY PRESENT THE
FINANCIAL POSITION OF NATIONAL MUNICIPAL FUND AS OF DECEMBER 31, 1999, 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 BOARD OF 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, 1999, 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, 1999, 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 ARE DULY
ORGANIZED SERIES OF CALVERT, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE
LAWS OF THE STATE OF MARYLAND, AND HAVE POWER TO CARRY ON THEIR 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 MARCH 31, 2000, [#]
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, 1999 ("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, 1999, 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, 1999, 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, 1999, 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, 1999. 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, 1999. 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 BOARD
OF 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 DIRECTORS,
OFFICERS, OR SHAREHOLDERS, AND SHALL BE TERMINATED WITHOUT LIABILITY AS OF THE
CLOSE OF BUSINESS ON DECEMBER 31, 1999, 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) MARYLAND MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
BARBARA J. KRUMSIEK, PRESIDENT
(SEAL) VIRGINIA MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
BARBARA J. KRUMSIEK, PRESIDENT
(SEAL) NATIONAL MUNICIPAL INTERMEDIATE FUND
BY: _________________________ BY: _______________________________
WILLIAM M. TARTIKOFF, SENIOR VICE PRESIDENT
Investment Advisory Agreement
Calvert Municipal Fund, Inc.
March 1, 1999
INVESTMENT ADVISORY AGREEMENT
CALVERT MUNICIPAL FUND, INC.
INVESTMENT ADVISORY AGREEMENT, MADE THIS 1ST DAY OF MARCH, 1999, BY AND
BETWEEN CALVERT ASSET MANAGEMENT COMPANY, INC., A DELAWARE CORPORATION (THE
"ADVISOR"), AND CALVERT MUNICIPAL FUND, INC., A MARYLAND CORPORATION (THE
"CORPORATION"), BOTH HAVING THEIR PRINCIPAL PLACE OF BUSINESS AT 4550 MONTGOMERY
AVENUE, BETHESDA, MARYLAND.
WHEREAS, THE CORPORATION IS REGISTERED AS AN INVESTMENT COMPANY UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "1940 ACT"), FOR THE PURPOSE OF
INVESTING AND REINVESTING ITS ASSETS IN SECURITIES, OFFERING SEPARATE SERIES
("FUND(S)"), AS SET FORTH IN ITS ARTICLES OF INCORPORATION, ITS BYLAWS AND ITS
REGISTRATION STATEMENTS UNDER THE 1940 ACT AND THE SECURITIES ACT OF 1933 (THE
"1933 ACT"), AS AMENDED, AND THE CORPORATION DESIRES TO AVAIL ITSELF OF THE
SERVICES, INFORMATION, ADVICE, ASSISTANCE AND FACILITIES OF AN INVESTMENT
ADVISOR AND TO HAVE AN INVESTMENT ADVISOR PERFORM FOR IT VARIOUS INVESTMENT
ADVISORY, RESEARCH SERVICES AND OTHER MANAGEMENT SERVICES; AND
WHEREAS, THE ADVISOR IS AN INVESTMENT ADVISOR REGISTERED UNDER THE
INVESTMENT ADVISERS ACT OF 1940, AS AMENDED, AND IS ENGAGED IN THE BUSINESS OF
RENDERING MANAGEMENT AND INVESTMENT ADVISORY SERVICES TO INVESTMENT COMPANIES
AND DESIRES TO PROVIDE SUCH SERVICES TO THE CORPORATION;
NOW, THEREFORE, IN CONSIDERATION OF THE TERMS AND CONDITIONS HEREINAFTER
SET FORTH, IT IS AGREED AS FOLLOWS:
1. EMPLOYMENT OF THE ADVISOR. THE CORPORATION HEREBY EMPLOYS THE ADVISOR TO
MANAGE THE INVESTMENT AND REINVESTMENT OF THE CORPORATION ASSETS, SUBJECT TO THE
CONTROL AND DIRECTION OF THE CORPORATION'S BOARD OF DIRECTORS, FOR THE PERIOD
AND ON THE TERMS HEREINAFTER SET FORTH. THE ADVISOR HEREBY ACCEPTS SUCH
EMPLOYMENT AND AGREES DURING SUCH PERIOD TO RENDER THE SERVICES AND TO ASSUME
THE OBLIGATIONS IN RETURN FOR THE COMPENSATION HEREIN PROVIDED. THE ADVISOR
SHALL FOR ALL PURPOSES HEREIN BE DEEMED TO BE AN INDEPENDENT CONTRACTOR AND
SHALL, EXCEPT AS EXPRESSLY PROVIDED OR AUTHORIZED (WHETHER HEREIN OR OTHERWISE),
HAVE NO AUTHORITY TO ACT FOR OR REPRESENT THE CORPORATION IN ANY WAY OR
OTHERWISE BE DEEMED AN AGENT OF THE CORPORATION.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. THE ADVISOR
UNDERTAKES TO PROVIDE THE FOLLOWING SERVICES AND TO ASSUME THE FOLLOWING
OBLIGATIONS:
A. THE ADVISOR SHALL MANAGE THE INVESTMENT AND REINVESTMENT OF THE
CORPORATION'S ASSETS, SUBJECT TO AND IN ACCORDANCE WITH THE INVESTMENT
OBJECTIVES AND POLICIES OF EACH FUND, AND ANY DIRECTIONS WHICH THE CORPORATION'S
BOARD OF DIRECTORS MAY ISSUE FROM TIME TO TIME. IN PURSUANCE OF THE FOREGOING,
THE ADVISOR SHALL MAKE ALL DETERMINATIONS WITH RESPECT TO THE INVESTMENT OF THE
CORPORATION'S ASSETS AND THE PURCHASE AND SALE OF PORTFOLIO SECURITIES AND SHALL
TAKE SUCH STEPS AS MAY BE NECESSARY TO IMPLEMENT THE SAME. SUCH DETERMINATION
AND SERVICES SHALL ALSO INCLUDE DETERMINING THE MANNER IN WHICH VOTING RIGHTS,
RIGHTS TO CONSENT TO CORPORATE ACTION, ANY OTHER RIGHTS PERTAINING TO THE
CORPORATION'S PORTFOLIO SECURITIES SHALL BE EXERCISED. THE ADVISOR SHALL RENDER
REGULAR REPORTS TO THE CORPORATION'S BOARD OF DIRECTORS CONCERNING THE
CORPORATION'S INVESTMENT ACTIVITIES.
B. THE ADVISOR SHALL, IN THE NAME OF THE CORPORATION, ON BEHALF OF EACH
FUND, PLACE ORDERS FOR THE EXECUTION OF PORTFOLIO TRANSACTIONS IN ACCORDANCE
WITH THE POLICIES WITH RESPECT THERETO SET FORTH IN THE CORPORATION'S CURRENT
REGISTRATION STATEMENT UNDER THE 1940 ACT AND THE 1933 ACT. IN CONNECTION WITH
THE PLACEMENT OF ORDERS FOR THE EXECUTION OF PORTFOLIO TRANSACTIONS THE ADVISOR
SHALL CREATE AND MAINTAIN ALL NECESSARY BROKERAGE RECORDS OF THE CORPORATION IN
ACCORDANCE WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS, INCLUDING BUT NOT
LIMITED TO RECORDS REQUIRED BY SECTION 31(A) OF THE 1940 ACT. ALL RECORDS SHALL
BE THE PROPERTY OF THE CORPORATION AND SHALL BE AVAILABLE FOR INSPECTION AND USE
BY THE SEC, THE CORPORATION OR ANY PERSON RETAINED BY THE CORPORATION. WHERE
APPLICABLE, SUCH RECORDS SHALL BE MAINTAINED BY THE ADVISOR FOR THE PERIODS AND
THE PLACES REQUIRED BY RULE 31A-2 UNDER THE 1940 ACT.
C. THE ADVISOR SHALL BEAR ITS EXPENSES OF PROVIDING SERVICES TO THE
CORPORATION PURSUANT TO THIS AGREEMENT EXCEPT SUCH EXPENSES AS ARE UNDERTAKEN BY
THE CORPORATION. IN ADDITION, THE ADVISOR SHALL PAY THE SALARIES AND FEES OF ALL
DIRECTORS AND EXECUTIVE OFFICERS WHO ARE EMPLOYEES OF THE ADVISOR OR ITS
AFFILIATES ("ADVISOR EMPLOYEES").
3. EXPENSES OF EACH FUND. EACH FUND SHALL PAY ALL EXPENSES OTHER THAN THOSE
EXPRESSLY ASSUMED BY THE ADVISOR. EXPENSES PAYABLE BY THE FUND SHALL INCLUDE,
BUT ARE NOT LIMITED TO:
A. FEES TO THE ADVISOR AS PROVIDED HEREIN;
B. LEGAL AND AUDIT EXPENSES;
C. FEES AND EXPENSES RELATED TO THE REGISTRATION AND QUALIFICATION OF THE
CORPORATION AND ITS SHARES FOR DISTRIBUTION UNDER FEDERAL AND STATE SECURITIES
LAWS;
D. EXPENSES OF THE ADMINISTRATIVE SERVICES AGENT, TRANSFER AGENT, REGISTRAR,
CUSTODIAN, DIVIDEND DISBURSING AGENT AND SHAREHOLDER SERVICING AGENT;
E. ANY TELEPHONE CHARGES ASSOCIATED WITH SHAREHOLDER SERVICING OR THE
MAINTENANCE OF THE FUNDS OR CORPORATION;
F. SALARIES, FEES AND EXPENSES OF DIRECTORS AND EXECUTIVE OFFICERS OF THE
CORPORATION, OTHER THAN ADVISOR EMPLOYEES;
G. TAXES AND CORPORATE FEES LEVIED AGAINST THE CORPORATION;
H. BROKERAGE COMMISSIONS AND OTHER EXPENSES ASSOCIATED WITH THE PURCHASE AND
SALE OF PORTFOLIO SECURITIES FOR THE CORPORATION;
I. EXPENSES, INCLUDING INTEREST, OF BORROWING MONEY;
J. EXPENSES INCIDENTAL TO MEETINGS OF THE CORPORATION'S SHAREHOLDERS AND THE
MAINTENANCE OF THE CORPORATION'S ORGANIZATIONAL EXISTENCE;
K. EXPENSES OF PRINTING STOCK CERTIFICATES REPRESENTING SHARES OF THE
CORPORATION AND EXPENSES OF PREPARING, PRINTING AND MAILING NOTICES, PROXY
MATERIAL, REPORTS TO REGULATORY BODIES AND REPORTS TO SHAREHOLDERS OF THE
CORPORATION;
L. EXPENSES OF PREPARING AND TYPESETTING OF PROSPECTUSES OF THE CORPORATION;
M. EXPENSES OF PRINTING AND DISTRIBUTING PROSPECTUSES TO SHAREHOLDERS OF THE
CORPORATION;
N. ASSOCIATION MEMBERSHIP DUES;
O. INSURANCE PREMIUMS FOR FIDELITY AND OTHER COVERAGE;
P. DISTRIBUTION PLAN EXPENSES, AS PERMITTED BY RULE 12B-1 UNDER THE 1940 ACT
AND AS APPROVED BY THE BOARD; AND
Q. SUCH OTHER LEGITIMATE CORPORATION EXPENSES AS THE BOARD OF DIRECTORS MAY
FROM TIME TO TIME DETERMINE ARE PROPERLY CHARGEABLE TO THE CORPORATION.
4. COMPENSATION OF ADVISOR.
A. AS COMPENSATION FOR THE SERVICES RENDERED AND OBLIGATIONS ASSUMED
HEREUNDER BY THE ADVISOR, THE TRUST SHALL PAY TO THE ADVISOR WITHIN TEN (10)
DAYS AFTER THE LAST DAY OF EACH CALENDAR MONTH A FEE EQUAL ON AN ANNUALIZED
BASIS AS SHOWN ON SCHEDULE A. ANY AMENDMENT TO THE SCHEDULE PERTAINING TO ANY
NEW OR EXISTING FUND SHALL NOT BE DEEMED TO AFFECT THE INTEREST OF ANY OTHER
FUND AND SHALL NOT REQUIRE THE APPROVAL OF THE SHAREHOLDERS OF ANY OTHER FUND.
B. SUCH FEE SHALL BE COMPUTED AND ACCRUED DAILY. UPON TERMINATION OF THIS
AGREEMENT BEFORE THE END OF ANY CALENDAR MONTH, THE FEE FOR SUCH PERIOD SHALL BE
PRORATED. FOR PURPOSES OF CALCULATING THE ADVISOR'S FEE, THE DAILY VALUE OF A
FUND'S NET ASSETS SHALL BE COMPUTED BY THE SAME METHOD AS THE FUND USES TO
COMPUTE THE VALUE OF ITS NET ASSETS IN CONNECTION WITH THE DETERMINATION OF THE
NET ASSET VALUE OF ITS SHARES.
C. THE ADVISOR RESERVES THE RIGHT (I) TO WAIVE ALL OR PART OF ITS FEE AND
ASSUME EXPENSES OF A FUND AND (II) TO MAKE PAYMENTS TO BROKERS AND DEALERS IN
CONSIDERATION OF THEIR PROMOTIONAL OR ADMINISTRATIVE SERVICES.
5. ACTIVITIES OF THE ADVISOR. THE SERVICES OF THE ADVISOR TO THE CORPORATION
HEREUNDER ARE NOT TO BE DEEMED EXCLUSIVE, AND THE ADVISOR SHALL BE FREE TO
RENDER SIMILAR SERVICES TO OTHERS. IT IS UNDERSTOOD THAT DIRECTORS AND OFFICERS
OF THE CORPORATION ARE OR MAY BECOME INTERESTED IN THE ADVISOR AS STOCKHOLDERS,
OFFICERS, OR OTHERWISE, AND THAT STOCKHOLDERS AND OFFICERS OF THE ADVISOR ARE OR
MAY BECOME SIMILARLY INTERESTED IN THE CORPORATION, AND THAT THE ADVISOR MAY
BECOME INTERESTED IN THE CORPORATION AS A SHAREHOLDER OR OTHERWISE.
6. USE OF NAMES. THE CORPORATION SHALL NOT USE THE NAME OF THE ADVISOR IN
ANY PROSPECTUS, SALES LITERATURE OR OTHER MATERIAL RELATING TO THE CORPORATION
IN ANY MANNER NOT APPROVED PRIOR THERETO BY THE ADVISOR; PROVIDED, HOWEVER, THAT
THE ADVISOR SHALL APPROVE ALL USES OF ITS NAME WHICH MERELY REFER IN ACCURATE
TERMS TO ITS APPOINTMENT HEREUNDER OR WHICH ARE REQUIRED BY THE SEC; AND,
PROVIDED, FURTHER, THAT IN NO EVENT SHALL SUCH APPROVAL BE UNREASONABLY
WITHHELD. THE ADVISOR SHALL NOT USE THE NAME OF THE CORPORATION OR ANY
CORPORATION IN ANY MATERIAL RELATING TO THE ADVISOR IN ANY MANNER NOT APPROVED
PRIOR THERETO BY THE CORPORATION; PROVIDED, HOWEVER, THAT THE CORPORATION SHALL
APPROVE ALL USES OF ITS NAME WHICH MERELY REFER IN ACCURATE TERMS TO THE
APPOINTMENT OF THE ADVISOR HEREUNDER OR WHICH ARE REQUIRED BY THE SEC; AND,
PROVIDE, FURTHER, THAT IN NO EVENT SHALL SUCH APPROVAL BE UNREASONABLY WITHHELD.
7. LIABILITY OF THE ADVISOR. ABSENT WILLFUL MISFEASANCE, BAD FAITH, GROSS
NEGLIGENCE, OR RECKLESS DISREGARD OF OBLIGATIONS OR DUTIES HEREUNDER ON THE PART
OF THE ADVISOR, THE ADVISOR SHALL NOT BE SUBJECT TO LIABILITY TO THE CORPORATION
OR TO ANY SHAREHOLDER OF THE CORPORATION FOR ANY ACT OR OMISSION IN THE COURSE
OF, OR CONNECTED WITH, RENDERING SERVICES HEREUNDER OR FOR ANY LOSSES THAT MAY
BE SUSTAINED IN THE PURCHASE, HOLDING OR SALE OF ANY SECURITY.
8. FORCE MAJEURE. THE ADVISOR SHALL NOT BE LIABLE FOR DELAYS OR ERRORS
OCCURRING BY REASON OF CIRCUMSTANCES BEYOND ITS CONTROL, INCLUDING BUT NOT
LIMITED TO ACTS OF CIVIL OR MILITARY AUTHORITY, NATIONAL EMERGENCIES, WORK
STOPPAGES, FIRE, FLOOD, CATASTROPHE, ACTS OF GOD, INSURRECTION, WAR, RIOT, OR
FAILURE OF COMMUNICATION OR POWER SUPPLY. IN THE EVENT OF EQUIPMENT BREAKDOWNS
BEYOND ITS CONTROL, THE ADVISOR SHALL TAKE REASONABLE STEPS TO MINIMIZE SERVICE
INTERRUPTIONS BUT SHALL HAVE NO LIABILITY WITH RESPECT THERETO.
9. RENEWAL, TERMINATION AND AMENDMENT. THIS AGREEMENT SHALL CONTINUE IN
EFFECT WITH RESPECT TO THE CORPORATION, UNLESS SOONER TERMINATED AS HEREINAFTER
PROVIDED, THROUGH DECEMBER 31, 1999, AND INDEFINITELY THEREAFTER IF ITS
CONTINUANCE SHALL BE SPECIFICALLY APPROVED AT LEAST ANNUALLY BY VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE CORPORATION OR
BY VOTE OF A MAJORITY OF THE CORPORATION'S BOARD OF DIRECTORS; AND FURTHER
PROVIDED THAT SUCH CONTINUANCE IS ALSO APPROVED ANNUALLY BY THE VOTE OF A
MAJORITY OF THE DIRECTORS WHO ARE NOT PARTIES TO THIS AGREEMENT OR INTERESTED
PERSONS OF THE ADVISOR, CAST IN PERSON AT A MEETING CALLED FOR THE PURPOSE OF
VOTING ON SUCH APPROVAL, OR AS ALLOWED BY LAW. THIS AGREEMENT MAY BE TERMINATED
AT ANY TIME, WITHOUT PAYMENT OF ANY PENALTY, BY THE CORPORATION'S BOARD OF
DIRECTORS OR BY A VOTE OF THE MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF
THE CORPORATION UPON 60 DAYS' PRIOR WRITTEN NOTICE TO THE ADVISOR AND BY THE
ADVISOR UPON 60 DAYS' PRIOR WRITTEN NOTICE TO THE CORPORATION. THIS AGREEMENT
MAY BE AMENDED AT ANY TIME BY THE PARTIES, SUBJECT TO APPROVAL BY THE
CORPORATION'S BOARD OF DIRECTORS AND, IF REQUIRED BY APPLICABLE SEC RULES AND
REGULATIONS, A VOTE OF A MAJORITY OF THE CORPORATION'S OUTSTANDING VOTING
SECURITIES. THIS AGREEMENT SHALL TERMINATE AUTOMATICALLY IN THE EVENT OF ITS
ASSIGNMENT. THE TERMS "ASSIGNMENT" AND "VOTE OF A MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" SHALL HAVE THE MEANING SET FORTH FOR SUCH TERMS IN THE 1940
ACT.
10. SEVERABILITY. IF ANY PROVISION OF THIS AGREEMENT SHALL BE HELD OR MADE
INVALID BY A COURT DECISION, STATUTE, RULE OR OTHERWISE, THE REMAINDER OF THIS
AGREEMENT SHALL NOT BE AFFECTED THEREBY.
11. MISCELLANEOUS. EACH PARTY AGREES TO PERFORM SUCH FURTHER ACTIONS AND
EXECUTE SUCH FURTHER DOCUMENTS AS ARE NECESSARY TO EFFECTUATE THE PURPOSES
HEREOF. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF MARYLAND. THE CAPTIONS IN THIS AGREEMENT
ARE INCLUDED FOR CONVENIENCE ONLY AND IN NO WAY DEFINE OR DELIMIT ANY OF THE
PROVISIONS HEREOF OR OTHERWISE AFFECT THEIR CONSTRUCTION OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS AGREEMENT AS OF THE
DATE FIRST WRITTEN ABOVE.
CALVERT MUNICIPAL FUND, INC.
BY:
TITLE:
CALVERT ASSET MANAGEMENT COMPANY, INC.
BY:
TITLE:
<PAGE>
INVESTMENT ADVISORY AGREEMENT
CALVERT ASSET MANAGEMENT COMPANY, INC.
CALVERT MUNICIPAL FUND, INC.
SCHEDULE A
AS COMPENSATION PURSUANT TO SECTION 4 OF THE INVESTMENT ADVISORY AGREEMENT
BETWEEN CALVERT ASSET MANAGEMENT COMPANY, INC. (THE "ADVISOR") AND CALVERT
MUNICIPAL FUND, INC. ("CMF") DATED MARCH 1, 1999, WITH RESPECT TO EACH CMF
PORTFOLIO, THE ADVISOR IS ENTITLED TO RECEIVE FROM EACH PORTFOLIO AN ANNUAL
ADVISORY FEE (THE "FEE") AS SHOWN BELOW. THE FEE SHALL BE COMPUTED DAILY AND
PAYABLE MONTHLY, BASED ON THE AVERAGE DAILY NET ASSETS OF THE APPROPRIATE
PORTFOLIO.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND: 0.60% OF THE FIRST $500
MILLION
0.50% ABOVE $500 MILLION
0.40% ABOVE $1 BILLION
DEFERRED COMPENSATION AGREEMENT
AGREEMENT ENTERED INTO THIS _____ DAY OF ______________, 19___, BETWEEN CALVERT
VARIABLE SERIES, INC., FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME, CALVERT
TAX-FREE RESERVES, THE CALVERT FUND, CALVERT CASH RESERVES, CALVERT SOCIAL
INVESTMENT FUND, CALVERT MUNICIPAL FUND, INC., CALVERT NEW WORLD FUND, INC.,
AND/OR CALVERT WORLD VALUES FUND, INC.(HEREINAFTER REFERRED TO AS THE FUND OR
FUNDS), AND ______________ (DIRECTOR OR TRUSTEE, HEREINAFTER REFERRED TO AS THE
TRUSTEE).
WHEREAS, THE TRUSTEE WILL BE RENDERING VALUABLE SERVICES TO THE FUND OR FUNDS AS
A MEMBER OF THE BOARD OF TRUSTEES, AND THE FUND OR FUNDS IS WILLING TO
ACCOMMODATE THE TRUSTEE'S DESIRE TO BE COMPENSATED FOR SUCH SERVICES ON A
DEFERRED BASIS;
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. WITH RESPECT TO SERVICES PERFORMED BY THE TRUSTEE FOR THE FUND OR FUNDS
ON AND AFTER THE FIRST DAY OF , 19___, THE TRUSTEE SHALL DEFER % OF THE
AMOUNTS OTHERWISE PAYABLE TO THE TRUSTEE FOR SERVING AS A TRUSTEE. THE DEFERRED
COMPENSATION SHALL BE CREDITED TO A BOOK RESERVE MAINTAINED BY THE FUND OR FUNDS
IN THE TRUSTEE'S NAME TOGETHER WITH CREDITED AMOUNTS IN THE NATURE OF EARNINGS
("ACCOUNT(S)"). THE ACCOUNT MAINTAINED FOR THE TRUSTEE SHALL BE PAID TO THE
TRUSTEE ON A DEFERRED BASIS IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
2. THE FUND OR FUNDS SHALL CREDIT THE TRUSTEE'S ACCOUNT AS OF THE DAY SUCH
AMOUNT WOULD HAVE BEEN PAID TO THE TRUSTEE IF THIS AGREEMENT WERE NOT IN EFFECT.
SUCH ACCOUNTS SHALL BE VALUED AT FAIR MARKET VALUE AS OF THE LAST DAY OF THE
CALENDAR YEAR AND SUCH OTHER DATES AS ARE NECESSARY FOR THE PROPER
ADMINISTRATION OF THIS AGREEMENT, AND EACH TRUSTEE SHALL RECEIVE A WRITTEN
ACCOUNTING OF HIS ACCOUNT BALANCE(S) FOLLOWING SUCH VALUATION.
A TRUSTEE MAY REQUEST THAT HIS/HER DEFERRED COMPENSATION BE ALLOCATED AMONG
THE AVAILABLE FUNDS OR PLACED IN A MONEY MARKET DEPOSIT ACCOUNT. THE INITIAL
ALLOCATION REQUEST MAY BE MADE AT THE TIME OF ENROLLMENT. ONCE MADE, AN
INVESTMENT ALLOCATION REQUEST SHALL REMAIN IN EFFECT FOR ALL SUBSEQUENT DEFERRED
COMPENSATION UNTIL CHANGED BY THE TRUSTEE. A TRUSTEE MAY CHANGE HIS/HER
INVESTMENT ALLOCATION BY SUBMITTING A WRITTEN REQUEST TO THE ADMINISTRATOR ON
SUCH FORM AS MAY BE REQUIRED BY THE ADMINISTRATOR OR BY TELEPHONING THE
ADMINISTRATOR (OR HIS/HER DELEGATE). SUCH CHANGES SHALL BECOME EFFECTIVE AS SOON
AS ADMINISTRATIVELY FEASIBLE AFTER THE ADMINISTRATOR RECEIVES SUCH REQUEST.
ALTHOUGH THE FUND INTENDS TO INVEST THE DEFERRED COMPENSATION ACCORDING TO THE
TRUSTEE'S REQUESTS, IT RESERVES THE RIGHT TO INVEST THE DEFERRED COMPENSATION
WITHOUT REGARD TO SUCH REQUESTS. THE ADMINISTRATOR IS THE CALVERT GROUP, LTD.
CONTROLLER.
3. AS OF JANUARY 31 OF THE CALENDAR YEAR FOLLOWING THE CALENDAR YEAR THE
TRUSTEE DIES, RETIRES, RESIGNS OR OTHERWISE CEASES TO BE A MEMBER OF THE BOARD
OF TRUSTEES OF THE FUND OR FUNDS; THE FUND OR FUNDS SHALL: (CHECK ONE)
( ) PAY THE TRUSTEE (OR HIS OR HER BENEFICIARY) A LUMP SUM AMOUNT
EQUAL TO THE BALANCE IN THE TRUSTEE'S ACCOUNT ON THAT DATE OR
( ) COMMENCE MAKING ANNUAL PAYMENTS TO THE TRUSTEE (OR HIS OR HER
BENEFICIARY) FOR A PERIOD OF ____ (2 THROUGH 15) YEARS.
IF THE SECOND BOX IS SELECTED, SUCH PAYMENTS SHALL BE MADE ON JANUARY 31ST
OF EACH YEAR IN APPROXIMATELY EQUAL ANNUAL INSTALLMENTS AS ADJUSTED AND COMPUTED
BY THE FUND OR FUNDS, WITH THE FINAL PAYMENT EQUALING THE THEN REMAINING BALANCE
IN THE TRUSTEE'S ACCOUNT. IF THE BALANCE IN THE TRUSTEE'S ACCOUNT AS OF THE DATE
OF THE FIRST SCHEDULED PAYMENT IS LESS THAN $2,000, THE FUND OR FUNDS SHALL
INSTEAD PAY SUCH AMOUNT IN A LUMP SUM AS OF THAT DATE. THE TRUSTEE MAY NOT
SELECT A PERIOD OF TIME, WHICH WILL CAUSE AN ANNUAL PAYMENT TO BE LESS THAN
$1,000. NOTWITHSTANDING THE FOREGOING, IN THE EVENT THAT THE TRUSTEE CEASES TO
BE A TRUSTEE OF THE FUND OR FUNDS AND BECOMES A PROPRIETOR, OFFICER, PARTNER,
EMPLOYEE, OR OTHERWISE BECOMES AFFILIATED WITH ANY BUSINESS OR ENTITY THAT IS IN
COMPETITION WITH THE FUND OR FUNDS, OR BECOMES EMPLOYED BY ANY GOVERNMENTAL
AGENCY HAVING JURISDICTION OVER THE AFFAIRS OF THE FUND OR FUNDS, THE FUND OR
FUNDS RESERVES THE RIGHT AT THE SOLE DISCRETION OF THE BOARD OF TRUSTEES TO MAKE
AN IMMEDIATE LUMP SUM PAYMENT TO THE TRUSTEE IN AN AMOUNT EQUAL TO THE BALANCE
IN THE TRUSTEE'S ACCOUNT AT THAT TIME.
NOTWITHSTANDING THE PRECEDING PARAGRAPH, THE FUND OR FUNDS MAY AT ANY TIME
MAKE A LUMP SUM PAYMENT TO THE TRUSTEE (OR SURVIVING BENEFICIARY) EQUAL TO A
PART OR ALL OF THE BALANCE IN THE TRUSTEE'S ACCOUNT UPON A SHOWING OF A
FINANCIAL EMERGENCY CAUSED BY CIRCUMSTANCES BEYOND THE CONTROL OF THE TRUSTEE
(OR SURVIVING BENEFICIARY) WHICH WOULD RESULT IN SERIOUS FINANCIAL HARDSHIP IF
SUCH PAYMENTS WERE NOT MADE. THE DETERMINATION OF WHETHER SUCH EMERGENCY EXISTS
SHALL BE MADE AT THE SOLE DISCRETION OF THE BOARD OF TRUSTEES OF THE FUND OR
FUNDS. THE AMOUNT OF THE PAYMENT SHALL BE LIMITED TO THE AMOUNT NECESSARY TO
MEET THE FINANCIAL EMERGENCY, AND ANY REMAINING BALANCE IN THE TRUSTEE'S ACCOUNT
SHALL THEREAFTER BE PAID AT THE TIME AND IN THE MANNER OTHERWISE SET FORTH IN
THIS SECTION.
4. IN THE EVENT THAT THE TRUSTEE DIES BEFORE PAYMENTS HAVE COMMENCED OR BEEN
COMPLETED UNDER SECTION 3 HEREOF, THE FUND OR FUNDS SHALL MAKE PAYMENT IN
ACCORDANCE WITH SECTION 3 TO THE TRUSTEE'S DESIGNATED BENEFICIARY, WHO SHALL BE:
IN THE EVENT THAT BOTH THE TRUSTEE AND THE DESIGNATED BENEFICIARY HAVE DIED
BEFORE THE COMMENCEMENT OR COMPLETION OF PAYMENTS UNDER SECTION 3, AN AMOUNT
EQUAL TO THE THEN REMAINING BALANCE IN THE TRUSTEE'S ACCOUNT (OR THE PORTION
THEREOF THAT WOULD HAVE BEEN PAYABLE TO THE BENEFICIARY) SHALL BE PAID IN A LUMP
SUM. SUCH PAYMENT SHALL BE MADE TO THE ESTATE OF THE TRUSTEE UNLESS PAYMENTS TO
THE BENEFICIARY HAVE ALREADY COMMENCED, IN WHICH CASE THE LUMP SUM PAYMENT SHALL
BE MADE TO THE ESTATE OF THE BENEFICIARY.
5. THE AGREEMENT SHALL REMAIN IN EFFECT WITH RESPECT TO THE TRUSTEE'S
COMPENSATION FOR SERVICES PERFORMED AS A TRUSTEE OF THE FUND OR FUNDS IN ALL
FUTURE YEARS UNLESS TERMINATED ON A PROSPECTIVE BASIS IN ACCORDANCE WITH THIS
SECTION. EITHER THE TRUSTEE OR THE FUND OR FUNDS MAY TERMINATE THIS AGREEMENT BY
WRITTEN NOTICE DELIVERED OR MAILED TO THE OTHER PARTY NO LATER THAN DECEMBER 31
OF THE CALENDAR YEAR PRECEDING THE CALENDAR YEAR IN WHICH SUCH TERMINATION IS TO
TAKE EFFECT. IN ADDITION, THE TRUSTEE MAY ALTER THE AMOUNT OF DEFERRAL FOR ANY
FUTURE CALENDAR YEAR IF THE TRUSTEE AND THE FUND OR FUNDS ENTER INTO AN
AMENDMENT ON OR BEFORE DECEMBER 31ST OF THE CALENDAR YEAR PRECEDING THE CALENDAR
YEAR FOR WHICH THE AMENDMENT IS TO TAKE EFFECT. THE AMENDMENT WILL BE DEEMED TO
SUPERSEDE THE AMOUNT OF DEFERRAL FOR ALL FUTURE YEARS UNLESS OTHERWISE AMENDED
OR TERMINATED. ANY TERMINATION OR NEW AMENDMENT SHALL RELATE SOLELY TO
COMPENSATION FOR SERVICES PERFORMED AFTER THE TERMINATION OR AMENDMENT BECOMES
EFFECTIVE AND SHALL NOT ALTER THE TERMS OF THE AGREEMENT WITH RESPECT TO THE
DEFERRED PAYMENT OF COMPENSATION FOR SERVICES PERFORMED DURING ANY CALENDAR YEAR
IN WHICH THIS AGREEMENT WAS IN EFFECT. NOTWITHSTANDING THE FOREGOING, THE
TRUSTEE MAY AT ANY TIME AMEND THE BENEFICIARY DESIGNATION HEREUNDER BY WRITTEN
NOTICE TO THE FUND OR FUNDS.
6. NOTHING CONTAINED IN THIS AGREEMENT AND NO ACTION TAKEN PURSUANT TO THE
PROVISIONS OF THIS AGREEMENT SHALL CREATE OR BE CONSTRUED TO CREATE A TRUST OF
ANY KIND, OR A FIDUCIARY RELATIONSHIP BETWEEN THE FUND OR FUNDS AND THE TRUSTEE,
ANY DESIGNATED BENEFICIARY OR ANY OTHER PERSON. ANY COMPENSATION DEFERRED UNDER
THE PROVISIONS OF THIS AGREEMENT SHALL CONTINUE FOR ALL PURPOSES TO BE A PART OF
THE GENERAL FUNDS OF THE FUND OR FUNDS. TO THE EXTENT THAT ANY PERSON ACQUIRES A
RIGHT TO RECEIVE PAYMENTS FROM THE FUND OR FUNDS UNDER THIS AGREEMENT, SUCH
RIGHT SHALL BE NO GREATER THAN THE RIGHT OF ANY UNSECURED GENERAL CREDITOR OF
THE FUND OR FUNDS.
7. THE RIGHT OF THE TRUSTEE OR ANY OTHER PERSON TO RECEIVE PAYMENTS UNDER
THIS AGREEMENT SHALL NOT BE ASSIGNED, TRANSFERRED, PLEDGED OR ENCUMBERED EXCEPT
BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION.
8. IF THE FUND OR FUNDS SHALL FIND THAT ANY PERSON TO WHOM ANY PAYMENT IS
PAYABLE UNDER THIS AGREEMENT IS UNABLE TO CARE FOR HIS OR HER AFFAIRS BECAUSE OF
ILLNESS OR ACCIDENT, OR IS A MINOR, ANY PAYMENT DUE (UNLESS A PRIOR CLAIM
THEREFOR SHALL HAVE BEEN MADE BY A DULY APPOINTED GUARDIAN, COMMITTEE OR OTHER
LEGAL REPRESENTATIVE) MAY BE PAID TO THE SPOUSE, A PARENT, OR A BROTHER OR
SISTER, OR TO ANY PERSON DEEMED BY THE FUND OR FUNDS TO HAVE INCURRED EXPENSE
FOR THE PERSON WHO IS OTHERWISE ENTITLED TO PAYMENT, IN SUCH MANNER AND
PROPORTIONS AS THE FUND OR FUNDS MAY DETERMINE. ANY SUCH PAYMENT SHALL SERVE TO
DISCHARGE THE LIABILITY OF THE FUND OR FUNDS UNDER THIS AGREEMENT TO MAKE
PAYMENT TO THE PERSON WHO IS OTHERWISE ENTITLED TO PAYMENT.
9. ANY WRITTEN NOTICE TO THE FUND OR FUNDS REFERRED TO IN THIS AGREEMENT
SHALL BE MADE BY MAILING OR DELIVERING SUCH NOTICE TO THE FUND OR FUNDS AT 4550
MONTGOMERY AVENUE, BETHESDA, MD 20814, TO THE ATTENTION OF THE CONTROLLER,
CALVERT GROUP, LTD. ANY WRITTEN NOTICE TO THE TRUSTEE REFERRED TO IN THIS
AGREEMENT SHALL BE MADE BY DELIVERY TO THE TRUSTEE IN PERSON OR BY MAILING SUCH
NOTICE TO THE TRUSTEE AT HIS OR HER PLACE OF RESIDENCE OR BUSINESS ADDRESS.
10. TO THE EXTENT REQUIRED BY LAW, THE FUND OR FUNDS SHALL WITHHOLD FEDERAL
OR STATE INCOME TAXES FROM ANY PAYMENTS HEREUNDER AND SHALL FURNISH THE TRUSTEE
(OR BENEFICIARY) AND THE APPLICABLE GOVERNMENTAL AGENCY OR AGENCIES WITH SUCH
REPORTS, STATEMENTS OR INFORMATION AS MAY BE REQUIRED IN CONNECTION WITH SUCH
PAYMENTS.
11. THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE
FUND OR FUNDS AND ITS SUCCESSORS AND ASSIGNS AND THE TRUSTEE AND HIS OR HER
HEIRS, EXECUTORS, ADMINISTRATORS AND LEGAL REPRESENTATIVE.
12. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF MARYLAND.
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE EXECUTED AS OF
THE DATE FIRST ABOVE WRITTEN.
CALVERT VARIABLE SERIES, INC.
FIRST VARIABLE RATE FUND FOR GOVERNMENT INCOME
CALVERT TAX-FREE RESERVES
THE CALVERT FUND
CALVERT CASH RESERVES
CALVERT SOCIAL INVESTMENT FUND
CALVERT MUNICIPAL FUND, INC.
CALVERT WORLD VALUES FUND, INC.
CALVERT NEW WORLD FUND, INC.
BY
(PRINT NAME OF TRUSTEE)
(SIGNATURE OF TRUSTEE)
DATE
ACKNOWLEDGMENT:
BY RONALD M. WOLFSHEIMER
(PRINT NAME OF OFFICER)
TREASURER
(TITLE)
(SIGNATURE OF OFFICER)
DATE
<PAGE>
APPLICATION FOR CALVERT GROUP
TRUSTEE DEFERRED COMPENSATION PLAN
1. INSTRUCTIONS
PLEASE COMPLETE SECTIONS 2 THROUGH 4 BELOW. THIS APPLICATION SHOULD BE
SIGNED BY THE TRUSTEE AND RETURNED TO THE ADMINISTRATOR.
2. TRUSTEE INFORMATION (PLEASE PRINT)
NAME OF FUND:
NAME OF TRUSTEE:
ADDRESS OF FUND: 4550 MONTGOMERY AVE., STE. 1000N
BETHESDA, MD 20814
3. INVESTMENT OF CONTRIBUTIONS
CONTRIBUTIONS TO THE CALVERT GROUP TRUSTEE'S DEFERRED COMPENSATION PLAN
SHALL BE INVESTED IN THE CALVERT GROUP FUNDS:
CALVERT FIRST GOVERNMENT MONEY MARKET FUND %
CSIF MANAGED INDEX PORTFOLIO _________%
CSIF MONEY MARKET PORTFOLIO %
CSIF BALANCED PORTFOLIO %
CSIF BOND PORTFOLIO %
CSIF EQUITY PORTFOLIO %
CALVERT INCOME FUND %
CALVERT NEW VISION SMALL CAP FUND %
CALVERT INTERNATIONAL EQUITY PORTFOLIO %
CALVERT CAPITAL ACCUMULATION FUND %
CALVERT NEW AFRICA FUND %
TOTAL %
4. PURSUANT TO SECTION 3, I CHOOSE TO HAVE MY ANNUAL PAYMENTS BE MADE FOR:
A ____ LUMP SUM OR
B ____ YEARS (NO LESS THAN 2 NOR GREATER THAN 15).
5. ACCEPTANCE
TRUSTEE ACCEPTANCE: I HEREBY AGREE TO THE TERMS AND CONDITIONS OF THE
CALVERT GROUP TRUSTEE DEFERRED COMPENSATION PLAN. I HAVE READ THE PROSPECTUS(ES)
OF THE CHOSEN FUND(S).
NAME DATE
FOR OFFICE USE ONLY
FUND NUMBER(S): ACCOUNT NUMBER:
CUSTODIAN AGREEMENT
THIS AGREEMENT, DATED AS OF APRIL 1, 1991, IS BETWEEN STATE STREET BANK AND
TRUST COMPANY, A MASSACHUSETTS TRUST COMPANY, HAVING ITS PRINCIPAL PLACE OF
BUSINESS AT 225 FRANKLIN STREET, BOSTON, MASSACHUSETTS, 02110 ("STATE STREET" OR
THE "CUSTODIAN"), AND [FUND], ON BEHALF OF [PORTFOLIO], HAVING ITS PRINCIPAL
PLACE OF BUSINESS AT 4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND,
20814. IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED IN
THIS AGREEMENT, THE PARTIES AGREE AS FOLLOWS:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
THE PORTFOLIO HEREBY EMPLOYS STATE STREET AS THE CUSTODIAN OF ITS ASSETS,
INCLUDING SECURITIES. THE PORTFOLIO AGREES TO DELIVER TO THE CUSTODIAN ALL
SECURITIES AND CASH NOW OR HEREAFTER OWNED OR ACQUIRED, AND ALL PAYMENTS OF
INCOME, PAYMENTS OF PRINCIPAL OR CAPITAL DISTRIBUTIONS RECEIVED BY IT ON
SECURITIES OWNED BY THE PORTFOLIO AT ANY GIVEN TIME, AND THE CASH CONSIDERATION
RECEIVED BY IT FOR SHARES OF THE PORTFOLIO. THE CUSTODIAN WILL NOT BE
RESPONSIBLE FOR ANY PROPERTY OF THE PORTFOLIO HELD OR RECEIVED BY THE PORTFOLIO
AND NOT DELIVERED TO THE CUSTODIAN.
UPON RECEIPT OF "PROPER INSTRUCTIONS" (AS DEFINED IN SECTION 4), THE
CUSTODIAN WILL EMPLOY ONE OR MORE SUBCUSTODIANS LOCATED IN THE UNITED STATES,
BUT ONLY IN ACCORDANCE WITH AN APPLICABLE VOTE BY THE BOARD OF
DIRECTORS/TRUSTEES OF THE FUND, AND PROVIDED THAT THE CUSTODIAN WILL HAVE NO
MORE OR LESS RESPONSIBILITY OR LIABILITY TO THE PORTFOLIO ON ACCOUNT OF ANY
ACTIONS OR OMISSIONS OF ANY SUB-CUSTODIAN SO EMPLOYED THAN ANY SUCH
SUB-CUSTODIAN HAS TO THE CUSTODIAN, AND FURTHER PROVIDED THAT THE CUSTODIAN WILL
NOT RELEASE THE SUB-CUSTODIAN FROM ANY RESPONSIBILITY OR LIABILITY UNLESS
MUTUALLY AGREED UPON BY THE PARTIES IN WRITING.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIO
2.1 HOLDING SECURITIES. THE CUSTODIAN WILL HOLD AND PHYSICALLY SEGREGATE
FOR THE ACCOUNT OF THE PORTFOLIO ALL NON-CASH PROPERTY OTHER THAN (A) SECURITIES
MAINTAINED IN A CLEARING AGENCY ACTING AS A SECURITIES DEPOSITORY OR IN A
BOOK-ENTRY SYSTEM AUTHORIZED BY THE U.S. DEPARTMENT OF THE TREASURY
(COLLECTIVELY REFERRED TO AS "SECURITIES SYSTEM;" SEE SECTION 2.10), AND (B)
COMMERCIAL PAPER OF AN ISSUER FOR WHICH THE CUSTODIAN ACTS AS ISSUING AND PAYING
AGENT ("DIRECT PAPER") WHICH IS DEPOSITED AND/OR MAINTAINED IN THE DIRECT PAPER
SYSTEM OF THE CUSTODIAN (SEE SECTION 2.11).
2.2 DELIVERY OF SECURITIES. THE CUSTODIAN WILL RELEASE AND DELIVER
PORTFOLIO SECURITIES HELD BY THE CUSTODIAN OR IN A SECURITIES SYSTEM ACCOUNT OF
THE CUSTODIAN OR IN THE CUSTODIAN'S DIRECT PAPER BOOK ENTRY SYSTEM ACCOUNT
("DIRECT PAPER SYSTEM ACCOUNT") ONLY UPON RECEIPT OF PROPER INSTRUCTIONS, WHICH
MAY BE CONTINUING INSTRUCTIONS WHEN DEEMED APPROPRIATE BY MUTUAL AGREEMENT OF
THE PARTIES, AND ONLY IN THE FOLLOWING CASES:
L) SALE. UPON THE SALE OF AND RECEIPT OF PAYMENT FOR PORTFOLIO SECURITIES;
2) SECURITIES SYSTEM. IN THE CASE OF A SALE EFFECTED THROUGH A SECURITIES
SYSTEM, IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2.10;
3) TENDER OFFER. TO THE DEPOSITORY AGENT OR OTHER RECEIVING AGENT IN
CONNECTION WITH TENDER OR OTHER SIMILAR OFFERS FOR THE PORTFOLIO'S SECURITIES;
4) REDEMPTION BY ISSUER. TO THE ISSUER OR ITS AGENT WHEN PORTFOLIO
SECURITIES ARE CALLED, REDEEMED, RETIRED OR OTHERWISE BECOME PAYABLE; PROVIDED
THAT, IN ANY SUCH CASE, THE CASH OR OTHER CONSIDERATION IS TO BE DELIVERED TO
THE CUSTODIAN;
5) TRANSFER TO ISSUER, NOMINEE; EXCHANGE. TO THE ISSUER OR ITS AGENT FOR
TRANSFER INTO THE NAME OF THE PORTFOLIO OR INTO THE NAME OF ANY NOMINEE OR
NOMINEES OF THE CUSTODIAN OR INTO THE NAME OR NOMINEE NAME OF ANY AGENT
APPOINTED PURSUANT TO THIS AGREEMENT OR INTO THE NAME OR NOMINEE NAME OF ANY
SUB-CUSTODIAN APPOINTED PURSUANT TO SECTION L; OR FOR EXCHANGE FOR A DIFFERENT
NUMBER OF BONDS, CERTIFICATES OR OTHER EVIDENCE REPRESENTING THE SAME AGGREGATE
FACE AMOUNT OR NUMBER OF UNITS AND BEARING THE SAME INTEREST RATE, MATURITY DATE
AND CALL PROVISIONS, IF ANY; PROVIDED THAT, IN ANY SUCH CASE, THE NEW SECURITIES
ARE TO BE DELIVERED TO THE CUSTODIAN;
6) SALE TO BROKER OR DEALER. UPON THE SALE OF PORTFOLIO SECURITIES TO THE
BROKER OR ITS CLEARING AGENT OR DEALER, AGAINST A RECEIPT, FOR EXAMINATION IN
ACCORDANCE WITH "STREET DELIVERY" CUSTOM; PROVIDED THAT THE CUSTODIAN WILL HAVE
NO RESPONSIBILITY OR LIABILITY FOR ANY LOSS ARISING FROM THE DELIVERY OF SUCH
SECURITIES PRIOR TO RECEIVING PAYMENT FOR SUCH SECURITIES EXCEPT AS MAY ARISE
FROM THE CUSTODIAN'S FAILURE TO ACT IN ACCORDANCE WITH ITS DUTIES AS SET FORTH
IN THIS AGREEMENT.
7) EXCHANGE OR CONVERSION. FOR EXCHANGE OR CONVERSION PURSUANT TO ANY PLAN
OF MERGER, CONSOLIDATION, RECAPITALIZATION, REORGANIZATION, SPLIT-UP OF SHARES,
CHANGE OF PAR VALUE OR READJUSTMENT OF THE SECURITIES OF THE ISSUER OF SUCH
SECURITIES, OR PURSUANT TO PROVISIONS FOR CONVERSION CONTAINED IN SUCH
SECURITIES, OR PURSUANT TO ANY DEPOSIT AGREEMENT PROVIDED THAT, IN ANY SUCH
CASE, THE NEW SECURITIES AND CASH, IF ANY, ARE TO BE DELIVERED TO THE CUSTODIAN;
8) WARRANTS, RIGHTS. IN THE CASE OF WARRANTS, RIGHTS OR SIMILAR SECURITIES,
THE SURRENDER THEREOF IN THE EXERCISE OF SUCH WARRANTS, RIGHTS OR SIMILAR
SECURITIES OR THE SURRENDER OF INTERIM RECEIPTS OR TEMPORARY SECURITIES FOR
DEFINITIVE SECURITIES; PROVIDED THAT, IN ANY SUCH CASE, THE NEW SECURITIES AND
CASH, IF ANY, ARE TO BE DELIVERED TO THE CUSTODIAN;
9) LOANS OF SECURITIES. FOR DELIVERY IN CONNECTION WITH ANY LOANS OF
SECURITIES MADE BY THE PORTFOLIO, MADE ONLY AGAINST RECEIPT OF ADEQUATE
COLLATERAL AS AGREED ON FROM TIME TO TIME BY THE CUSTODIAN AND THE PORTFOLIO.
LOANS MAY BE IN THE FORM OF CASH, OBLIGATIONS ISSUED BY THE UNITED STATES
GOVERNMENT, ITS AGENCIES OR INSTRUMENTALITIES, OR SUCH OTHER PROPERTY AS
MUTUALLY AGREED BY THE PARTIES, EXCEPT THAT IN CONNECTION WITH ANY LOANS FOR
WHICH COLLATERAL IS TO BE CREDITED TO THE CUSTODIAN'S ACCOUNT IN THE BOOK-ENTRY
SYSTEM AUTHORIZED BY THE U.S. DEPARTMENT OF THE TREASURY, THE CUSTODIAN WILL NOT
BE HELD LIABLE OR RESPONSIBLE FOR THE DELIVERY OF SECURITIES OWNED BY THE
PORTFOLIO PRIOR TO THE RECEIPT OF SUCH COLLATERAL, UNLESS THE CUSTODIAN FAILS TO
ACT IN ACCORDANCE WITH ITS DUTIES SET FORTH IN THIS AGREEMENT;
10) BORROWINGS. FOR DELIVERY AS SECURITY IN CONNECTION WITH ANY BORROWINGS
BY THE PORTFOLIO REQUIRING A PLEDGE OF ASSETS BY THE PORTFOLIO, MADE ONLY
AGAINST RECEIPT OF AMOUNTS BORROWED; EXCEPT, WHERE ADDITIONAL COLLATERAL IS
REQUIRED TO SECURE A BORROWING ALREADY MADE, FURTHER SECURITIES MAY BE RELEASED
FOR THAT PURPOSE, SUBJECT TO PROPER INSTRUCTIONS;
11) OPTIONS. FOR DELIVERY IN ACCORDANCE WITH THE PROVISIONS OF ANY
AGREEMENT AMONG THE PORTFOLIO, THE CUSTODIAN AND A BROKER-DEALER REGISTERED
UNDER THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT") AND A MEMBER OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD"), RELATING TO
COMPLIANCE WITH THE RULES OF THE OPTIONS CLEARING CORPORATION, ANY REGISTERED
NATIONAL SECURITIES EXCHANGE, ANY SIMILAR ORGANIZATION OR ORGANIZATIONS, OR THE
INVESTMENT COMPANY ACT OF 1940, REGARDING ESCROW OR OTHER ARRANGEMENTS IN
CONNECTION WITH TRANSACTIONS BY THE PORTFOLIO;
12) FUTURES. FOR DELIVERY IN ACCORDANCE WITH THE PROVISIONS OF ANY
AGREEMENT AMONG THE PORTFOLIO, THE CUSTODIAN, AND A FUTURES COMMISSION MERCHANT
REGISTERED UNDER THE COMMODITY EXCHANGE ACT, RELATING TO COMPLIANCE WITH THE
RULES OF THE COMMODITY FUTURES TRADING COMMISSION AND/OR ANY CONTRACT MARKET,
ANY SIMILAR ORGANIZATION OR ORGANIZATIONS, OR THE INVESTMENT COMPANY ACT OF
1940, REGARDING ACCOUNT DEPOSITS IN CONNECTION WITH TRANSACTIONS BY THE
PORTFOLIO;
13) IN-KIND DISTRIBUTIONS. UPON RECEIPT OF INSTRUCTIONS FROM THE
PORTFOLIO'S TRANSFER AGENT, FOR DELIVERY TO THE TRANSFER AGENT OR TO THE HOLDERS
OF SHARES IN CONNECTION WITH DISTRIBUTIONS IN KIND, AS MAY BE DESCRIBED FROM
TIME TO TIME IN THE PORTFOLIO'S CURRENTLY EFFECTIVE PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION, IN SATISFACTION OF SHAREHOLDER REQUESTS FOR REPURCHASE
OR REDEMPTION;
14) MISCELLANEOUS. FOR ANY OTHER PROPER CORPORATE PURPOSE, MADE ONLY UPON
RECEIPT OF A CERTIFIED COPY OF A RESOLUTION OF THE BOARD OF TRUSTEES SIGNED BY
AN OFFICER OF THE FUND AND CERTIFIED BY THE SECRETARY OR AN ASSISTANT SECRETARY,
SPECIFYING THE SECURITIES TO BE DELIVERED, SETTING FORTH THE PURPOSE FOR WHICH
SUCH DELIVERY IS TO BE MADE, DECLARING SUCH PURPOSE TO BE A PROPER CORPORATE
PURPOSE, AND NAMING THE PERSON OR PERSONS TO WHOM DELIVERY OF THE SECURITIES
WILL BE MADE.
IN ALL CASES, PAYMENTS TO THE PORTFOLIO WILL BE MADE IN CASH, BY A
CERTIFIED CHECK OR A TREASURER'S OR CASHIER'S CHECK OF A BANK, BY EFFECTIVE BANK
WIRE TRANSFER THROUGH THE FEDERAL RESERVE WIRE SYSTEM OR, IF APPROPRIATE,
OUTSIDE OF THE FEDERAL RESERVE WIRE SYSTEM AND SUBSEQUENT CREDIT TO THE
PORTFOLIO'S CUSTODIAN ACCOUNT, OR, IN CASE OF DELIVERY THROUGH A STOCK CLEARING
COMPANY, BY BOOK-ENTRY CREDIT BY THE STOCK CLEARING COMPANY IN ACCORDANCE WITH
THE THEN CURRENT STREET CUSTOM, OR SUCH OTHER FORM OF PAYMENT AS MAY BE MUTUALLY
AGREED ON BY THE PARTIES, IN ALL SUCH CASES COLLECTED FUNDS TO BE PROMPTLY
CREDITED TO THE PORTFOLIO.
2.3 REGISTRATION OF SECURITIES. SECURITIES HELD BY THE CUSTODIAN (OTHER
THAN BEARER SECURITIES) WILL BE REGISTERED (A) IN THE NAME OF THE PORTFOLIO OR
(B) IN THE NAME OF ANY NOMINEE OF THE PORTFOLIO OR OF ANY NOMINEE OF THE
CUSTODIAN ASSIGNED EXCLUSIVELY TO THE PORTFOLIO, UNLESS THE PORTFOLIO HAS
AUTHORIZED IN WRITING THE APPOINTMENT OF A NOMINEE TO BE USED IN COMMON WITH
OTHER REGISTERED INVESTMENT COMPANIES HAVING THE SAME INVESTMENT ADVISER AS THE
PORTFOLIO, OR IN THE NAME OR NOMINEE NAME OF ANY AGENT APPOINTED PURSUANT TO
SECTION 2.9 OR IN THE NAME OR NOMINEE NAME OF ANY SUB-CUSTODIAN APPOINTED
PURSUANT TO SECTION 1. ALL SECURITIES ACCEPTED BY THE CUSTODIAN ON BEHALF OF THE
PORTFOLIO UNDER THE TERMS OF THIS AGREEMENT WILL BE IN "STREET NAME" OR OTHER
GOOD DELIVERY FORM.
2.4 BANK ACCOUNTS. THE CUSTODIAN WILL OPEN AND MAINTAIN A SEPARATE BANK
ACCOUNT OR ACCOUNTS IN THE NAME OF THE PORTFOLIO, SUBJECT ONLY TO DRAFT OR ORDER
BY THE CUSTODIAN ACTING PURSUANT TO THE TERMS OF THIS AGREEMENT. THE CUSTODIAN
WILL HOLD IN THE ACCOUNT(S), IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT, ALL CASH RECEIVED BY IT FROM OR FOR THE ACCOUNT OF THE PORTFOLIO,
OTHER THAN CASH MAINTAINED BY THE PORTFOLIO IN A BANK ACCOUNT ESTABLISHED AND
USED IN ACCORDANCE WITH RULE 17F-3 UNDER THE INVESTMENT COMPANY ACT OF 1940.
FUNDS HELD BY THE CUSTODIAN FOR THE PORTFOLIO MAY BE DEPOSITED FOR THE
PORTFOLIO'S CREDIT IN THE BANK AFFILIATE OF THE CUSTODIAN OR IN SUCH OTHER BANKS
OR TRUST COMPANIES AS THE CUSTODIAN MAY IN ITS DISCRETION DEEM NECESSARY OR
DESIRABLE; PROVIDED, HOWEVER, THAT EVERY SUCH BANK OR TRUST COMPANY MUST BE
QUALIFIED TO ACT AS A CUSTODIAN UNDER THE INVESTMENT COMPANY ACT OF 1940. FUNDS
WILL BE DEPOSITED BY THE CUSTODIAN IN ITS CAPACITY AS CUSTODIAN AND WILL BE
WITHDRAWABLE BY THE CUSTODIAN ONLY IN THAT CAPACITY.
2.5 SALE OF SHARES AND AVAILABILITY OF FEDERAL FUNDS. UPON MUTUAL AGREEMENT
BETWEEN THE PORTFOLIO AND THE CUSTODIAN, THE CUSTODIAN WILL, UPON THE RECEIPT OF
PROPER INSTRUCTIONS, MAKE FEDERAL FUNDS AVAILABLE TO THE PORTFOLIO AS OF
SPECIFIED TIMES AGREED UPON FROM TIME TO TIME BY THE PORTFOLIO AND THE CUSTODIAN
IN THE AMOUNT OF CHECKS RECEIVED IN PAYMENT FOR SHARES OF THE PORTFOLIO WHICH
ARE DEPOSITED INTO THE PORTFOLIO'S ACCOUNT.
2.6 COLLECTION OF INCOME, DIVIDENDS. THE CUSTODIAN WILL COLLECT ON A TIMELY
BASIS ALL INCOME AND OTHER PAYMENTS WITH RESPECT TO REGISTERED SECURITIES HELD
TO WHICH THE PORTFOLIO IS ENTITLED EITHER BY LAW OR PURSUANT TO CUSTOM IN THE
SECURITIES BUSINESS. THE CUSTODIAN WILL ALSO COLLECT ON A TIMELY BASIS ALL
INCOME AND OTHER PAYMENTS WITH RESPECT TO BEARER SECURITIES IF, ON THE DATE OF
PAYMENT BY THE ISSUER, THE SECURITIES ARE HELD BY THE CUSTODIAN OR ITS AGENT.
THE CUSTODIAN WILL CREDIT ALL SUCH INCOME OR OTHER PAYMENTS, AS COLLECTED, TO
THE PORTFOLIO'S CUSTODIAN ACCOUNT. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, THE CUSTODIAN WILL DETACH AND PRESENT FOR PAYMENT ALL COUPONS AND
OTHER INCOME ITEMS REQUIRING PRESENTATION AS AND WHEN THEY BECOME DUE AND WILL
COLLECT INTEREST WHEN DUE ON SECURITIES HELD PURSUANT TO THIS AGREEMENT. THE
CUSTODIAN WILL ALSO RECEIVE AND COLLECT ALL STOCK DIVIDENDS, RIGHTS AND OTHER
ITEMS OF LIKE NATURE AS AND WHEN THEY BECOME DUE OR PAYABLE. INCOME DUE THE
PORTFOLIO ON SECURITIES LOANED PURSUANT TO THE PROVISIONS OF SECTION 2.2(10)
WILL BE THE RESPONSIBILITY OF THE PORTFOLIO; THE CUSTODIAN WILL HAVE NO DUTY OR
RESPONSIBILITY IN CONNECTION WITH LOANED SECURITIES OTHER THAN TO PROVIDE THE
PORTFOLIO WITH SUCH INFORMATION OR DATA AS MAY BE NECESSARY TO ASSIST THE
PORTFOLIO IN ARRANGING FOR THE TIMELY DELIVERY TO THE CUSTODIAN OF THE INCOME TO
WHICH THE PORTFOLIO IS PROPERLY ENTITLED.
2.7 PAYMENT OF PORTFOLIO MONIES. UPON RECEIPT OF PROPER INSTRUCTIONS, WHICH
MAY BE CONTINUING INSTRUCTIONS WHEN DEEMED APPROPRIATE BY MUTUAL AGREEMENT OF
THE PARTIES, THE CUSTODIAN WILL PAY OUT MONIES OF THE PORTFOLIO IN THE FOLLOWING
CASES ONLY:
L) PURCHASES. UPON THE PURCHASE OF DOMESTIC SECURITIES, OPTIONS, FUTURES
CONTRACTS OR OPTIONS ON FUTURES CONTRACTS FOR THE ACCOUNT OF THE PORTFOLIO BUT
ONLY (A) AGAINST THE DELIVERY OF SUCH SECURITIES, OR EVIDENCE OF TITLE TO SUCH
OPTIONS, FUTURES CONTRACTS OR OPTIONS ON FUTURES CONTRACTS, TO THE CUSTODIAN (OR
ANY BANK, BANKING FIRM OR TRUST COMPANY DOING BUSINESS IN THE UNITED STATES OR
ABROAD WHICH IS QUALIFIED UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
TO ACT AS A CUSTODIAN AND HAS BEEN DESIGNATED BY THE CUSTODIAN AS ITS AGENT FOR
THIS PURPOSE IN ACCORDANCE WITH SECTION 2.9 OF THIS AGREEMENT) REGISTERED IN THE
NAME OF THE PORTFOLIO OR IN THE NAME OF A NOMINEE OF THE PORTFOLIO OR OF THE
CUSTODIAN REFERRED TO IN SECTION 2.3 OF THIS AGREEMENT, OR IN OTHER PROPER FORM
FOR TRANSFER; (B) IN THE CASE OF A PURCHASE EFFECTED THROUGH A SECURITIES
SYSTEM, IN ACCORDANCE WITH THE CONDITIONS SET FORTH IN SECTION 2.10 OF THIS
AGREEMENT; (C) IN THE CASE OF A PURCHASE INVOLVING THE DIRECT PAPER SYSTEM, IN
ACCORDANCE WITH THE CONDITIONS SET FORTH IN SECTION 2.11; OR (D) IN THE CASE OF
REPURCHASE AGREEMENTS ENTERED INTO BETWEEN THE PORTFOLIO AND THE CUSTODIAN, OR
ANOTHER BANK, OR A BROKER-DEALER WHICH IS A MEMBER OF NASD, (I) AGAINST DELIVERY
OF THE SECURITIES EITHER IN CERTIFICATE FORM OR THROUGH AN ENTRY CREDITING THE
CUSTODIAN'S ACCOUNT AT THE FEDERAL RESERVE BANK WITH SUCH SECURITIES OR (II)
AGAINST DELIVERY OF THE RECEIPT EVIDENCING PURCHASE BY THE PORTFOLIO OF
SECURITIES OWNED BY THE CUSTODIAN ALONG WITH WRITTEN EVIDENCE OF THE AGREEMENT
BY THE CUSTODIAN TO REPURCHASE SUCH SECURITIES FROM THE PORTFOLIO. ALL COUPON
BONDS ACCEPTED BY THE CUSTODIAN MUST HAVE THE COUPONS ATTACHED OR MUST BE
ACCOMPANIED BY A CHECK PAYABLE ON COUPON PAYABLE DATE FOR THE INTEREST DUE ON
THAT DATE.
2) EXCHANGES. IN CONNECTION WITH CONVERSION, EXCHANGE OR SURRENDER OF
SECURITIES OWNED BY THE PORTFOLIO AS SET FORTH IN SECTION 2.2 HEREOF;
3) REDEMPTIONS. FOR THE REDEMPTION OR REPURCHASE OF SHARES ISSUED BY THE
PORTFOLIO AS SET FORTH IN THIS AGREEMENT;
4) EXPENSE AND LIABILITY. FOR THE PAYMENT OF ANY EXPENSE OR LIABILITY
INCURRED BY THE PORTFOLIO, INCLUDING BUT NOT LIMITED TO THE FOLLOWING PAYMENTS
FOR THE ACCOUNT OF THE PORTFOLIO: INTEREST, TAXES, MANAGEMENT, ACCOUNTING,
TRANSFER AGENT AND LEGAL FEES, AND OPERATING EXPENSES OF THE PORTFOLIO WHETHER
OR NOT SUCH EXPENSES ARE TO BE IN WHOLE OR PART CAPITALIZED OR TREATED AS
DEFERRED EXPENSES;
5) DIVIDENDS. FOR THE PAYMENT OF ANY DIVIDENDS OR OTHER DISTRIBUTIONS TO
SHAREHOLDERS DECLARED BY THE PORTFOLIO;
6) SHORT SALE DIVIDEND. FOR PAYMENT OF THE AMOUNT OF DIVIDENDS RECEIVED IN
RESPECT OF SECURITIES SOLD SHORT;
7) LOAN. FOR REPAYMENT OF A LOAN UPON REDELIVERY OF PLEDGED SECURITIES AND
UPON SURRENDER OF THE NOTE(S), IF ANY, EVIDENCING THE LOAN;
8) MISCELLANEOUS. FOR ANY OTHER PROPER PURPOSE UPON RECEIPT OF A CERTIFIED
COPY OF A RESOLUTION OF THE BOARD OF TRUSTEES SIGNED BY AN OFFICER OF THE FUND
AND CERTIFIED BY ITS SECRETARY OR AN ASSISTANT SECRETARY, SPECIFYING THE AMOUNT
OF SUCH PAYMENT, SETTING FORTH THE PURPOSE FOR WHICH SUCH PAYMENT IS TO BE MADE,
DECLARING SUCH PURPOSE TO BE A PROPER PURPOSE, AND NAMING THE PERSON OR PERSONS
TO WHOM SUCH PAYMENT IS TO BE MADE.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
WHERE PAYMENT FOR PORTFOLIO SECURITIES IS MADE BY THE CUSTODIAN IN ADVANCE OF
RECEIPT OF THE SECURITIES PURCHASED IN THE ABSENCE OF SPECIFIC WRITTEN
INSTRUCTIONS FROM THE PORTFOLIO TO SO PAY IN ADVANCE, THE CUSTODIAN WILL BE
ABSOLUTELY LIABLE TO THE PORTFOLIO FOR SUCH SECURITIES TO THE SAME EXTENT AS IF
THE SECURITIES HAD BEEN RECEIVED BY THE CUSTODIAN.
2.9 APPOINTMENT OF AGENTS. AT ITS DISCRETION, THE CUSTODIAN MAY AT ANY TIME
APPOINT (AND MAY AT ANY TIME REMOVE) ANY OTHER BANK OR TRUST COMPANY QUALIFIED
TO ACT AS A CUSTODIAN UNDER THE INVESTMENT COMPANY ACT OF 1940 AS ITS AGENT TO
CARRY OUT SUCH OF THE PROVISIONS OF THIS SECTION 2 AS THE CUSTODIAN MAY FROM
TIME TO TIME DIRECT; PROVIDED, HOWEVER, THAT THE APPOINTMENT OF ANY AGENT WILL
NOT RELIEVE THE CUSTODIAN OF ITS RESPONSIBILITIES OR LIABILITIES UNDER THIS
AGREEMENT.
2.10 DEPOSIT OF SECURITIES IN SECURITIES SYSTEMS. THE CUSTODIAN MAY DEPOSIT
AND/OR MAINTAIN PORTFOLIO SECURITIES IN A SECURITIES SYSTEM IN ACCORDANCE WITH
APPLICABLE FEDERAL RESERVE BOARD AND SECURITIES AND EXCHANGE COMMISSION RULES
AND REGULATIONS, IF ANY, AND SUBJECT TO THE FOLLOWING PROVISIONS:
L) ACCOUNT OF CUSTODIAN. THE CUSTODIAN MAY KEEP PORTFOLIO SECURITIES IN A
SECURITIES SYSTEM PROVIDED THAT SUCH SECURITIES ARE REPRESENTED IN AN ACCOUNT OF
THE CUSTODIAN IN THE SECURITIES SYSTEM THAT DOES NOT INCLUDE ANY ASSETS OF THE
CUSTODIAN OTHER THAN ASSETS HELD AS A FIDUCIARY, CUSTODIAN OR OTHERWISE FOR
CUSTOMERS;
2) RECORDS. THE CUSTODIAN'S REOCRDS, WITH RESPECT TO PORTFOLIO SECURITIES
MAINTAINED IN A SECURITIES SYSTEM, MUST IDENTIFY BY BOOK ENTRY THOSE SECURITIES
BELONGING TO THE PORTFOLIO;
3) PAYMENT/DELIVERY.
(A) SUBJECT TO SECTION 2.7 (PAYMENT OF PORTFOLIO MONIES), THE CUSTODIAN WILL
PAY FOR PORTFOLIO SECURITIES UPON (I) RECEIPT OF ADVICE FROM THE SECURITIES
SYSTEM THAT SUCH SECURITIES HAVE BEEN TRANSFERRED TO THE ACCOUNT, AND (II) THE
MAKING OF AN ENTRY ON THE RECORDS OF THE CUSTODIAN TO REFLECT SUCH PAYMENT AND
TRANSFER FOR THE ACCOUNT OF THE PORTFOLIO.
(B) SUBJECT TO SECTION 2.2 (DELIVERY OF SECURITIES), THE CUSTODIAN WILL
TRANSFER PORTFOLIO SECURITIES UPON (I) RECEIPT OF ADVICE FROM THE SECURITIES
SYSTEM THAT PAYMENT FOR SUCH SECURITIES HAS BEEN TRANSFERRED TO THE CUSTODIAN'S
ACCOUNT, AND (II) THE MAKING OF AN ENTRY ON THE RECORDS OF THE CUSTODIAN TO
REFLECT SUCH TRANSFER AND PAYMENT FOR THE ACCOUNT OF THE PORTFOLIO.
(C) COPIES OF ALL ADVICES FROM THE SECURITIES SYSTEM OF TRANSFERS OF
PORTFOLIO SECURITIES WILL IDENTIFY THE PORTFOLIO, BE MAINTAINED FOR THE
PORTFOLIO BY THE CUSTODIAN AND BE PROVIDED TO THE PORTFOLIO AT ITS REQUEST. THE
CUSTODIAN WILL FURNISH DAILY TRANSACTION SHEETS REFLECTING EACH DAY'S
TRANSACTIONS IN THE SECURITIES SYSTEM FOR THE ACCOUNT OF THE PORTFOLIO;
4) REPORTS. THE CUSTODIAN WILL PROVIDE THE PORTFOLIO WITH ANY REPORT
OBTAINED BY THE CUSTODIAN ON THE SECURITIES SYSTEM'S ACCOUNTING SYSTEM, INTERNAL
ACCOUNTING CONTROL AND PROCEDURES FOR SAFEGUARDING SECURITIES DEPOSITED IN THE
SECURITIES SYSTEM, AND FURTHER AGREES TO PROVIDE THE PORTFOLIO WITH COPIES OF
ANY DOCUMENTATION IT HAS RELATING TO ITS ARRANGEMENTS WITH THE SECURITIES
SYSTEMS AS SET FORTH IN THIS AGREEMENT OR AS OTHERWISE REQUIRED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AGENCY OR
ORGANIZATION;
5) INDEMNIFICATION. ANYTHING TO THE CONTRARY IN THIS AGREEMENT
NOTWITHSTANDING, THE CUSTODIAN WILL BE LIABLE TO THE PORTFOLIO FOR ANY LOSS OR
EXPENSE, INCLUDING REASONABLE ATTORNEYS FEES, OR DAMAGE TO THE PORTFOLIO
RESULTING FROM USE OF THE SECURITIES SYSTEM BY REASON OF ANY FAILURE BY THE
CUSTODIAN, ITS AGENTS, OR ANY EMPLOYEE OR AGENT OF THE CUSTODIAN OR AGENT, OR
FROM FAILURE OF THE CUSTODIAN OR ANY SUCH AGENT TO ENFORCE EFFECTIVELY SUCH
RIGHTS AS IT MAY HAVE AGAINST THE SECURITIES SYSTEM; AT THE ELECTION OF THE
PORTFOLIO, IT WILL BE ENTITLED TO BE SUBROGATED TO THE RIGHTS OF THE CUSTODIAN
WITH RESPECT TO ANY CLAIM AGAINST THE SECURITIES SYSTEM OR ANY OTHER PERSON
WHICH THE CUSTODIAN MAY HAVE AS ACONSEQUENCE OF ANY SUCH LOSS, EXPENSE OR DAMAGE
IF AND TO THE EXTENT THAT THE PORTFOLIO HAS NOT BEEN MADE WHOLE FOR ANY SUCH
LOSS, EXPENSE OR DAMAGE.
2.11 PORTFOLIO ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. THE
CUSTODIAN MAY DEPOSIT AND/OR MAINTAIN SECURITIES OWNED BY THE PORTFOLIO IN THE
DIRECT PAPER SYSTEM OF THE CUSTODIAN SUBJECT TO THE FOLLOWING PROVISIONS:
L) NO TRANSACTION RELATING TO SECURITIES IN THE DIRECT PAPER SYSTEM WILL BE
EFFECTED IN THE ABSENCE OF PROPER INSTRUCTIONS;
2) THE CUSTODIAN MAY KEEP SECURITIES OF THE PORTFOLIO IN THE DIRECT PAPER
SYSTEM ONLY IF SUCH SECURITIES ARE REPRESENTED IN AN ACCOUNT OF THE CUSTODIAN IN
THE DIRECT PAPER SYSTEM THAT DOES NOT INCLUDE ANY ASSETS OF THE CUSTODIAN OTHER
THAN ASSETS HELD AS A FIDUCIARY, CUSTODIAN OR OTHERWISE FOR CUSTOMERS;
3) THE RECORDS OF THE CUSTODIAN WITH RESPECT TO SECURITIES OF THE PORTFOLIO
THAT ARE MAINTAINED IN THE DIRECT PAPER SYSTEM WILL IDENTIFY BY BOOK ENTRY THOSE
SECURITIES BELONGING TO THE PORTFOLIO;
4) THE CUSTODIAN WILL PAY FOR SECURITIES PURCHASED FOR THE ACCOUNT OF THE
PORTFOLIO UPON THE MAKING OF AN ENTRY ON THE RECORDS OF THE CUSTODIAN TO REFLECT
SUCH PAYMENT AND TRANSFER OF SECURITIES TO THE ACCOUNT OF THE PORTFOLIO. THE
CUSTODIAN WILL TRANSFER SECURITIES SOLD FOR THE ACCOUNT OF THE PORTFOLIO UPON
THE MAKING OF AN ENTRY ON THE RECORDS OF THE CUSTODIAN TO REFLECT SUCH TRANSFER
AND RECEIPT OF PAYMENT FOR THE ACCOUNT OF THE PORTFOLIO;
5) THE CUSTODIAN WILL FURNISH THE PORTFOLIO CONFIRMATION OF EACH TRANSFER TO
OR FROM THE ACCOUNT OF THE PORTFOLIO, IN THE FORM OF A WRITTEN ADVICE OR NOTICE,
OF DIRECT PAPER ON THE NEXT BUSINESS DAY FOLLOWING SUCH TRANSFER AND WILL
FURNISH TO THE PORTFOLIO COPIES OF DAILY TRANSACTION SHEETS REFLECTING EACH
DAY'S TRANSACTION IN THE SECURITIES SYSTEM FOR THE ACCOUNT OF THE PORTFOLIO;
6) THE CUSTODIAN WILL PROVIDE THE PORTFOLIO WITH ANY REPORT ON ITS SYSTEM OF
INTERNAL ACCOUNTING CONTROL AS THE PORTFOLIO MAY REASONABLY REQUEST FROM TIME TO
TIME;
2.12 SEGREGATED ACCOUNT. THE CUSTODIAN WILL, UPON RECEIPT OF PROPER
INSTRUCTIONS, ESTABLISH AND MAINTAIN A SEGREGATED ACCOUNT OR ACCOUNTS FOR AND ON
BEHALF OF THE PORTFOLIO, INTO WHICH MAY BE TRANSFERRED CASH AND/OR SECURITIES,
INCLUDING SECURITIES MAINTAINED IN AN ACCOUNT BY THE CUSTODIAN PURSUANT TO
SECTION 2.10 OF THIS AGREEMENT; (I) IN ACCORDANCE WITH THE PROVISIONS OF ANY
AGREEMENT AMONG THE PORTFOLIO, THE CUSTODIAN AND A BROKER-DEALER REGISTERED
UNDER THE EXCHANGE ACT AND A MEMBER OF THE NASD (OR ANY FUTURES COMMISSION
MERCHANT REGISTERED UNDER THE COMMODITY EXCHANGE ACT), RELATING TO COMPLIANCE
WITH THE RULES OF THE OPTIONS CLEARING CORPORATION AND OF ANY REGISTERED
NATIONAL SECURITIES EXCHANGE (OR THE COMMODITY FUTURES TRADING COMMISSION OR ANY
REGISTERED CONTRACT MARKET), OR OF ANY SIMILAR ORGANIZATION OR ORGANIZATIONS,
REGARDING ESCROW OR OTHER ARRANGEMENTS IN CONNECTION WITH TRANSACTIONS BY THE
PORTFOLIO, (II) FOR PURPOSES OF SEGREGATING CASH OR GOVERNMENT SECURITIES IN
CONNECTION WITH OPTIONS PURCHASED, SOLD OR WRITTEN BY THE PORTFOLIO OR COMMODITY
FUTURES CONTRACTS OR OPTIONS THEREON PURCHASED OR SOLD BY THE PORTFOLIO, (III)
FOR THE PURPOSES OF COMPLIANCE BY THE PORTFOLIO WITH THE PROCEDURES REQUIRED BY
INVESTMENT COMPANY ACT RELEASE NO. 10666, OR ANY SUBSEQUENT RELEASE, RULE OR
POLICY, OF THE SECURITIES AND EXCHANGE COMMISSION RELATING TO THE MAINTENANCE OF
SEGREGATED ACCOUNTS BY REGISTERED INVESTMENT COMPANIES AND (IV) FOR OTHER PROPER
CORPORATE PURPOSES UPON RECEIPT OF A CERTIFIED COPY OF A RESOLUTION OF THE BOARD
OF TRUSTEES OR OF THE EXECUTIVE COMMITTEE SIGNED BY AN OFFICER OF THE PORTFOLIO
AND CERTIFIED BY THE SECRETARY OR AN ASSISTANT SECRETARY, SETTING FORTH THE
PURPOSE OR PURPOSES OF SUCH SEGREGATED ACCOUNT AND DECLARING SUCH PURPOSES TO BE
PROPER CORPORATE PURPOSES.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. THE CUSTODIAN WILL EXECUTE
OWNERSHIP AND OTHER CERTIFICATES AND AFFIDAVITS FOR ALL FEDERAL AND STATE TAX
PURPOSES IN CONNECTION WITH RECEIPT OF INCOME OR OTHER PAYMENTS FOR PORTFOLIO
SECURITIES AND IN CONNECTION WITH TRANSFERS OF SUCH SECURITIES.
2.14 PROXIES. IF THE SECURITIES ARE REGISTERED OTHER THAN IN THE NAME OF THE
PORTFOLIO OR A NOMINEE OF THE PORTFOLIO, THE CUSTODIAN WILL CAUSE ALL PROXIES
PROMPTLY TO BE EXECUTED BY THE REGISTERED HOLDER OF SUCH SECURITIES, WITHOUT
INDICATION OF THE MANNER IN WHICH SUCH PROXIES ARE TO BE VOTED, AND WILL
PROMPTLY DELIVER TO THE PORTFOLIO ALL PROXY SOLICITING MATERIALS AND ALL NOTICES
RELATING TO SUCH SECURITIES.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. THE CUSTODIAN WILL
TRANSMIT PROMPTLY TO THE PORTFOLIO ALL WRITTEN INFORMATION (INCLUDING, WITHOUT
LIMITATION, PENDENCY OF CALLS AND MATURITIES OF DOMESTIC SECURITIES AND
EXPIRATIONS OF RIGHTS IN CONNECTION THEREWITH AND NOTICES OF EXERCISE OF CALL
AND PUT OPTIONS WRITTEN BY THE PORTFOLIO AND THE MATURITY OF FUTURES CONTRACTS
PURCHASED OR SOLD BY THE PORTFOLIO) RECEIVED BY THE CUSTODIAN FROM ISSUERS OF
THE PORTFOLIO SECURITIES BY THE CUSTODIAN, AN AGENT APPOINTED UNDER SECTION 2.9,
OR SUBCUSTODIAN APPOINTED UNDER SECTION 1. WITH RESPECT TO TENDER OR EXCHANGE
OFFERS, THE CUSTODIAN WILL TRANSMIT PROMPTLY TO THE PORTFOLIO ALL WRITTEN
INFORMATION RECEIVED BY THE CUSTODIAN, AN AGENT APPOINTED UNDER SECTION 2.9, OR
SUBCUSTODIAN APPOINTED UNDER SECTION 1 FROM ISSUERS OF THE SECURITIES WHOSE
TENDER OR EXCHANGE IS SOUGHT AND FROM THE PARTY (OR ITS AGENTS) MAKING THE
TENDER OR EXCHANGE OFFER. IF THE PORTFOLIO DESIRES TO TAKE ACTION WITH RESPECT
TO ANY TENDER OFFER, EXCHANGE OFFER OR ANY OTHER SIMILAR TRANSACTION, THE
PORTFOLIO WILL NOTIFY THE CUSTODIAN OF SUCH DESIRED ACTION AT LEAST 3 BUSINESS
DAYS PRIOR TO THE TIME SUCH ACTION MUST BE TAKEN UNDER THE TERMS OF THE TENDER,
EXCHANGE OFFER, OR OTHER SIMILAR TRANSACTION, AND IT WILL BE THE RESPONSIBILITY
OF THE CUSTODIAN TO TIMELY TRANSMIT TO THE APPROPRIATE PERSON(S) THE PORTFOLIO'S
NOTICE. WHERE THE PORTFOLIO DOES NOT NOTIFY THE CUSTODIAN OF ITS DESIRED ACTION
WITHIN THE 3 BUSINESS DAY PERIOD, THE CUSTODIAN WILL USE ITS BEST EFFORTS TO
TIMELY TRANSMIT THE FUND'S NOTICE TO THE APPROPRIATE PERSON.
2.16 REPORTS TO PORTFOLIO BY INDEPENDENT PUBLIC ACCOUNTANTS. THE CUSTODIAN WILL
PROVIDE THE PORTFOLIO, AT SUCH TIMES AS THE PORTFOLIO MAY REASONABLY REQUIRE,
WITH REPORTS BY INDEPENDENT PUBLIC ACCOUNTANTS ON THE ACCOUNTING SYSTEM,
INTERNAL ACCOUNTING CONTROL AND PROCEDURES FOR SAFEGUARDING SECURITIES, FUTURES
CONTRACTS AND OPTIONS ON FUTURES CONTRACTS, INCLUDING SECURITIES DEPOSITED
AND/OR MAINTAINED IN A SECURITIES SYSTEM, RELATING TO THE SERVICES PROVIDED BY
THE CUSTODIAN UNDER THIS CONTRACT; SUCH REPORTS WILL BE OF SUFFICIENT SCOPE AND
IN SUFFICIENT DETAIL, AS MAY REASONABLY BE REQUIRED BY THE PORTFOLIO TO PROVIDE
REASONABLE ASSURANCE THAT ANY MATERIAL INADEQUACIES EXISTING OR ARISING SINCE
THE PRIOR EXAMINATION WOULD BE DISCLOSED BY SUCH EXAMINATION. THE REPORTS MUST
DESCRIBE ANY MATERIAL INADEQUACIES DISCLOSED AND, IF THERE ARE NO SUCH
INADEQUACIES, THE REPORTS WILL SO STATE.
3. PAYMENTS FOR REDEMPTIONS OF SHARES OF THE PORTFOLIO
FROM SUCH FUNDS AS MAY BE AVAILABLE FOR THE PURPOSE BUT SUBJECT TO THE
LIMITATIONS OF THE GOVERNING DOCUMENTS OF THE PORTFOLIO AND ANY APPLICABLE VOTES
OF THE BOARD OF TRUSTEES OF THE FUND PURSUANT THERETO, THE CUSTODIAN WILL, UPON
RECEIPT OF INSTRUCTIONS FROM THE TRANSFER AGENT, MAKE FUNDS AVAILABLE FOR
PAYMENT TO HOLDERS OF SHARES WHO HAVE DELIVERED TO THE TRANSFER AGENT A REQUEST
FOR REDEMPTION OF THEIR SHARES. IN CONNECTION WITH THE REDEMPTION OF SHARES OF
THE PORTFOLIO, THE CUSTODIAN IS AUTHORIZED UPON RECEIPT OF INSTRUCTIONS FROM THE
TRANSFER AGENT TO WIRE FUNDS TO OR THROUGH A COMMERCIAL BANK DESIGNATED BY THE
REDEEMING SHAREHOLDER.
THE CUSTODIAN WILL RECEIVE PAYMENTS FOR PORTFOLIO SHARES ISSUED OR SOLDFROM
THE DISTRIBUTOR FOR THE PORTFOLIO'S SHARES OR FROM THE TRANSFER AGENT OF THE
PORTFOLIO AND DEPOSIT AS RECEIVED INTO THE FUND'S ACCOUNT SUCH PAYMENTS AS ARE
RECEIVED FOR SHARES OF THE PORTFOLIO ISSUED OR SOLD FROM TIME TO TIME BY THE
PORTFOLIO. THE CUSTODIAN WILL PROVIDE TIMELY NOTIFICATION TO THE PORTFOLIO AND
THE TRANSFER AGENT OF ANY RECEIPT BY IT OF PAYMENTS FOR SHARES OF THE PORTFOLIO.
4. PROPER INSTRUCTIONS
"PROPER INSTRUCTIONS" MEANS A WRITING SIGNED OR INITIALLED BY ONE OR MORE
PERSONS AUTHORIZED BY THE BOARD OF TRUSTEES. EACH SUCH WRITING MUST SET FORTH
THE SPECIFIC TRANSACTION OR TYPE OF TRANSACTION INVOLVED, INCLUDING A STATEMENT
OF THE PURPOSE FOR WHICH SUCH ACTION IS REQUESTED, AND MAY BE A BLANKET
INSTRUCTION AUTHORIZING SPECIFIC TRANSACTIONS OF A ROUTINE NATURE OR OCCURING
REPEATEDLY. ORAL INSTRUCTIONS WILL BE CONSIDERED PROPER INSTRUCTIONS IF THE
CUSTODIAN REASONABLY BELIEVES THEM TO HAVE BEEN GIVEN BY A PERSON AUTHORIZED TO
GIVE SUCH INSTRUCTIONS WITH RESPECT TO THE TRANSACTION INVOLVED. THE PORTFOLIO
WILL CAUSE ALL ORAL INSTRUCTIONS TO BE CONFIRMED IN WRITING. UPON RECEIPT OF A
CERTIFICATE OF THE SECRETARY OR AN ASSISTANT SECRETARY AS TO THE AUTHORIZATION
BY THE BOARD OF TRUSTEES OF THE FUND, ACCOMPANIED BY A DETAILED DESCRIPTION OF
PROCEDURES APPROVED BY THE BOARD OF TRUSTEES, PROPER INSTRUCTIONS MAY INCLUDE
COMMUNICATIONS EFFECTED DIRECTLY BETWEEN ELECTRO-MECHANICAL OR ELECTRONIC
DEVICES PROVIDED THAT THE BOARD OF TRUSTEES AND THE CUSTODIAN ARE SATISFIED THAT
SUCH PROCEDURES AFFORD ADEQUATE SAFEGUARDS FOR THE PORTFOLIO'S ASSETS.
5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
IN ITS DISCRETION THE CUSTODIAN MAY, WITHOUT EXPRESS AUTHORITY FROM THE
PORTFOLIO:
L) MAKE PAYMENTS TO ITSELF OR OTHERS FOR MINOR EXPENSES OF HANDLING
SECURITIES OR OTHER SIMILAR ITEMS RELATING TO ITS DUTIES UNDER THIS AGREEMENT,
PROVIDED THAT ALL SUCH PAYMENTS WILL BE ACCOUNTED FOR TO THE PORTFOLIO;
2) SURRENDER SECURITIES IN TEMPORARY FORM FOR SECURITIES IN DEFINITIVE FORM;
3) ENDORSE FOR COLLECTION, IN THE NAME OF THE PORTFOLIO, CHECKS, DRAFTS AND
OTHER NEGOTIABLE INSTRUMENTS ON THE SAME DAY AS RECEIVED; AND
4) IN GENERAL, ATTEND TO ALL NONDISCRETIONARY DETAILS IN CONNECTION WITH THE
SALE, EXCHANGE, SUBSTITUTION, PURCHASE, TRANSFER AND OTHER DEALINGS WITH THE
SECURITIES AND PROPERTY OF THE PORTFOLIO EXCEPT AS OTHERWISE DIRECTED BY THE
BOARD OF TRUSTEES OF THE FUND.
6. EVIDENCE OF AUTHORITY, RELIANCE ON DOCUMENTS
THE CUSTODIAN WILL NOT BE LIABLE FOR ACTIONS TAKEN PURSUANT TO
INSTRUCTIONS, NOTICE, REQUEST, CONSENT, CERTIFICATE OR OTHER INSTRUMENT OR PAPER
REASONABLY AND IN GOOD FAITH BELIEVED BY IT TO BE GENUINE AND TO HAVE BEEN
PROPERLY EXECUTED BY OR ON BEHALF OF THE PORTFOLIO IN ACCORDANCE WITH PROPER
INSTRUCTIONS AS DEFINED IN SECTION 4 OF THIS AGREEMENT. THE CUSTODIAN MAY
RECEIVE AND ACCEPT A CERTIFIED COPY OF A VOTE OF THE BOARD OF TRUSTEES OF THE
FUND AS CONCLUSIVE EVIDENCE (A) OF THE AUTHORITY OF ANY PERSON TO ACT IN
ACCORDANCE WITH SUCH VOTE OR (B) OF ANY DETERMINATION OR OF ANY ACTION BY THE
BOARD OF TRUSTEES PURSUANT TO THE GOVERNING DOCUMENTS OF THE FUND AS DESCRIBED
IN SUCH VOTE, AND SUCH VOTE MAY BE CONSIDERED AS IN FULL FORCE AND EFFECT UNTIL
RECEIPT BY THE CUSTODIAN OF WRITTEN NOTICE TO THE CONTRARY. SO LONG AS AND TO
THE EXTENT THAT IT IS IN THE EXERCISE OF THE STANDARD OF CARE SET FORTH IN
SECTION 11 OF THIS AGREEMENT, THE CUSTODIAN WILL NOT BE RESPONSIBLE FOR THE
TITLE, VALIDITY OR GENUINENESS OF ANY PROPERTY OR EVIDENCE OF TIT!E RECEIVED BY
IT OR DELIVERED BY IT PURSUANT TO THIS AGREEMENT AND WILL BE HELD HARMLESS IN
ACTING UPON ANY NOTICE, REQUEST, CONSENT, CERTIFICATE OR OTHER INSTRUMENT
REASONABLY BELIEVED BY IT TO BE GENUINE AND TO BE SIGNED BY THE PROPER PARTY OR
PARTIES.
7. RECORDS, INVENTORY
THE CUSTODIAN WILL CREATE AND MAINTAIN ALL RECORDS RELATING TO ITS
ACTIVITIES AND OBLIGATIONS UNDER THIS AGREEMENT IN SUCH MANNER AS WILL MEET THE
OBLIGATIONS OF THE PORTFOLIO UNDER THE INVESTMENT COMPANY ACT OF 1940, WITH
PARTICULAR ATTENTION TO SECTION 31 AND RULES 31A-1 AND 31A-2 THEREUNDER,
APPLICABLE FEDERAL AND STATE TAX LAWS AND ANY OTHER LAW OR ADMINISTRATIVE RULES
OR PROCEDURES THAT MAY BE APPLICABLE TO THE PORTFOLIO. ALL SUCH RECORDS WILL BE
THE PROPERTY OF THE PORTFOLIO AND WILL AT ALL TIMES DURING THE REGULAR BUSINESS
HOURS OF THE CUSTODIAN BE OPEN FOR INSPECTION AND AUDIT BY DULY AUTHORIZED
OFFICERS, EMPLOYEES OR AGENTS OF THE PORTFOLIO AND EMPLOYEES AND AGENTS OF THE
SECURITIES AND EXCHANGE COMMISSION, AND, IN THE EVENT OF TERMINATION OF THIS
AGREEMENT, WILL BE DELIVERED IN ACCORDANCE WITH SECTION 12 OF THIS AGREEMENT.
THE CUSTODIAN WILL, AT THE PORTFOLIO'S REQUEST, SUPPLY THE PORTFOLIO WITH A
TABULATION OF SECURITIES OWNED BY THE PORTFOLIO AND HELD BY THE CUSTODIAN AND
WILL, WHEN REQUESTED TO DO SO BY THE PORTFOLIO AND FOR SUCH COMPENSATION AS WILL
BE AGREED UPON BETWEEN THE PORTFOLIO AND THE CUSTODIAN, INCLUDE CERTIFICATE
NUMBERS IN SUCH TABULATIONS. THE CUSTODIAN WILL CONDUCT A PERIODIC INVENTORY OF
ALL SECURITIES AND OTHER PROPERTY SUBJECT TO THIS AGREEMENT AND PROVIDE TO THE
PORTFOLIO A PERIODIC RECONCILIATION OF THE VAULTED POSITION OF THE PORTFOLIO TO
THE APPRAISED POSITION OF THE PORTFOLIO. THE CUSTODIAN WILL PROMPTLY REPORT TO
THE PORTFOLIO THE RESULTS OF THE RECONCILIATION, INDICATING ANY SHORTAGES OR
DISCREPANCIES UNCOVERED THEREBY, AND TAKE APPROPRIATE ACTION TO REMEDY ANY SUCH
SHORTAGES OR DISCREPANCIES.
8. OPINION OF THE PORTFOLIO'S INDEPENDENT ACCOUNTANT
THE CUSTODIAN WILL COOPERATE WITH THE PORTFOLIO'S INDEPENDENT PUBLIC
ACCOUNTANTS IN CONNECTION WITH THE ANNUAL AND OTHER AUDITS OF THE BOOKS AND
RECORDS OF THE PORTFOLIO AND TAKE ALL REASONABLE ACTION, AS THE PORTFOLIO MAY
FROM TIME TO TIME REQUEST, TO PROVIDE THE NECESSARY INFORMATION TO SUCH
ACCOUNTANTS FOR THE EXPRESSION OF THEIR OPINION WITHOUT ANY QUALIFICATION AS TO
THE SCOPE OF THEIR EXAMINATION, INCLUDING BUT NOT LIMITED TO, ANY OPINION IN
CONNECTION WITH THE PREPARATION OF THE PORTFOLIO'S FORM N-LA, AND FORM N-SAR OR
OTHER REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION OR STATE REGULATORY
AGENCY AND WITH RESPECT TO ANY OTHER LEGAL REQUIREMENTS.
9. COMPENSATION OF CUSTODIAN
THE CUSTODIAN WILL BE ENTITLED TO REASONABLE COMPENSATION FOR ITS SERVICES
AND EXPENSES AS CUSTODIAN, AS AGREED UPON FROM TIME TO TIME BETWEEN THE
PORTFOLIO AND THE CUSTODIAN.
10. RESPONSIBILITY OF CUSTODIAN - INDEMNIFICATION
REASONABLE CARE - NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, THE CUSTODIAN WILL BE HELD TO THE EXERCISE OF REASONABLE CARE IN
CARRYING OUT THE PROVISIONS OF THIS AGREEMENT, BUT WILL BE KEPT INDEMNIFIED BY
AND WILL BE WITHOUT LIABILITY TO THE PORTFOLIO FOR ANY ACTION TAKEN OR OMITTED
BY IT IN GOOD FAITH WITHOUT NEGLIGENCE.
NOTICE TO PORTFOLIO - IN ORDER FOR THE INDEMNIFICATION PROVISION CONTAINED
IN THIS SECTION TO APPLY, IT IS UNDERSTOOD THAT IF IN ANY CASE THE PORTFOLIO MAY
BE ASKED TO INDEMNIFY OR HOLD THE CUSTODIAN HARMLESS, THE PORTFOLIO WILL BE
FULLY AND PROMPTLY ADVISED OF ALL PERTINENT FACTS CONCERNING THE SITUATION IN
QUESTION, AND IT IS FURTHER UNDERSTOOD THAT THE CUSTODIAN WILL USE ALL
REASONABLE CARE TO IDENTIFY AND NOTIFY THE PORTFOLIO PROMPTLY CONCERNING ANY
SITUATION WHICH PRESENTS OR APPEARS LIKELY TO PRESENT THE PROBABILITY OF SUCH A
CLAIM FOR INDEMNIFICATION AGAINST THE PORTFOLIO.
DEFENSE OF CUSTODIAN - THE PORTFOLIO WILL HAVE THE OPTION TO DEFEND THE
CUSTODIAN AGAINST ANY CLAIM WHICH MAY BE THE SUBJECT OF THIS INDEMNIFICATION,
AND IN THE EVENT THAT THE PORTFOLIO SO ELECTS, IT WILL SO NOTIFY THE CUSTODIAN,
AND THEREUPON THE PORTFOLIO WILL TAKE OVER COMPLETE DEFENSE OF THE CLAIM AND THE
CUSTODIAN WILL IN SUCH SITUATION INITIATE NO FURTHER LEGAL OR OTHER EXPENSES FOR
WHICH IT WILL SEEK INDEMNIFICATION UNDER THIS SECTION. THE CUSTODIAN WILL IN NO
CASE CONFESS ANY CLAIM OR MAKE ANY COMPROMISE IN ANY CASE IN WHICH THE PORTFOLIO
WILL BE ASKED TO INDEMNIFY THE CUSTODIAN EXCEPT WITH THE PORTFOLIO'S PRIOR
WRITTEN CONSENT. NOTHING IN THIS SECTION WILL BE CONSTRUED TO LIMIT ANY RIGHT
OR CAUSE OF ACTION ON THE PART OF THE CUSTODIAN UNDER THIS AGREEMENT WHICH IS
INDEPENDENT OF ANY RIGHT OR CAUSE OF ACTION ON THE PART OF THE PORTFOLIO. THE
CUSTODIAN WILL BE ENTITLED TO RELY ON AND MAY ACT UPON ADVICE OF COUNSEL (WHO
MAY BE COUNSEL FOR THE PORTFOLIO OR SUCH OTHER COUNSEL AS MAY BE AGREED TO BY
THE PARTIES) ON ALL MATTERS, AND WILL BE WITHOUT LIABILITY FOR ANY ACTION
REASONABLY TAKEN OR OMITTED PURSUANT TO SUCH ADVICE.
IF THE PORTFOLIO REQUIRES THE CUSTODIAN TO TAKE ANY ACTION WITH RESPECT TO
SECURITIES THAT INVOLVES THE PAYMENT OF MONEY, OR THAT MAY, IN THE OPINION OF
THE CUSTODIAN, RESULT IN THE CUSTODIAN OR ITS NOMINEE ASSIGNED TO THE PORTFOLIO
BEING LIABLE FOR THE PAYMENT OF MONEY OR INCURRING LIABILITY OF SOME OTHER FORM,
THE PORTFOLIO, AS A PREREQUISITE TO REQUIRING THE CUSTODIAN TO TAKE SUCH ACTION,
WILL INDEMNIFY THE CUSTODIAN IN AN AMOUNT AND FORM SATISFACTORY TO IT.
IF THE PORTFOLIO REQUIRES THE CUSTODIAN TO ADVANCE CASH OR SECURITIES FOR
ANY PURPOSE OR IN THE EVENT THAT THE CUSTODIAN OR ITS NOMINEE INCURS OR IS
ASSESSED ANY TAXES, CHARGES, EXPENSES, ASSESSMENTS, CLAIMS OR LIABILITIES IN
CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, EXCEPT AS MAY ARISE FROM THE
CUSTODIAN'S OR ITS AGENT'S NEGLIGENT ACTION OR OMISSION, OR WILLFUL MISCONDUCT,
ANY PROPERTY HELD FOR THE ACCOUNT OF THE PORTFOLIO WILL SERVE AS SECURITY. IF
THE PORTFOLIO FAILS TO REPAY THE CUSTODIAN PROMPTLY, THE CUSTODIAN WILL BE
ENTITLED TO USE AVAILABLE CASH AND TO DISPOSE OF THE PORTFOLIO'S ASSETS TO THE
EXTENT NECESSARY FOR REIMBURSEMENT. IF THE CUSTODIAN EXERCISES THIS OPTION, IT
MUST GIVE THE PORTFOLIO REASONABLE NOTICE SO AS TO ENABLE THE PORTFOLIO TO REPAY
THE CASH OR SECURITIES ADVANCED. SUCH NOTICE WILL NOT PRECLUDE THE CUSTODIAN
FROM ASSERTING ANY LIEN UNDER THIS PROVISION.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
THIS AGREEMENT WILL BECOME EFFECTIVE AS OF ITS EXECUTION, AND WILL CONTINUE
IN FORCE UNTIL TERMINATED AS PROVIDED IN THIS SECTION. IT MAY BE AMENDED AT ANY
TIME BY MUTUAL AGREEMENT OF THE PARTIES, AND MAY BE TERMINATED BY EITHER PARTY
WITH 60 DAYS WRITTEN NOTICE. THE PORTFOLIO MAY, BY ACTION OF THE FUND'S BOARD
OF TRUSTEES, IMMEDIATELY TERMINATE THIS AGREEMENT IN THE EVENT OF THE
APPOINTMENT OF A CONSERVATOR OR RECEIVER FOR THE CUSTODIAN BY THE COMPTROLLER OF
THE CURRENCY OR A LIKE EVENT AT THE DIRECTION OF AN APPROPRIATE REGULATORY
AGENCY OR COURT OF COMPETENT JURISDICTION.
IN THE EVENT THE AGREEMENT TERMINATES, THE PORTFOLIO WILL PAY THE CUSTODIAN
WHATEVER COMPENSATION IS DUE AS OF THE DATE OF THE TERMINATION, AND WILL
REIMBURSE THE CUSTODIAN FOR COSTS, EXPENSES AND DISBURSEMENTS INCURRED IN
CONNECTION WITH TERMINATION, BUT ONLY TO THE EXTENT THE PORTFOLIO GIVES PRIOR
APPROVAL FOR THE EXPENDITURES. APPROVAL WILL NOT BE UNREASONABLY WITHHELD.
12. SUCCESSOR CUSTODIAN
IF A SUCCESSOR CUSTODIAN IS APPOINTED BY THE BOARD OF TRUSTEES OF THE FUND,
THE CUSTODIAN WILL, UPON TERMINATION, DELIVER TO THE SUCCESSOR CUSTODIAN AT THE
OFFICE OF THE CUSTODIAN, DULY ENDORSED AND IN THE FORM FOR TRANSFER, ALL
SECURITIES, FUNDS AND OTHER PROPERTIES THEN HELD BY IT PURSUANT TO THIS
AGREEMENT, AND WILL TRANSFER TO AN ACCOUNT OF THE SUCCESSOR CUSTODIAN ALL OF THE
PORTFOLIO'S SECURITIES HELD IN A SECURITIES SYSTEM. THE CUSTODIAN WILL USE ITS
BEST EFFORTS TO ASSURE THAT THE SUCCESSOR CUSTODIAN WILL CONTINUE ANY
SUBCUSTODIAN AGREEMENT ENTERED INTO BY THE CUSTODIAN AND ANY SUBCUSTODIAN ON
BEHALF OF THE PORTFOLIO.
IF NO SUCCESSOR IS TO BE APPOINTED, THE CUSTODIAN WILL MAKE THE SECURITIES,
FUNDS AND OTHER PROPERTIES AVAILABLE AS ABOVE TO THE PORTFOLIO UPON RECEIPT OF A
CERTIFIED COPY OF A VOTE OF THE BOARD OF TRUSTEES OF THE FUND.
IF NO WRITTEN ORDER DESIGNATING A SUCCESSOR CUSTODIAN OR CERTIFIED COPY OF
A VOTE OF THE BOARD OF TRUSTEES IS DELIVERED TO THE CUSTODIAN ON OR BEFORE THE
EFFECTIVE DATE OF THE TERMINATION, THE CUSTODIAN WILL HAVE THE RIGHT TO MAKE
DELIVERY TO A BANK (AS DEFINED IN THE INVESTMENT COMPANY ACT OF 1940) OR TRUST
COMPANY OF ITS OWN SELECTION HAVING AGGREGATE CAPITAL, SURPLUS, AND UNDIVIDED
PROFITS, AS SHOWN BY ITS LAST PUBLISHED REPORT, OF NOT LESS THAN $25,000,000,
WHICH WILL BECOME THE SUCCESSOR CUSTODIAN UNDER THIS AGREEMENT.
IN THE EVENT THE SECURITIES, FUNDS AND OTHER PROPERTIES REMAIN IN THE
POSSESSION OF THE CUSTODIAN AFTER THE TERMINATION DATE DUE TO FAILURE BY THE
PORTFOLIO TO PROCURE THE CERTIFIED COPY OF THE APPROPRIATE VOTE OF THE BOARD OF
TRUSTEES, THE CUSTODIAN WILL BE ENTITLED TO FAIR COMPENSATION FOR ITS SERVICES
DURING THE PERIOD DURING WHICH IT RETAINS POSSESSION OF THE PROPERTY, AND THE
PROVISIONS OF THIS AGREEMENT RELATING TO THE DUTIES AND OBLIGATIONS OF THE
CUSTODIAN WILL REMAIN IN FULL FORCE.
IF DURING THE TERM OF THIS AGREEMENT THE PORTFOLIO IS LIQUIDATED PURSUANT
TO LAW, THE CUSTODIAN WILL DISTRIBUTE THE REMAINING ASSETS OF THE PORTFOLIO
AFTER SATISFYING ALL EXPENSES AND LIABILITIES OF THE PORTFOLIO. SUCH
DISTRIBUTIONS WILL BE PRO RATA AMONG THE PORTFOLIO'S SHAREHOLDERS AS CERTIFIED
BY THE TRANSFER AGENT, AND WILL BE IN CASH OR, IF THE PORTFOLIO SO ORDERS, IN
PORTFOLIO SECURITIES. SECTION 10 (RESPONSIBILITY OF CUSTODIAN) WILL SURVIVE ANY
TERMINATION OF THIS AGREEMENT.
13. INTERPRETIVE AND ADDITIONAL PROVISIONS
IN CONNECTION WITH THE OPERATION OF THIS AGREEMENT, THE CUSTODIAN AND THE
PORTFOLIO MAY FROM TIME TO TIME AGREE ON SUCH PROVISIONS INTERPRETIVE OF OR IN
ADDITION TO THE PROVISIONS OF THIS AGREEMENT AS MAY IN THEIR JOINT OPINION BE
CONSISTENT WITH THE GENERAL TENOR OF THIS AGREEMENT. ANY SUCH INTERPRETIVE OR
ADDITIONAL PROVISIONS WILL BE IN A WRITING SIGNED BY BOTH PARTIES AND WILL BE
ANNEXED TO TH IS AGREEMENT. NO INTERPRETIVE OR ADDITIONAL PROVISIONS WILL
CONTRAVENE ANY APPLICABLE FEDERAL OR STATE REGULATIONS OR ANY PROVISION OF THE
GOVERNING DOCUMENTS OF THE PORTFOLIO, NOR WILL THEY BE DEEMED AMENDMENTS TO THIS
AGREEMENT.
14. NOTICE
NOTICE WILL BE CONSIDERED SUFFICIENT IF SENT BY REGISTERED OR CERTIFIED
MAIL, OR BY SUCH OTHER MEANS AS THE PARTIES AGREE, TO THE OTHER PARTY AT THE
ADDRESS SET FORTH ABOVE OR AT ANY OTHER ADDRESS SPECIFIED IN WRITING AND
DELIVERED TO THE OTHER PARTY.
15. BOND
THE CUSTODIAN WILL, AT ALL TIMES, MAINTAIN A BOND ISSUED BY A REPUTABLE
FIDELITY INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN THE PLACE WHERE THE BOND
IS ISSUED. THE BOND WILL BE ISSUED AGAINST LARCENY AND EMBEZZLEMENT, AND WILL
COVER EACH OFFICER AND EMPLOYEE OF THE CUSTODIAN WHO MAY, SINGLY OR JOINTLY WITH
OTHERS, HAVE ACCESS TO SECURITIES OR FUNDS OF THE PORTFOLIO, EITHER DIRECTLY OR
THROUGH AUTHORITY TO RECEIVE AND CARRY OUT ANY CERTIFICATE INSTRUCTION, ORDER
REQUEST, NOTE OR OTHER INSTRUMENT REQUIRED OR PERMITTED BY THIS AGREEMENT. THE
CUSTODIAN AGREES THAT IT WILL NOT CANCEL, TERMINATE OR MODIFY THE BOND SO AS TO
AFFECT ADVERSELY THE PORTFOLIO, EXCEPT AFTER WRITTEN NOTICE TO THE PORTFOLIO NOT
LESS THAN 10 DAYS PRIOR TO THE EFFECTIVE DATE OF SUCH CANCELLATION, TERMINATION
OR MODIFICATION. THE CUSTODIAN WILL FURNISH TO THE PORTFOLIO A COPY OF EACH
SUCH BOND AND EACH AMENDMENT THERETO.
16. CONFIDENTIALITY
THE CUSTODIAN AGREES TO TREAT ALL RECORDS AND OTHER INFORMATION RELATIVE TO
THE PORTFOLIO AND ITS PRIOR, PRESENT OR FUTURE SHAREHOLDERS AS CONFIDENTIAL, AND
THE CUSTODIAN, ON BEHALF OF ITSELF AND ITS EMPLOYEES, AGREES TO KEEP
CONFIDENTIAL ALL SUCH INFORMATION EXCEPT WHEN REQUESTED TO DIVULGE SUCH
INFORMATION BY DULY CONSTITUTED AUTHORITIES, OR WHEN SO REQUESTED BY THE
PORTFOLIO. IF REQUESTED TO DIVULGE CONFIDENTIAL INFORMATION, THE CUSTODIAN WILL
NOT RELEASE THE INFORMATION UNTIL IT NOTIFIES THE PORTFOLIO IN WRITING AND
RECEIVES APPROVAL IN WRITING FROM THE PORTFOLIO. APPROVAL BY THE PORTFOLIO WILL
NOT BE UNREASONABLY WITHHELD AND MAY NOT BE WITHHELD WHERE THE CUSTODIAN MAY BE
EXPOSED TO CIVIL OR CRIMINAL CONTEMPT PROCEEDINGS FOR FAILURE TO COMPLY.
17. EXEMPTION FROM LIENS
THE SECURITIES AND OTHER ASSETS HELD BY THE CUSTODIAN FOR THE PORTFOLIO
WILL BE SUBJECT TO NO LIEN OR CHARGE OF ANY KIND IN FAVOR OF THE CUSTODIAN OR
ANY PERSON CLAIMING THROUGH THE CUSTODIAN, BUT NOTHING HEREIN WILL BE DEEMED TO
DEPRIVE THE CUSTODIAN OF ITS RIGHT TO INVOKE ANY AND ALL REMEDIES AVAILABLE AT
LAW OR EQUITY TO COLLECT AMOUNTS DUE IT UNDER THIS AGREEMENT. NEITHER THE
CUSTODIAN NOR ANY SUBCUSTODIAN APPOINTED PURSUANT TO SECTION 1 OF THIS AGREEMENT
WILL HAVE ANY POWER OR AUTHORITY TO ASSIGN, HYPOTHECATE, PLEDGE OR OTHERWISE
DISPOSE OF ANY SECURITIES HELD BY IT FOR THE PORTFOLIO, EXCEPT UPON THE
DIRECTION OF THE PORTFOLIO, DULY GIVEN AS HEREIN PROVIDED, AND ONLY FOR THE
ACCOUNT OF THE PORTFOLIO.
18. MASSACHUSETTS LAW TO APPLY
THIS AGREEMENT WILL BE CONSTRUED AND THE PROVISIONS THEREOF INTERPRETED
UNDER AND IN ACCORDANCE WITH LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
19. GOVERNING DOCUMENTS
THE TERM "GOVERNING DOCUMENTS" REFERS TO THE FUND'S AGREEMENT OF TRUST,
BY-LAWS AND REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED FROM TIME TO TIME WITH REGARD TO THE PORTFOLIO.
20. DIRECTORS AND TRUSTEES
NEITHER THE HOLDERS OF SHARES IN THE PORTFOLIO NOR ANY DIRECTORS OR
TRUSTEES OF THE FUND WILL BE PERSONALLY LIABLE HEREUNDER.
21. MASSACHUSETTS BUSINESS TRUST
WITH RESPECT TO THE PORTFOLIO WHICH IS A PARTY TO THIS AGREEMENT AND WHICH
IS ORGANIZED AS A MASSACHUSETTS BUSINESS TRUST, THE TERM FUND MEANS AND REFERS
TO THE TRUSTEES SERVING UNDER THE APPLICABLE TRUST AGREEMENT. IT IS EXPRESSLY
AGREED THAT THE OBLIGATIONS OF THE TRUST UNDER THIS AGREEMENT WILL NOT BE
BINDING ON ANY OF THE TRUSTEES, SHAREHOLDERS, NOMINEES, OFFICERS, AGENTS OR
EMPLOYEES OF THE TRUST PERSONALLY, BUT BIND ONLY THE TRUST PROPERTY.
22. SUCCESSORS OF PARTIES
THIS CONTRACT WILL BE BINDING ON AND WILL INURE TO THE BENEFIT OF THE
PORTFOLIO AND THE CUSTODIAN AND THEIR RESPECTIVE SUCCESSORS.
IN WITNESS WHEREOF, EACH OF THE PARTIES HAS CAUSED THIS INSTRUMENT TO BE
EXECUTED IN ITS NAME AND BEHALF BY ITS DULY AUTHORIZED REPRESENTATIVE AND ITS
SEAL TO BE AFFIXED HEREUNDER AS OF THE DATES INDICATED BELOW.
[FUND]
ATTEST: BY:
STATE STREET TRUST COMPANY
ATTEST: BY
EXHIBIT 11
MARCH 10, 2000
SECURITIES AND EXCHANGE COMMISSION
JUDICIARY PLAZA
450 FIFTH STREET, N.W.
WASHINGTON, D.C. 20549
RE: EXHIBIT 11, FORM N-14
CALVERT MUNICIPAL INTERMEDIATE FUND, INC.
811-6525 AND 33-44968
LADIES AND GENTLEMEN:
AS COUNSEL TO THE CALVERT MUNICIPAL INTERMEDIATE FUND, INC. (THE "FUND"), IT IS
MY OPINION, BASED UPON AN EXAMINATION OF THE FUND'S ARTICLES OF INCORPORATION
AND BY-LAWS AND SUCH OTHER ORIGINAL OR PHOTOSTATIC COPIES OF FUND RECORDS,
CERTIFICATES OF PUBLIC OFFICIALS, DOCUMENTS, PAPERS, STATUTES, AND AUTHORITIES
AS I DEEMED NECESSARY TO FORM THE BASIS OF THIS OPINION, THAT THE SECURITIES
BEING REGISTERED BY THIS REGISTRATION STATEMENT ON FORM N-14 WILL, WHEN SOLD, BE
LEGALLY ISSUED, FULLY PAID AND NON-ASSESSABLE.
CONSENT IS HEREBY GIVEN TO FILE THIS OPINION OF COUNSEL WITH THE SECURITIES AND
EXCHANGE COMMISSION AS AN EXHIBIT TO THIS REGISTRATION STATEMENT.
SINCERELY,
/S/ IVY WAFFORD DUKE
IVY WAFFORD DUKE
ASSOCIATE GENERAL COUNSEL
Calvert Virginia Municipal
Intermediate Fund
April 12, 2000
APRIL 12, 2000
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
4550 MONTGOMERY AVENUE
SUITE 1000
BETHESDA, MARYLAND 20814
RE: ACQUISITION OF ASSETS OF CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
BY CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
LADIES AND GENTLEMEN:
YOU HAVE ASKED FOR OUR OPINION AS TO CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE TRANSACTION DESCRIBED BELOW.
PARTIES TO THE TRANSACTION
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND ("TARGET FUND") IS A SERIES OF
CALVERT MUNICIPAL FUND, INC. (THE "COMPANY"), A MARYLAND CORPORATION.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND ("ACQUIRING FUND") IS ALSO A
SERIES OF THE COMPANY.
DESCRIPTION OF PROPOSED TRANSACTION
IN THE PROPOSED TRANSACTION (THE "REORGANIZATION"), ACQUIRING FUND WILL
ACQUIRE ALL OF THE ASSETS OF TARGET FUND IN EXCHANGE FOR SHARES OF ACQUIRING
FUND OF EQUIVALENT VALUE AND THE ASSUMPTION OF THE IDENTIFIED LIABILITIES OF
TARGET FUND. TARGET FUND WILL THEN DISSOLVE AND DISTRIBUTE ALL OF THE ACQUIRING
FUND SHARES WHICH IT HOLDS TO ITS SHAREHOLDERS PRO RATA IN PROPORTION TO THEIR
SHAREHOLDINGS IN TARGET FUND, IN COMPLETE REDEMPTION OF ALL OUTSTANDING SHARES
OF TARGET FUND.
SCOPE OF REVIEW AND ASSUMPTIONS
IN RENDERING OUR OPINION, WE HAVE REVIEWED AND RELIED UPON THE FORM OF
AGREEMENT AND PLAN OF REORGANIZATION BETWEEN ACQUIRING FUND AND TARGET FUND (THE
"REORGANIZATION AGREEMENT") WHICH IS ENCLOSED IN A PROSPECTUS/PROXY STATEMENT,
REGISTRATION NUMBER 33-44968, TO BE FILED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION ON OR ABOUT APRIL 17, 2000, WHICH DESCRIBES THE PROPOSED
TRANSACTIONS, AND ON THE INFORMATION PROVIDED IN SUCH PROSPECTUS/PROXY
STATEMENT. 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 THE
CLOSING OF THE TRANSACTION. WE FURTHER ASSUME THAT THE TRANSACTION WILL BE
CARRIED OUT IN ACCORDANCE WITH THE REORGANIZATION AGREEMENT.
REPRESENTATIONS
WRITTEN REPRESENTATIONS, COPIES OF WHICH ARE ATTACHED HERETO, HAVE BEEN
MADE TO US BY THE APPROPRIATE OFFICERS OF TARGET FUND AND ACQUIRING FUND, AND WE
HAVE WITHOUT INDEPENDENT VERIFICATION RELIED UPON SUCH REPRESENTATIONS IN
RENDERING OUR OPINIONS.
OPINIONS
BASED ON AND SUBJECT TO THE FOREGOING, AND OUR EXAMINATION OF THE LEGAL
AUTHORITY WE HAVE DEEMED TO BE RELEVANT, WE HAVE THE FOLLOWING OPINIONS:
1. THE TRANSFER OF ALL OF THE ASSETS OF TARGET FUND IN EXCHANGE FOR
SHARES OF ACQUIRING FUND AND ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED
SPECIFIED LIABILITIES OF TARGET FUND FOLLOWED BY THE DISTRIBUTION OF SAID
ACQUIRING FUND SHARES TO THE SHAREHOLDERS OF TARGET FUND IN DISSOLUTION AND
LIQUIDATION OF TARGET FUND WILL CONSTITUTE A REORGANIZATION WITHIN THE MEANING
OF 368(A)(1)(C) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
AND ACQUIRING FUND AND TARGET FUND WILL EACH BE "A PARTY TO A REORGANIZATION"
WITHIN THE MEANING OF 368(B) OF THE CODE.
2. NO GAIN OR LOSS WILL BE RECOGNIZED BY ACQUIRING FUND UPON THE
RECEIPT OF THE ASSETS OF TARGET FUND SOLELY IN EXCHANGE FOR ACQUIRING FUND
SHARES AND THE ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED LIABILITIES OF
TARGET FUND.
3. NO GAIN OR LOSS WILL BE RECOGNIZED TO TARGET FUND UPON THE TRANSFER
OF ITS ASSETS TO ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND SHARES AND THE
ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED LIABILITIES OF TARGET FUND, OR
UPON THE DISTRIBUTION (WHETHER ACTUAL OR CONSTRUCTIVE) OF SUCH ACQUIRING FUND
SHARES TO THE SHAREHOLDERS OF TARGET FUND IN EXCHANGE FOR THEIR TARGET FUND
SHARES.
4. THE SHAREHOLDERS OF TARGET FUND WILL RECOGNIZE NO GAIN OR LOSS UPON
THE EXCHANGE OF THEIR TARGET FUND SHARES FOR ACQUIRING FUND SHARES IN
LIQUIDATION OF TARGET FUND.
5. THE AGGREGATE BASIS OF THE ACQUIRING FUND SHARES RECEIVED BY EACH
TARGET FUND SHAREHOLDER PURSUANT TO THE REORGANIZATION WILL BE THE SAME AS THE
AGGREGATE BASIS OF THE TARGET FUND SHARES HELD BY SUCH SHAREHOLDER IMMEDIATELY
PRIOR TO THE REORGANIZATION.
6. THE HOLDING PERIOD OF THE ACQUIRING FUND SHARES RECEIVED BY EACH
TARGET FUND SHAREHOLDER WILL INCLUDE THE PERIOD DURING WHICH THE TARGET FUND
SHARES EXCHANGED THEREFOR WERE HELD BY SUCH SHAREHOLDER, PROVIDED THE TARGET
FUND SHARES WERE HELD AS A CAPITAL ASSET ON THE DATE OF THE REORGANIZATION.
7. THE BASIS OF THE ASSETS OF TARGET FUND ACQUIRED BY ACQUIRING FUND
WILL BE THE SAME AS THE BASIS OF THOSE ASSETS IN THE HANDS OF TARGET FUND
IMMEDIATELY PRIOR TO THE REORGANIZATION, AND THE HOLDING PERIOD OF THE ASSETS OF
TARGET FUND IN THE HANDS OF ACQUIRING FUND WILL INCLUDE THE PERIOD DURING WHICH
THOSE ASSETS WERE HELD BY TARGET FUND.
THIS OPINION LETTER IS DELIVERED TO YOU IN SATISFACTION OF THE REQUIREMENTS
OF SECTION 8(D) OF THE REORGANIZATION AGREEMENT. WE HEREBY CONSENT TO THE
FILING OF THIS OPINION AS AN EXHIBIT TO THE REGISTRATION STATEMENT ON FORM N-14
RELATING TO THE REORGANIZATION AND TO USE OF OUR NAME AND ANY REFERENCE TO OUR
FIRM IN SUCH 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
F:\DML\CGF\CAPOPN.VA:4/12/00
<PAGE>
Calvert Maryland Municipal
Intermediate Fund
April 12, 2000
APRIL 12, 2000
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
4550 MONTGOMERY AVENUE
SUITE 1000
BETHESDA, MARYLAND 20814
RE: ACQUISITION OF ASSETS OF CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
BY CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
LADIES AND GENTLEMEN:
YOU HAVE ASKED FOR OUR OPINION AS TO CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF THE TRANSACTION DESCRIBED BELOW.
PARTIES TO THE TRANSACTION
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND ("TARGET FUND") IS A SERIES OF
CALVERT MUNICIPAL FUND, INC. (THE "COMPANY"), A MARYLAND CORPORATION.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND ("ACQUIRING FUND") IS ALSO A
SERIES OF THE COMPANY.
DESCRIPTION OF PROPOSED TRANSACTION
IN THE PROPOSED TRANSACTION (THE "REORGANIZATION"), ACQUIRING FUND WILL
ACQUIRE ALL OF THE ASSETS OF TARGET FUND IN EXCHANGE FOR SHARES OF ACQUIRING
FUND OF EQUIVALENT VALUE AND THE ASSUMPTION OF THE IDENTIFIED LIABILITIES OF
TARGET FUND. TARGET FUND WILL THEN DISSOLVE AND DISTRIBUTE ALL OF THE ACQUIRING
FUND SHARES WHICH IT HOLDS TO ITS SHAREHOLDERS PRO RATA IN PROPORTION TO THEIR
SHAREHOLDINGS IN TARGET FUND, IN COMPLETE REDEMPTION OF ALL OUTSTANDING SHARES
OF TARGET FUND.
SCOPE OF REVIEW AND ASSUMPTIONS
IN RENDERING OUR OPINION, WE HAVE REVIEWED AND RELIED UPON THE FORM OF
AGREEMENT AND PLAN OF REORGANIZATION BETWEEN ACQUIRING FUND AND TARGET FUND (THE
"REORGANIZATION AGREEMENT") WHICH IS ENCLOSED IN A PROSPECTUS/PROXY STATEMENT,
REGISTRATION NUMBER 33-44968, TO BE FILED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION ON OR ABOUT APRIL 17, 2000, WHICH DESCRIBES THE PROPOSED
TRANSACTIONS, AND ON THE INFORMATION PROVIDED IN SUCH PROSPECTUS/PROXY
STATEMENT. 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 THE
CLOSING OF THE TRANSACTION. WE FURTHER ASSUME THAT THE TRANSACTION WILL BE
CARRIED OUT IN ACCORDANCE WITH THE REORGANIZATION AGREEMENT.
REPRESENTATIONS
WRITTEN REPRESENTATIONS, COPIES OF WHICH ARE ATTACHED HERETO, HAVE BEEN
MADE TO US BY THE APPROPRIATE OFFICERS OF TARGET FUND AND ACQUIRING FUND, AND WE
HAVE WITHOUT INDEPENDENT VERIFICATION RELIED UPON SUCH REPRESENTATIONS IN
RENDERING OUR OPINIONS.
OPINIONS
BASED ON AND SUBJECT TO THE FOREGOING, AND OUR EXAMINATION OF THE LEGAL
AUTHORITY WE HAVE DEEMED TO BE RELEVANT, WE HAVE THE FOLLOWING OPINIONS:
1. THE TRANSFER OF ALL OF THE ASSETS OF TARGET FUND IN EXCHANGE FOR
SHARES OF ACQUIRING FUND AND ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED
SPECIFIED LIABILITIES OF TARGET FUND FOLLOWED BY THE DISTRIBUTION OF SAID
ACQUIRING FUND SHARES TO THE SHAREHOLDERS OF TARGET FUND IN DISSOLUTION AND
LIQUIDATION OF TARGET FUND WILL CONSTITUTE A REORGANIZATION WITHIN THE MEANING
OF 368(A)(1)(C) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
AND ACQUIRING FUND AND TARGET FUND WILL EACH BE "A PARTY TO A REORGANIZATION"
WITHIN THE MEANING OF 368(B) OF THE CODE.
2. NO GAIN OR LOSS WILL BE RECOGNIZED BY ACQUIRING FUND UPON THE
RECEIPT OF THE ASSETS OF TARGET FUND SOLELY IN EXCHANGE FOR ACQUIRING FUND
SHARES AND THE ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED LIABILITIES OF
TARGET FUND.
3. NO GAIN OR LOSS WILL BE RECOGNIZED TO TARGET FUND UPON THE TRANSFER
OF ITS ASSETS TO ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND SHARES AND THE
ASSUMPTION BY ACQUIRING FUND OF THE IDENTIFIED LIABILITIES OF TARGET FUND, OR
UPON THE DISTRIBUTION (WHETHER ACTUAL OR CONSTRUCTIVE) OF SUCH ACQUIRING FUND
SHARES TO THE SHAREHOLDERS OF TARGET FUND IN EXCHANGE FOR THEIR TARGET FUND
SHARES.
4. THE SHAREHOLDERS OF TARGET FUND WILL RECOGNIZE NO GAIN OR LOSS UPON
THE EXCHANGE OF THEIR TARGET FUND SHARES FOR ACQUIRING FUND SHARES IN
LIQUIDATION OF TARGET FUND.
5. THE AGGREGATE BASIS OF THE ACQUIRING FUND SHARES RECEIVED BY EACH
TARGET FUND SHAREHOLDER PURSUANT TO THE REORGANIZATION WILL BE THE SAME AS THE
AGGREGATE BASIS OF THE TARGET FUND SHARES HELD BY SUCH SHAREHOLDER IMMEDIATELY
PRIOR TO THE REORGANIZATION.
6. THE HOLDING PERIOD OF THE ACQUIRING FUND SHARES RECEIVED BY EACH
TARGET FUND SHAREHOLDER WILL INCLUDE THE PERIOD DURING WHICH THE TARGET FUND
SHARES EXCHANGED THEREFOR WERE HELD BY SUCH SHAREHOLDER, PROVIDED THE TARGET
FUND SHARES WERE HELD AS A CAPITAL ASSET ON THE DATE OF THE REORGANIZATION.
7. THE BASIS OF THE ASSETS OF TARGET FUND ACQUIRED BY ACQUIRING FUND
WILL BE THE SAME AS THE BASIS OF THOSE ASSETS IN THE HANDS OF TARGET FUND
IMMEDIATELY PRIOR TO THE REORGANIZATION, AND THE HOLDING PERIOD OF THE ASSETS OF
TARGET FUND IN THE HANDS OF ACQUIRING FUND WILL INCLUDE THE PERIOD DURING WHICH
THOSE ASSETS WERE HELD BY TARGET FUND.
THIS OPINION LETTER IS DELIVERED TO YOU IN SATISFACTION OF THE REQUIREMENTS
OF SECTION 8(D) OF THE REORGANIZATION AGREEMENT. WE HEREBY CONSENT TO THE
FILING OF THIS OPINION AS AN EXHIBIT TO THE REGISTRATION STATEMENT ON FORM N-14
RELATING TO THE REORGANIZATION AND TO USE OF OUR NAME AND ANY REFERENCE TO OUR
FIRM IN SUCH 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
F:\DML\CGF\CAPOPN.MD:4/12/00
Calvert Municipal Fund
Administrative Services Agreement
March 1, 1999
ADMINISTRATIVE SERVICES AGREEMENT
CALVERT MUNICIPAL FUND, INC.
ADMINISTRATIVE SERVICES AGREEMENT, MADE AS OF MAY 15, 1992, BY AND BETWEEN
CALVERT ADMINISTRATIVE SERVICES COMPANY, A DELAWARE CORPORATION HAVING ITS
PRINCIPAL PLACE OF BUSINESS AT 4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND
("CASC"), AND CALVERT MUNICIPAL FUND, INC., A MARYLAND CORPORATION CREATED
PURSUANT TO ARTICLES OF INCORPORATION FILED WITH THE DEPARTMENT OF ASSESSMENTS
AND TAXATION OF THE STATE OF MARYLAND (THE "FUND").
THE PARTIES TO THIS AGREEMENT, INTENDING TO BE LEGALLY BOUND, AGREE WITH
EACH OTHER AS FOLLOWS:
1. PROVISION OF SERVICES. CASC HEREBY UNDERTAKES TO THE FUND'S SERIES,
AS DESIGNATED IN SCHEDULE A, WITH CERTAIN ADMINISTRATIVE SERVICES THAT MAY BE
REQUIRED IN THE CONDUCT OF BUSINESS. SUCH SERVICES INCLUDE, BUT ARE NOT LIMITED
TO, MAINTAINING THE FUND'S ORGANIZATIONAL EXISTENCE, PREPARING THE SERIES'
PROSPECTUSES, PREPARING NOTICES, PROXY MATERIALS, REPORTS TO REGULATORY BODIES
AND REPORTS TO SHAREHOLDERS OF THE SERIES, DETERMINING THE DAILY NET ASSET VALUE
OF SHARES, DETERMINING THE AMOUNT OF DAILY DIVIDENDS OF NET INVESTMENT INCOME
PER SHARE, KEEPING THE BOOKS AND RECORDS, AND SUCH OTHER INCIDENTAL
ADMINISTRATIVE SERVICES AS ARE NECESSARY TO THE CONDUCT OF THE FUND'S AFFAIRS,
RELATIVE TO THE SERIES DESIGNATED IN SCHEDULE A. THE FUND HEREBY ENGAGES CASC TO
PROVIDE IT WITH SUCH SERVICES, OR TO CAUSE SUCH SERVICES TO BE PROVIDED TO THE
FUND BY THIRD PARTIES.
2. SCOPE OF AUTHORITY. CASC IS AT ALL TIMES, IN THE PERFORMANCE OF ITS
FUNCTIONS UNDER THIS AGREEMENT, SUBJECT TO ANY DIRECTION AND CONTROL OF THE
TRUSTEES OF THE FUND AND OF ITS OFFICERS, AND TO THE TERMS OF ITS DECLARATION OF
TRUST AND BYLAWS, EXCEPT THAT IT HAS NO OBLIGATION TO PROVIDE TO THE FUND ANY
SERVICES THAT ARE CLEARLY OUTSIDE THE SCOPE OF THOSE CONTEMPLATED IN THIS
AGREEMENT. IN THE PERFORMANCE OF ITS DUTIES UNDER THIS AGREEMENT, CASC IS
AUTHORIZED TO TAKE ANY ACTION IT DEEMS ADVISABLE. CASC MAY CONTRACT WITH OTHER
PERSONS TO PROVIDE TO THE FUND ANY OF THE SERVICES CONTEMPLATED UNDER THE
AGREEMENT UNDER SUCH TERMS AS CASC DEEMS REASONABLE, AND CASC HAS THE AUTHORITY
TO DIRECT THE ACTIVITIES OF THOSE OTHER PERSONS IN THE MANNER CASC DEEMS
APPROPRIATE.
3. OTHER ACTIVITIES OF CASC. CASC AND ANY OF ITS AFFILIATES MAY RENDER
TO OTHER PERSONS SERVICES SIMILAR TO THOSE IT PROVIDES TO THE FUND UNDER THIS
AGREEMENT. CASC OR ANY INTERESTED PERSON OF CASC MAY INVEST IN ANY SERIES AS A
SHAREHOLDER, BECOME AN OFFICER OR TRUSTEE OF THE FUND IF PROPERLY ELECTED, OR
ENTER INTO ANY OTHER RELATIONSHIP WITH THE FUND APPROVED BY THE TRUSTEES, IF
NECESSARY, AND IN ACCORDANCE WITH LAW.
4. RECORDKEEPING AND OTHER INFORMATION. CASC WILL, COMMENCING NO LATER
THAN THE EFFECTIVE DATE OF THIS AGREEMENT, OR THE COMMENCEMENT DATE OF ANY
SUBSEQUENTLY-CONSTITUTED SERIES, CREATE AND MAINTAIN ALL NECESSARY
ADMINISTRATIVE RECORDS OF THE RELEVANT SERIES IN ACCORDANCE WITH ALL APPLICABLE
LAWS, RULES AND REGULATIONS, INCLUDING, BUT NOT LIMITED TO, RECORDS REQUIRED BY
SECTION 31(A) OF THE INVESTMENT COMPANY ACT OF 1940 AND THE RULES UNDER THAT
SECTION. ALL RECORDS ARE THE PROPERTY OF THE FUND AND ARE AVAILABLE FOR
INSPECTION AND USE BY THE FUND.
5. AUDIT, INSPECTION AND VISITATION. CASC WILL MAKE AVAILABLE DURING
REGULAR BUSINESS HOURS ALL RECORDS AND OTHER DATA CREATED AND MAINTAINED
PURSUANT TO THIS AGREEMENT FOR REASONABLE AUDIT AND INSPECTION BY THE SEC, THE
FUND OR ANY PERSON RETAINED BY THE FUND IF THAT PERSON'S FUNCTION NECESSITATES
ACCESS TO SUCH RECORDS AND DATA.
6. COMPENSATION TO CASC. CASC WILL BE COMPENSATED BY THE FUND ON A
MONTHLY BASIS FOR THE SERVICES PERFORMED UNDER THIS AGREEMENT, THE RATE OF
COMPENSATION BEING SET FORTH IN SCHEDULE A. CASC WILL NOT BE RESPONSIBLE FOR ANY
COSTS OR EXPENSES OF THE FUND OTHER THAN THOSE SPECIFICALLY ASSUMED IN PARAGRAPH
1. EXPENSES INCURRED BY CASC AND NOT INCLUDED IN SCHEDULE A WILL BE REIMBURSED
TO CASC BY THE FUND, AS APPROPRIATE. SUCH EXPENSES MAY INCLUDE EXPENSES
INCIDENTAL TO MEETINGS OF SHAREHOLDERS, TAXES AND CORPORATE FEES LEVIED AGAINST
THE FUND OR ITS SERIES, EXPENSES OF PRINTING STOCK CERTIFICATES REPRESENTING
SHARES OF THE SERIES, EXPENSES OF PRINTING, MAILING NOTICES, PROXY MATERIAL,
REPORTS TO REGULATORY BODIES AND REPORTS TO SHAREHOLDERS OF THE FUND, EXPENSES
OF TYPESETTING PROSPECTUSES AND PRINTING AND MAILING PROSPECTUSES TO
SHAREHOLDERS, AND DATA PROCESSING EXPENSES INCIDENTAL TO MAINTENANCE OF BOOKS
AND RECORDS. SUCH CHARGES ARE PAYABLE IN FULL UPON RECEIPT OF A BILLING INVOICE.
IN LIEU OF REIMBURSING CASC FOR EXPENSES INCURRED AND NOT INCLUDED IN SCHEDULE
A, THE FUND MAY, IN ITS DISCRETION, DIRECTLY PAY ANY EXPENSES.
7. USE OF NAMES. THE FUND MAY NOT USE THE NAME OF CASC IN ANY
PROSPECTUS, SALES LITERATURE OR OTHER MATERIAL RELATING TO THE FUND OR ITS
SERIES IN ANY MANNER WITHOUT PRIOR APPROVAL BY CASC, SUCH APPROVAL NOT TO BE
UNREASONABLY WITHHELD; PROVIDED, HOWEVER, THAT CASC HEREBY APPROVES ALL USES OF
ITS NAME THAT MERELY REFER IN ACCURATE TERMS TO ITS APPOINTMENT OR THAT ARE
REQUIRED BY THE SEC OR A STATE SECURITIES COMMISSION. CASC MAY NOT USE THE NAME
OF THE FUND OR ITS SERIES IN ANY MATERIAL RELATING TO CASC IN ANY MANNER WITHOUT
PRIOR APPROVAL BY THE FUND, SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD;
PROVIDED, HOWEVER, THAT THE FUND HEREBY APPROVES ALL USES OF ITS NAME OR THE
NAMES OF ITS SERIES THAT MERELY REFER IN ACCURATE TERMS TO THE APPOINTMENT OF
CASC OR THAT ARE REQUIRED BY THE SEC OR A STATE SECURITIES COMMISSION.
8. SECURITY. CASC REPRESENTS AND WARRANTS THAT, TO THE BEST OF ITS
KNOWLEDGE, THE VARIOUS PROCEDURES AND SYSTEMS THAT CASC PROPOSES TO IMPLEMENT
WITH REGARD TO SAFEGUARDING INFORMATION FROM LOSS OR DAMAGE ATTRIBUTABLE TO
FIRE, THEFT OR ANY OTHER CAUSE (INCLUDING PROVISION FOR TWENTY-FOUR HOUR A DAY
RESTRICTED ACCESS) WITH RESPECT TO THE FUND'S BOOKS AND RECORDS ADMINISTERED
PURSUANT TO THIS AGREEMENT AND CASC'S RECORDS, DATA, EQUIPMENT, FACILITIES AND
OTHER PROPERTY USED IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT
ARE ADEQUATE AND THAT CASC WILL IMPLEMENT THESE PROCEDURES AND SYSTEM IN A
MANNER CALCULATED TO ENSURE THE PERFORMANCE OF CASC'S OBLIGATIONS UNDER THIS
AGREEMENT.
9. LIMITATION OF LIABILITY. THE FUND WILL INDEMNIFY AND HOLD CASC
HARMLESS AGAINST ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR EXPENSES (INCLUDING
REASONABLE COUNSEL FEES AND EXPENSES) RESULTING FROM ANY CLAIM, DEMAND, ACTION
OR SUIT BROUGHT BY ANY PERSON (INCLUDING A SHAREHOLDER NAMING THE FUND OR ANY OF
ITS SERIES AS A PARTY) OTHER THAN THE FUND NOT RESULTING FROM CASC'S NEGLIGENCE,
OR CAUSED BY ERRORS OF JUDGMENT OR MISTAKES OF LAW COMMITTED BY CASC IN A GOOD
FAITH EFFORT TO CARRY OUT ITS DUTIES UNDER THIS AGREEMENT.
IN NO EVENT WILL CASC BE LIABLE FOR INDIRECT, SPECIAL, OR CONSEQUENTIAL
DAMAGES (EVEN IF CASC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES)
ARISING FROM THE OBLIGATIONS ASSUMED HEREUNDER AND THE SERVICES PROVIDED FOR BY
THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOSS OF USE OF
ACCOUNTING SYSTEMS, COST OF CAPITAL, COST OF SUBSTITUTE FACILITIES, PROGRAMS OR
SERVICES, DOWNTIME COSTS, OR CLAIMS OF THE FUND'S SHAREHOLDERS FOR SUCH DAMAGE.
10. LIMITATION OF FUND'S LIABILITY. CASC ACKNOWLEDGES THAT IT HAS
RECEIVED NOTICE OF AND ACCEPTS THE LIMITATION ON THE FUND'S LIABILITY. CASC
AGREES THAT THE FUND'S OBLIGATIONS IN ANY CASE EXTEND ONLY TO THE SERIES AND
THEIR ASSETS, AND THAT CASC WILL NOT SEEK SATISFACTION OF ANY OBLIGATION FROM
THE SHAREHOLDERS OR ANY TRUSTEE, OFFICER, EMPLOYEE OR AGENT OF THE FUND.
11. FORCE MAJEURE. CASC WILL NOT BE LIABLE FOR DELAYS OR ERRORS CAUSED
BY CIRCUMSTANCES BEYOND CASC'S CONTROL, INCLUDING BUT NOT LIMITED TO ACTS OF
CIVIL OR MILITARY AUTHORITY, NATIONAL EMERGENCIES, WORK STOPPAGES, FIRE, FLOOD
CATASTROPHE, ACTS OF GOD, INSURRECTION, WAR, RIOT, OR FAILURE OF COMMUNICATION
OR POWER SUPPLY. IN THE EVENT OF EQUIPMENT BREAKDOWNS BEYOND ITS CONTROL, CASC
WILL TAKE REASONABLE STEPS TO MINIMIZE SERVICE INTERRUPTIONS BUT WILL HAVE NO
LIABILITY IN THE EVENT INTERRUPTIONS OCCUR.
12. AMENDMENTS. CASC AND THE FUND WILL CONSULT EACH OTHER REGARDING
CASC'S PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT. ANY CHANGE IN THE
FUND'S REGISTRATION STATEMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE 1940 ACT OR IN THE FORMS RELATING TO ANY PLAN, PROGRAM OR SERVICE OFFERED BY
THE CURRENT PROSPECTUSES OF THE SERIES THAT WOULD REQUIRE A CHANGE IN CASC'S
OBLIGATIONS UNDER THIS AGREEMENT WILL BE SUBJECT TO CASC'S APPROVAL, WHICH WILL
NOT BE UNREASONABLY WITHHELD.
13. DURATION, TERMINATION, ETC. NEITHER THIS AGREEMENT NOR ANY OF ITS
PROVISIONS MAY BE CHANGED, WAIVED, DISCHARGED, OR TERMINATED ORALLY, BUT ONLY BY
WRITTEN INSTRUMENT WHICH WILL MAKE SPECIFIC REFERENCE TO THIS AGREEMENT AND
WHICH WILL BE SIGNED BY THE PARTY AGAINST WHICH ENFORCEMENT OF SUCH CHANGE,
WAIVER, DISCHARGE OR TERMINATION IS SOUGHT. THIS AGREEMENT WILL CONTINUE IN
EFFECT UNTIL DECEMBER 31, 1997, AND FOR ONE-YEAR TERMS THEREAFTER OR AS THE
PARTIES MAY MUTUALLY AGREE. THIS AGREEMENT MAY BE TERMINATED FOR CAUSE EITHER BY
THE FUND OR CASC, BUT ONLY AFTER A REASONABLE OPPORTUNITY TO CURE HAS BEEN
PROVIDED TO THE PARTY ACCUSED OF NOT PERFORMING ACCORDING TO THE TERMS OF THIS
AGREEMENT. WHAT CONSTITUTES A REASONABLE AMOUNT OF TIME TO CURE ANY DEFICIENCY
WILL BE DETERMINED BY THE PARTIES IN THE CONTEXT OF ACTION THAT NEEDS TO BE
TAKEN IN ORDER TO CURE THE DEFICIENCY, BUT IN NO EVENT WILL THE PARTY HAVE LESS
THAN 90 DAYS TO ATTEMPT TO CURE THE DEFICIENCY. IN THE EVENT THAT THE CAUSE
REMAINS UNREMEDIED, THE PARTIES HAVE THE OPTION TO TERMINATE THE CONTRACT PRIOR
TO ITS EXPIRATION DATE. ANY SUCH TERMINATION WILL NOT AFFECT THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER PARAGRAPHS 9 AND 10 OF THIS AGREEMENT. IN THE
EVENT THE FUND DESIGNATES A SUCCESSOR TO ANY OF CASC'S OBLIGATIONS UNDER THIS
AGREEMENT, CASC WILL, AT THE EXPENSE AND DIRECTION OF THE FUND, TRANSFER TO SUCH
SUCCESSOR ALL RELEVANT BOOKS, RECORDS AND OTHER DATA ESTABLISHED OR MAINTAINED
BY CASC.
14. MISCELLANEOUS. EACH PARTY AGREES TO PERFORM SUCH FURTHER ACTS AND
EXECUTE SUCH FURTHER DOCUMENTS AS ARE NECESSARY TO EFFECTUATE THE PURPOSES OF
THIS AGREEMENT. THIS AGREEMENT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF MARYLAND. THE CAPTIONS IN THIS AGREEMENT ARE
INCLUDED FOR CONVENIENCE ONLY AND DO NOT DEFINE OR DELIMIT ANY OF THE PROVISIONS
HEREOF OR OTHERWISE AFFECT THEIR CONSTRUCTION OR EFFECT.
IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS AGREEMENT AS OF THE
DATE INDICATED ABOVE.
CALVERT ADMINISTRATIVE SERVICES COMPANY
BY
TITLE
CALVERT MUNICIPAL FUND, INC.
BY
TITLE
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
SCHEDULE A
FOR ITS SERVICES UNDER THIS ADMINISTRATIVE SERVICES AGREEMENT, CALVERT
ADMINISTRATIVE SERVICES COMPANY IS ENTITLED TO RECEIVE FROM EACH PORTFOLIO OF
CALVERT MUNICIPAL FUND, INC. A FEE OF 10 BASIS POINTS BASED ON AGGREGATE NET
ASSETS.
<PAGE>
AMENDMENT TO ADMINISTRATIVE SERVICES AGREEMENT
THE ADMINISTRATIVE SERVICES AGREEMENT DATED JANUARY 3, 1984, BY AND BETWEEN
CALVERT ADMINISTRATIVE SERVICE COMPANY, A DELAWARE CORPORATION ("CASC"), AD
CALVERT MUNICIPAL FUND, INC., A MARYLAND CORPORATION (THE "FUND"), IS HEREBY
AMENDED AS OF THIS FOURTH DAY OF NOVEMBER, 1992, BY THE PARTIES SO AS TO REVISE
THE TERMS OF SECTION 9 (LIMITATION OF LIABILITY):
PARAGRAPH 1 OF SECTION 9 IS REVISED AS FOLLOWS: "THE FUND WILL INDEMNIFY
AND HOLD CASC HARMLESS AGAINST ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES OR
EXPENSES (INCLUDING REASONABLE COUNSEL FEES AND EXPENSES) RESULTING FROM ANY
CLAIM, DEMAND, ACTION OR SUIT BROUGHT BY ANY PERSON (INCLUDING A SHAREHOLDER
NAMING THE FUND AS A PARTY) OTHER THAN THE FUND NOT RESULTING FROM CASC'S
NEGLIGENCE, OR CAUSE BY ERRORS OF JUDGMENT OR MISTAKES OF LAW COMMITTED BY CASC
IN A GOOD FAITH EFFORT TO CARRY OUT ITS DUTIES UNDER THIS AGREEMENT."
PARAGRAPHS 2 AND 3 OF SECTION 9 ARE HEREBY DELETED.
THIS AMENDMENT WAS DULY APPROVED BY A MAJORITY OF THE BOARD OF DIRECTORS AT
A MEETING HELD ON NOVEMBER 4, 1992.
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AMENDMENT TO THE
ADMINISTRATIVE SERVICES AGREEMENT TO BE SIGNED BY THEIR RESPECTIVE OFFICIALS,
DULY AUTHORIZED, AS OF NOVEMBER 4, 1992.
CALVERT ADMINISTRATIVE SERVICES COMPANY
BY
TITLE
CALVERT MUNICIPAL FUND, INC.
BY
TITLE
(DRAFT)
EXHIBIT 14
CONSENT OF INDEPENDENT AUDITORS
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
MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA 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 11, 2000, ON
OUR AUDIT OF THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS OF
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND AND CALVERT VIRGINIA
MUNICIPAL INTERMEDIATE FUND, WHICH REPORT IS INCLUDED IN THE ANNUAL
REPORT TO SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 1999, IN THE
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 2000.
2. THE INCORPORATION BY REFERENCE OF OUR REPORT DATED FEBRUARY 11, 2000,
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, 1999, IN THE STATEMENT OF ADDITIONAL INFORMATION DATED
APRIL 30, 2000.
3. THE REFERENCE TO OUR FIRM UNDER THE HEADING "INDEPENDENT ACCOUNTANTS AND
CUSTODIANS" IN THE STATEMENTS OF ADDITIONAL INFORMATION DATED APRIL
30, 2000, OF THE CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND, CALVERT
VIRGINIA MUNICIPAL INTERMEDIATE FUND AND THE CALVERT NATIONAL MUNICIPAL
INTERMEDIATE FUND.
PRICEWATERHOUSECOOPERS, LLP
BALTIMORE, MARYLAND
APRIL 25, 2000
EXHIBIT 16
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX BARBARA KRUMSIEK
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX RICHARD L. BAIRD, JR.
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
CHARLES E. DIEHL FRANK H. BLATZ, JR.
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX DOUGLAS E. FELDMAN
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
FRANK H. BLATZ, JR. CHARLES E. DIEHL
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX PETER W. GAVIAN
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
M. CHARITO KRUVANT JOHN G. GUFFEY, JR.
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX M. CHARITO KRUVANT
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
CHARLES E. DIEHL ARTHUR J. PUGH
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
KATHERINE STONER DAVID R. ROCHAT
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
MAY 7, 1997
DATE /SIGNATURE/
EDWIDGE SAINT-FELIX D. WAYNE SILBY
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED TRUSTEE/DIRECTOR OF FIRST VARIABLE RATE FUND FOR
GOVERNMENT INCOME, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT
FUND, AND CALVERT MUNICIPAL FUND, INC. (COLLECTIVELY, THE "FUNDS"), HEREBY
CONSTITUTE RONALD M. WOLFSHEIMER, WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER,
KATHERINE STONER, LISA CROSSLEY, AND IVY WAFFORD DUKE MY TRUE AND LAWFUL
ATTORNEYS, WITH FULL POWER TO EACH OF THEM, TO SIGN FOR ME AND IN MY NAME IN THE
APPROPRIATE CAPACITIES, ALL REGISTRATION STATEMENTS AND AMENDMENTS FILED BY THE
FUNDS WITH ANY FEDERAL OR STATE AGENCY, AND TO DO ALL SUCH THINGS IN MY NAME AND
BEHALF NECESSARY FOR REGISTERING AND MAINTAINING REGISTRATION OR EXEMPTIONS FROM
REGISTRATION OF THE FUNDS WITH ANY GOVERNMENT AGENCY IN ANY JURISDICTION,
DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
JANUARY 16, 1998
DATE /SIGNATURE/
ROGER WILKINS FREDERICK BORTS, M.D.
WITNESS NAME OF TRUSTEE/DIRECTOR
<PAGE>
POWER OF ATTORNEY
I, THE UNDERSIGNED OFFICER OF CALVERT SOCIAL INVESTMENT FUND, CALVERT WORLD
VALUES FUND, ACACIA CAPITAL CORPORATION, CALVERT NEW WORLD FUND, FIRST VARIABLE
RATE FUND, CALVERT TAX-FREE RESERVES, CALVERT CASH RESERVES, THE CALVERT FUND
AND CALVERT MUNICIPAL FUND (EACH, RESPECTIVELY, THE "FUND"), HEREBY CONSTITUTE
WILLIAM M. TARTIKOFF, SUSAN WALKER BENDER, KATHERINE STONER, LISA CROSSLEY, AND
IVY WAFFORD DUKE MY TRUE AND LAWFUL ATTORNEYS, WITH FULL POWER TO EACH OF THEM,
TO SIGN FOR ME AND IN MY NAME IN THE APPROPRIATE CAPACITIES, ALL REGISTRATION
STATEMENTS AND AMENDMENTS FILED BY THE FUND WITH ANY FEDERAL OR STATE AGENCY,
AND TO DO ALL SUCH THINGS IN MY NAME AND BEHALF NECESSARY FOR REGISTERING AND
MAINTAINING REGISTRATION OR EXEMPTIONS FROM REGISTRATION OF THE FUND WITH ANY
GOVERNMENT AGENCY IN ANY JURISDICTION, DOMESTIC OR FOREIGN.
THE SAME PERSONS ARE AUTHORIZED GENERALLY TO DO ALL SUCH THINGS IN MY NAME
AND BEHALF TO COMPLY WITH THE PROVISIONS OF ALL FEDERAL, STATE AND FOREIGN LAWS,
REGULATIONS, AND POLICY PRONOUNCEMENTS AFFECTING THE FUNDS, INCLUDING, BUT NOT
LIMITED TO, THE SECURITIES ACT OF 1933, THE SECURITIES EXCHANGE ACT OF 1934, THE
INVESTMENT COMPANY ACT OF 1940, THE INVESTMENT ADVISERS ACT OF 1940, AND ALL
STATE LAWS REGULATING THE SECURITIES INDUSTRY.
THE SAME PERSONS ARE FURTHER AUTHORIZED TO SIGN MY NAME TO ANY DOCUMENT
NEEDED TO MAINTAIN THE LAWFUL OPERATION OF THE FUNDS IN CONNECTION WITH ANY
TRANSACTION APPROVED BY THE BOARD OF TRUSTEE/DIRECTORS.
WHEN ANY OF THE ABOVE-REFERENCED ATTORNEYS SIGNS MY NAME TO ANY DOCUMENT IN
CONNECTION WITH MAINTAINING THE LAWFUL OPERATION OF THE FUNDS, THE SIGNING IS
AUTOMATICALLY RATIFIED AND CONFIRMED BY ME BY VIRTUE OF THIS POWER OF ATTORNEY.
WITNESS MY HAND ON THE DATE SET FORTH BELOW.
DECEMBER 16, 1997
DATE /SIGNATURE/
WILLIAM M. TARTIKOFF RONALD M. WOLFSHEIMER
WITNESS NAME OF OFFICER
CALVERT MUNICIPAL FUND, INC.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
PROSPECTUS
APRIL 30, 1999
ABOUT THE FUNDS
2 INVESTMENT OBJECTIVE, STRATEGY, PAST PERFORMANCE
8 FEES AND EXPENSES
9 PRINCIPAL INVESTMENT PRACTICES AND RISKS
ABOUT YOUR INVESTMENT
14 CALVERT GROUP AND THE PORTFOLIO MANAGEMENT TEAM
14 ADVISORY FEES
15 HOW TO BUY SHARES
15 GETTING STARTED
16 DISTRIBUTION AND SERVICE FEES
16 ACCOUNT APPLICATION
17 IMPORTANT - HOW SHARES ARE PRICED
17 WHEN YOUR ACCOUNT WILL BE CREDITED
18 OTHER CALVERT GROUP FEATURES
(EXCHANGES, MINIMUM ACCOUNT BALANCE, ETC.)
20 DIVIDENDS, CAPITAL GAINS AND TAXES
22 HOW TO SELL SHARES
24 FINANCIAL HIGHLIGHTS
28 EXHIBIT A- REDUCED SALES CHARGES
30 EXHIBIT B- SERVICE FEES AND
OTHER ARRANGEMENTS WITH DEALERS
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SEC OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
OBJECTIVES
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND ("NATIONAL") SEEKS TO EARN THE
HIGHEST LEVEL OF INTEREST INCOME EXEMPT FROM FEDERAL INCOME TAXES AS IS
CONSISTENT WITH PRUDENT INVESTMENT MANAGEMENT, PRESERVATION OF CAPITAL, AND
CERTAIN QUALITY AND MATURITY CHARACTERISTICS.
CALVERT CALIFORNIA, MARYLAND AND VIRGINIA MUNICIPAL INTERMEDIATE FUNDS (THE
"STATE FUNDS") SEEK TO EARN THE HIGHEST LEVEL OF INTEREST INCOME EXEMPT FROM
FEDERAL AND SPECIFIC STATE INCOME TAXES AS IS CONSISTENT WITH PRUDENT
INVESTMENT MANAGEMENT, PRESERVATION OF CAPITAL, AND THE QUALITY AND MATURITY
OBJECTIVES OF EACH FUND.
PRINCIPAL INVESTMENT STRATEGIES
NATIONAL AND THE STATE FUNDS ("EACH FUND" OR "THE FUNDS") ARE EACH
NONDIVERSIFIED MUTUAL FUNDS. EACH FUND TYPICALLY INVESTS AT LEAST 65% OF
ITS NET ASSETS IN INVESTMENT GRADE DEBT SECURITIES. THE ADVISOR LOOKS FOR
SECURITIES WITH STRONG CREDIT QUALITY WITHIN THEIR RATING CATEGORY THAT ARE
ATTRACTIVELY PRICED. THIS MAY INCLUDE INVESTMENTS WITH UNUSUAL FEATURES OR
PRIVATELY PLACED ISSUES, THAT ARE NOT WIDELY FOLLOWED IN THE FIXED INCOME
MARKETPLACE. THE AVERAGE DOLLAR-WEIGHTED MATURITY WILL BE BETWEEN 3 AND 10
YEARS.
TYPES OF INVESTMENTS
THE FUND INVESTS IN TAX-SUPPORTED DEBT (GENERAL OBLIGATION BONDS OF STATE
AND LOCAL ISSUERS), VARIOUS TYPES OF REVENUE DEBT (TRANSPORTATION, HOUSING,
UTILITIES, HOSPITAL), SPECIAL TAX OBLIGATIONS, AND QUALIFIED PRIVATE
ACTIVITY BONDS AND OTHER STATE AND LOCAL GOVERNMENT AUTHORITIES, MUNICIPAL
LEASES, CERTIFICATES OF PARTICIPATION IN SUCH INVESTMENTS. THE OBLIGATIONS
MAY BE STRUCTURED AS VARIABLE RATE OR ADJUSTABLE RATE OBLIGATIONS AND ARE
OFTEN SUPPORTED BY A THIRD PARTY LETTER OF CREDIT.
UNDER NORMAL MARKET CONDITIONS, EACH FUND WILL INVEST AT LEAST 65% OF ITS
TOTAL ASSETS IN MUNICIPAL OBLIGATIONS WHOSE INTEREST IS EXEMPT FROM FEDERAL,
AND, IF A STATE FUND, THAT SPECIFIC STATE'S INCOME TAX. THE FUND WILL ALSO
ATTEMPT TO INVEST THE REMAINING 35% OF ITS TOTAL ASSETS IN SUCH OBLIGATIONS,
BUT MAY INVEST IT IN MUNICIPAL OBLIGATIONS OF OTHER STATES, TERRITORIES AND
POSSESSIONS OF THE UNITED STATES, THE DISTRICT OF COLUMBIA AND THEIR
RESPECTIVE AUTHORITIES, AGENCIES, INSTRUMENTALITIES AND POLITICAL
SUBDIVISIONS OR IN SHORT-TERM TAXABLE MONEY MARKET-TYPE INSTRUMENTS.
DIVIDENDS PAID BY THE STATE FUNDS WHICH ARE DERIVED FROM INTEREST
ATTRIBUTABLE TO STATE MUNICIPAL OBLIGATIONS WILL BE EXEMPT FROM FEDERAL AND
THAT SPECIFIC STATE'S PERSONAL INCOME TAXES. DIVIDENDS DERIVED FROM
INTEREST ON TAX-EXEMPT OBLIGATIONS OF OTHER GOVERNMENTAL ISSUERS WILL BE
EXEMPT FROM FEDERAL INCOME TAX, BUT MAY BE SUBJECT TO STATE INCOME TAXES.
THE INTEREST OF CERTAIN OBLIGATIONS MAY BE SUBJECT TO THE FEDERAL
ALTERNATIVE MINIMUM TAX.
<PAGE>
THE FUNDS MAY PURCHASE UNRATED SECURITIES, SO LONG AS THE ADVISOR DETERMINES
THEY ARE OF COMPARABLE CREDIT QUALITY. UNRATED SECURITIES MAY BE LESS LIQUID
THAN THOSE THAT ARE RATED.
PRINCIPAL RISKS
YOU COULD LOSE MONEY ON YOUR INVESTMENT IN THE FUNDS, OR THE FUNDS COULD
UNDERPERFORM, MOST LIKELY FOR ANY OF THE FOLLOWING REASONS:
O THE BOND MARKET GOES DOWN
O THE INDIVIDUAL BONDS IN THE FUNDS DO NOT PERFORM AS WELL AS EXPECTED
O THE ADVISOR'S FORECAST AS TO INTEREST RATES IS NOT CORRECT
O THE ADVISOR'S ALLOCATION AMONG DIFFERENT SECTORS OF THE BOND MARKET
DOES NOT PERFORM AS WELL AS EXPECTED
O BECAUSE THE STATE FUNDS INVEST PRIMARILY IN CALIFORNIA, MARYLAND,
AND VIRGINIA MUNICIPAL OBLIGATIONS, RESPECTIVELY, THE ECONOMY AND POLITICAL
CLIMATE IN THOSE STATES WILL HAVE A GREAT IMPACT ON THE STATE FUNDS
O THE FUNDS ARE NON-DIVERSIFIED. COMPARED TO OTHER FUNDS, THE FUNDS
MAY INVEST MORE OF ITS ASSETS IN A SMALLER NUMBER OF BONDS. GAINS OR LOSSES
ON A SINGLE BOND MAY HAVE GREATER IMPACT ON THE FUNDS.
AN INVESTMENT IN THE FUNDS IS NOT A BANK DEPOSIT AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
PERFORMANCE CHARTS
THE BAR CHARTS AND TABLES BELOW SHOW EACH FUND'S ANNUAL RETURNS AND ITS
LONG-TERM PERFORMANCE. THE CHART SHOWS HOW THE PERFORMANCE OF THE SHARES HAS
VARIED FROM YEAR TO YEAR. THE TABLE COMPARES EACH FUND'S PERFORMANCE OVER
TIME TO THAT OF THE LEHMAN MUNICIPAL 10 YEAR BOND INDEX TR. THIS IS A WIDELY
RECOGNIZED, UNMANAGED INDEX OF BOND PRICES. IT ALSO SHOWS THE FUND'S RETURNS
COMPARED TO THE LIPPER OTHER STATES MUNICIPAL DEBT FUNDS INDEX, A COMPOSITE
INDEX OF THE ANNUAL RETURN OF MUTUAL FUNDS THAT HAVE AN INVESTMENT GOAL
SIMILAR TO THAT OF THE FUND. PAST PERFORMANCE DOES NOT NECESSARILY INDICATE
HOW ANY FUND WILL PERFORM IN THE FUTURE.
THE BAR CHART DOES NOT REFLECT ANY SALES CHARGE THAT YOU MAY BE REQUIRED TO
PAY UPON PURCHASE OR REDEMPTION OF THE FUND'S SHARES. ANY SALES CHARGE WILL
REDUCE YOUR RETURN. THE AVERAGE TOTAL RETURN TABLE SHOWS RETURNS WITH THE
MAXIMUM SALES CHARGE DEDUCTED. NO SALES CHARGE HAS BEEN APPLIED TO THE INDEX
USED FOR COMPARISON IN THE TABLE.
<PAGE>
NATIONAL
YEAR-BY-YEAR TOTAL RETURN (AT NAV)
BAR CHART
1993 9.47% 1996 4.32%
1994 -1.18% 1997 7.11%
1995 13.64% 1998 5.46%
BEST QUARTER (OF PERIODS SHOWN) Q1 '95 5.19%
WORST QUARTER (OF PERIODS SHOWN) Q1 '94 -2.40%
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12-31-98)
(WITH MAXIMUM SALES CHARGE DEDUCTED)
1 YEAR 5 YEARS SINCE INCEPTION
NATIONAL 2.52% 5.10% 5.80%
(INCEPTION 9/30/92)
LEHMAN MUNICIPAL BOND 10 YEAR
INDEX TR 6.11% 6.22% 7.31%
LIPPER INTERMEDIATE MUNICIPAL DEBT
FUNDS INDEX 5.62% 5.13% 5.95%
<PAGE>
CALIFORNIA
YEAR-BY-YEAR TOTAL RETURN (AT NAV)
BAR CHART
1993 8.88% 1996 4.04%
1994 -2.57% 1997 6.61%
1995 11.95% 1998 5.51%
BEST QUARTER (OF PERIODS SHOWN) Q1 '95 4.64%
WORST QUARTER (OF PERIODS SHOWN) Q1 '94 -2.87%
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12-31-98)
(WITH MAXIMUM SALES CHARGE DEDUCTED)
1 YEAR 5 YEARS SINCE INCEPTION
CALIFORNIA 2.61% 4.34% 5.46%
(INCEPTION 5/29/92)
LEHMAN MUNICIPAL BOND 10 YEAR
INDEX TR 6.11% 6.22% 7.68%
LIPPER CALIFORNIA INTERMEDIATE MUNICIPAL
DEBT FUNDS AVERAGE 5.33% 5.43% 7.02%
THE MONTH END DATE OF 5/31/92 IS USED FOR COMPARISON PURPOSES ONLY, ACTUAL
INCEPTION IS 5/29/92
<PAGE>
MARYLAND
YEAR-BY-YEAR TOTAL RETURN (AT NAV)
BAR CHART
1994 -2.94% 1997 7.68%
1995 13.66% 1998 4.88%
1996 3.96%
BEST QUARTER (OF PERIODS SHOWN) Q1 '95 5.40%
WORST QUARTER (OF PERIODS SHOWN) Q1 '94 -3.51%
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12-31-98)
(WITH MAXIMUM SALES CHARGE DEDUCTED)
1 YEAR 5 YEARS SINCE INCEPTION
MARYLAND 1.93% 4.65% 4.79%
(INCEPTION 9/30/93)
LEHMAN MUNICIPAL BOND 10 YEAR
INDEX TR 6.11% 6.22% 6.21%
LIPPER OTHER STATES MUNICIPAL DEBT
FUNDS AVERAGE 5.08% 4.72% 4.69%
<PAGE>
VIRGINIA
YEAR-BY-YEAR TOTAL RETURN (AT NAV)
BAR CHART
1994 -2.04% 1997 6.71%
1995 13.78% 1998 4.88%
1996 3.82%
BEST QUARTER (OF PERIODS SHOWN) Q1 '95 5.80%
WORST QUARTER (OF PERIODS SHOWN) Q1 '94 -2.95%
AVERAGE ANNUAL TOTAL RETURNS (AS OF 12-31-98)
(WITH MAXIMUM SALES CHARGE DEDUCTED)
1 YEAR 5 YEARS SINCE INCEPTION
VIRGINIA 1.94% 4.65% 4.84%
(INCEPTION 10/1/93)
LEHMAN MUNICIPAL BOND 10 YEAR
INDEX TR 6.11% 6.22% 6.21%
LIPPER OTHER STATES MUNICIPAL DEBT
FUNDS AVERAGE 5.05% 4.61% 4.69%
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
NATIONAL
MAXIMUM SALES CHARGE (LOAD) 2.75%
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
(AS A PERCENTAGE OF PURCHASE OR REDEMPTION
PROCEEDS, WHICHEVER IS LOWER)
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES2 0.29%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.99%
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
CALIFORNIA
MAXIMUM SALES CHARGE (LOAD) 2.75%
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
(AS A PERCENTAGE OF PURCHASE OR REDEMPTION
PROCEEDS, WHICHEVER IS LOWER)
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES2 0.22%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.92%
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
MARYLAND
MAXIMUM SALES CHARGE (LOAD) 2.75%
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
(AS A PERCENTAGE OF PURCHASE OR REDEMPTION
PROCEEDS, WHICHEVER IS LOWER)
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES2 0.29%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.99%
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
VIRGINIA
MAXIMUM SALES CHARGE (LOAD) 2.75%
IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFERING PRICE)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE1
(AS A PERCENTAGE OF PURCHASE OR REDEMPTION
PROCEEDS, WHICHEVER IS LOWER)
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
MANAGEMENT FEES 0.70%
DISTRIBUTION AND SERVICE (12B-1) FEES 0.00%
OTHER EXPENSES2 0.29%
TOTAL ANNUAL FUND OPERATING EXPENSES 0.99%
EXPLANATION OF FEES AND EXPENSES TABLE
1 PURCHASES OF SHARES FOR ACCOUNTS WITH $1 MILLION OR MORE ARE NOT SUBJECT
TO FRONT-END SALES CHARGES, BUT MAY BE SUBJECT TO A 1.0% CONTINGENT DEFERRED
SALES CHARGE ON SHARES REDEEMED WITHIN 1 YEAR OF PURCHASE. (SEE "HOW TO BUY
SHARES)
2 EXPENSES HAVE BEEN RESTATED TO REFLECT EXPENSES EXPECTED TO BE INCURRED IN
1999.
<PAGE>
ANNUAL FUND OPERATING EXPENSES
EXPENSES ARE BASED ON EXPENSES FOR EACH FUND'S MOST RECENT FISCAL YEAR,
UNLESS OTHERWISE INDICATED. MANAGEMENT FEES INCLUDE THE ADMINISTRATIVE FEE
PAID BY THE FUND TO CALVERT ADMINISTRATIVE SERVICES COMPANY, AN AFFILIATE OF
THE ADVISOR, CALVERT ASSET MANAGEMENT COMPANY, INC.
RULE 12B-1 FEES INCLUDE AN ASSET-BASED SALES CHARGE. THUS, LONG-TERM
SHAREHOLDERS IN THOSE FUNDS WITH SUCH FEES 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.
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN A FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE ASSUMES THAT:
YOU INVEST $10,000 IN A FUND FOR THE TIME PERIODS INDICATED;
YOUR INVESTMENT HAS A 5% RETURN EACH YEAR; AND
THE FUND'S OPERATING EXPENSES REMAIN THE SAME.
ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, UNDER THESE ASSUMPTIONS
YOUR COSTS WOULD BE:
NUMBER OF YEARS INVESTMENT IS HELD
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
NATIONAL $373 $582 $807 $1,455
CALIFORNIA $366 $560 $770 $1,375
MARYLAND $373 $582 $807 $1,455
VIRGINIA $373 $582 $807 $1,455
PRINCIPAL INVESTMENT PRACTICES AND RISKS
THE MOST CONCISE DESCRIPTION OF EACH FUND'S PRINCIPAL INVESTMENT STRATEGIES
AND ASSOCIATED RISKS IS UNDER THE EARLIER SUMMARY FOR EACH FUND. THE FUNDS
ARE ALSO PERMITTED TO INVEST IN CERTAIN OTHER INVESTMENTS AND TO USE CERTAIN
INVESTMENT TECHNIQUES THAT HAVE HIGHER RISKS ASSOCIATED WITH THEM. ON THE
FOLLOWING PAGES ARE BRIEF DESCRIPTIONS OF THE INVESTMENTS AND TECHNIQUES,
SUMMARIZED IN THE EARLIER SUMMARY ALONG WITH CERTAIN ADDITIONAL INVESTMENT
TECHNIQUES AND THEIR RISKS.
FOR EACH OF THE INVESTMENT PRACTICES LISTED, THE TABLE BELOW SHOWS EACH
FUND'S LIMITATIONS AS A PERCENTAGE OF ITS ASSETS AND THE PRINCIPAL TYPES OF
RISK INVOLVED. (SEE THE PAGES FOLLOWING THE TABLE FOR A DESCRIPTION OF THE
TYPES OF RISKS.) NUMBERS IN THIS TABLE SHOW MAXIMUM ALLOWABLE AMOUNT ONLY;
FOR ACTUAL USAGE, CONSULT THE FUND'S ANNUAL/SEMI-ANNUAL REPORTS.
<PAGE>
KEY TO TABLE
@ FUND CURRENTLY USES
0 PERMITTED, BUT NOT TYPICALLY USED
(% OF ASSETS ALLOWABLE, IF RESTRICTED)
- -- NOT PERMITTED
XN ALLOWED UP TO X% OF FUND'S NET ASSETS
XT ALLOWED UP TO X% OF FUND'S TOTAL ASSETS
NA NOT APPLICABLE TO THIS TYPE OF FUND
NAT'L. CA MD VA
- ------------------------------------------ -------- -------- -------- -------
CONVENTIONAL SECURITIES:
INVESTMENT GRADE BONDS. BONDS RATED @ @ @ @
BBB/BAA OR HIGHER OR COMPARABLE UNRATED
BONDS. RISKS: INTEREST RATE, MARKET ,
CREDIT AND INFORMATION.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
BELOW-INVESTMENT GRADE BONDS. BONDS @ @ @ @
RATED BELOW BBB/BAA OR COMPARABLE 35N 35N 35N 35N
UNRATED BONDS, ALSO KNOWN AS HIGH-YIELD
BONDS. THEY ARE SUBJECT TO GREATER
CREDIT RISK THAN INVESTMENT GRADE BONDS.
RISKS: CREDIT, MARKET, INTEREST RATE,
LIQUIDITY AND INFORMATION.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
UNRATED DEBT SECURITIES. BONDS THAT HAVE @ @ @ @
NOT BEEN RATED BY A RECOGNIZED RATING
AGENCY; THE ADVISOR HAS DETERMINED THE
CREDIT QUALITY BASED ON ITS OWN
RESEARCH. RISKS: CREDIT, MARKET,
INTEREST RATE, LIQUIDITY AND
INFORMATION.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
ILLIQUID SECURITIES. SECURITIES WHICH 15N 15N 15N 15N
CANNOT BE READILY SOLD BECAUSE THERE IS
NO ACTIVE MARKET. RISKS: LIQUIDITY,
MARKET AND TRANSACTION.
- ------------------------------------------ -------- -------- -------- -------
<PAGE>
UNLEVERAGED DERIVATIVE SECURITIES
- ------------------------------------------ -------- -------- -------- -------
ASSET-BACKED SECURITIES. SECURITIES ARE @ @ @ @
ISSUED BY A SPECIAL PURPOSE ENTITY AND
ARE BACKED BY FIXED-INCOME OR OTHER
INTEREST BEARING ASSETS. RISKS: CREDIT,
INTEREST RATE AND LIQUIDITY.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
MORTGAGE-BACKED SECURITIES (TYPICALLY,
SINGLE-FAMILY MORTGAGE BONDS). @ @ @ @
SECURITIES ARE BACKED BY POOLS OF
MORTGAGES, INCLUDING PASSTHROUGH
CERTIFICATES. RISKS: CREDIT, EXTENSION,
PREPAYMENT, LIQUIDITY AND INTEREST RATE.
- ------------------------------------------ -------- -------- -------- -------
LEVERAGED DERIVATIVE INSTRUMENTS
- ------------------------------------------ -------- -------- -------- -------
OPTIONS ON SECURITIES AND INDICES. 5T 5T 5T 5T
CONTRACTS GIVING THE HOLDER THE RIGHT
BUT NOT THE OBLIGATION TO PURCHASE OR
SELL A SECURITY (OR THE CASH VALUE, IN
THE CASE OF AN OPTION ON AN INDEX) AT A
SPECIFIED PRICE WITHIN A SPECIFIED TIME.
ANY OPTIONS WRITTEN BY THE FUND MUST BE
"COVERED". THE LIMITATION IS BASED ON
NET PREMIUM PAYMENTS. RISKS: INTEREST
RATE, MARKET, LEVERAGE, CORRELATION,
LIQUIDITY, CREDIT AND OPPORTUNITY.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
FUTURES CONTRACT. AGREEMENT TO BUY OR 5N 5N 5N 5N
SELL A SPECIFIC AMOUNT OF A COMMODITY OR
FINANCIAL INSTRUMENT AT A PARTICULAR
PRICE ON A SPECIFIC FUTURE DATE. RISKS:
INTEREST RATE, MARKET, LEVERAGE,
CORRELATION, LIQUIDITY AND OPPORTUNITY.
- ------------------------------------------ -------- -------- -------- -------
- ------------------------------------------ -------- -------- -------- -------
STRUCTURED SECURITIES. INVERSE FLOATING @ @ @ @
RATE MUNICIPAL NOTES AND BONDS. THESE
SECURITIES TEND TO BE HIGHLY SENSITIVE
TO INTEREST RATE MOVEMENTS. RISKS:
CREDIT, INTEREST RATE, MARKET, LEVERAGE,
LIQUIDITY AND CORRELATION.
- ------------------------------------------ -------- -------- -------- -------
<PAGE>
- ------------------------------------------ -------- -------- -------- -------
TEMPORARY DEFENSIVE POSITIONS. @ @ @ @
DURING ADVERSE MARKET, ECONOMIC OR
POLITICAL CONDITIONS, THE FUND MAY
DEPART FROM ITS PRINCIPAL INVESTMENT
STRATEGIES BY INCREASING ITS INVESTMENT
IN U.S. GOVERNMENT SECURITIES AND OTHER
SHORT-TERM INTEREST-BEARING SECURITIES.
DURING TIMES OF ANY TEMPORARY DEFENSIVE
POSITIONS, A FUND MAY NOT BE ABLE TO
ACHIEVE ITS INVESTMENT OBJECTIVE RISKS:
OPPORTUNITY.
- ------------------------------------------ -------- -------- -------- -------
THE FUNDS HAVE ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS THAT ARE NOT
PRINCIPAL TO THEIR INVESTMENT STRATEGIES (FOR EXAMPLE, REPURCHASE
AGREEMENTS, BORROWING, PLEDGING, AND SECURITIES LENDING, AND WHEN-ISSUED
SECURITIES.) THESE POLICIES AND RESTRICTIONS ARE DISCUSSED IN THE SAI.
CORRELATION RISK
THIS OCCURS WHEN A FUND "HEDGES"- USES ONE INVESTMENT TO OFFSET THE FUND'S
POSITION IN ANOTHER. IF THE TWO INVESTMENTS DO NOT BEHAVE IN RELATION TO ONE
ANOTHER THE WAY FUND MANAGERS EXPECT THEM TO, THEN UNEXPECTED OR UNDESIRED
RESULTS MAY OCCUR. FOR EXAMPLE, A HEDGE MAY ELIMINATE OR REDUCE GAINS AS
WELL AS OFFSET LOSSES.
CREDIT RISK
THE RISK THAT THE ISSUER OF A SECURITY OR THE COUNTERPARTY TO AN INVESTMENT
CONTRACT MAY DEFAULT OR BECOME UNABLE TO PAY ITS OBLIGATIONS WHEN DUE.
EXTENSION RISK
THE RISK THAT AN UNEXPECTED RISE IN INTEREST RATES WILL EXTEND THE LIFE OF A
MORTGAGE-BACKED SECURITY BEYOND THE EXPECTED PREPAYMENT TIME, TYPICALLY
REDUCING THE SECURITY'S VALUE.
INFORMATION RISK
THE RISK THAT INFORMATION ABOUT A SECURITY OR ISSUER OR THE MARKET MIGHT NOT
BE AVAILABLE, COMPLETE, ACCURATE OR COMPARABLE.
INTEREST RATE RISK
THE RISK THAT CHANGES IN INTEREST RATES WILL ADVERSELY AFFECT THE VALUE OF
AN INVESTOR'S SECURITIES. WHEN INTEREST RATES RISE, THE VALUE OF
FIXED-INCOME SECURITIES WILL GENERALLY FALL. CONVERSELY, A DROP IN INTEREST
RATES WILL GENERALLY CAUSE AN INCREASE IN THE VALUE OF FIXED-INCOME
SECURITIES. LONGER-TERM SECURITIES AND ZERO COUPON/"STRIPPED" COUPON
SECURITIES ("STRIPS") ARE SUBJECT TO GREATER INTEREST RATE RISK.
<PAGE>
LEVERAGE RISK
THE RISK THAT OCCURS IN SOME SECURITIES OR TECHNIQUES WHICH TEND TO MAGNIFY
THE EFFECT OF SMALL CHANGES IN AN INDEX OR A MARKET. THIS CAN RESULT IN A
LOSS THAT EXCEEDS THE AMOUNT ACTUALLY INVESTED.
LIQUIDITY RISK
THE RISK THAT OCCURS WHEN INVESTMENTS CANNOT BE READILY SOLD. A FUND MAY
HAVE TO ACCEPT A LESS-THAN-DESIRABLE PRICE TO COMPLETE THE SALE OF AN
ILLIQUID SECURITY OR MAY NOT BE ABLE TO SELL IT AT ALL.
MANAGEMENT RISK
THIS MEANS THAT A FUND'S PORTFOLIO MANAGEMENT PRACTICES MIGHT NOT WORK TO
ACHIEVE THEIR DESIRED RESULT.
MARKET RISK
THIS MEANS THE RISK THAT SECURITIES PRICES IN A MARKET, A SECTOR OR AN
INDUSTRY WILL FLUCTUATE, AND THAT SUCH MOVEMENTS MIGHT REDUCE AN
INVESTMENT'S VALUE.
OPPORTUNITY RISK
THE RISK OF MISSING OUT ON AN INVESTMENT OPPORTUNITY BECAUSE THE ASSETS
NEEDED TO TAKE ADVANTAGE OF IT ARE COMMITTED TO LESS ADVANTAGEOUS
INVESTMENTS OR STRATEGIES.
POLITICAL RISK
THE RISK THAT MAY OCCUR WITH FOREIGN INVESTMENTS, AND MEANS THAT THE VALUE
OF AN INVESTMENT MAY BE ADVERSELY AFFECTED BY NATIONALIZATION, TAXATION,
WAR, GOVERNMENT INSTABILITY OR OTHER ECONOMIC OR POLITICAL ACTIONS OR
FACTORS.
PREPAYMENT RISK
THE RISK THAT UNANTICIPATED PREPAYMENTS MAY OCCUR, REDUCING THE VALUE OF A
MORTGAGE-BACKED SECURITY. THE FUND MUST THEN REINVEST THOSE ASSETS AT THE
CURRENT, MARKET RATE WHICH MAY BE LOWER.
TRANSACTION RISK
THE RISK THAT A FUND MAY BE DELAYED OR UNABLE TO SETTLE A TRANSACTION OR
THAT COMMISSIONS AND SETTLEMENT EXPENSES MAY BE HIGHER THAN USUAL.
<PAGE>
ABOUT CALVERT GROUP
CALVERT ASSET MANAGEMENT COMPANY, INC. (4550 MONTGOMERY AVENUE, SUITE 1000N,
BETHESDA, MD 20814) ("CAMCO") IS THE FUNDS' INVESTMENT ADVISOR AND PROVIDES
DAY-TO-DAY INVESTMENT MANAGEMENT SERVICES TO THE FUNDS. IT HAS BEEN MANAGING
MUTUAL FUNDS SINCE 1976. CAMCO IS THE INVESTMENT ADVISOR FOR OVER 25 MUTUAL
FUNDS. AS OF DECEMBER 31, 1998, CAMCO HAD $6 BILLION IN ASSETS UNDER
MANAGEMENT.
CAMCO USES A TEAM APPROACH TO ITS MANAGEMENT OF THE FUND. SINCE INCEPTION,
INVESTMENT SELECTIONS FOR THE FUND HAVE BEEN MADE BY RENO J. MARTINI AND
DANIEL K. HAYES. MR. MARTINI, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT
OFFICER OF CAMCO, OVERSEES THE INVESTMENT MANAGEMENT OF ALL CALVERT FUNDS
FOR CAMCO. MR. MARTINI HAS OVER 18 YEARS OF EXPERIENCE IN EVALUATING AND
PURCHASING MUNICIPAL SECURITIES AND HAS BEEN THE HEAD OF CAMCO'S ASSET
MANAGEMENT TEAM SINCE 1985. MR. HAYES SERVES AS HEAD OF PORTFOLIO RESEARCH
AND HAS BEEN A PORTFOLIO MANAGER FOR CAMCO SINCE 1984. HE IS A VICE
PRESIDENT OF CAMCO, AND IS AN OFFICER OF EACH OF THE OTHER INVESTMENT
COMPANIES IN THE CALVERT GROUP OF FUNDS, EXCEPT FOR CALVERT NEW WORLD FUND,
INC.
ADVISORY FEES
THE AGGREGATE ANNUAL ADVISORY FEE PAID TO CAMCO BY THE FUNDS FOR THE MOST
RECENT FISCAL YEAR AS A PERCENTAGE OF EACH FUND'S AVERAGE DAILY NET ASSETS
WAS 0.60%.
A WORD ABOUT THE YEAR 2000 (Y2K) AND OUR COMPUTER SYSTEMS
LIKE OTHER MUTUAL FUNDS, CAMCO AND ITS SERVICE PROVIDERS USE COMPUTER
SYSTEMS FOR ALL ASPECTS OF OUR BUSINESS -- PROCESSING SHAREHOLDER AND FUND
TRANSACTIONS, FUND ACCOUNTING, EXECUTING TRADES, AND PRICING SECURITIES JUST
TO NAME A FEW. MANY CURRENT SOFTWARE PROGRAMS CANNOT DISTINGUISH BETWEEN THE
YEAR 2000 AND THE YEAR 1900. THIS CAN CAUSE PROBLEMS WITH RETIREMENT PLAN
DISTRIBUTIONS, DIVIDEND PAYMENT SOFTWARE, TRANSACTION SOFTWARE, AND NUMEROUS
OTHER AREAS THAT COULD IMPACT THE FUNDS. CALVERT GROUP HAS BEEN REVIEWING
ALL OF ITS COMPUTER SYSTEMS FOR Y2K COMPLIANCE. ALTHOUGH, AT THIS TIME,
THERE CAN BE NO ASSURANCE THAT THERE WILL BE NO NEGATIVE IMPACT ON THE
FUNDS, THE ADVISOR, THE UNDERWRITER, TRANSFER AGENT AND CUSTODIAN HAVE
ADVISED THE FUNDS THAT THEY HAVE BEEN ACTIVELY WORKING ON ANY NECESSARY
CHANGES TO THEIR COMPUTER SYSTEMS TO PREPARE FOR Y2K AND EXPECT THAT THEIR
SYSTEMS, AND THOSE OF THEIR OUTSIDE SERVICE PROVIDERS, WILL BE ADAPTED IN
TIME FOR THAT EVENT. FOR MORE INFORMATION, PLEASE VISIT OUR WEBSITE AT
WWW.CALVERTGROUP.COM.
<PAGE>
HOW TO BUY SHARES
GETTING STARTED - BEFORE YOU OPEN AN ACCOUNT
YOU HAVE A FEW DECISIONS TO MAKE BEFORE YOU OPEN AN ACCOUNT IN A MUTUAL FUND.
FIRST, DECIDE WHICH FUND OR FUNDS BEST SUITS YOUR NEEDS AND YOUR GOALS.
SECOND, DECIDE WHAT KIND OF ACCOUNT YOU WANT TO OPEN. CALVERT OFFERS
INDIVIDUAL, JOINT, TRUST, UNIFORM GIFT/TRANSFER TO MINOR ACCOUNTS, AND
SEVERAL OTHER TYPES OF ACCOUNTS.
SALES CHARGES
EACH FUND HAS A FRONT-END SALES CHARGE. THIS TABLE SHOWS THE CHARGES BOTH AS
A PERCENTAGE OF OFFERING PRICE AND AS A PERCENTAGE OF THE AMOUNT YOU INVEST.
THE TERM "OFFERING PRICE" MEANS THE NET ASSET VALUE PLUS THE FRONT-END SALES
CHARGE. IF YOU INVEST MORE, THE SALES CHARGE WILL BE LOWER. FOR EXAMPLE, IF
YOU INVEST MORE THAN $50,000, OR IF YOUR CUMULATIVE PURCHASES OR THE VALUE
IN YOUR ACCOUNT IS MORE THAN $50,000,3 THEN THE SALES CHARGE IS REDUCED TO
2.25%.
YOUR INVESTMENT SALES CHARGE % % OF AMT.
IN SHARES OF OFFERING PRICE INVESTED
LESS THAN $50,000 2.75% 2.83%
$50,000 BUT LESS THAN $100,000 2.25% 2.30%
$100,000 BUT LESS THAN $250,000 1.75% 1.78%
$250,000 BUT LESS THAN $500,000 1.25% 1.27%
$500,000 BUT LESS THAN $1,000,000 1.00% 1.01%
$1,000,000 AND OVER NONE* NONE*
3 THIS IS CALLED "RIGHTS OF ACCUMULATION." THE SALES CHARGE IS CALCULATED BY
TAKING INTO ACCOUNT NOT ONLY THE DOLLAR AMOUNT OF THE NEW PURCHASE OF
SHARES, BUT ALSO THE HIGHER OF COST OR CURRENT VALUE OF SHARES YOU HAVE
PREVIOUSLY PURCHASED IN CALVERT GROUP FUNDS THAT IMPOSE SALES CHARGES. THIS
AUTOMATICALLY APPLIES TO YOUR ACCOUNT FOR EACH NEW PURCHASE OF SHARES.
* PURCHASES OF SHARES AT NET ASSET VALUE FOR ACCOUNTS WITH $1,000,000 OR
MORE ARE SUBJECT TO A ONE YEAR CONTINGENT DEFERRED SALES CHARGE ("CDSC") OF
1.00%. SEE THE "CALCULATION OF CONTINGENT DEFERRED SALES CHARGE AND WAIVER
OF SALES CHARGES."
THE FRONT-END SALES CHARGE MAY BE WAIVED FOR CERTAIN PURCHASES OR INVESTORS,
SUCH AS PARTICIPANTS IN CERTAIN GROUP RETIREMENT PLANS OR OTHER QUALIFIED
GROUPS AND CLIENTS OF REGISTERED INVESTMENT ADVISERS. FOR DETAILS ON THESE
AND OTHER PURCHASES THAT MAY QUALIFY FOR A REDUCED SALES CHARGE, SEE EXHIBIT
A.
<PAGE>
CALCULATION OF CONTINGENT DEFERRED SALES CHARGE AND WAIVER OF SALES CHARGES
THE CDSC WILL NOT BE CHARGED ON SHARES YOU RECEIVED AS DIVIDENDS OR FROM
CAPITAL GAINS DISTRIBUTIONS OR ON ANY CAPITAL APPRECIATION (GAIN IN THE
VALUE) OF SHARES THAT ARE SOLD.
SHARES THAT ARE NOT SUBJECT TO THE CDSC WILL BE REDEEMED FIRST, FOLLOWED BY
SHARES YOU HAVE HELD THE LONGEST. THE CDSC IS CALCULATED BY DETERMINING THE
SHARE VALUE AT BOTH THE TIME OF PURCHASE AND REDEMPTION AND THEN MULTIPLYING
WHICHEVER VALUE IS LESS BY THE PERCENTAGE THAT APPLIES AS SHOWN ABOVE. IF
YOU CHOOSE TO SELL ONLY PART OF YOUR SHARES, THE CAPITAL APPRECIATION FOR
THOSE SHARES ONLY IS INCLUDED IN THE CALCULATION, RATHER THAN THE CAPITAL
APPRECIATION FOR THE ENTIRE ACCOUNT.
DISTRIBUTION AND SERVICE FEES
THE FUNDS HAVE ADOPTED A PLAN UNDER RULE 12B-1 OF THE INVESTMENT COMPANY ACT
OF 1940 THAT ALLOWS EACH FUND TO PAY DISTRIBUTION FEES FOR THE SALE AND
DISTRIBUTION OF ITS SHARES. THE DISTRIBUTION PLAN ALSO PAYS SERVICE FEES TO
PERSONS (SUCH AS YOUR FINANCIAL PROFESSIONAL) FOR SERVICES PROVIDED TO
SHAREHOLDERS. BECAUSE THESE FEES ARE PAID OUT OF A FUND'S ASSETS ON AN
ONGOING BASIS, OVER TIME, THESE FEES WILL INCREASE THE COST OF YOUR
INVESTMENT AND MAY COST YOU MORE THAN PAYING OTHER TYPES OF SALES CHARGES.
PLEASE SEE EXHIBIT B FOR MORE SERVICE FEE INFORMATION.
THE MAXIMUM ANNUAL PERCENTAGE PAYABLE UNDER EACH FUND'S DISTRIBUTION PLAN
TOTALS 0.25%, BASED ON AVERAGE DAILY NET ASSETS OF EACH FUND.
NEXT STEP - ACCOUNT APPLICATION
COMPLETE AND SIGN AN APPLICATION FOR EACH NEW ACCOUNT. WHEN MULTIPLE CLASSES
OF SHARES ARE OFFERED, PLEASE SPECIFY WHICH CLASS YOU WISH TO PURCHASE. FOR
MORE INFORMATION, CONTACT YOUR BROKER OR OUR SHAREHOLDER SERVICES DEPARTMENT
AT 800-368-2748.
MINIMUM TO OPEN AN ACCOUNT MINIMUM ADDITIONAL
$2,000 INVESTMENTS -$250
PLEASE MAKE YOUR CHECK PAYABLE
TO THE FUND AND MAIL IT TO:
NEW ACCOUNTS SUBSEQUENT INVESTMENTS
(INCLUDE APPLICATION) (INCLUDE INVESTMENT SLIP)
CALVERT GROUP CALVERT GROUP
P.O. BOX 419544 P.O. BOX 419739
KANSAS, CITY MO KANSAS CITY, MO
64141-6544 64141-6739
<PAGE>
BY REGISTERED, CALVERT GROUP
CERTIFIED, OR C/O NFDS,
OVERNIGHT MAIL 330 WEST 9TH ST.
KANSAS CITY, MO 64105-1807
AT THE CALVERT OFFICE VISIT THE CALVERT OFFICE TO MAKE
INVESTMENTS BY CHECK. SEE THE BACK
COVER PAGE FOR THE ADDRESS.
IMPORTANT - HOW SHARES ARE PRICED
THE PRICE OF SHARES IS BASED ON EACH FUND'S NET ASSET VALUE ("NAV"). NAV IS
COMPUTED BY ADDING THE VALUE OF A FUND'S HOLDINGS PLUS OTHER ASSETS,
SUBTRACTING LIABILITIES, AND THEN DIVIDING THE RESULT BY THE NUMBER OF
SHARES OUTSTANDING. IF A FUND HAS MORE THAN ONE CLASS OF SHARES, THE NAV OF
EACH CLASS WILL BE DIFFERENT, DEPENDING ON THE NUMBER OF SHARES OUTSTANDING
FOR EACH CLASS.
PORTFOLIO SECURITIES AND OTHER ASSETS ARE VALUED BASED ON MARKET QUOTATIONS,
EXCEPT THAT SECURITIES MATURING WITHIN 60 DAYS ARE VALUED AT AMORTIZED COST.
IF MARKET QUOTATIONS ARE NOT READILY AVAILABLE, SECURITIES ARE VALUED BY A
METHOD THAT THE FUND'S BOARD OF TRUSTEES/DIRECTORS BELIEVES ACCURATELY
REFLECTS FAIR VALUE.
THE NAV IS CALCULATED AS OF THE CLOSE OF EACH BUSINESS DAY, WHICH COINCIDES
WITH THE CLOSING OF THE REGULAR SESSION OF THE NEW YORK STOCK EXCHANGE
("NYSE") (NORMALLY 4 P.M. ET). EACH FUND IS OPEN FOR BUSINESS EACH DAY THE
NYSE IS OPEN. PLEASE NOTE THAT THERE ARE SOME FEDERAL HOLIDAYS, HOWEVER,
SUCH AS COLUMBUS DAY AND VETERANS' DAY, WHEN THE NYSE IS OPEN AND THE FUND
IS OPEN BUT PURCHASES CANNOT BE MADE BECAUSE THE POST OFFICES AND BANKS ARE
CLOSED.
WHEN YOUR ACCOUNT WILL BE CREDITED
BEFORE YOU BUY SHARES, PLEASE READ THE FOLLOWING INFORMATION TO MAKE SURE
YOUR INVESTMENT IS CREDITED PROPERLY AND IN A TIMELY MANNER.
O YOUR PURCHASE WILL BE PROCESSED AT THE NAV NEXT CALCULATED AFTER
YOUR ORDER IS RECEIVED.
O ALL OF YOUR PURCHASES MUST BE MADE IN US DOLLARS.
O NO CASH WILL BE ACCEPTED.
O NO CREDIT CARD OR CREDIT LOAN CHECKS WILL BE ACCEPTED.
O EACH FUND RESERVES THE RIGHT TO SUSPEND THE OFFERING OF SHARES FOR
A PERIOD OF TIME OR TO REJECT ANY SPECIFIC PURCHASE ORDER.
O AS A CONVENIENCE, CHECK PURCHASES RECEIVED AT CALVERT'S OFFICE IN
BETHESDA, MARYLAND WILL BE SENT BY OVERNIGHT DELIVERY TO THE TRANSFER AGENT
AND WILL BE CREDITED THE NEXT BUSINESS DAY UPON RECEIPT.
<PAGE>
O ANY CHECK PURCHASE RECEIVED WITHOUT AN INVESTMENT SLIP MAY CAUSE
DELAYED CREDITING.
O IF YOUR CHECK DOES NOT CLEAR YOUR BANK, YOUR PURCHASE WILL BE
CANCELED AND YOU WILL BE CHARGED A $10 FEE PLUS ANY COSTS INCURRED.
O ALL PURCHASES WILL BE CONFIRMED AND CREDITED TO YOUR ACCOUNT IN
FULL AND FRACTIONAL SHARES (ROUNDED TO THE NEAREST 1/100TH OF A SHARE).
EARNING DIVIDENDS
IF THE TRANSFER AGENT RECEIVES YOUR WIRE PURCHASE BY 5 P.M. ET, YOUR ACCOUNT
WILL BEGIN EARNING DIVIDENDS ON THE NEXT BUSINESS DAY. EXCHANGES BEGIN
EARNING DIVIDENDS THE NEXT BUSINESS DAY AFTER THE EXCHANGE REQUEST IS
RECEIVED BY MAIL OR TELEPHONE. PURCHASES RECEIVED BY CHECK WILL BEGIN
EARNING DIVIDENDS THE NEXT BUSINESS DAY AFTER THEY ARE CREDITED TO THE
ACCOUNT.
OTHER CALVERT GROUP FEATURES
CALVERT INFORMATION NETWORK
FOR 24 HOUR PERFORMANCE AND ACCOUNT INFORMATION CALL 800-368-2745 OR VISIT
HTTP://WWW.CALVERTGROUP.COM
YOU CAN OBTAIN CURRENT PERFORMANCE AND PRICING INFORMATION, VERIFY ACCOUNT
BALANCES, AND AUTHORIZE CERTAIN TRANSACTIONS WITH THE CONVENIENCE OF ONE
PHONE CALL, 24 HOURS A DAY.
ACCOUNT SERVICES
BY SIGNING UP FOR SERVICES WHEN YOU OPEN YOUR ACCOUNT, YOU AVOID HAVING TO
OBTAIN A SIGNATURE GUARANTEE. IF YOU WISH TO ADD SERVICES AT A LATER DATE, A
SIGNATURE GUARANTEE TO VERIFY YOUR SIGNATURE MAY BE OBTAINED FROM ANY BANK,
TRUST COMPANY AND SAVINGS AND LOAN ASSOCIATION, CREDIT UNION, BROKER-DEALER
FIRM OR MEMBER OF A DOMESTIC STOCK EXCHANGE. A NOTARY PUBLIC CANNOT PROVIDE
A SIGNATURE GUARANTEE.
CALVERT MONEY CONTROLLER
CALVERT MONEY CONTROLLER ALLOWS YOU TO PURCHASE OR SELL SHARES BY ELECTRONIC
FUNDS TRANSFER WITHOUT THE TIME DELAY OF MAILING A CHECK OR THE ADDED
EXPENSE OF A WIRE. USE THIS SERVICE TO TRANSFER UP TO $300,000
ELECTRONICALLY. ALLOW ONE OR TWO BUSINESS DAYS AFTER YOU PLACE YOUR REQUEST
FOR THE TRANSFER TO TAKE PLACE. MONEY TRANSFERRED TO PURCHASE NEW SHARES
WILL BE SUBJECT TO A HOLD OF UP TO 10 BUSINESS DAYS. TRANSACTION REQUESTS
MUST BE RECEIVED BY 4 P.M. ET. YOU MAY REQUEST THIS SERVICE ON YOUR INITIAL
ACCOUNT APPLICATION. CALVERT MONEY CONTROLLER TRANSACTIONS RETURNED FOR
INSUFFICIENT FUNDS WILL INCUR A $25 CHARGE.
<PAGE>
TELEPHONE TRANSACTIONS
YOU MAY PURCHASE, REDEEM, OR EXCHANGE SHARES, WIRE FUNDS AND USE CALVERT
MONEY CONTROLLER BY TELEPHONE IF YOU HAVE PRE-AUTHORIZED SERVICE
INSTRUCTIONS. YOU RECEIVE TELEPHONE PRIVILEGES AUTOMATICALLY WHEN YOU OPEN
YOUR ACCOUNT UNLESS YOU ELECT OTHERWISE. FOR OUR MUTUAL PROTECTION, THE
FUND, THE SHAREHOLDER SERVICING AGENT AND THEIR AFFILIATES USE PRECAUTIONS
SUCH AS VERIFYING SHAREHOLDER IDENTITY AND RECORDING TELEPHONE CALLS TO
CONFIRM INSTRUCTIONS GIVEN BY PHONE. A CONFIRMATION STATEMENT IS SENT FOR
MOST TRANSACTIONS; PLEASE REVIEW THIS STATEMENT AND VERIFY THE ACCURACY OF
YOUR TRANSACTION IMMEDIATELY.
EXCHANGES
CALVERT GROUP OFFERS A WIDE VARIETY OF INVESTMENT OPTIONS THAT INCLUDES
COMMON STOCK FUNDS, TAX-EXEMPT AND CORPORATE BOND FUNDS, AND MONEY MARKET
FUNDS (CALL YOUR BROKER OR CALVERT REPRESENTATIVE FOR MORE INFORMATION). WE
MAKE IT EASY FOR YOU TO PURCHASE SHARES IN OTHER CALVERT FUNDS IF YOUR
INVESTMENT GOALS CHANGE. THE EXCHANGE PRIVILEGE OFFERS FLEXIBILITY BY
ALLOWING YOU TO EXCHANGE SHARES ON WHICH YOU HAVE ALREADY PAID A SALES
CHARGE FROM ONE MUTUAL FUND TO ANOTHER AT NO ADDITIONAL CHARGE.
COMPLETE AND SIGN AN ACCOUNT APPLICATION, TAKING CARE TO REGISTER YOUR NEW
ACCOUNT IN THE SAME NAME AND TAXPAYER IDENTIFICATION NUMBER AS YOUR EXISTING
CALVERT ACCOUNT(S). EXCHANGE INSTRUCTIONS MAY THEN BE GIVEN BY TELEPHONE IF
TELEPHONE REDEMPTIONS HAVE BEEN AUTHORIZED AND THE SHARES ARE NOT IN
CERTIFICATE FORM.
BEFORE YOU MAKE AN EXCHANGE, PLEASE NOTE THE FOLLOWING:
EACH EXCHANGE REPRESENTS THE SALE OF SHARES OF ONE FUND AND THE PURCHASE OF
SHARES OF ANOTHER. THEREFORE, YOU COULD REALIZE A TAXABLE GAIN OR LOSS.
YOU MAY EXCHANGE SHARES ACQUIRED BY REINVESTMENT OF DIVIDENDS OR
DISTRIBUTIONS INTO ANOTHER CALVERT FUND AT NO ADDITIONAL CHARGE.
SHARES MAY ONLY BE EXCHANGED FOR SHARES OF THE SAME CLASS OF ANOTHER CALVERT
FUND.
NO CDSC IS IMPOSED ON EXCHANGES OF SHARES SUBJECT TO A CDSC AT THE TIME OF
THE EXCHANGE. THE APPLICABLE CDSC IS IMPOSED AT THE TIME THE SHARES ACQUIRED
BY THE EXCHANGE ARE REDEEMED.
SHAREHOLDERS (AND THOSE MANAGING MULTIPLE ACCOUNTS) WHO MAKE TWO PURCHASES
AND TWO REDEMPTIONS OF SHARES OF THE SAME FUND DURING ANY SIX-MONTH PERIOD
WILL BE GIVEN WRITTEN NOTICE AND MAY BE PROHIBITED FROM PLACING ADDITIONAL
INVESTMENTS. THIS POLICY DOES NOT PROHIBIT A SHAREHOLDER FROM REDEEMING
SHARES OF ANY FUND, AND DOES NOT APPLY TO TRADES SOLELY BETWEEN MONEY MARKET
FUNDS.
<PAGE>
EACH FUND RESERVES THE RIGHT TO TERMINATE OR MODIFY THE EXCHANGE PRIVILEGE
WITH 60 DAYS' WRITTEN NOTICE.
COMBINED GENERAL MAILINGS (HOUSEHOLDING)
MULTIPLE ACCOUNTS WITH THE SAME SOCIAL SECURITY NUMBER WILL RECEIVE ONE
MAILING PER HOUSEHOLD OF INFORMATION SUCH AS PROSPECTUSES AND SEMI-ANNUAL
AND ANNUAL REPORTS. YOU MAY REQUEST FURTHER GROUPING OF ACCOUNTS TO RECEIVE
FEWER MAILINGS. SEPARATE STATEMENTS WILL BE GENERATED FOR EACH SEPARATE
ACCOUNT AND WILL BE MAILED IN ONE ENVELOPE FOR EACH COMBINATION ABOVE.
SPECIAL SERVICES AND CHARGES
EACH FUND PAYS FOR SHAREHOLDER SERVICES BUT NOT FOR SPECIAL SERVICES THAT
ARE REQUIRED BY A FEW SHAREHOLDERS, SUCH AS A REQUEST FOR A HISTORICAL
TRANSCRIPT OF AN ACCOUNT. YOU MAY BE REQUIRED TO PAY A FEE FOR THESE SPECIAL
SERVICES.
IF YOU ARE PURCHASING SHARES THROUGH A PROGRAM OF SERVICES OFFERED BY A
BROKER/DEALER OR FINANCIAL INSTITUTION, YOU SHOULD READ THE PROGRAM
MATERIALS TOGETHER WITH THIS PROSPECTUS. CERTAIN FEATURES MAY BE MODIFIED IN
THESE PROGRAMS. INVESTORS MAY BE CHARGED A FEE IF THEY EFFECT TRANSACTIONS
IN FUND SHARES THROUGH A BROKER OR AGENT.
MINIMUM ACCOUNT BALANCE
PLEASE MAINTAIN A BALANCE IN EACH OF YOUR ACCOUNTS OF AT LEAST $1,000. IF
THE BALANCE IN ANY OF YOUR ACCOUNTS FALLS BELOW THE MINIMUM DURING A MONTH,
YOUR ACCOUNT MAY BE CLOSED AND THE PROCEEDS MAILED TO THE ADDRESS OF RECORD.
YOU WILL RECEIVE NOTICE THAT YOUR ACCOUNT IS BELOW THE MINIMUM, AND WILL BE
CLOSED IF THE BALANCE IS NOT BROUGHT UP TO THE REQUIRED MINIMUM AMOUNT
WITHIN 30 DAYS.
DIVIDENDS, CAPITAL GAINS AND TAXES
THE FUND PAYS DIVIDENDS FROM ITS NET INVESTMENT INCOME MONTHLY. NET
INVESTMENT INCOME CONSISTS OF INTEREST INCOME, NET SHORT-TERM CAPITAL GAINS,
IF ANY, AND DIVIDENDS DECLARED AND PAID ON INVESTMENTS, LESS EXPENSES.
DISTRIBUTIONS OF NET SHORT-TERM CAPITAL GAINS (TREATED AS DIVIDENDS FOR TAX
PURPOSES) AND NET LONG-TERM CAPITAL GAINS, IF ANY, ARE NORMALLY PAID ONCE A
YEAR; HOWEVER, THE FUND DOES NOT ANTICIPATE MAKING ANY SUCH DISTRIBUTIONS
UNLESS AVAILABLE CAPITAL LOSS CARRYOVERS HAVE BEEN USED OR HAVE EXPIRED.
DIVIDEND PAYMENT OPTIONS
DIVIDENDS AND ANY DISTRIBUTIONS ARE AUTOMATICALLY REINVESTED IN THE SAME
FUND AT NAV (WITHOUT SALES CHARGE), UNLESS YOU ELECT TO HAVE AMOUNTS OF $10
OR MORE PAID IN CASH (BY CHECK OR BY CALVERT MONEY CONTROLLER). DIVIDENDS
AND DISTRIBUTIONS FROM ANY CALVERT GROUP FUND MAY BE AUTOMATICALLY INVESTED
IN AN
<PAGE>
IDENTICALLY REGISTERED ACCOUNT IN ANY OTHER CALVERT GROUP FUND AT NAV. IF
REINVESTED IN THE SAME ACCOUNT, NEW SHARES WILL BE PURCHASED AT NAV ON THE
REINVESTMENT DATE, WHICH IS GENERALLY 1 TO 3 DAYS PRIOR TO THE PAYMENT DATE.
YOU MUST NOTIFY THE FUND IN WRITING TO CHANGE YOUR PAYMENT OPTIONS. IF YOU
ELECT TO HAVE DIVIDENDS AND/OR DISTRIBUTIONS PAID IN CASH, AND THE US POSTAL
SERVICE RETURNS THE CHECK AS UNDELIVERABLE, IT, AS WELL AS FUTURE DIVIDENDS
AND DISTRIBUTIONS, WILL BE REINVESTED IN ADDITIONAL SHARES. NO DIVIDENDS
WILL ACCRUE ON AMOUNTS REPRESENTED BY UNCASHED DISTRIBUTION OR REDEMPTION
CHECKS.
BUYING A DIVIDEND
AT THE TIME OF PURCHASE, THE SHARE PRICE MAY REFLECT UNDISTRIBUTED INCOME,
CAPITAL GAINS OR UNREALIZED APPRECIATION OF SECURITIES. ANY INCOME OR
CAPITAL GAINS FROM THESE AMOUNTS WHICH ARE LATER DISTRIBUTED TO YOU ARE
FULLY TAXABLE. ON THE RECORD DATE FOR A DISTRIBUTION, SHARE VALUE IS REDUCED
BY THE AMOUNT OF THE DISTRIBUTION. IF YOU BUY SHARES JUST BEFORE THE RECORD
DATE ("BUYING A DIVIDEND") YOU WILL PAY THE FULL PRICE FOR THE SHARES AND
THEN RECEIVE A PORTION OF THE PRICE BACK AS A TAXABLE DISTRIBUTION.
FEDERAL TAXES
DIVIDENDS DERIVED FROM INTEREST ON MUNICIPAL OBLIGATIONS CONSTITUTE
EXEMPT-INTEREST DIVIDENDS, ON WHICH YOU ARE NOT SUBJECT TO FEDERAL INCOME
TAX. HOWEVER, DIVIDENDS WHICH ARE FROM TAXABLE INTEREST AND ANY
DISTRIBUTIONS OF SHORT TERM CAPITAL GAIN ARE TAXABLE TO YOU AS ORDINARY
INCOME. IF THE FUND MAKES ANY DISTRIBUTIONS OF LONG-TERM CAPITAL GAINS, THEN
THESE ARE TAXABLE TO YOU AS LONG-TERM CAPITAL GAINS, REGARDLESS OF HOW LONG
YOU HELD YOUR SHARES OF THE FUND. DIVIDENDS ATTRIBUTABLE TO INTEREST ON
CERTAIN PRIVATE ACTIVITY BONDS MUST BE INCLUDED IN FEDERAL ALTERNATIVE
MINIMUM TAX FOR INDIVIDUALS AND FOR CORPORATIONS. EACH FUND MAY INVEST IN
AND DERIVE INCOME FROM TAXABLE SHORT-TERM MONEY MARKET INVESTMENTS, FOR
LIQUIDITY PURPOSES OR PENDING INVESTMENT OF THE NEW ASSETS (20% FOR NATIONAL
AND CALIFORNIA, 35% FOR MARYLAND AND VIRGINIA). INTEREST EARNED FROM TAXABLE
INVESTMENTS WILL BE TAXABLE AS ORDINARY INCOME.
IF ANY TAXABLE INCOME OR GAINS ARE PAID, IN JANUARY, YOUR FUND WILL MAIL YOU
FORM 1099-DIV INDICATING THE FEDERAL TAX STATUS OF DIVIDENDS AND ANY CAPITAL
GAIN DISTRIBUTIONS PAID TO YOU DURING THE PAST YEAR. GENERALLY, DIVIDENDS
AND DISTRIBUTIONS ARE TAXABLE IN THE YEAR THEY ARE PAID. HOWEVER, ANY
DIVIDENDS AND DISTRIBUTIONS PAID IN JANUARY BUT DECLARED DURING THE PRIOR
THREE MONTHS ARE TAXABLE IN THE YEAR DECLARED. DIVIDENDS AND DISTRIBUTIONS
ARE TAXABLE TO YOU REGARDLESS OF WHETHER THEY ARE TAKEN IN CASH OR
REINVESTED.
YOU MAY REALIZE A CAPITAL GAIN OR LOSS WHEN YOU SELL OR EXCHANGE SHARES.
THIS CAPITAL GAIN OR LOSS WILL BE SHORT- OR LONG-TERM, DEPENDING ON HOW LONG
YOU HAVE OWNED THE SHARES WHICH WERE SOLD. IN JANUARY, YOUR FUND WILL MAIL
YOU FORM 1099-B INDICATING THE TOTAL AMOUNT OF ALL SALES, INCLUDING
EXCHANGES. YOU SHOULD KEEP YOUR ANNUAL YEAR-END ACCOUNT STATEMENTS TO
DETERMINE THE COST (BASIS) OF THE SHARES TO REPORT ON YOUR TAX RETURNS.
<PAGE>
OTHER TAX INFORMATION - STATE FUNDS ONLY
DIVIDENDS DERIVED FROM INTEREST ON SPECIFIC STATE OR LOCAL OBLIGATIONS ARE
EXEMPT FROM THAT STATE'S PERSONAL INCOME TAX, AS ARE DIVIDENDS FROM
OBLIGATIONS ISSUED BY CERTAIN TERRITORIES, SUCH AS PUERTO RICO. YOUR STATE
FUND WILL ADVISE YOU EACH JANUARY OF THE PERCENT OF DIVIDENDS QUALIFYING FOR
THIS EXEMPTION. YOU SHOULD CONSULT YOUR TAX ADVISOR WITH REGARD TO HOW
CERTAIN DIVIDENDS AFFECT YOU.
TAXPAYER IDENTIFICATION NUMBER
IF WE DO NOT HAVE YOUR CORRECT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION
NUMBER ("TIN") AND A SIGNED CERTIFIED APPLICATION OR FORM W-9, FEDERAL LAW
REQUIRES US TO WITHHOLD 31% OF YOUR REPORTABLE DIVIDENDS, AND POSSIBLY 31%
OF CERTAIN REDEMPTIONS. IN ADDITION, YOU MAY BE SUBJECT TO A FINE BY THE
INTERNAL REVENUE SERVICE. YOU WILL ALSO BE PROHIBITED FROM OPENING ANOTHER
ACCOUNT BY EXCHANGE. IF THIS TIN INFORMATION IS NOT RECEIVED WITHIN 60 DAYS
AFTER YOUR ACCOUNT IS ESTABLISHED, YOUR ACCOUNT MAY BE REDEEMED (CLOSED) AT
THE CURRENT NAV ON THE DATE OF REDEMPTION. CALVERT GROUP RESERVES THE RIGHT
TO REJECT ANY NEW ACCOUNT OR ANY PURCHASE ORDER FOR FAILURE TO SUPPLY A
CERTIFIED TIN.
HOW TO SELL SHARES
YOU MAY REDEEM ALL OR A PORTION OF YOUR SHARES ON ANY DAY EACH FUND IS OPEN
FOR BUSINESS, PROVIDED THE AMOUNT REQUESTED IS NOT ON HOLD. WHEN YOU
PURCHASE BY CHECK OR WITH CALVERT MONEY CONTROLLER (ELECTRONIC FUNDS
TRANSFER), THE PURCHASE WILL BE ON HOLD FOR UP TO 10 BUSINESS DAYS FROM THE
DATE OF RECEIPT. DURING THE HOLD PERIOD, REDEMPTION PROCEEDS WILL NOT BE
SENT UNTIL THE TRANSFER AGENT IS REASONABLY SATISFIED THAT THE PURCHASE
PAYMENT HAS BEEN COLLECTED.
YOUR SHARES WILL BE REDEEMED AT THE NAV NEXT CALCULATED AFTER YOUR
REDEMPTION REQUEST IS RECEIVED AND ACCEPTED (LESS ANY APPLICABLE CDSC). THE
PROCEEDS WILL NORMALLY BE SENT TO YOU ON THE NEXT BUSINESS DAY, BUT IF
MAKING IMMEDIATE PAYMENT COULD ADVERSELY AFFECT THE FUND, IT MAY TAKE UP TO
SEVEN (7) DAYS TO MAKE PAYMENT. CALVERT MONEY CONTROLLER REDEMPTIONS
GENERALLY WILL BE CREDITED TO YOUR BANK ACCOUNT BY THE SECOND BUSINESS DAY
AFTER YOUR PHONE CALL. WHEN THE NYSE IS CLOSED (OR WHEN TRADING IS
RESTRICTED) FOR ANY REASON OTHER THAN ITS CUSTOMARY WEEKEND OR HOLIDAY
CLOSINGS, OR UNDER ANY EMERGENCY CIRCUMSTANCES AS DETERMINED BY THE
SECURITIES AND EXCHANGE COMMISSION, REDEMPTIONS MAY BE SUSPENDED OR PAYMENT
DATES POSTPONED. PLEASE NOTE THAT THERE ARE SOME FEDERAL HOLIDAYS, HOWEVER,
SUCH AS COLUMBUS DAY AND VETERANS' DAY, WHEN THE NYSE IS OPEN AND THE FUND
IS OPEN BUT REDEMPTIONS CANNOT BE MADE BECAUSE THE POST OFFICES AND BANKS
ARE CLOSED.
THE FUND HAS THE RIGHT TO REDEEM SHARES IN ASSETS OTHER THAN CASH FOR
REDEMPTION AMOUNTS EXCEEDING, IN ANY 90-DAY PERIOD, $250,000 OR 1% OF THE
NET ASSET VALUE OF THE FUND, WHICHEVER IS LESS.
<PAGE>
FOLLOW THESE SUGGESTIONS TO ENSURE TIMELY PROCESSING OF YOUR REDEMPTION
REQUEST:
BY TELEPHONE - CALL 800.368.2745
YOU MAY REDEEM SHARES FROM YOUR ACCOUNT BY TELEPHONE AND HAVE YOUR MONEY
MAILED TO YOUR ADDRESS OF RECORD OR ELECTRONICALLY TRANSFERRED OR WIRED TO A
BANK YOU HAVE PREVIOUSLY AUTHORIZED. A CHARGE OF $5 MAY BE IMPOSED ON WIRE
TRANSFERS OF LESS THAN $1,000.
WRITTEN REQUESTS
CALVERT GROUP, P.O. BOX 419544, KANSAS CITY, MO 64141-6544
YOUR LETTER SHOULD INCLUDE YOUR ACCOUNT NUMBER AND FUND AND THE NUMBER OF
SHARES OR THE DOLLAR AMOUNT YOU ARE REDEEMING. PLEASE PROVIDE A DAYTIME
TELEPHONE NUMBER, IF POSSIBLE, FOR US TO CALL IF WE HAVE QUESTIONS. IF THE
MONEY IS BEING SENT TO A NEW BANK, PERSON, OR ADDRESS OTHER THAN THE ADDRESS
OF RECORD, YOUR LETTER MUST BE SIGNATURE GUARANTEED.
SYSTEMATIC CHECK REDEMPTIONS
IF YOU MAINTAIN AN ACCOUNT WITH A BALANCE OF $10,000 OR MORE, YOU MAY HAVE
UP TO TWO (2) REDEMPTION CHECKS FOR A FIXED AMOUNT SENT TO YOU ON THE 15TH
OF THE MONTH, SIMPLY BY SENDING A LETTER WITH ALL INFORMATION, INCLUDING
YOUR ACCOUNT NUMBER, AND THE DOLLAR AMOUNT ($100 MINIMUM). IF YOU WOULD LIKE
A REGULAR CHECK MAILED TO ANOTHER PERSON OR PLACE, YOUR LETTER MUST BE
SIGNATURE GUARANTEED. SHARES SUBJECT TO THE ONE-YEAR CDSC WHICH ARE REDEEMED
BY SYSTEMATIC CHECK REDEMPTION WILL BE CHARGED THE CDSC.
CORPORATIONS AND ASSOCIATIONS
YOUR LETTER OF INSTRUCTION AND CORPORATE RESOLUTION SHOULD BE SIGNED BY
PERSON(S) AUTHORIZED TO ACT ON THE ACCOUNT, ACCOMPANIED BY SIGNATURE
GUARANTEE(S).
TRUSTS
YOUR LETTER OF INSTRUCTION SHOULD BE SIGNED BY THE TRUSTEE(S) (AS
TRUSTEE(S)), WITH A SIGNATURE GUARANTEE. (IF THE TRUSTEE'S NAME IS NOT
REGISTERED ON YOUR ACCOUNT, PLEASE PROVIDE A COPY OF THE TRUST DOCUMENT,
CERTIFIED WITHIN THE LAST 60 DAYS.)
THROUGH YOUR DEALER
YOUR DEALER MUST RECEIVE YOUR REQUEST BEFORE THE CLOSE OF REGULAR TRADING ON
THE NYSE TO RECEIVE THAT DAY'S NAV. YOUR DEALER WILL BE RESPONSIBLE FOR
FURNISHING ALL NECESSARY DOCUMENTATION TO CALVERT GROUP AND MAY CHARGE YOU
FOR SERVICES PROVIDED.
<PAGE>
FINANCIAL HIGHLIGHTS
THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE FUNDS'
FINANCIAL PERFORMANCE FOR THE PAST 5 YEARS. INFORMATION REFLECTS FINANCIAL
RESULTS FOR A SINGLE SHARE, BY FUND. THE TOTAL RETURNS IN THE TABLE
REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED (OR LOST) ON AN
INVESTMENT IN A FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS), AND DOES NOT REFLECT ANY APPLICABLE FRONT- OR BACK-END SALES
CHARGE. THIS INFORMATION HAS BEEN AUDITED BY PRICEWATERHOUSECOOPERS LLP,
WHOSE REPORT, ALONG WITH A FUND'S FINANCIAL STATEMENTS, ARE INCLUDED IN THE
FUND'S ANNUAL REPORT, WHICH IS AVAILABLE UPON REQUEST.
NATIONAL
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
NET ASSET VALUE, BEGINNING $10.79 $10.56 $10.62
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .45 .50 .50
NET REALIZED AND UNREALIZED
GAIN (LOSS) .13 .23 (.06)
TOTAL FROM INVESTMENT OPERATIONS .58 .73 .44
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.46) (.50) (.50)
NET REALIZED GAINS (.09) -- --
TOTAL DISTRIBUTIONS (.55) (.50) (.50)
TOTAL INCREASE (DECREASE) IN
NET ASSET VALUE .03 .23 (.06)
NET ASSET VALUE, ENDING $10.82 $10.79 $10.56
TOTAL RETURN * 5.46% 7.11% 4.32%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.17% 4.71% 4.83%
TOTAL EXPENSES + .97% .97% 1.04%
NET EXPENSES .94% .94% 1.01%
PORTFOLIO TURNOVER 44% 29% 23%
NET ASSETS, ENDING
(IN THOUSANDS) $71,065 $48,933 $45,612
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 6,570 4,535 4,319
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
NET ASSET VALUE, BEGINNING $9.81 $10.42
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .51 .50
NET REALIZED AND UNREALIZED GAIN (LOSS) .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 * 13.64% (1.18%)
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.97% 4.88%
TOTAL EXPENSES + .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
<PAGE>
CALIFORNIA
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
NET ASSET VALUE, BEGINNING $10.63 $10.44 $10.51
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .45 .49 .48
NET REALIZED AND UNREALIZED
GAIN (LOSS) .12 .18 (.07)
TOTAL FROM INVESTMENT OPERATIONS .57 .67 .41
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.46) (.48) (.48)
TOTAL INCREASE (DECREASE) IN
NET ASSET VALUE .11 .19 (.07)
NET ASSET VALUE, ENDING $10.74 $10.63 $10.44
TOTAL RETURN * 5.51% 6.61% 4.04%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.23% 4.64% 4.59%
TOTAL EXPENSES + .90% .91% .97%
NET EXPENSES .88% .88% .94%
PORTFOLIO TURNOVER 12% 48% 25%
NET ASSETS, ENDING
(IN THOUSANDS) $36,963 $35,085 $35,693
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 3,442 3,300 3,419
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
NET ASSET VALUE, BEGINNING $9.81 $10.56
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .47 .48
NET REALIZED AND UNREALIZED GAIN (LOSS) .69 (.76)
TOTAL FROM INVESTMENT OPERATIONS 1.16 (.28)
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.46) (.47)
NET REALIZED GAINS -- --
TOTAL DISTRIBUTIONS (.46) (.47)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE .70 (.75)
NET ASSET VALUE, ENDING $10.51 $9.81
TOTAL RETURN * 12.07% (2.57%)
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.59% 4.67%
TOTAL EXPENSES + .91% --
NET EXPENSES .89% .76%
EXPENSES REIMBURSED -- .13%
PORTFOLIO TURNOVER 47% 68%
NET ASSETS, ENDING (IN THOUSANDS) $34,424 $34,111
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 3,276 3,476
<PAGE>
MARYLAND
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
NET ASSET VALUE, BEGINNING $5.18 $5.03 $5.06
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .21 .23 .23
NET REALIZED AND UNREALIZED
GAIN (LOSS) .04 .15 (.04)
TOTAL FROM INVESTMENT OPERATIONS .25 .38 .19
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.22) (.23) (.22)
TOTAL INCREASE (DECREASE) IN
NET ASSET VALUE .03 .15 (.03)
NET ASSET VALUE, ENDING $5.21 $5.18 $5.03
TOTAL RETURN * 4.88% 7.68% 3.96%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.13% 4.48% 4.59%
TOTAL EXPENSES + .97% .99% 1.00%
NET EXPENSES .93% .92% .94%
EXPENSES REIMBURSED -- -- .04%
PORTFOLIO TURNOVER 24% 13% 8%
NET ASSETS, ENDING
(IN THOUSANDS) $12,165 $12,437 $12,023
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 2,336 2,400 2,338
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
NET ASSET VALUE, BEGINNING $4.67 $5.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .24 .24
NET REALIZED AND UNREALIZED GAIN (LOSS) .39 (.39)
TOTAL FROM INVESTMENT OPERATIONS .63 (.15)
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.24) (.23)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE .39 (.38)
NET ASSET VALUE, ENDING $5.06 $4.67
TOTAL RETURN * 13.66% (2.94%)
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.87% 5.01%
TOTAL EXPENSES + .51% --
NET EXPENSES .48% .17%
EXPENSES REIMBURSED .43% .86%
PORTFOLIO TURNOVER 11% 77%
NET ASSETS, ENDING (IN THOUSANDS) $9,411 $7,429
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 1,860 1,589
<PAGE>
VIRGINIA
PERIODS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
NET ASSET VALUE, BEGINNING $5.21 $5.10 $5.13
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .21 .22 .22
NET REALIZED AND UNREALIZED
GAIN (LOSS) .04 .11 (.03)
TOTAL FROM INVESTMENT OPERATIONS .25 .33 .19
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.21) (.22) (.22)
TOTAL INCREASE (DECREASE) IN
NET ASSET VALUE .04 .11 (.03)
NET ASSET VALUE, ENDING $5.25 $5.21 $5.10
TOTAL RETURN* 4.88% 6.71% 3.82%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.03% 4.38% 4.35%
TOTAL EXPENSES + .97% .96% 1.00%
NET EXPENSES .93% .88% .92%
EXPENSES REIMBURSED -- -- .03%
PORTFOLIO TURNOVER 36% 8% 4%
NET ASSETS, ENDING
(IN THOUSANDS) $14,439 $13,542 $12,618
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 2,748 2,602 2,475
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
NET ASSET VALUE, BEGINNING $4.74 $5.06
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .24 .23
NET REALIZED AND UNREALIZED GAIN (LOSS) .39 (.32)
TOTAL FROM INVESTMENT OPERATIONS .63 (.09)
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.24) (.23)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE .39 (.32)
NET ASSET VALUE, ENDING $5.13 $4.74
TOTAL RETURN* 13.54% (2.04%)
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.86% 4.87%
TOTAL EXPENSES + .54% --
NET EXPENSES .51% .19%
EXPENSES REIMBURSED .38% .86%
PORTFOLIO TURNOVER 11% 65%%
NET ASSETS, ENDING (IN THOUSANDS) $7,295 $5,866
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 1,423 1,239
* TOTAL RETURN DOES NOT REFLECT DEDUCTION OF FRONT-END SALES CHARGE.
+ 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. TOTAL EXPENSES ARE PRESENTED NET OF EXPENSE
WAIVERS AND REIMBURSEMENTS.
<PAGE>
EXHIBIT A
REDUCED SALES CHARGES
YOU MAY QUALIFY FOR A REDUCED SALES CHARGE THROUGH SEVERAL PURCHASE PLANS
AVAILABLE. YOU MUST NOTIFY THE FUND AT THE TIME OF PURCHASE TO TAKE
ADVANTAGE OF THE REDUCED SALES CHARGE.
RIGHTS OF ACCUMULATION CAN BE APPLIED TO SEVERAL ACCOUNTS
SALES CHARGE BREAKPOINTS ARE AUTOMATICALLY CALCULATED FOR EACH ACCOUNT BASED
ON THE HIGHER OF COST OR CURRENT VALUE OF SHARES PREVIOUSLY PURCHASED. THIS
PRIVILEGE CAN BE APPLIED TO A FAMILY GROUP OR OTHER QUALIFIED GROUP* UPON
REQUEST. SHARES COULD THEN BE PURCHASED AT THE REDUCED SALES CHARGE WHICH
APPLIES TO THE ENTIRE GROUP; THAT IS, BASED ON THE HIGHER OF COST OR CURRENT
VALUE OF SHARES PREVIOUSLY PURCHASED AND CURRENTLY HELD BY ALL THE MEMBERS
OF THE GROUP.
FOOTNOTE:
* A "QUALIFIED GROUP" IS ONE WHICH:
HAS BEEN IN EXISTENCE FOR MORE THAN SIX MONTHS, AND
HAS A PURPOSE OTHER THAN ACQUIRING SHARES AT A DISCOUNT, AND
SATISFIES UNIFORM CRITERIA WHICH ENABLE CDI AND BROKERS OFFERING
SHARES TO REALIZE ECONOMIES OF SCALE IN DISTRIBUTING SUCH SHARES.
A QUALIFIED GROUP MUST HAVE MORE THAN 10 MEMBERS, MUST BE AVAILABLE
TO ARRANGE FOR GROUP MEETINGS BETWEEN REPRESENTATIVES OF CDI OR
BROKERS DISTRIBUTING SHARES, MUST AGREE TO INCLUDE SALES AND OTHER
MATERIALS RELATED TO THE FUNDS IN ITS PUBLICATIONS AND MAILINGS TO
MEMBERS AT REDUCED OR NO COST TO CDI OR BROKERS. A PENSION PLAN IS
NOT A QUALIFIED GROUP FOR RIGHTS OF ACCUMULATION.
LETTER OF INTENT
IF YOU (OR YOUR GROUP, AS DESCRIBED ABOVE) PLAN TO PURCHASE $50,000 OR MORE
OF CALVERT FUND SHARES OVER THE NEXT 13 MONTHS, YOUR SALES CHARGE MAY BE
REDUCED THROUGH A "LETTER OF INTENT." YOU PAY THE LOWER SALES CHARGE
APPLICABLE TO THE TOTAL AMOUNT YOU PLAN TO INVEST OVER THE 13-MONTH PERIOD,
EXCLUDING ANY MONEY MARKET PORTFOLIO PURCHASES. PART OF YOUR SHARES WILL BE
HELD IN ESCROW, SO THAT IF YOU DO NOT INVEST THE AMOUNT INDICATED, YOU WILL
HAVE TO PAY THE SALES CHARGE APPLICABLE TO THE SMALLER INVESTMENT ACTUALLY
MADE. FOR MORE INFORMATION, SEE THE SAI.
NEITHER THE FUNDS, NOR CALVERT DISTRIBUTORS, INC. ("CDI"), NOR ANY AFFILIATE
THEREOF WILL REIMBURSE A PLAN OR PARTICIPANT FOR ANY SALES CHARGES PAID
PRIOR TO RECEIPT OF SUCH WRITTEN COMMUNICATION AND CONFIRMATION BY CALVERT
GROUP. PLAN ADMINISTRATORS SHOULD SEND REQUESTS FOR THE WAIVER OF SALES
CHARGES BASED ON THE ABOVE CONDITIONS TO: CALVERT GROUP RETIREMENT PLANS,
4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND 20814.
<PAGE>
OTHER CIRCUMSTANCES
THERE IS NO SALES CHARGE ON SHARES OF ANY FUND OF THE CALVERT GROUP OF FUNDS
SOLD TO (I) CURRENT OR RETIRED DIRECTORS, TRUSTEES, OR OFFICERS OF THE
CALVERT GROUP OF FUNDS, EMPLOYEES OF CALVERT GROUP, LTD. AND ITS AFFILIATES,
OR THEIR FAMILY MEMBERS; (II) CSIF ADVISORY COUNCIL MEMBERS, DIRECTORS,
OFFICERS, AND EMPLOYEES OF ANY SUBADVISOR FOR THE CALVERT GROUP OF FUNDS,
EMPLOYEES OF BROKER/DEALERS DISTRIBUTING THE FUND'S SHARES AND IMMEDIATE
FAMILY MEMBERS OF THE COUNCIL, SUBADVISOR, OR BROKER/DEALER; (III) PURCHASES
MADE THROUGH A REGISTERED INVESTMENT ADVISOR; (IV) TRUST DEPARTMENTS OF
BANKS OR SAVINGS INSTITUTIONS FOR TRUST CLIENTS OF SUCH BANK OR INSTITUTION,
(V) PURCHASES THROUGH A BROKER MAINTAINING AN OMNIBUS ACCOUNT WITH THE FUND,
PROVIDED THE PURCHASES ARE MADE BY (A) INVESTMENT ADVISORS OR FINANCIAL
PLANNERS PLACING TRADES FOR THEIR OWN ACCOUNTS (OR THE ACCOUNTS OF THEIR
CLIENTS) AND WHO CHARGE A MANAGEMENT, CONSULTING, OR OTHER FEE FOR THEIR
SERVICES; OR (B) CLIENTS OF SUCH INVESTMENT ADVISORS OR FINANCIAL PLANNERS
WHO PLACE TRADES FOR THEIR OWN ACCOUNTS IF SUCH ACCOUNTS ARE LINKED TO THE
MASTER ACCOUNT OF SUCH INVESTMENT ADVISOR OR FINANCIAL PLANNER ON THE BOOKS
AND RECORDS OF THE BROKER OR AGENT; OR (C) RETIREMENT AND DEFERRED
COMPENSATION PLANS AND TRUSTS, INCLUDING, BUT NOT LIMITED TO, THOSE DEFINED
IN SECTION 401(A) OR SECTION 403(B) OF THE I.R.C., AND "RABBI TRUSTS."
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS FROM OTHER CALVERT GROUP FUNDS
YOU MAY PREARRANGE TO HAVE YOUR DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
FROM ANOTHER CALVERT GROUP FUND AUTOMATICALLY INVESTED IN ANOTHER ACCOUNT
WITH NO ADDITIONAL SALES CHARGE.
PURCHASES MADE AT NAV
EXCEPT FOR MONEY MARKET FUNDS, IF YOU MAKE A PURCHASE AT NAV, YOU MAY
EXCHANGE THAT AMOUNT TO ANOTHER CALVERT GROUP FUND AT NO ADDITIONAL SALES
CHARGE.
REINSTATEMENT PRIVILEGE
IF YOU REDEEM SHARES AND THEN WITHIN 30 DAYS DECIDE TO REINVEST IN THE SAME
FUND, YOU MAY DO SO AT THE NET ASSET VALUE NEXT COMPUTED AFTER THE
REINVESTMENT ORDER IS RECEIVED, WITHOUT A SALES CHARGE. YOU MAY USE THE
REINSTATEMENT PRIVILEGE ONLY ONCE. THE FUNDS RESERVE THE RIGHT TO MODIFY OR
ELIMINATE THIS PRIVILEGE.
<PAGE>
EXHIBIT B
SERVICE FEES AND ARRANGEMENTS WITH DEALERS
CALVERT DISTRIBUTORS, INC., THE FUND'S UNDERWRITER, PAYS DEALERS A
COMMISSION, OR REALLOWANCE (EXPRESSED AS A PERCENTAGE OF THE OFFERING PRICE)
WHEN YOU PURCHASE SHARES OF NON-MONEY MARKET PORTFOLIOS. CDI ALSO PAYS
DEALERS AN ONGOING SERVICE FEE WHILE YOU OWN SHARES OF A FUND (EXPRESSED AS
AN ANNUAL PERCENTAGE RATE OF AVERAGE DAILY NET ASSETS HELD IN CALVERT
ACCOUNTS BY THAT DEALER). THE TABLE BELOW SHOWS THE AMOUNT OF PAYMENT.
MAXIMUM COMMISSION/SERVICE FEES
NATIONAL 2.25%/0.15%
CALIFORNIA 2.25%/0.15%
MARYLAND 2.25%/0.15%
VIRGINIA 2.25%/0.15%
OCCASIONALLY, CDI MAY REALLOW TO DEALERS THE FULL FRONT-END SALES CHARGE.
CDI MAY ALSO PAY ADDITIONAL CONCESSIONS, INCLUDING NON-CASH PROMOTIONAL
INCENTIVES, SUCH AS MERCHANDISE OR TRIPS, TO BROKERS EMPLOYING REGISTERED
REPRESENTATIVES WHO HAVE SOLD OR ARE EXPECTED TO SELL A MINIMUM DOLLAR
AMOUNT OF SHARES OF THE FUNDS AND/OR SHARES OF OTHER FUNDS UNDERWRITTEN BY
CDI. CDI MAY MAKE EXPENSE REIMBURSEMENTS FOR SPECIAL TRAINING OF A BROKER'S
REGISTERED REPRESENTATIVES, ADVERTISING OR EQUIPMENT, OR TO DEFRAY THE
EXPENSES OF SALES CONTESTS. CAMCO, CDI, OR THEIR AFFILIATES MAY PAY CERTAIN
BROKER-DEALERS AND/OR OTHER PERSONS, FOR THE SALE AND DISTRIBUTION OF THE
SECURITIES OR FOR SERVICES TO THE FUND. PAYMENTS MAY INCLUDE ADDITIONAL
COMPENSATION BASED ON ASSETS HELD THROUGH THAT FIRM BEYOND THE REGULARLY
SCHEDULED RATES, AND FINDER'S FEES. CDI PAYS DEALERS A FINDER'S FEE ON
SHARES PURCHASED AT NAV IN ACCOUNTS WITH $1 MILLION OR MORE. THE FINDER'S
FEE IS 1% OF THE NAV PURCHASE AMOUNT ON THE FIRST $2 MILLION, .80% ON $2 TO
$3 MILLION, .50% ON $3 TO $50 MILLION, .25% ON $50 TO $100 MILLION, AND .15%
OVER $100 MILLION. IF A FINDER'S FEE IS PAID, THEN THE SERVICE FEE BEGINS IN
THE 13TH MONTH AFTER PURCHASE. ALL PAYMENTS WILL BE IN COMPLIANCE WITH THE
RULES OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
<PAGE>
TO OPEN AN ACCOUNT:
800-368-2748
PERFORMANCE AND PRICES:
CALVERT INFORMATION NETWORK
24 HOURS, 7 DAYS A WEEK
800-368-2745
SERVICE FOR EXISTING ACCOUNTS:
SHAREHOLDERS 800-368-2745
BROKERS 800-368-2746
TDD FOR HEARING-IMPAIRED:
800-541-1524
BRANCH OFFICE:
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
REGISTERED, CERTIFIED OR
OVERNIGHT MAIL:
CALVERT GROUP
C/O NFDS
330 WEST 9TH STREET
KANSAS CITY, MO 64105
CALVERT GROUP WEB-SITE
ADDRESS: HTTP://WWW.CALVERTGROUP.COM
PRINCIPAL UNDERWRITER
CALVERT DISTRIBUTORS, INC.
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
<PAGE>
OUTSIDE BACK COVER PAGE
FOR INVESTORS WHO WANT MORE INFORMATION ABOUT THE FUNDS, THE FOLLOWING
DOCUMENTS ARE AVAILABLE FREE UPON REQUEST:
ANNUAL/SEMI-ANNUAL REPORTS: ADDITIONAL INFORMATION ABOUT EACH FUND'S
INVESTMENTS IS AVAILABLE IN THE FUND'S ANNUAL AND SEMI-ANNUAL REPORTS TO
SHAREHOLDERS. IN THE FUND'S ANNUAL REPORT, YOU WILL FIND A DISCUSSION OF THE
MARKET CONDITIONS AND INVESTMENT STRATEGIES THAT SIGNIFICANTLY AFFECTED THE
FUND'S PERFORMANCE DURING ITS LAST FISCAL YEAR.
STATEMENT OF ADDITIONAL INFORMATION (SAI): THE SAI FOR EACH FUND PROVIDES
MORE DETAILED INFORMATION ABOUT THE FUND AND IS INCORPORATED INTO THIS
PROSPECTUS BY REFERENCE.
YOU CAN GET FREE COPIES OF REPORTS AND THE SAI, REQUEST OTHER INFORMATION
AND DISCUSS YOUR QUESTIONS ABOUT THE FUNDS BY CONTACTING YOUR BROKER, OR THE
FUNDS AT:
CALVERT GROUP
4550 MONTGOMERY AVE, SUITE 1000N
BETHESDA, MD. 20814
TELEPHONE: 1-800-368-2745
CALVERT GROUP WEB-SITE
ADDRESS: HTTP://WWW.CALVERTGROUP.COM
YOU CAN REVIEW THE FUNDS' REPORTS AND SAIS AT THE PUBLIC REFERENCE ROOM OF
THE SECURITIES AND EXCHANGE COMMISSION. YOU CAN GET TEXT-ONLY COPIES:
FOR A FEE, BY WRITING TO OR CALLING THE PUBLIC REFERENCE ROOM OF THE
COMMISSION, WASHINGTON, D.C. 20549-6009, TELEPHONE: 1-800-SEC-0330.
FREE FROM THE COMMISSION'S INTERNET WEBSITE AT HTTP://WWW.SEC.GOV.
INVESTMENT COMPANY ACT FILE NO.: 811-6525 (CALVERT MUNICIPAL FUND, INC.)
STATEMENT OF ADDITIONAL INFORMATION - APRIL 30, 1999
CALVERT MUNICIPAL FUND, INC.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND
4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND 20814
TABLE OF CONTENTS
INVESTMENT POLICIES AND RISKS 2
INVESTMENT RESTRICTIONS 7
PURCHASES AND REDEMPTIONS OF SHARES 8
DIVIDENDS AND DISTRIBUTIONS 9
TAX MATTERS 9
VALUATION OF SHARES 10
CALCULATION OF YIELD AND TOTAL RETURN 10
ADVERTISING 12
DIRECTORS AND OFFICERS 12
INVESTMENT ADVISOR 15
ADMINISTRATIVE SERVICES 16
METHOD OF DISTRIBUTION 16
TRANSFER AND SHAREHOLDER SERVICING AGENT 17
INDEPENDENT ACCOUNTANTS AND CUSTODIANS 17
PORTFOLIO TRANSACTIONS 18
GENERAL INFORMATION 18
CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES 19
APPENDIX 19
NEW ACCOUNT INFORMATION
(800) 368-2748
(301) 951-4820
SHAREHOLDER SERVICES
(800) 368-2745
BROKER SERVICES
(800) 368-2746
(301) 951-4850
TDD FOR THE HEARING- IMPAIRED
(800) 541-1524
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
INVESTORS SHOULD READ THE STATEMENT OF ADDITIONAL INFORMATION IN CONJUNCTION
WITH THE PROSPECTUS OF CALVERT MUNICIPAL FUND (THE "FUND"), DATED APRIL 30,
1999, WHICH MAY BE OBTAINED FREE OF CHARGE BY WRITING OR CALLING THE FUND.
THE AUDITED FINANCIAL STATEMENTS INCLUDED IN THE ANNUAL REPORT TO
SHAREHOLDERS DATED DECEMBER 31, 1998, ARE EXPRESSLY INCORPORATED BY
REFERENCE AND MADE A PART OF THIS STATEMENT OF ADDITIONAL INFORMATION.
COPIES OF THIS REPORT MAY BE OBTAINED FREE OF CHARGE BY WRITING OR CALLING
THE FUND.
INVESTMENT POLICIES AND RISKS
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND ("NATIONAL") INVESTS
PRIMARILY IN A NONDIVERSIFIED PORTFOLIO OF MUNICIPAL OBLIGATIONS, INCLUDING
SOME WITH INTEREST THAT MAY BE SUBJECT TO ALTERNATIVE MINIMUM TAX. THE
AVERAGE DOLLAR-WEIGHTED MATURITY OF INVESTMENTS IS BETWEEN 3 AND 10 YEARS.
FIXED RATE INVESTMENTS NORMALLY HAVE REMAINING MATURITIES OF 12 YEARS OR
LESS; VARIABLE RATE INVESTMENTS MAY HAVE LONGER MATURITIES. A COMPLETE
EXPLANATION OF MUNICIPAL OBLIGATIONS AND MUNICIPAL BOND AND NOTE RATINGS
APPEARS IN THE APPENDIX.
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND ("CALIFORNIA")
INVESTS PRIMARILY IN A NONDIVERSIFIED PORTFOLIO OF MUNICIPAL OBLIGATIONS,
INCLUDING SOME WITH INTEREST THAT MAY BE SUBJECT TO ALTERNATIVE MINIMUM TAX.
FIXED RATE INVESTMENTS NORMALLY HAVE REMAINING MATURITIES OF 12 YEARS OR
LESS; VARIABLE RATE INVESTMENTS MAY HAVE LONGER MATURITIES. A COMPLETE
EXPLANATION OF MUNICIPAL OBLIGATIONS AND MUNICIPAL BOND AND NOTE RATINGS
APPEARS IN THE APPENDIX.
CALVERT MARYLAND AND VIRGINIA MUNICIPAL INTERMEDIATE FUNDS
("MARYLAND" AND/OR "VIRGINIA") INVEST PRIMARILY IN A NONDIVERSIFIED
PORTFOLIO OF MUNICIPAL OBLIGATIONS, INCLUDING SOME WITH INTEREST THAT MAY BE
SUBJECT TO ALTERNATIVE MINIMUM TAX. A COMPLETE EXPLANATION OF MUNICIPAL
OBLIGATIONS AND MUNICIPAL BOND AND NOTE RATINGS APPEARS IN THE APPENDIX.
UNDER NORMAL MARKET CONDITIONS, EACH FUND WILL ATTEMPT TO INVEST AT
LEAST 65% OF ITS TOTAL ASSETS IN MUNICIPAL OBLIGATIONS WITH INTEREST THAT IS
EXEMPT FROM FEDERAL AND, FOR CALIFORNIA, MARYLAND, AND VIRGINIA, SPECIFIC
STATE INCOME TAX, INCLUDING THOSE ISSUED BY OR ON BEHALF OF THE STATE FOR
WHICH THE FUND IS NAMED AND THE STATE'S POLITICAL SUBDIVISIONS. CALIFORNIA,
MARYLAND, AND VIRGINIA WILL ALSO ATTEMPT TO INVEST THE REMAINING 35% OF
TOTAL ASSETS IN THESE OBLIGATIONS, BUT MAY INVEST ASSETS IN MUNICIPAL
OBLIGATIONS OF OTHER STATES, TERRITORIES AND POSSESSIONS OF THE UNITED
STATES, THE DISTRICT OF COLUMBIA, AND THEIR RESPECTIVE AUTHORITIES,
AGENCIES, INSTRUMENTALITIES AND POLITICAL SUBDIVISIONS. DIVIDENDS YOU
RECEIVE FROM THE FUND THAT ARE DERIVED FROM INTEREST ON TAX-EXEMPT
OBLIGATIONS OF OTHER STATES WILL BE EXEMPT FROM FEDERAL INCOME TAX, BUT WILL
BE SUBJECT TO YOUR STATE'S INCOME TAXES. FOR NATIONAL, TO THE EXTENT THE
OBLIGATIONS ARE ISSUED BY YOUR STATE OF RESIDENCE, YOU MAY ALSO BE EXEMPT
FROM CERTAIN STATE AND LOCAL INCOME TAXES.
VARIABLE RATE DEMAND NOTES
THE BOARD OF DIRECTORS OF THE FUND HAS APPROVED INVESTMENTS IN
FLOATING AND VARIABLE RATE DEMAND NOTES UPON THE FOLLOWING CONDITIONS:
NATIONAL, CALIFORNIA, MARYLAND, AND VIRGINIA ("EACH PORTFOLIO" OR "THE
PORTFOLIOS") EACH HAVE THE RIGHT OF DEMAND, UPON NOTICE NOT TO EXCEED THIRTY
DAYS, AGAINST THE ISSUER TO RECEIVE PAYMENT; THE ISSUER WILL BE ABLE TO MAKE
PAYMENT UPON SUCH DEMAND, EITHER FROM ITS OWN RESOURCES OR THROUGH AN
UNQUALIFIED COMMITMENT FROM A THIRD PARTY; AND THE RATE OF INTEREST PAYABLE
IS CALCULATED TO ENSURE THAT THE MARKET VALUE OF SUCH NOTES WILL APPROXIMATE
PAR VALUE ON THE ADJUSTMENT DATES. THE REMAINING MATURITY OF SUCH DEMAND
NOTES IS DEEMED THE PERIOD REMAINING UNTIL SUCH TIME AS THE PORTFOLIOS HAVE
THE RIGHT TO DISPOSE OF THE NOTES AT A PRICE WHICH APPROXIMATES PAR AND
MARKET VALUE. NOTES WITH A RIGHT OF DEMAND EXCEEDING SEVEN DAYS ARE
CONSIDERED ILLIQUID AND ARE SUBJECT TO PURCHASE RESTRICTIONS.
MUNICIPAL LEASES
EACH PORTFOLIO MAY INVEST IN MUNICIPAL LEASES, OR STRUCTURED
INSTRUMENTS WHERE THE UNDERLYING SECURITY IS A MUNICIPAL LEASE. A MUNICIPAL
LEASE IS AN OBLIGATION OF A GOVERNMENT OR GOVERNMENTAL AUTHORITY, NOT
SUBJECT TO VOTER APPROVAL, USED TO FINANCE CAPITAL PROJECTS OR EQUIPMENT
ACQUISITIONS AND PAYABLE THROUGH PERIODIC RENTAL PAYMENTS. EACH PORTFOLIO
MAY PURCHASE UNRATED LEASES. THE FUND'S ADVISOR, UNDER THE SUPERVISION OF
THE BOARD OF TRUSTEES/DIRECTORS, IS RESPONSIBLE FOR DETERMINING THE CREDIT
QUALITY OF SUCH LEASES ON AN ONGOING BASIS, INCLUDING AN ASSESSMENT OF THE
LIKELIHOOD THAT THE LEASE WILL NOT BE CANCELED. CERTAIN MUNICIPAL LEASES MAY
BE CONSIDERED ILLIQUID AND SUBJECT TO EACH PORTFOLIO'S LIMIT ON ILLIQUID
SECURITIES. THE BOARD OF TRUSTEES/DIRECTORS HAS DIRECTED THE ADVISOR TO
TREAT A MUNICIPAL LEASE AS A LIQUID SECURITY IF IT SATISFIES THE FOLLOWING
CONDITIONS: (A) SUCH TREATMENT MUST BE CONSISTENT WITH EACH PORTFOLIO'S
INVESTMENT RESTRICTIONS; (B) THE ADVISOR SHOULD BE ABLE TO CONCLUDE THAT THE
OBLIGATION WILL MAINTAIN ITS LIQUIDITY THROUGHOUT THE TIME IT IS HELD BY A
PORTFOLIO, BASED ON THE FOLLOWING FACTORS: (1) WHETHER THE LEASE MAY BE
TERMINATED BY THE LESSEE; (2) THE POTENTIAL RECOVERY, IF ANY, FROM A SALE OF
THE LEASED PROPERTY UPON TERMINATION OF THE LEASE; (3) THE LESSEE'S GENERAL
CREDIT STRENGTH (E.G., ITS DEBT, ADMINISTRATIVE, ECONOMIC AND FINANCIAL
CHARACTERISTICS AND PROSPECTS); (4) THE LIKELIHOOD THAT THE LESSEE WILL
DISCONTINUE APPROPRIATING FUNDING FOR THE LEASED PROPERTY BECAUSE THE
PROPERTY IS NO LONGER DEEMED ESSENTIAL TO ITS OPERATIONS (E.G., THE
POTENTIAL FOR AN "EVENT OF NONAPPROPRIATION"), AND (5) ANY CREDIT
ENHANCEMENT OR LEGAL RECOURSE PROVIDED UPON AN EVENT OF NONAPPROPRIATION OR
OTHER TERMINATION OF THE LEASE; AND (C) THE ADVISOR SHOULD DETERMINE WHETHER
THE OBLIGATION CAN BE DISPOSED OF WITHIN SEVEN DAYS IN THE ORDINARY COURSE
OF BUSINESS AT APPROXIMATELY THE AMOUNT AT WHICH A PORTFOLIO HAS VALUED IT
FOR PURPOSES OF CALCULATING NET ASSET VALUE, TAKING INTO ACCOUNT THE
FOLLOWING FACTORS: (1) THE FREQUENCY OF TRADES AND QUOTES; (2) THE
VOLATILITY OF QUOTATIONS AND TRADE PRICES; (3) THE NUMBER OF DEALERS WILLING
TO PURCHASE OR SELL THE SECURITY AND THE NUMBER OF POTENTIAL PURCHASERS; (4)
DEALER UNDERTAKINGS TO MAKE A MARKET IN THE SECURITY; (5) THE NATURE OF THE
SECURITY AND THE NATURE OF THE MARKETPLACE TRADES (E.G., THE TIME NEEDED TO
DISPOSE OF THE SECURITY, THE METHOD OF SOLICITING OFFERS, AND THE MECHANICS
OF THE TRANSFER); (6) THE RATING OF THE SECURITY AND THE FINANCIAL CONDITION
AND PROSPECTS OF THE ISSUER; AND (7) OTHER FACTORS RELEVANT TO THE
PORTFOLIO'S ABILITY TO DISPOSE OF THE SECURITY.
TEMPORARY INVESTMENTS
SHORT-TERM MONEY MARKET TYPE INVESTMENTS CONSIST OF: OBLIGATIONS OF
THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES; CERTIFICATES OF
DEPOSIT OF BANKS WITH ASSETS OF ONE BILLION DOLLARS OR MORE; COMMERCIAL
PAPER OR OTHER CORPORATE NOTES OF INVESTMENT-GRADE QUALITY; AND ANY OF SUCH
ITEMS SUBJECT TO SHORT-TERM REPURCHASE AGREEMENTS.
WHEN-ISSUED PURCHASES
NEW ISSUES OF MUNICIPAL OBLIGATIONS ARE OFFERED ON A WHEN-ISSUED
BASIS; THAT IS, DELIVERY AND PAYMENT FOR THE SECURITIES NORMALLY TAKE PLACE
15 TO 45 DAYS AFTER THE DATE OF THE TRANSACTION. THE PAYMENT OBLIGATION AND
THE YIELD THAT WILL BE RECEIVED ON THE SECURITIES ARE EACH FIXED AT THE TIME
THE BUYER ENTERS INTO THE COMMITMENT. THE PORTFOLIOS WILL ONLY MAKE
COMMITMENTS TO PURCHASE THESE SECURITIES WITH THE INTENTION OF ACTUALLY
ACQUIRING THEM, BUT MAY SELL THESE SECURITIES BEFORE THE SETTLEMENT DATE IF
IT IS DEEMED ADVISABLE AS A MATTER OF INVESTMENT STRATEGY.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS AND THE SECURITIES HELD
IN A PORTFOLIO ARE SUBJECT TO CHANGES IN MARKET VALUE BASED UPON THE
PUBLIC'S PERCEPTION OF THE CREDITWORTHINESS OF THE ISSUER AND CHANGES IN THE
LEVEL OF INTEREST RATES (WHICH WILL GENERALLY RESULT IN BOTH CHANGING IN
VALUE IN THE SAME WAY, I.E., BOTH EXPERIENCING APPRECIATION WHEN INTEREST
RATES DECLINE AND DEPRECIATION WHEN INTEREST RATES RISE). THEREFORE, IF IN
ORDER TO ACHIEVE HIGHER INTEREST INCOME, A PORTFOLIO REMAINS SUBSTANTIALLY
FULLY INVESTED AT THE SAME TIME THAT IT HAS PURCHASED SECURITIES ON A
WHEN-ISSUED BASIS, THERE WILL BE A GREATER POSSIBILITY THAT THE MARKET VALUE
OF THE PORTFOLIO'S ASSETS MAY VARY.
WHEN THE TIME COMES TO PAY FOR WHEN-ISSUED SECURITIES, A PORTFOLIO
WILL MEET ITS OBLIGATIONS FROM THEN AVAILABLE CASH FLOW, SALE OF SECURITIES
OR, ALTHOUGH IT WOULD NOT NORMALLY EXPECT TO DO SO, FROM SALE OF THE
WHEN-ISSUED SECURITIES THEMSELVES (WHICH MAY HAVE A MARKET VALUE GREATER OR
LESS THAN THE PORTFOLIO'S PAYMENT OBLIGATION). SALE OF SECURITIES TO MEET
SUCH OBLIGATIONS CARRIES WITH IT A GREATER POTENTIAL FOR THE REALIZATION OF
CAPITAL LOSSES AND CAPITAL GAINS WHICH ARE NOT EXEMPT FROM FEDERAL INCOME
TAX. WHEN-ISSUED SECURITIES DO NOT EARN INCOME UNTIL THEY HAVE IN FACT BEEN
ISSUED.
WHEN A PORTFOLIO PURCHASES A WHEN-ISSUED SECURITY, IT WILL MAINTAIN
AN AMOUNT OF CASH, CASH EQUIVALENTS (FOR EXAMPLE, COMMERCIAL PAPER AND DAILY
TENDER ADJUSTABLE NOTES) OR SHORT-TERM HIGH-GRADE FIXED INCOME SECURITIES IN
A SEGREGATED ACCOUNT WITH THE PORTFOLIO'S CUSTODIAN. THE SEGREGATED ACCOUNT
EQUALS THE MARKET VALUE OF THE WHEN-ISSUED PURCHASE, THEREBY ENSURING THE
TRANSACTION IS UNLEVERAGED.
DERIVATIVES
THE PORTFOLIOS CAN USE VARIOUS TECHNIQUES TO INCREASE OR DECREASE
EXPOSURE TO CHANGING SECURITY PRICES, INTEREST RATES, OR OTHER FACTORS THAT
AFFECT SECURITY VALUES. THESE TECHNIQUES MAY INVOLVE DERIVATIVE TRANSACTIONS
SUCH AS BUYING AND SELLING OPTIONS AND FUTURES CONTRACTS AND LEVERAGED
NOTES, ENTERING INTO SWAP AGREEMENTS, AND PURCHASING INDEXED SECURITIES. THE
PORTFOLIOS CAN USE THESE PRACTICES EITHER AS SUBSTITUTION OR AS PROTECTION
AGAINST AN ADVERSE MOVE IN THE PORTFOLIOS TO ADJUST THE RISK AND RETURN
CHARACTERISTICS OF THE PORTFOLIOS. IF THE ADVISOR JUDGES MARKET CONDITIONS
INCORRECTLY OR EMPLOYS A STRATEGY THAT DOES NOT CORRELATE WELL WITH A
PORTFOLIO'S INVESTMENTS, OR IF THE COUNTERPARTY TO THE TRANSACTION DOES NOT
PERFORM AS PROMISED, THESE TECHNIQUES COULD RESULT IN A LOSS. THESE
TECHNIQUES MAY INCREASE THE VOLATILITY OF A PORTFOLIO AND MAY INVOLVE A
SMALL INVESTMENT OF CASH RELATIVE TO THE MAGNITUDE OF THE RISK ASSUMED.
DERIVATIVES ARE OFTEN ILLIQUID.
TRANSACTIONS IN FUTURES CONTRACTS
EACH PORTFOLIO MAY ENGAGE IN THE PURCHASE AND SALE OF FUTURES
CONTRACTS ON AN INDEX OF MUNICIPAL BONDS OR ON U.S. TREASURY SECURITIES, OR
OPTIONS ON SUCH FUTURES CONTRACTS, FOR HEDGING AND SUBSTITUTION PURPOSES
ONLY. EACH PORTFOLIO MAY SELL SUCH FUTURES CONTRACTS IN ANTICIPATION OF A
DECLINE IN THE COST OF MUNICIPAL BONDS IT HOLDS OR MAY PURCHASE SUCH FUTURES
CONTRACTS IN ANTICIPATION OF AN INCREASE IN THE VALUE OF MUNICIPAL BONDS THE
PORTFOLIO INTENDS TO ACQUIRE. EACH PORTFOLIO ALSO IS AUTHORIZED TO PURCHASE
AND SELL OTHER FINANCIAL FUTURES CONTRACTS WHICH IN THE OPINION OF THE
INVESTMENT ADVISOR PROVIDE AN APPROPRIATE HEDGE FOR SOME OR ALL OF ITS
SECURITIES.
BECAUSE OF LOW INITIAL MARGIN DEPOSITS MADE UPON THE OPENING OF A
FUTURES POSITION, FUTURES TRANSACTIONS INVOLVE SUBSTANTIAL LEVERAGE. AS A
RESULT, RELATIVELY SMALL MOVEMENTS IN THE PRICE OF THE FUTURES CONTRACT CAN
RESULT IN SUBSTANTIAL UNREALIZED GAINS OR LOSSES. BECAUSE EACH PORTFOLIO
WILL ENGAGE IN THE PURCHASE AND SALE OF FINANCIAL FUTURES CONTRACTS SOLELY
FOR HEDGING AND SUBSTITUTION PURPOSES, HOWEVER, ANY LOSSES INCURRED IN
CONNECTION THEREWITH SHOULD, IF THE STRATEGY IS SUCCESSFUL, BE OFFSET IN
WHOLE OR IN PART BY INCREASES IN THE VALUE OF SECURITIES HELD BY A PORTFOLIO
OR DECREASES IN THE PRICE OF SECURITIES A PORTFOLIO INTENDS TO ACQUIRE.
MUNICIPAL BOND INDEX FUTURES CONTRACTS COMMENCED TRADING IN JUNE
1985, AND IT IS POSSIBLE THAT TRADING IN SUCH FUTURES CONTRACTS WILL BE LESS
LIQUID THAN THAT IN OTHER FUTURES CONTRACTS. THE TRADING OF FUTURES
CONTRACTS AND OPTIONS THEREON IS SUBJECT TO CERTAIN MARKET RISKS, SUCH AS
TRADING HALTS, SUSPENSIONS, EXCHANGE OR CLEARING HOUSE EQUIPMENT FAILURES,
GOVERNMENT INTERVENTION OR OTHER DISRUPTIONS OF NORMAL TRADING ACTIVITY,
WHICH COULD AT TIMES MAKE IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE EXISTING
POSITIONS.
THE LIQUIDITY OF A SECONDARY MARKET IN FUTURES CONTRACTS MAY BE
FURTHER ADVERSELY AFFECTED BY "DAILY PRICE FLUCTUATION LIMITS" ESTABLISHED
BY CONTRACT MARKETS, WHICH LIMIT THE AMOUNT OF FLUCTUATION IN THE PRICE OF A
FUTURES CONTRACT OR OPTION THEREON DURING A SINGLE TRADING DAY. ONCE THE
DAILY LIMIT HAS BEEN REACHED IN THE CONTRACT, NO TRADES MAY BE ENTERED INTO
AT A PRICE BEYOND THE LIMIT, THUS PREVENTING THE LIQUIDATION OF OPEN
POSITIONS. PRICES OF EXISTING CONTRACTS HAVE IN THE PAST MOVED THE DAILY
LIMIT ON A NUMBER OF CONSECUTIVE TRADING DAYS. EACH PORTFOLIO WILL ENTER
INTO A FUTURES POSITION ONLY IF, IN THE JUDGMENT OF THE INVESTMENT ADVISOR,
THERE APPEARS TO BE AN ACTIVELY TRADED SECONDARY MARKET FOR SUCH FUTURES
CONTRACTS.
THE SUCCESSFUL USE OF TRANSACTIONS IN FUTURES CONTRACTS AND OPTIONS
THEREON DEPENDS ON THE ABILITY OF THE INVESTMENT ADVISOR TO CORRECTLY
FORECAST THE DIRECTION AND EXTENT OF PRICE MOVEMENTS OF THESE INSTRUMENTS,
AS WELL AS PRICE MOVEMENTS OF THE SECURITIES HELD BY EACH PORTFOLIO WITHIN A
GIVEN TIME FRAME. TO THE EXTENT THESE PRICES REMAIN STABLE DURING THE PERIOD
IN WHICH A FUTURES OR OPTION CONTRACT IS HELD BY A PORTFOLIO, OR MOVE IN A
DIRECTION OPPOSITE TO THAT ANTICIPATED, A PORTFOLIO MAY REALIZE A LOSS ON
THE HEDGING TRANSACTION WHICH IS NOT FULLY OR PARTIALLY OFFSET BY AN
INCREASE IN THE VALUE OF ITS SECURITIES. AS A RESULT, A PORTFOLIO'S TOTAL
RETURN FOR SUCH PERIOD MAY BE LESS THAN IF IT HAD NOT ENGAGED IN THE HEDGING
TRANSACTION.
DESCRIPTION OF FINANCIAL FUTURES CONTRACTS
FUTURES CONTRACTS. A FUTURES CONTRACT OBLIGATES THE SELLER OF A
CONTRACT TO DELIVER AND THE PURCHASER OF A CONTRACT TO TAKE DELIVERY OF THE
TYPE OF FINANCIAL INSTRUMENT CALLED FOR IN THE CONTRACT OR, IN SOME
INSTANCES, TO MAKE A CASH SETTLEMENT, AT A SPECIFIED FUTURE TIME FOR A
SPECIFIED PRICE. ALTHOUGH THE TERMS OF A CONTRACT CALL FOR ACTUAL DELIVERY
OR ACCEPTANCE OF SECURITIES, OR FOR A CASH SETTLEMENT, IN MOST CASES THE
CONTRACTS ARE CLOSED OUT BEFORE THE DELIVERY DATE WITHOUT THE DELIVERY OR
ACCEPTANCE TAKING PLACE. EACH PORTFOLIO INTENDS TO CLOSE OUT ANY FUTURES
CONTRACTS PRIOR TO THE DELIVERY DATE OF SUCH CONTRACTS.
EACH PORTFOLIO MAY SELL FUTURES CONTRACTS IN ANTICIPATION OF A
DECLINE IN THE VALUE OF ITS INVESTMENTS IN MUNICIPAL BONDS. THE LOSS
ASSOCIATED WITH ANY SUCH DECLINE COULD BE REDUCED WITHOUT EMPLOYING FUTURES
AS A HEDGE BY SELLING LONG-TERM SECURITIES AND EITHER REINVESTING THE
PROCEEDS IN SECURITIES WITH SHORTER MATURITIES OR BY HOLDING ASSETS IN CASH.
THIS STRATEGY, HOWEVER, ENTAILS INCREASED TRANSACTION COSTS IN THE FORM OF
BROKERAGE COMMISSIONS AND DEALER SPREADS AND WILL TYPICALLY REDUCE EACH
PORTFOLIO'S AVERAGE YIELDS AS A RESULT OF THE SHORTENING OF MATURITIES.
THE PURCHASE OR SALE OF A FUTURES CONTRACT DIFFERS FROM THE
PURCHASE OR SALE OF A SECURITY, IN THAT NO PRICE OR PREMIUM IS PAID OR
RECEIVED. INSTEAD, AN AMOUNT OF CASH OR SECURITIES ACCEPTABLE TO EACH
PORTFOLIO'S FUTURES COMMISSION MERCHANT AND THE RELEVANT CONTRACT MARKET,
WHICH VARIES BUT IS GENERALLY ABOUT 5% OR LESS OF THE CONTRACT AMOUNT, MUST
BE DEPOSITED WITH THE BROKER. THIS AMOUNT IS KNOWN AS "INITIAL MARGIN," AND
REPRESENTS A "GOOD FAITH" DEPOSIT ASSURING THE PERFORMANCE OF BOTH THE
PURCHASER AND THE SELLER UNDER THE FUTURES CONTRACT. SUBSEQUENT PAYMENTS,
KNOWN AS "VARIATION MARGIN," ARE REQUIRED TO BE MADE ON A DAILY BASIS AS THE
PRICE OF THE FUTURES CONTRACT FLUCTUATES, MAKING THE LONG OR SHORT POSITIONS
IN THE FUTURES CONTRACT MORE OR LESS VALUABLE, A PROCESS KNOWN AS "MARKING
TO THE MARKET." PRIOR TO THE SETTLEMENT DATE OF THE FUTURES CONTRACT, THE
POSITION MAY BE CLOSED OUT BY TAKING AN OPPOSITE POSITION WHICH WILL OPERATE
TO TERMINATE THE POSITION IN THE FUTURES CONTRACT. A FINAL DETERMINATION OF
VARIATION MARGIN IS THEN MADE, ADDITIONAL CASH IS REQUIRED TO BE PAID TO OR
RELEASED BY THE BROKER, AND THE PURCHASER REALIZES A LOSS OR GAIN. IN
ADDITION, A COMMISSION IS PAID ON EACH COMPLETED PURCHASE AND SALE
TRANSACTION.
THE SALE OF FINANCIAL FUTURES CONTRACTS PROVIDES AN ALTERNATIVE
MEANS OF HEDGING A PORTFOLIO AGAINST DECLINES IN THE VALUE OF ITS
INVESTMENTS IN MUNICIPAL BONDS. AS SUCH VALUES DECLINE, THE VALUE OF A
PORTFOLIO'S POSITION IN THE FUTURES CONTRACTS WILL TEND TO INCREASE, THUS
OFFSETTING ALL OR A PORTION OF THE DEPRECIATION IN THE MARKET VALUE OF THE
PORTFOLIO'S FIXED INCOME INVESTMENTS WHICH ARE BEING HEDGED. WHILE A
PORTFOLIO WILL INCUR COMMISSION EXPENSES IN ESTABLISHING AND CLOSING OUT
FUTURES POSITIONS, COMMISSIONS ON FUTURES TRANSACTIONS MAY BE SIGNIFICANTLY
LOWER THAN TRANSACTION COSTS INCURRED IN THE PURCHASE AND SALE OF FIXED
INCOME SECURITIES. IN ADDITION, THE ABILITY OF A PORTFOLIO TO TRADE IN THE
STANDARDIZED CONTRACTS AVAILABLE IN THE FUTURES MARKET MAY OFFER A MORE
EFFECTIVE HEDGING STRATEGY THAN A PROGRAM TO REDUCE THE AVERAGE MATURING OF
PORTFOLIO SECURITIES, DUE TO THE UNIQUE AND VARIED CREDIT AND TECHNICAL
CHARACTERISTICS OF THE MUNICIPAL DEBT INSTRUMENTS AVAILABLE TO THE
PORTFOLIO. EMPLOYING FUTURES AS A HEDGE MAY ALSO PERMIT EACH PORTFOLIO TO
ASSUME A HEDGING POSTURE WITHOUT REDUCING THE YIELD ON ITS INVESTMENTS,
BEYOND ANY AMOUNTS REQUIRED TO ENGAGE IN FUTURES TRADING.
EACH PORTFOLIO MAY ENGAGE IN THE PURCHASE AND SALE OF FUTURES
CONTRACTS ON AN INDEX OF MUNICIPAL SECURITIES. THESE INSTRUMENTS PROVIDE FOR
THE PURCHASE OR SALE OF A HYPOTHETICAL PORTFOLIO OF MUNICIPAL BONDS AT A
FIXED PRICE IN A STATED DELIVERY MONTH. UNLIKE MOST OTHER FUTURES CONTRACTS,
HOWEVER, A MUNICIPAL BOND INDEX FUTURES CONTRACT DOES NOT REQUIRE ACTUAL
DELIVERY OF SECURITIES BUT RESULTS IN A CASH SETTLEMENT BASED UPON THE
DIFFERENCE IN VALUE OF THE INDEX BETWEEN THE TIME THE CONTRACT WAS ENTERED
INTO AND THE TIME IT IS LIQUIDATED.
THE MUNICIPAL BOND INDEX UNDERLYING THE FUTURES CONTRACTS TRADED BY
EACH PORTFOLIO IS THE BOND BUYER MUNICIPAL BOND INDEX, DEVELOPED BY THE BOND
BUYER AND THE CHICAGO BOARD OF TRADE ("CBT"), THE CONTRACT MARKET ON WHICH
THE FUTURES CONTRACTS ARE TRADED. AS CURRENTLY STRUCTURED, THE INDEX IS
COMPRISED OF 40 TAX-EXEMPT INTERMEDIATE-TERM MUNICIPAL REVENUE AND GENERAL
OBLIGATION BONDS. EACH BOND INCLUDED IN THE INDEX MUST BE RATED EITHER A- OR
HIGHER BY STANDARD & POOR'S OR A OR HIGHER BY MOODY'S INVESTORS SERVICE AND
MUST HAVE A REMAINING MATURITY OF 19 YEARS OR MORE. TWICE A MONTH NEW ISSUES
SATISFYING THE ELIGIBILITY REQUIREMENTS ARE ADDED TO, AND AN EQUAL NUMBER OF
OLD ISSUES WILL BE DELETED FROM, THE INDEX. THE VALUE OF THE INDEX IS
COMPUTED DAILY ACCORDING TO A FORMULA BASED UPON THE PRICE OF EACH BOND IN
THE INDEX, AS EVALUATED BY FOUR DEALER-TO-DEALERS BROKERS.
EACH PORTFOLIO MAY ALSO PURCHASE AND SELL FUTURES CONTRACTS ON U.S.
TREASURY BILLS, NOTES AND BONDS FOR THE SAME TYPES OF HEDGING AND
SUBSTITUTION PURPOSES. SUCH FUTURES CONTRACTS PROVIDE FOR DELIVERY OF THE
UNDERLYING SECURITY AT A SPECIFIED FUTURE TIME FOR A FIXED PRICE, AND THE
VALUE OF THE FUTURES CONTRACT THEREFORE GENERALLY FLUCTUATES WITH MOVEMENTS
IN INTEREST RATES.
THE MUNICIPAL BOND INDEX FUTURES CONTRACT, FUTURES CONTRACTS ON
U.S. TREASURY SECURITIES AND OPTIONS ON SUCH FUTURES CONTRACTS ARE TRADED ON
THE CBT, WHICH, LIKE OTHER CONTRACT MARKETS, ASSURES THE PERFORMANCE OF THE
PARTIES TO EACH FUTURES CONTRACT THROUGH A CLEARING CORPORATION, A NONPROFIT
ORGANIZATION MANAGED BY THE EXCHANGE MEMBERSHIP, WHICH IS ALSO RESPONSIBLE
FOR HANDLING DAILY ACCOUNTING OF DEPOSITS OR WITHDRAWALS OF MARGIN.
EACH PORTFOLIO MAY ALSO PURCHASE FINANCIAL FUTURES CONTRACTS WHEN
NOT FULLY INVESTED IN MUNICIPAL BONDS, IN ANTICIPATION OF AN INCREASE IN THE
COST OF SECURITIES A PORTFOLIO INTENDS TO PURCHASE. AS SUCH SECURITIES ARE
PURCHASED, AN EQUIVALENT AMOUNT OF FUTURES CONTRACTS WILL BE CLOSED OUT. IN
A SUBSTANTIAL MAJORITY OF THESE TRANSACTIONS, A PORTFOLIO WILL PURCHASE
MUNICIPAL BONDS UPON TERMINATION OF THE FUTURES CONTRACTS. DUE TO CHANGING
MARKET CONDITIONS AND INTEREST RATE FORECASTS, HOWEVER, A FUTURES POSITION
MAY BE TERMINATED WITHOUT A CORRESPONDING PURCHASE OF SECURITIES.
NEVERTHELESS, ALL PURCHASES OF FUTURES CONTRACTS BY A PORTFOLIO WILL BE
SUBJECT TO CERTAIN RESTRICTIONS, DESCRIBED BELOW.
OPTIONS ON FUTURES CONTRACTS. AN OPTION ON A FUTURES CONTRACT
PROVIDES THE PURCHASER WITH THE RIGHT, BUT NOT THE OBLIGATION, TO ENTER INTO
A LONG POSITION IN THE UNDERLYING FUTURES CONTRACT (THAT IS, PURCHASE THE
FUTURES CONTRACT), IN THE CASE OF A "CALL" OPTION, OR A SHORT POSITION (SELL
THE FUTURES CONTRACT), IN THE CASE OF A "PUT" OPTION, FOR A FIXED PRICE UP
TO A STATED EXPIRATION DATE. THE OPTION IS PURCHASED FOR A NON-REFUNDABLE
FEE, KNOWN AS THE "PREMIUM." UPON EXERCISE OF THE OPTION, THE CONTRACT
MARKET CLEARING HOUSE ASSIGNS EACH PARTY TO THE OPTION AN OPPOSITE POSITION
IN THE UNDERLYING FUTURES CONTRACT. IN THE EVENT OF EXERCISE, THEREFORE, THE
PARTIES ARE SUBJECT TO ALL OF THE RISKS OF FUTURES TRADING, SUCH AS PAYMENT
OF INITIAL AND VARIATION MARGIN. IN ADDITION, THE SELLER, OR "WRITER," OF
THE OPTION IS SUBJECT TO MARGIN REQUIREMENTS ON THE OPTION POSITION. OPTIONS
ON FUTURES CONTRACTS ARE TRADED ON THE SAME CONTRACT MARKETS AS THE
UNDERLYING FUTURES CONTRACTS.
EACH PORTFOLIO MAY PURCHASE OPTIONS ON FUTURES CONTRACTS FOR THE
SAME TYPES OF PURPOSES DESCRIBED ABOVE IN CONNECTION WITH FUTURES CONTRACTS.
FOR EXAMPLE, IN ORDER TO PROTECT AGAINST AN ANTICIPATED DECLINE IN THE VALUE
OF SECURITIES IT HOLDS, A PORTFOLIO COULD PURCHASE PUT OPTIONS ON FUTURES
CONTRACTS, INSTEAD OF SELLING THE UNDERLYING FUTURES CONTRACTS. CONVERSELY,
IN ORDER TO PROTECT AGAINST THE ADVERSE EFFECTS OF ANTICIPATED INCREASES IN
THE COSTS OF SECURITIES TO BE ACQUIRED, A PORTFOLIO COULD PURCHASE CALL
OPTIONS ON FUTURES CONTRACTS, INSTEAD OF PURCHASING THE UNDERLYING FUTURES
CONTRACTS. EACH PORTFOLIO GENERALLY WILL SELL OPTIONS ON FUTURES CONTRACTS
ONLY TO CLOSE OUT AN EXISTING POSITION.
EACH PORTFOLIO WILL NOT ENGAGE IN TRANSACTIONS IN SUCH INSTRUMENTS
UNLESS AND UNTIL THE INVESTMENT ADVISOR DETERMINES THAT MARKET CONDITIONS
AND THE CIRCUMSTANCES OF THE PORTFOLIO WARRANT SUCH TRADING. TO THE EXTENT
THAT A PORTFOLIO ENGAGES IN THE PURCHASE AND SALE OF FUTURES CONTRACTS OR
OPTIONS THEREON, IT WILL DO SO ONLY AT A LEVEL WHICH IS REFLECTIVE OF THE
INVESTMENT ADVISOR'S VIEW OF THE PORTFOLIO'S HEDGING NEEDS, THE LIQUIDITY OF
THE MARKET FOR FUTURES CONTRACTS AND THE ANTICIPATED CORRELATION BETWEEN
MOVEMENTS IN THE VALUE OF THE FUTURES OR OPTION CONTRACT AND THE VALUE OF
SECURITIES HELD BY THE PORTFOLIO.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS. UNDER REGULATIONS OF THE COMMODITY FUTURES TRADING COMMISSION
("CFTC"), THE FUTURES TRADING ACTIVITIES DESCRIBED HEREIN WILL NOT RESULT IN
A PORTFOLIO BEING DEEMED TO BE A "COMMODITY POOL," AS DEFINED UNDER SUCH
REGULATIONS, PROVIDED THAT CERTAIN TRADING RESTRICTIONS ARE ADHERED TO. IN
PARTICULAR, CFTC REGULATIONS REQUIRE THAT ALL FUTURES AND OPTION POSITIONS
ENTERED INTO BY A PORTFOLIO QUALIFY AS BONA FIDE HEDGE TRANSACTIONS, AS
DEFINED UNDER CFTC REGULATIONS, OR, IN THE CASE OF LONG POSITIONS, THAT THE
VALUE OF SUCH POSITIONS NOT EXCEED AN AMOUNT OF SEGREGATED FUNDS DETERMINED
BY REFERENCE TO CERTAIN CASH AND SECURITIES POSITIONS MAINTAINED BY A
PORTFOLIO AND ACCRUED PROFITS ON SUCH POSITIONS. IN ADDITION, AS A MATTER OF
OPERATING POLICY, A PORTFOLIO MAY NOT PURCHASE OR SELL A FUTURES CONTRACT OR
AN OPTION THEREON IF, IMMEDIATELY THEREAFTER, THE SUM OF THE AMOUNT OF
INITIAL MARGIN DEPOSITS ON THE PORTFOLIO'S EXISTING FUTURES POSITIONS AND
PREMIUMS ON SUCH OPTIONS WOULD EXCEED 5% OF ITS TOTAL ASSETS, BASED ON NET
PREMIUM PAYMENTS.
WHEN A PORTFOLIO PURCHASES A FUTURES CONTRACT, IT WILL MAINTAIN AN
AMOUNT OF CASH, CASH EQUIVALENTS (FOR EXAMPLE, COMMERCIAL PAPER AND DAILY
TENDER ADJUSTABLE NOTES) OR SHORT-TERM HIGH-GRADE FIXED INCOME SECURITIES IN
A SEGREGATED ACCOUNT WITH THE PORTFOLIO'S CUSTODIAN, SO THAT THE AMOUNT SO
SEGREGATED PLUS THE AMOUNT OF INITIAL AND VARIATION MARGIN HELD IN THE
ACCOUNT OF ITS BROKER EQUALS THE MARKET VALUE OF THE FUTURES CONTRACT,
THEREBY ENSURING THAT THE USE OF SUCH FUTURES IS UNLEVERAGED.
RISK FACTORS IN TRANSACTIONS IN FUTURES CONTRACTS. THE PARTICULAR
MUNICIPAL BONDS COMPRISING THE INDEX UNDERLYING THE MUNICIPAL BOND INDEX
FUTURES CONTRACT MAY VARY FROM THE BONDS HELD BY THE PORTFOLIO. IN ADDITION,
THE SECURITIES UNDERLYING FUTURES CONTRACTS ON U.S. TREASURY SECURITIES WILL
NOT BE THE SAME AS SECURITIES HELD BY THE PORTFOLIOS. AS A RESULT, EACH
PORTFOLIO'S ABILITY EFFECTIVELY TO HEDGE ALL OR A PORTION OF THE VALUE OF
ITS MUNICIPAL BONDS THROUGH THE USE OF FUTURES CONTRACTS WILL DEPEND IN PART
ON THE DEGREE TO WHICH PRICE MOVEMENTS IN THE INDEX UNDERLYING THE MUNICIPAL
BOND INDEX FUTURES CONTRACT, OR THE U.S. TREASURY SECURITIES UNDERLYING
OTHER FUTURES CONTRACTS TRADE, CORRELATE WITH PRICE MOVEMENTS OF THE
MUNICIPAL BONDS HELD BY THE PORTFOLIO.
FOR EXAMPLE, WHERE PRICES OF SECURITIES IN A PORTFOLIO DO NOT MOVE
IN THE SAME DIRECTION OR TO THE SAME EXTENT AS THE VALUES OF THE SECURITIES
OR INDEX UNDERLYING A FUTURES CONTRACT, THE TRADING OF SUCH FUTURES
CONTRACTS MAY NOT EFFECTIVELY HEDGE THE PORTFOLIO'S INVESTMENTS AND MAY
RESULT IN TRADING LOSSES. THE CORRELATION MAY BE AFFECTED BY DISPARITIES IN
THE AVERAGE MATURITY, RATINGS, GEOGRAPHICAL MIX OR STRUCTURE OF THE
PORTFOLIO'S INVESTMENTS AS COMPARED TO THOSE COMPRISING THE INDEX, AND
GENERAL ECONOMIC OR POLITICAL FACTORS. IN ADDITION, THE CORRELATION BETWEEN
MOVEMENTS IN THE VALUE OF THE INDEX UNDERLYING A FUTURES CONTRACT MAY BE
SUBJECT TO CHANGE OVER TIME, AS ADDITIONS TO AND DELETIONS FROM THE INDEX
ALTER ITS STRUCTURE. IN THE CASE OF FUTURES CONTRACTS ON U.S. TREASURY
SECURITIES AND OPTIONS THEREON, THE ANTICIPATED CORRELATION OF PRICE
MOVEMENTS BETWEEN THE U.S. TREASURY SECURITIES UNDERLYING THE FUTURES OR
OPTIONS AND MUNICIPAL BONDS MAY BE ADVERSELY AFFECTED BY ECONOMIC,
POLITICAL, LEGISLATIVE OR OTHER DEVELOPMENTS THAT HAVE A DISPARATE IMPACT ON
THE RESPECTIVE MARKETS FOR SUCH SECURITIES. IN THE EVENT THAT THE INVESTMENT
ADVISOR DETERMINES TO ENTER INTO TRANSACTIONS IN FINANCIAL FUTURES CONTRACTS
OTHER THAN THE MUNICIPAL BOND INDEX FUTURES CONTRACT OR FUTURES ON U.S.
TREASURY SECURITIES, THE RISK OF IMPERFECT CORRELATION BETWEEN MOVEMENTS IN
THE PRICES OF SUCH FUTURES CONTRACTS AND THE PRICES OF MUNICIPAL BONDS HELD
BY A PORTFOLIO MAY BE GREATER.
THE TRADING OF FUTURES CONTRACTS ON AN INDEX ALSO ENTAILS THE RISK
OF IMPERFECT CORRELATION BETWEEN MOVEMENTS IN THE PRICE OF THE FUTURES
CONTRACT AND THE VALUE OF THE UNDERLYING INDEX. THE ANTICIPATED SPREAD
BETWEEN THE PRICES MAY BE DISTORTED DUE TO DIFFERENCES IN THE NATURE OF THE
MARKETS, SUCH AS MARGIN REQUIREMENTS, LIQUIDITY AND THE PARTICIPATION OF
SPECULATORS IN THE FUTURES MARKETS. THE RISK OF IMPERFECT CORRELATION,
HOWEVER, GENERALLY DIMINISHES AS THE DELIVERY MONTH SPECIFIED IN THE FUTURES
CONTRACT APPROACHES.
PRIOR TO EXERCISE OR EXPIRATION, A POSITION IN FUTURES CONTRACTS OR
OPTIONS THEREON MAY BE TERMINATED ONLY BY ENTERING INTO A CLOSING PURCHASE
OR SALE TRANSACTION. THIS REQUIRES A SECONDARY MARKET ON THE RELEVANT
CONTRACT MARKET. EACH PORTFOLIO WILL ENTER INTO A FUTURES OR OPTION POSITION
ONLY IF THERE APPEARS TO BE A LIQUID SECONDARY MARKET THEREFOR, ALTHOUGH
THERE CAN BE NO ASSURANCE THAT SUCH A LIQUID SECONDARY MARKET WILL EXIST FOR
ANY PARTICULAR CONTRACT AT ANY SPECIFIC TIME. THUS, IT MAY NOT BE POSSIBLE
TO CLOSE OUT A POSITION ONCE IT HAS BEEN ESTABLISHED. UNDER SUCH
CIRCUMSTANCES, A PORTFOLIO COULD BE REQUIRED TO MAKE CONTINUING DAILY CASH
PAYMENTS OF VARIATION MARGIN IN THE EVENT OF ADVERSE PRICE MOVEMENTS. IN
SUCH SITUATION, IF A PORTFOLIO HAS INSUFFICIENT CASH, IT MAY BE REQUIRED TO
SELL PORTFOLIO SECURITIES TO MEET DAILY VARIATION MARGIN REQUIREMENTS AT A
TIME WHEN IT MAY BE DISADVANTAGEOUS TO DO SO. IN ADDITION, A PORTFOLIO MAY
BE REQUIRED TO PERFORM UNDER THE TERMS OF THE FUTURES OR OPTION CONTRACTS IT
HOLDS. THE INABILITY TO CLOSE OUT FUTURES OR OPTIONS POSITIONS ALSO COULD
HAVE AN ADVERSE IMPACT ON A PORTFOLIO'S ABILITY EFFECTIVELY TO HEDGE ITS
PORTFOLIO.
WHEN A PORTFOLIO PURCHASES AN OPTION ON A FUTURES CONTRACT, ITS
RISK IS LIMITED TO THE AMOUNT OF THE PREMIUM, PLUS RELATED TRANSACTION
COSTS, ALTHOUGH THIS ENTIRE AMOUNT MAY BE LOST. IN ADDITION, IN ORDER TO
PROFIT FROM THE PURCHASE OF AN OPTION ON A FUTURES CONTRACT, A PORTFOLIO MAY
BE REQUIRED TO EXERCISE THE OPTION AND LIQUIDATE THE UNDERLYING FUTURES
CONTRACT, SUBJECT TO THE AVAILABILITY OF A LIQUID SECONDARY MARKET. THE
TRADING OF OPTIONS ON FUTURES CONTRACTS ALSO ENTAILS THE RISK THAT CHANGES
IN THE VALUE OF THE UNDERLYING FUTURES CONTRACT WILL NOT BE FULLY REFLECTED
IN THE VALUE OF THE OPTION, ALTHOUGH THE RISK OF IMPERFECT CORRELATION
GENERALLY TENDS TO DIMINISH AS THE MATURITY DATE OF THE FUTURES CONTRACT OR
EXPIRATION DATE OF THE OPTION APPROACHES.
"TRADING LIMITS" OR "POSITION LIMITS" MAY ALSO BE IMPOSED ON THE
MAXIMUM NUMBER OF CONTRACTS WHICH ANY PERSON MAY HOLD AT A GIVEN TIME. A
CONTRACT MARKET MAY ORDER THE LIQUIDATION OF POSITIONS FOUND TO BE IN
VIOLATION OF THESE LIMITS AND IT MAY IMPOSE OTHER SANCTIONS OR RESTRICTIONS.
THE INVESTMENT ADVISOR DOES NOT BELIEVE THAT TRADING LIMITS WILL HAVE ANY
ADVERSE IMPACT ON THE STRATEGIES FOR HEDGING A PORTFOLIO'S INVESTMENTS.
FURTHER, THE TRADING OF FUTURES CONTRACTS IS SUBJECT TO THE RISK OF
THE INSOLVENCY OF A BROKERAGE FIRM OR CLEARING CORPORATION, WHICH COULD MAKE
IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE EXISTING POSITIONS OR TO RECOVER
EXCESS VARIATION MARGIN PAYMENTS.
IN ADDITION TO THE RISKS OF IMPERFECT CORRELATION AND LACK OF A
LIQUID SECONDARY MARKET FOR SUCH INSTRUMENTS, TRANSACTIONS IN FUTURES
CONTRACTS INVOLVE RISKS RELATED TO LEVERAGING AND THE POTENTIAL FOR
INCORRECT FORECASTS OF THE DIRECTION AND EXTENT OF INTEREST RATE MOVEMENTS
WITHIN A GIVEN TIME FRAME.
CREDIT QUALITY
AS AN OPERATING POLICY, EACH PORTFOLIO MAY NOT INVEST MORE THAN 35%
OF ITS NET ASSETS IN NON-INVESTMENT GRADE MUNICIPAL OBLIGATIONS. AS HAS BEEN
THE INDUSTRY PRACTICE, THIS DETERMINATION OF CREDIT QUALITY IS MADE AT THE
TIME A PORTFOLIO ACQUIRES THE OBLIGATION. HOWEVER, BECAUSE IT IS POSSIBLE
THAT SUBSEQUENT DOWNGRADES COULD OCCUR, IF AN OBLIGATION HELD BY A PORTFOLIO
IS LATER DOWNGRADED, THE ADVISOR, UNDER THE SUPERVISION OF THE FUND'S BOARD
OF DIRECTORS, WILL CONSIDER WHETHER IT IS IN THE BEST INTEREST OF THE
SHAREHOLDERS TO HOLD OR TO DISPOSE OF THE OBLIGATION. AMONG THE CRITERIA
THAT MAY BE CONSIDERED BY THE ADVISOR AND THE BOARD ARE THE PROBABILITY THAT
THE OBLIGATIONS WILL BE ABLE TO MAKE SCHEDULED INTEREST AND PRINCIPAL
PAYMENTS IN THE FUTURE, THE EXTENT TO WHICH ANY DEVALUATION OF THE
OBLIGATION HAS ALREADY BEEN REFLECTED IN THE PORTFOLIO' NET ASSET VALUE, AND
THE TOTAL PERCENTAGE, IF ANY, OF OBLIGATIONS CURRENTLY RATED BELOW
INVESTMENT-GRADE HELD BY A PORTFOLIO.
NONINVESTMENT-GRADE SECURITIES ("JUNK BONDS") HAVE MODERATE TO POOR
PROTECTION OF PRINCIPAL AND INTEREST PAYMENTS AND ARE PREDOMINATELY
SPECULATIVE. THEY INVOLVE GREATER RISK OF DEFAULT OR PRICE DECLINES DUE TO
CHANGES IN THE ISSUER'S CREDITWORTHINESS THAN INVESTMENT-GRADE DEBT
SECURITIES. BECAUSE THE MARKET FOR LOWER-RATED SECURITIES MAY BE THINNER AND
LESS ACTIVE THAN FOR HIGHER-RATED SECURITIES, THERE MAY BE MARKET PRICE
VOLATILITY FOR THESE SECURITIES AND LIMITED LIQUIDITY IN THE RESALE MARKET.
MARKET PRICES FOR THESE SECURITIES MAY DECLINE SIGNIFICANTLY IN PERIODS OF
GENERAL ECONOMIC DIFFICULTY OR RISING INTEREST RATES.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
THE PORTFOLIOS HAVE ADOPTED THE FOLLOWING FUNDAMENTAL INVESTMENT
RESTRICTIONS. THESE RESTRICTIONS CANNOT BE CHANGED WITHOUT THE APPROVAL OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF EACH PORTFOLIO.
(1) EACH PORTFOLIO MAY NOT MAKE ANY INVESTMENT
INCONSISTENT WITH ITS CLASSIFICATION AS A NONDIVERSIFIED
INVESTMENT COMPANY UNDER THE 1940 ACT.
(2) EACH PORTFOLIO MAY NOT CONCENTRATE ITS INVESTMENTS IN
THE SECURITIES OF ISSUERS PRIMARILY ENGAGED IN ANY
PARTICULAR INDUSTRY (OTHER THAN SECURITIES ISSUED OR
GUARANTEED BY THE U.S. GOVERNMENT OR ITS AGENCIES OR
INSTRUMENTALITIES AND REPURCHASE AGREEMENTS SECURED
THEREBY).
(3) EACH PORTFOLIO MAY NOT ISSUE SENIOR SECURITIES OR
BORROW MONEY, EXCEPT FROM BANKS FOR TEMPORARY OR EMERGENCY
PURPOSES AND THEN ONLY IN AN AMOUNT UP TO 33 1/3% OF THE
VALUE OF ITS TOTAL ASSETS OR AS PERMITTED BY LAW AND
EXCEPT BY ENGAGING IN REVERSE REPURCHASE AGREEMENTS, WHERE
ALLOWED. IN ORDER TO SECURE ANY PERMITTED BORROWINGS AND
REVERSE REPURCHASE AGREEMENTS UNDER THIS SECTION, A
PORTFOLIO MAY PLEDGE, MORTGAGE OR HYPOTHECATE ITS ASSETS.
(4) EACH PORTFOLIO MAY NOT UNDERWRITE THE SECURITIES OF
OTHER ISSUERS, EXCEPT AS ALLOWED BY LAW OR TO THE EXTENT
THAT THE PURCHASE OF OBLIGATIONS IN ACCORDANCE WITH A
PORTFOLIO'S INVESTMENT OBJECTIVE AND POLICIES, EITHER
DIRECTLY FROM THE ISSUER, OR FROM AN UNDERWRITER FOR AN
ISSUER, MAY BE DEEMED AN UNDERWRITING.
(5) EACH PORTFOLIO MAY NOT INVEST DIRECTLY IN COMMODITIES
OR REAL ESTATE, ALTHOUGH IT MAY INVEST IN SECURITIES WHICH
ARE SECURED BY REAL ESTATE OR REAL ESTATE MORTGAGES AND
SECURITIES OF ISSUERS WHICH INVEST OR DEAL IN COMMODITIES,
COMMODITY FUTURES, REAL ESTATE OR REAL ESTATE MORTGAGES.
(6) EACH PORTFOLIO MAY NOT MAKE LOANS, OTHER THAN THROUGH
THE PURCHASE OF MONEY MARKET INSTRUMENTS AND REPURCHASE
AGREEMENTS OR BY THE PURCHASE OF BONDS, DEBENTURES OR
OTHER DEBT SECURITIES, OR AS PERMITTED BY LAW. THE
PURCHASE OF ALL OR A PORTION OF AN ISSUE OF PUBLICLY OR
PRIVATELY DISTRIBUTED DEBT OBLIGATIONS IN ACCORDANCE WITH
A PORTFOLIO'S INVESTMENT OBJECTIVE, POLICIES AND
RESTRICTIONS, SHALL NOT CONSTITUTE THE MAKING OF A LOAN.
NONFUNDAMENTAL INVESTMENT RESTRICTIONS
THE BOARD OF TRUSTEES/DIRECTORS HAS ADOPTED THE FOLLOWING
NONFUNDAMENTAL INVESTMENT RESTRICTIONS. A NONFUNDAMENTAL INVESTMENT
RESTRICTION CAN BE CHANGED BY THE BOARD AT ANY TIME WITHOUT A SHAREHOLDER
VOTE.
(1) EACH PORTFOLIO MAY NOT PURCHASE COMMON STOCKS,
PREFERRED STOCKS, WARRANTS, OR OTHER EQUITY SECURITIES.
(2) EACH PORTFOLIO DOES NOT INTEND TO MAKE ANY PURCHASES
OF SECURITIES IF BORROWING EXCEEDS 5% OF A PORTFOLIO'S
TOTAL ASSETS.
(3) EACH PORTFOLIO MAY NOT PURCHASE ILLIQUID SECURITIES
IF MORE THAN 15% OF THE VALUE OF NET ASSETS WOULD BE
INVESTED IN SUCH SECURITIES;
(4) EACH PORTFOLIO MAY NOT SELL SECURITIES SHORT,
PURCHASE SECURITIES ON MARGIN, OR WRITE PUT AND CALL
OPTIONS, EXCEPT TO THE EXTENT PERMITTED UNDER
"TRANSACTIONS IN FUTURES CONTRACTS" OR ELSEWHERE IN
THE PROSPECTUS OR SAI. THE PORTFOLIOS RESERVE THE
RIGHT TO PURCHASE SECURITIES WITH PUTS ATTACHED.
(5) EACH PORTFOLIO 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 PORTFOLIO'S TOTAL ASSETS, BASED ON
NET PREMIUM PAYMENTS.
(6) NATIONAL AND CALIFORNIA EACH MAY NOT 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 PORTFOLIO,
EXCEEDS 5% OF THE PORTFOLIO'S TOTAL ASSETS.
PURCHASES AND REDEMPTIONS OF SHARES
SHARE CERTIFICATES WILL BE ISSUED AT NO CHARGE IF REQUESTED IN
WRITING BY THE INVESTOR. NO CERTIFICATES WILL BE ISSUED FOR FRACTIONAL
SHARES (SEE PROSPECTUS, "HOW TO SELL YOUR SHARES").
TO CHANGE REDEMPTION INSTRUCTIONS ALREADY GIVEN, SHAREHOLDERS MUST
SEND A WRITTEN NOTICE TO CALVERT GROUP, C/O NFDS, 330 W. 9TH, KANSAS CITY,
MO 64105, WITH A VOIDED COPY OF A CHECK FOR THE BANK WIRING INSTRUCTIONS TO
BE ADDED. IF A VOIDED CHECK DOES NOT ACCOMPANY THE REQUEST, THEN THE REQUEST
MUST BE SIGNATURE GUARANTEED BY A COMMERCIAL BANK, SAVINGS AND LOAN
ASSOCIATION, TRUST COMPANY, MEMBER FIRM OF ANY NATIONAL SECURITIES EXCHANGE,
OR CERTAIN CREDIT UNIONS. FURTHER DOCUMENTATION MAY BE REQUIRED FROM
CORPORATIONS, FIDUCIARIES, AND INSTITUTIONAL INVESTORS.
THE RIGHT OF REDEMPTION MAY BE SUSPENDED OR THE DATE OF PAYMENT
POSTPONED FOR ANY PERIOD DURING WHICH THE NEW YORK STOCK EXCHANGE IS CLOSED
(OTHER THAN CUSTOMARY WEEKEND AND HOLIDAY CLOSINGS), WHEN TRADING ON THE NEW
YORK STOCK EXCHANGE IS RESTRICTED, OR AN EMERGENCY EXISTS, AS DETERMINED BY
THE SEC, OR IF THE COMMISSION HAS ORDERED SUCH A SUSPENSION FOR THE
PROTECTION OF SHAREHOLDERS. REDEMPTION PROCEEDS ARE NORMALLY MAILED OR WIRED
THE NEXT BUSINESS DAY AFTER A PROPER REDEMPTION REQUEST HAS BEEN RECEIVED,
UNLESS REDEMPTIONS HAVE BEEN SUSPENDED OR POSTPONED AS DESCRIBED ABOVE.
CERTAIN SHARES MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE
WHICH IS SUBTRACTED FROM THE REDEMPTION PROCEEDS (SEE PROSPECTUS,
"CALCULATION OF CONTINGENT DEFERRED SALES CHARGES AND WAIVER OF SALES
CHARGES").
REDEMPTION PROCEEDS ARE NORMALLY PAID IN CASH. HOWEVER, EACH
PORTFOLIO HAS THE RIGHT TO REDEEM SHARES IN ASSETS OTHER THAN CASH FOR
REDEMPTION AMOUNTS EXCEEDING, IN ANY 90-DAY PERIOD, $250,000 OR 1% OF THE
NET ASSET VALUE OF A PORTFOLIO, WHICHEVER IS LESS.
REDUCED SALES CHARGES
EACH PORTFOLIO IMPOSES REDUCED SALES CHARGES IN CERTAIN SITUATIONS
IN WHICH THE PRINCIPAL UNDERWRITER (WHICH OFFERS THE PORTFOLIO' SHARES
CONTINUOUSLY AND ON A "BEST EFFORTS" BASIS) AND THE DEALERS SELLING EACH
PORTFOLIO'S SHARES MAY EXPECT TO REALIZE SIGNIFICANT ECONOMIES OF SCALE WITH
RESPECT TO SUCH SALES. GENERALLY, SALES COSTS DO NOT INCREASE IN PROPORTION
TO THE DOLLAR AMOUNT OF THE SHARES SOLD; FOR EXAMPLE, THE PER-DOLLAR
TRANSACTION COST FOR A SALE TO AN INVESTOR OF SHARES WORTH $5,000 IS
GENERALLY MUCH HIGHER THAN THE PER-DOLLAR COST FOR A SALE OF SHARES WORTH
$1,000,000. THUS, THE APPLICABLE SALES CHARGE DECLINES AS A PERCENTAGE OF
THE DOLLAR AMOUNT OF SHARES SOLD AS THE DOLLAR AMOUNT INCREASES.
WHEN A SHAREHOLDER AGREES TO MAKE PURCHASES OF SHARES OVER A PERIOD
OF TIME TOTALING A CERTAIN DOLLAR AMOUNT PURSUANT TO A LETTER OF INTENT, THE
UNDERWRITER AND SELLING DEALERS CAN EXPECT TO REALIZE THE ECONOMIES OF SCALE
APPLICABLE TO THAT STATED GOAL AMOUNT. THUS THE PORTFOLIO IMPOSES THE SALES
CHARGE APPLICABLE TO THE GOAL AMOUNT. SIMILARLY, THE UNDERWRITER AND SELLING
DEALERS ALSO EXPERIENCE COST SAVINGS WHEN DEALING WITH EXISTING
SHAREHOLDERS, ENABLING THE PORTFOLIO TO AFFORD EXISTING SHAREHOLDERS THE
RIGHT OF ACCUMULATION. THE UNDERWRITER AND SELLING DEALERS CAN ALSO EXPECT
TO REALIZE ECONOMIES OF SCALE WHEN MAKING SALES TO THE MEMBERS OF CERTAIN
QUALIFIED GROUPS WHICH AGREE TO FACILITATE DISTRIBUTION OF THE PORTFOLIO'
SHARES TO THEIR MEMBERS. SEE "EXHIBIT A - REDUCED SALES CHARGES" IN THE
PROSPECTUS.
DIVIDENDS AND DISTRIBUTIONS
EACH PORTFOLIO DECLARES AND PAYS MONTHLY DIVIDENDS OF ITS NET
INCOME TO SHAREHOLDERS OF RECORD AS OF THE CLOSE OF BUSINESS ON EACH
DESIGNATED MONTHLY RECORD DATE. NET INVESTMENT INCOME CONSISTS OF THE
INTEREST INCOME EARNED ON INVESTMENTS (ADJUSTED FOR AMORTIZATION OF ORIGINAL
ISSUE DISCOUNTS OR PREMIUMS OR MARKET PREMIUMS), LESS ESTIMATED EXPENSES.
CAPITAL GAINS, IF ANY, ARE NORMALLY PAID ONCE A YEAR AND WILL BE
AUTOMATICALLY REINVESTED AT NET ASSET VALUE IN ADDITIONAL SHARES. DIVIDENDS
AND ANY DISTRIBUTIONS ARE AUTOMATICALLY REINVESTED IN ADDITIONAL SHARES OF
THE FUND, UNLESS YOU ELECT TO HAVE THE DIVIDENDS OF $10 OR MORE PAID IN CASH
(BY CHECK OR BY CALVERT MONEY CONTROLLER). YOU MAY ALSO REQUEST TO HAVE YOUR
DIVIDENDS AND DISTRIBUTIONS FROM THE PORTFOLIO INVESTED IN SHARES OF ANY
OTHER CALVERT GROUP FUND, AT NO ADDITIONAL CHARGE.
TAX MATTERS
EACH PORTFOLIO INTENDS TO CONTINUE TO QUALIFY AS REGULATED
INVESTMENT COMPANIES UNDER SUBCHAPTER M OF THE INTERNAL REVENUE CODE. IF FOR
ANY REASON A PORTFOLIO SHOULD FAIL TO QUALIFY, IT WOULD BE TAXED AS A
CORPORATION AT THE PORTFOLIO LEVEL, RATHER THAN PASSING THROUGH ITS INCOME
AND GAINS TO SHAREHOLDERS.
EACH PORTFOLIO'S DIVIDENDS OF NET INVESTMENT INCOME CONSTITUTE
EXEMPT-INTEREST DIVIDENDS ON WHICH SHAREHOLDERS ARE NOT GENERALLY SUBJECT TO
FEDERAL INCOME TAX; HOWEVER UNDER THE ACT, DIVIDENDS ATTRIBUTABLE TO
INTEREST ON CERTAIN PRIVATE ACTIVITY BONDS MUST BE INCLUDED IN FEDERAL
ALTERNATIVE MINIMUM TAXABLE INCOME FOR THE PURPOSE OF DETERMINING LIABILITY
(IF ANY) FOR INDIVIDUALS AND FOR CORPORATIONS. EACH PORTFOLIO'S DIVIDENDS
DERIVED FROM TAXABLE INTEREST AND DISTRIBUTIONS OF NET SHORT-TERM CAPITAL
GAINS, WHETHER TAKEN IN CASH OR REINVESTED IN ADDITIONAL SHARES, ARE TAXABLE
TO SHAREHOLDERS AS ORDINARY INCOME AND DO NOT QUALIFY FOR THE DIVIDENDS
RECEIVED DEDUCTION FOR CORPORATIONS. IF YOU HELD SHARES FOR SIX MONTHS OR
LESS, LOSSES MUST BE OFFSET BY THE AMOUNT OF EXEMPT-INTEREST DIVIDENDS YOU
RECEIVED, AND, TO THE EXTENT OF CAPITAL GAIN DISTRIBUTIONS YOU RECEIVED, THE
LOSS AMOUNT NOT OFFSET (DISALLOWED) MUST BE TREATED AS LONG-TERM CAPITAL
LOSS.
A SHAREHOLDER MAY ALSO BE SUBJECT TO SOME STATE AND LOCAL TAXES ON
DIVIDENDS AND DISTRIBUTIONS. EACH PORTFOLIO WILL NOTIFY ITS SHAREHOLDERS
ANNUALLY ABOUT THE TAX STATUS OF DIVIDENDS AND DISTRIBUTIONS PAID AND THE
AMOUNT OF DIVIDENDS WITHHELD, IF ANY, DURING THE PREVIOUS YEAR.
THE CODE PROVIDES THAT INTEREST ON INDEBTEDNESS INCURRED OR
CONTINUED IN ORDER TO PURCHASE OR CARRY SHARES OF A REGULATED INVESTMENT
COMPANY WHICH DISTRIBUTES EXEMPT-INTEREST DIVIDENDS DURING THE YEAR IS NOT
DEDUCTIBLE. FURTHERMORE, ENTITIES OR PERSONS WHO ARE "SUBSTANTIAL USERS" (OR
PERSONS RELATED TO "SUBSTANTIAL USERS") OF FACILITIES FINANCED BY PRIVATE
ACTIVITY BONDS SHOULD CONSULT THEIR TAX ADVISORS BEFORE PURCHASING SHARES OF
A PORTFOLIO. "SUBSTANTIAL USER" IS GENERALLY DEFINED AS INCLUDING A
"NONEXEMPT PERSON" WHO REGULARLY USES IN TRADE OR BUSINESS A PART OF A
FACILITY FINANCED FROM THE PROCEEDS OF PRIVATE ACTIVITY BONDS.
EACH PORTFOLIO MAY BE REQUIRED TO WITHHOLD 31% OF ANY LONG-TERM
CAPITAL GAIN DIVIDENDS AND 31% OF EACH REDEMPTION TRANSACTION IF: (A) THE
SHAREHOLDER'S SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER
("TIN") IS NOT PROVIDED OR AN OBVIOUSLY INCORRECT TIN IS PROVIDED; (B) THE
SHAREHOLDER DOES NOT CERTIFY UNDER PENALTIES OF PERJURY THAT THE TIN
PROVIDED IS THE SHAREHOLDER'S CORRECT TIN AND THAT THE SHAREHOLDER IS NOT
SUBJECT TO BACKUP WITHHOLDING UNDER SECTION 3406(A)(1)(C) OF THE CODE
BECAUSE OF UNDERREPORTING (HOWEVER, FAILURE TO PROVIDE CERTIFICATION AS TO
THE APPLICATION OF SECTION 3406(A)(1)(C) WILL RESULT ONLY IN BACKUP
WITHHOLDING ON CAPITAL GAIN DIVIDENDS, NOT ON REDEMPTIONS); OR (C) A
PORTFOLIO IS NOTIFIED BY THE INTERNAL REVENUE SERVICE THAT THE TIN PROVIDED
BY THE SHAREHOLDER IS INCORRECT OR THAT THERE HAS BEEN UNDERREPORTING OF
INTEREST OR DIVIDENDS BY THE SHAREHOLDER. AFFECTED SHAREHOLDERS WILL RECEIVE
STATEMENTS AT LEAST ANNUALLY SPECIFYING THE AMOUNT WITHHELD.
IN ADDITION, EACH PORTFOLIO IS REQUIRED TO REPORT TO THE INTERNAL
REVENUE SERVICE THE FOLLOWING INFORMATION WITH RESPECT TO REDEMPTION
TRANSACTIONS: (A) THE SHAREHOLDER'S NAME, ADDRESS, ACCOUNT NUMBER AND
TAXPAYER IDENTIFICATION NUMBER; (B) THE TOTAL DOLLAR VALUE OF THE
REDEMPTIONS; AND (C) THE IDENTIFYING CUSIP NUMBER.
CERTAIN SHAREHOLDERS ARE, HOWEVER, EXEMPT FROM THE BACKUP
WITHHOLDING AND BROKER REPORTING REQUIREMENTS. EXEMPT SHAREHOLDERS INCLUDE:
CORPORATIONS; FINANCIAL INSTITUTIONS; TAX-EXEMPT ORGANIZATIONS; INDIVIDUAL
RETIREMENT PLANS; THE U.S., A STATE, THE DISTRICT OF COLUMBIA, A U.S.
POSSESSION, A FOREIGN GOVERNMENT, AN INTERNATIONAL ORGANIZATION, OR ANY
POLITICAL SUBDIVISION, AGENCY, OR INSTRUMENTALITY OF ANY OF THE FOREGOING;
U.S. REGISTERED COMMODITIES OR SECURITIES DEALERS; REAL ESTATE INVESTMENT
TRUSTS; REGISTERED INVESTMENT COMPANIES; BANK COMMON TRUST FUNDS; CERTAIN
CHARITABLE TRUSTS; AND FOREIGN CENTRAL BANKS OF ISSUE. NONRESIDENT ALIENS
ALSO ARE GENERALLY NOT SUBJECT TO EITHER REQUIREMENT BUT, ALONG WITH CERTAIN
FOREIGN PARTNERSHIPS AND FOREIGN CORPORATIONS, MAY INSTEAD BE SUBJECT TO
WITHHOLDING UNDER SECTION 1441 OF THE CODE. SHAREHOLDERS CLAIMING EXEMPTION
FROM BACKUP WITHHOLDING AND BROKER REPORTING SHOULD CALL OR WRITE FOR
FURTHER INFORMATION.
VALUATION OF SHARES
EACH PORTFOLIO'S ASSETS ARE VALUED UTILIZING THE AVERAGE BID DEALER
MARKET QUOTATION AS FURNISHED BY AN INDEPENDENT PRICING SERVICE. SECURITIES
AND OTHER ASSETS FOR WHICH MARKET QUOTATIONS ARE NOT READILY AVAILABLE ARE
VALUED BASED ON THE CURRENT MARKET FOR SIMILAR SECURITIES OR ASSETS, AS
DETERMINED IN GOOD FAITH BY THE FUND'S ADVISOR UNDER THE SUPERVISION OF THE
BOARD OF DIRECTORS.
VALUATIONS, MARKET QUOTATIONS AND MARKET EQUIVALENTS ARE PROVIDED
BY KENNY S&P EVALUATION SERVICES, A SUBSIDIARY OF MCGRAW-HILL. THE USE OF
KENNY AS A PRICING SERVICE BY THE FUND HAS BEEN APPROVED BY THE BOARD OF
DIRECTORS. VALUATIONS PROVIDED BY KENNY ARE DETERMINED WITHOUT EXCLUSIVE
RELIANCE ON QUOTED PRICES AND TAKE INTO CONSIDERATION APPROPRIATE FACTORS
SUCH AS INSTITUTION-SIZE TRADING IN SIMILAR GROUPS OF SECURITIES, YIELD,
QUALITY, COUPON RATE, MATURITY, TYPE OF ISSUE, TRADING CHARACTERISTICS, AND
OTHER MARKET DATA.
EACH PORTFOLIO DETERMINES THE NET ASSET VALUE FOR ITS SHARES EVERY
BUSINESS DAY AT THE CLOSE OF THE REGULAR SESSION OF THE NEW YORK STOCK
EXCHANGE (GENERALLY, 4:00 P.M. EASTERN TIME), AND AT SUCH OTHER TIMES AS MAY
BE NECESSARY OR APPROPRIATE. THE PORTFOLIOS DO NOT DETERMINE NET ASSET VALUE
ON CERTAIN NATIONAL HOLIDAYS OR OTHER DAYS ON WHICH THE NEW YORK STOCK
EXCHANGE IS CLOSED: NEW YEAR'S DAY, MARTIN LUTHER KING DAY, PRESIDENTS' DAY,
GOOD FRIDAY, MEMORIAL DAY, INDEPENDENCE DAY, LABOR DAY, THANKSGIVING DAY AND
CHRISTMAS DAY.
NET ASSET VALUE AND OFFERING PRICE PER SHARE
NATIONAL
NET ASSET VALUE PER SHARE
($71,064,503/6,570,474 SHARES) $10.82
MAXIMUM SALES CHARGE
(2.75% OF OFFERING PRICE) 0.30
OFFERING PRICE PER SHARE $11.12
CALIFORNIA
NET ASSET VALUE PER SHARE
($36,963,400/3,442,156 SHARES) $10.74
MAXIMUM SALES CHARGE
(2.75% OF OFFERING PRICE) 0.30
OFFERING PRICE PER SHARE $11.04
MARYLAND
NET ASSET VALUE PER SHARE
($12,164,979/2,335,912 SHARES) $5.21
MAXIMUM SALES CHARGE
(2.75% OF OFFERING PRICE) 0.14
OFFERING PRICE PER SHARE $5.35
VIRGINIA
NET ASSET VALUE PER SHARE
($14,438,800/2,747,881 SHARES) $5.25
MAXIMUM SALES CHARGE
(2.75% OF OFFERING PRICE) 0.14
OFFERING PRICE PER SHARE $5.39
CALCULATION OF YIELD AND TOTAL RETURN
EACH PORTFOLIO MAY ADVERTISE ITS "TOTAL RETURN." TOTAL RETURN IS
HISTORICAL IN NATURE AND IS NOT INTENDED TO INDICATE FUTURE PERFORMANCE.
TOTAL RETURN WILL BE QUOTED FOR THE MOST RECENT ONE-YEAR PERIOD, FIVE-YEAR
PERIOD, AND PERIOD FROM INCEPTION OF THE PORTFOLIO'S OFFERING OF SHARES.
RETURN QUOTATIONS FOR PERIODS IN EXCESS OF ONE YEAR REPRESENT THE AVERAGE
ANNUAL TOTAL RETURN FOR THE PERIOD INCLUDED IN THE PARTICULAR QUOTATION.
TOTAL RETURN IS A COMPUTATION OF THE PORTFOLIO'S DIVIDEND YIELD, PLUS OR
MINUS REALIZED OR UNREALIZED CAPITAL APPRECIATION OR DEPRECIATION, LESS FEES
AND EXPENSES. TOTAL RETURN QUOTATIONS REFLECT THE DEDUCTION OF THE
PORTFOLIO'S MAXIMUM SALES CHARGE ("RETURN WITH MAXIMUM LOAD"), EXCEPT
QUOTATIONS OF "RETURN WITHOUT MAXIMUM LOAD" WHICH DO NOT DEDUCT THE SALES
CHARGE. NOTE: "TOTAL RETURN" AS QUOTED IN THE FINANCIAL HIGHLIGHTS SECTION
OF THE PROSPECTUS AND ANNUAL REPORT TO SHAREHOLDERS, HOWEVER, PER SEC
INSTRUCTIONS, DOES NOT REFLECT DEDUCTION OF THE SALES CHARGE, AND
CORRESPONDS TO "RETURN WITHOUT MAXIMUM LOAD" AS REFERRED TO HEREIN. RETURN
WITHOUT MAXIMUM LOAD SHOULD BE CONSIDERED ONLY BY INVESTORS, SUCH AS
PARTICIPANTS IN CERTAIN PENSION PLANS, TO WHOM THE SALES CHARGE DOES NOT
APPLY, OR FOR PURPOSES OF COMPARISON ONLY WITH COMPARABLE FIGURES WHICH ALSO
DO NOT REFLECT SALES CHARGES, SUCH AS LIPPER AVERAGES. TOTAL RETURN IS
COMPUTED ACCORDING TO THE FOLLOWING FORMULA:
P(1 + T)N = ERV
WHERE P = A HYPOTHETICAL INITIAL PAYMENT OF $1,000; T = TOTAL RETURN; N =
NUMBER OF YEARS; AND ERV = THE ENDING REDEEMABLE VALUE OF A HYPOTHETICAL
$1,000 PAYMENT MADE AT THE BEGINNING OF THE 1, 5 OR 10 YEAR PERIODS AT THE
END OF SUCH PERIODS (OR PORTIONS THEREOF, IF APPLICABLE). RETURNS FOR THE
PERIODS FROM INCEPTION THROUGH DECEMBER 31, 1998 ARE AS FOLLOWS:
NATIONAL NATIONAL
WITH WITHOUT
MAX. LOAD MAX. LOAD
ONE YEAR 2.52% 5.46%
FIVE YEAR 5.10% 5.68%
FROM INCEPTION 5.80% 6.27%
(9/30/92)
CALIFORNIA CALIFORNIA
WITH WITHOUT
MAX. LOAD MAX. LOAD
ONE YEAR 2.61% 5.51%
FIVE YEAR 4.34% 4.93%
FROM INCEPTION 5.45% 5.89%
(5/29/92)
MARYLAND MARYLAND
WITH WITHOUT
MAX. LOAD MAX. LOAD
ONE YEAR 1.94% 4.88%
FIVE YEAR 4.65% 5.23%
FROM INCEPTION 4.79% 5.34%
(9/30/93)
VIRGINIA VIRGINIA
WITH WITHOUT
MAX. LOAD MAX. LOAD
ONE YEAR 1.94% 4.88%
FIVE YEAR 4.65% 5.22%
FROM INCEPTION 4.84% 5.39%
(9/30/93)
EACH PORTFOLIO MAY ALSO ADVERTISE ITS "YIELD" AND "TAXABLE
EQUIVALENT YIELD." AS WITH TOTAL RETURN, BOTH YIELD FIGURES ARE HISTORICAL
AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. "YIELD" QUOTATIONS
REFER TO THE AGGREGATE IMPUTED YIELD-TO-MATURITY OF INVESTMENTS BASED ON THE
MARKET VALUE AS OF THE LAST DAY OF A GIVEN THIRTY-DAY OR ONE-MONTH PERIOD
LESS ACCRUED EXPENSES (NET OF REIMBURSEMENT), DIVIDED BY THE AVERAGE DAILY
NUMBER OF OUTSTANDING SHARES ENTITLED TO RECEIVE DIVIDENDS TIMES THE MAXIMUM
OFFERING PRICE ON THE LAST DAY OF THE PERIOD (SO THAT THE EFFECT OF THE
SALES CHARGE IS INCLUDED IN THE CALCULATION), COMPOUNDED ON A "BOND
EQUIVALENT," OR SEMI-ANNUAL, BASIS. YIELD IS COMPUTED ACCORDING TO THE
FOLLOWING FORMULA:
YIELD = 2[(A-B/CD)+1)6 - 1]
WHERE A = DIVIDENDS AND INTEREST EARNED DURING THE PERIOD; B = EXPENSES
ACCRUED FOR THE PERIOD (NET OF REIMBURSEMENT); C = THE AVERAGE DAILY NUMBER
OF SHARES OUTSTANDING DURING THE PERIOD THAT WERE ENTITLED TO RECEIVE
DIVIDENDS; AND D = THE MAXIMUM OFFERING PRICE PER SHARE ON THE LAST DAY OF
THE PERIOD.
THE TAXABLE EQUIVALENT YIELD IS THE YIELD AN INVESTOR WOULD BE
REQUIRED TO OBTAIN FROM TAXABLE INVESTMENTS TO EQUAL A PORTFOLIO'S YIELD,
ALL OR A PORTION OF WHICH MAY BE EXEMPT FROM FEDERAL INCOME TAXES. THE
TAXABLE EQUIVALENT YIELD IS COMPUTED BY TAKING THE PORTION OF THE YIELD
EXEMPT FROM FEDERAL INCOME TAXES AND MULTIPLYING THE EXEMPT YIELD BY A
FACTOR BASED ON A STATED INCOME TAX RATE, THEN ADDING THE PORTION OF THE
YIELD THAT IS NOT EXEMPT FROM FEDERAL INCOME TAXES. THE FACTOR WHICH IS USED
TO CALCULATE THE TAX EQUIVALENT YIELD IS THE RECIPROCAL OF THE DIFFERENCE
BETWEEN 1 AND THE APPLICABLE INCOME TAX RATE, WHICH WILL BE STATED IN THE
ADVERTISEMENT.
FOR THE THIRTY-DAY PERIOD ENDED DECEMBER 31, 1998, THE YIELD AND
FEDERAL TAX EQUIVALENT YIELDS WERE AS FOLLOWS:
DECEMBER 31, 36% FEDERAL 39.6% FEDERAL
1998 TAX EQUIVALENT TAX EQUIVALENT
YIELD YIELD YIELD
NATIONAL 3.67% 5.73% 6.08%
CALIFORNIA 3.56% 5.56% 5.89%
VIRGINIA 3.39% 5.30% 5.61%
MARYLAND 3.46% 5.41% 5.73%
ADVERTISING
THE FUND OR ITS AFFILIATES MAY PROVIDE INFORMATION SUCH AS, BUT NOT
LIMITED TO, THE ECONOMY, INVESTMENT CLIMATE, INVESTMENT PRINCIPLES,
SOCIOLOGICAL CONDITIONS AND POLITICAL AMBIANCE. DISCUSSION MAY INCLUDE
HYPOTHETICAL SCENARIOS OR LISTS OF RELEVANT FACTORS DESIGNED TO AID THE
INVESTOR IN DETERMINING WHETHER THE PORTFOLIO IS COMPATIBLE WITH THE
INVESTOR'S GOALS. THE FUND MAY LIST PORTFOLIO HOLDINGS OR GIVE EXAMPLES OR
SECURITIES THAT MAY HAVE BEEN CONSIDERED FOR INCLUSION IN THE PORTFOLIO,
WHETHER HELD OR NOT.
THE FUND OR ITS AFFILIATES MAY SUPPLY COMPARATIVE PERFORMANCE DATA
AND RANKINGS FROM INDEPENDENT SOURCES SUCH AS DONOGHUE'S MONEY FUND REPORT,
BANK RATE MONITOR, MONEY, FORBES, LIPPER ANALYTICAL SERVICES, INC., CDA
INVESTMENT TECHNOLOGIES, INC., WIESENBERGER INVESTMENT COMPANIES SERVICE,
RUSSELL 2000/SMALL STOCK INDEX, MUTUAL FUND VALUES MORNINGSTAR RATINGS,
MUTUAL FUND FORECASTER, BARRON'S, THE WALL STREET JOURNAL, AND SCHABACKER
INVESTMENT MANAGEMENT, INC. SUCH AVERAGES GENERALLY DO NOT REFLECT ANY
FRONT- OR BACK-END SALES CHARGES THAT MAY BE CHARGED BY FUNDS IN THAT
GROUPING. THE FUND MAY ALSO CITE TO ANY SOURCE, WHETHER IN PRINT OR ON-LINE,
SUCH AS BLOOMBERG, IN ORDER TO ACKNOWLEDGE ORIGIN OF INFORMATION. THE
PORTFOLIO MAY COMPARE ITSELF OR ITS PORTFOLIO HOLDINGS TO OTHER INVESTMENTS,
WHETHER OR NOT ISSUED OR REGULATED BY THE SECURITIES INDUSTRY, INCLUDING,
BUT NOT LIMITED TO, CERTIFICATES OF DEPOSIT AND TREASURY NOTES. THE FUND,
ITS ADVISOR, AND ITS AFFILIATES RESERVE THE RIGHT TO UPDATE PERFORMANCE
RANKINGS AS NEW RANKINGS BECOME AVAILABLE.
CALVERT GROUP IS THE NATION'S LEADING FAMILY OF SOCIALLY
RESPONSIBLE MUTUAL FUNDS, BOTH IN TERMS OF SOCIALLY RESPONSIBLE MUTUAL FUND
ASSETS UNDER MANAGEMENT, AND NUMBER OF SOCIALLY RESPONSIBLE MUTUAL FUND
PORTFOLIOS OFFERED (SOURCE: SOCIAL INVESTMENT FORUM, DECEMBER 31, 1998).
CALVERT GROUP WAS ALSO THE FIRST TO OFFER A FAMILY OF SOCIALLY RESPONSIBLE
MUTUAL FUND PORTFOLIOS.
DIRECTORS AND OFFICERS
EACH PORTFOLIO'S BOARD OF TRUSTEES/DIRECTORS SUPERVISES THE
PORTFOLIO'S ACTIVITIES AND REVIEWS ITS CONTRACTS WITH COMPANIES THAT PROVIDE
IT WITH SERVICES.
RICHARD L. BAIRD, JR., TRUSTEE/DIRECTOR. MR. BAIRD IS EXECUTIVE
VICE PRESIDENT FOR THE FAMILY HEALTH COUNCIL, INC. IN PITTSBURGH,
PENNSYLVANIA, A NON-PROFIT CORPORATION WHICH PROVIDES FAMILY PLANNING
SERVICES, NUTRITION, MATERNAL/CHILD HEALTH CARE, AND VARIOUS HEALTH
SCREENING SERVICES. MR. BAIRD IS A TRUSTEE/DIRECTOR OF EACH OF THE
INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS, EXCEPT FOR CALVERT
VARIABLE SERIES, INC., CALVERT NEW WORLD FUND, INC. AND CALVERT WORLD VALUES
FUND, INC. DOB: 05/09/48. ADDRESS: 211 OVERLOOK DRIVE, PITTSBURGH,
PENNSYLVANIA 15216.
FRANK H. BLATZ, JR., ESQ., TRUSTEE/DIRECTOR. MR. BLATZ IS A PARTNER
IN THE LAW FIRM OF SNEVILY, ELY, WILLIAMS & BLATZ. HE WAS FORMERLY A PARTNER
WITH ABRAMS, BLATZ, GRAN, HENDRICKS & REINA, P.A. HE IS ALSO A DIRECTOR OF
CALVERT VARIABLE SERIES, INC. DOB: 10/29/35. ADDRESS: 308 EAST BROAD STREET,
WESTFIELD, NEW JERSEY 07091.
FREDERICK T. BORTS, M.D., TRUSTEE/DIRECTOR. DR. BORTS IS A
RADIOLOGIST WITH KAISER PERMANENTE. PRIOR TO THAT, HE WAS A RADIOLOGIST AT
BETHLEHEM MEDICAL IMAGING IN ALLENTOWN, PENNSYLVANIA. DOB: 07/23/49.
ADDRESS: 16 ILIAHI STREET, HONOLULU, HAWAII, 96817.
CHARLES E. DIEHL, TRUSTEE/DIRECTOR. MR. DIEHL IS A SELF-EMPLOYED
CONSULTANT AND IS VICE PRESIDENT AND TREASURER EMERITUS OF THE GEORGE
WASHINGTON UNIVERSITY. HE HAS RETIRED FROM UNIVERSITY SUPPORT SERVICES, INC.
OF HERNDON, VIRGINIA. FORMERLY, HE WAS A DIRECTOR OF ACACIA MUTUAL LIFE
INSURANCE COMPANY, AND IS CURRENTLY A DIRECTOR OF SERVUS FINANCIAL
CORPORATION. DOB: 10/13/22. ADDRESS: 1658 QUAIL HOLLOW COURT, MCLEAN,
VIRGINIA 22101.
DOUGLAS E. FELDMAN, M.D., TRUSTEE/DIRECTOR. DR. FELDMAN IS MANAGING
PARTNER OF FELDMAN OTOLARYNGOLOGY, HEAD AND NECK SURGERY IN WASHINGTON, D.C.
A GRADUATE OF HARVARD MEDICAL SCHOOL, HE IS ASSOCIATE PROFESSOR OF
OTOLARYNGOLOGY, HEAD AND NECK SURGERY AT GEORGETOWN UNIVERSITY AND GEORGE
WASHINGTON UNIVERSITY MEDICAL SCHOOL, AND PAST CHAIRMAN OF THE DEPARTMENT OF
OTOLARYNGOLOGY, HEAD AND NECK SURGERY AT THE WASHINGTON HOSPITAL CENTER. HE
IS INCLUDED IN THE BEST DOCTORS IN AMERICA. DOB: 05/23/48. ADDRESS: 7536
PEPPERELL DRIVE, BETHESDA, MARYLAND 20817.
PETER W. GAVIAN, CFA, TRUSTEE/DIRECTOR. MR. GAVIAN IS PRESIDENT OF
CORPORATE FINANCE OF WASHINGTON, INC. FORMERLY, HE WAS A PRINCIPAL OF GAVIAN
DE VAUX ASSOCIATES, AN INVESTMENT BANKING FIRM. HE IS ALSO A CHARTERED
FINANCIAL ANALYST AND AN ACCREDITED SENIOR BUSINESS APPRAISER. DOB:
12/08/32. ADDRESS: 3005 FRANKLIN ROAD NORTH, ARLINGTON, VIRGINIA 22201.
JOHN G. GUFFEY, JR., TRUSTEE/DIRECTOR. MR. GUFFEY IS CHAIRMAN OF
THE CALVERT SOCIAL INVESTMENT FOUNDATION, ORGANIZING DIRECTOR OF THE
COMMUNITY CAPITAL BANK IN BROOKLYN, NEW YORK, AND A FINANCIAL CONSULTANT TO
VARIOUS ORGANIZATIONS. IN ADDITION, HE IS A FORMER DIRECTOR OF THE COMMUNITY
BANKERS MUTUAL FUND OF DENVER, COLORADO, A DIRECTOR OF ARIEL FUNDS, AND THE
TREASURER AND DIRECTOR OF SILBY, GUFFEY, AND CO., INC., A VENTURE CAPITAL
FIRM. MR. GUFFEY IS A TRUSTEE/DIRECTOR OF EACH OF THE OTHER INVESTMENT
COMPANIES IN THE CALVERT GROUP OF FUNDS, EXCEPT FOR CALVERT VARIABLE SERIES,
INC. AND CALVERT NEW WORLD FUND, INC.
MR. GUFFEY HAS BEEN ADVISED THAT THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") HAS ENTERED AN ORDER AGAINST HIM RELATING TO HIS FORMER
SERVICE AS A DIRECTOR OF COMMUNITY BANKERS MUTUAL FUND, INC. THIS FUND IS
NOT CONNECTED WITH ANY CALVERT FUND OR THE CALVERT GROUP AND CEASED
OPERATIONS IN SEPTEMBER, 1994. MR. GUFFEY CONSENTED TO THE ENTRY OF THE
ORDER WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE ORDER. THE ORDER
CONTAINS FINDINGS (1) THAT THE COMMUNITY BANKERS MUTUAL FUND'S PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION WERE MATERIALLY FALSE AND MISLEADING
BECAUSE THEY MISSTATED OR FAILED TO STATE MATERIAL FACTS CONCERNING THE
PRICING OF FUND SHARES AND THE PERCENTAGE OF ILLIQUID SECURITIES IN THE
FUND'S PORTFOLIO AND THAT MR. GUFFEY, AS A MEMBER OF THE FUND'S BOARD,
SHOULD HAVE KNOWN OF THESE MISSTATEMENTS AND THEREFORE VIOLATED THE
SECURITIES ACT OF 1933; (2) THAT THE PRICE OF THE FUND'S SHARES SOLD TO THE
PUBLIC WAS NOT BASED ON THE CURRENT NET ASSET VALUE OF THE SHARES, IN
VIOLATION OF THE INVESTMENT COMPANY ACT OF 1940 (THE "INVESTMENT COMPANY
ACT"); AND (3) THAT THE BOARD OF THE FUND, INCLUDING MR. GUFFEY, VIOLATED
THE INVESTMENT COMPANY ACT BY DIRECTING THE FILING OF A MATERIALLY FALSE
REGISTRATION STATEMENT. THE ORDER DIRECTED MR. GUFFEY TO CEASE AND DESIST
FROM COMMITTING OR CAUSING FUTURE VIOLATIONS AND TO PAY A CIVIL PENALTY OF
$5,000. THE SEC PLACED NO RESTRICTIONS ON MR. GUFFEY'S CONTINUING TO SERVE
AS A TRUSTEE OR DIRECTOR OF MUTUAL FUNDS. DOB: 05/15/48. ADDRESS: 388 CALLI
CALINA, SANTA FE, NEW MEXICO 87501.
*BARBARA J. KRUMSIEK, PRESIDENT AND TRUSTEE/DIRECTOR. MS. KRUMSIEK
SERVES AS PRESIDENT, CHIEF EXECUTIVE OFFICER AND VICE CHAIRMAN OF CALVERT
GROUP, LTD. AND AS AN OFFICER AND DIRECTOR OF EACH OF ITS AFFILIATED
COMPANIES. SHE IS A DIRECTOR OF CALVERT-SLOAN ADVISERS, L.L.C., AND A
TRUSTEE/DIRECTOR OF EACH OF THE INVESTMENT COMPANIES IN THE CALVERT GROUP OF
FUNDS. MS. KRUMSIEK IS THE PRESIDENT OF EACH OF THE INVESTMENT COMPANIES,
EXCEPT FOR CALVERT SOCIAL INVESTMENT FUND, OF WHICH SHE IS THE SENIOR VICE
PRESIDENT. PRIOR TO JOINING CALVERT GROUP, MS. KRUMSIEK SERVED AS A MANAGING
DIRECTOR OF ALLIANCE FUND DISTRIBUTORS, INC. DOB: 08/09/52.
M. CHARITO KRUVANT, TRUSTEE/DIRECTOR. MS. KRUVANT IS PRESIDENT AND
CEO OF CREATIVE ASSOCIATES INTERNATIONAL, INC., A FIRM THAT SPECIALIZES IN
HUMAN RESOURCES DEVELOPMENT, INFORMATION MANAGEMENT, PUBLIC AFFAIRS AND
PRIVATE ENTERPRISE DEVELOPMENT. SHE IS ALSO A DIRECTOR OF CALVERT VARIABLE
SERIES, INC., AND ACACIA FEDERAL SAVINGS BANK. DOB: 12/08/45. ADDRESS: 5301
WISCONSIN AVENUE, N.W., WASHINGTON, D.C. 20015.
ARTHUR J. PUGH, TRUSTEE/DIRECTOR. MR. PUGH IS A DIRECTOR OF CALVERT
VARIABLE SERIES, INC., AND SERVES AS A DIRECTOR OF ACACIA FEDERAL SAVINGS
BANK. DOB: 09/24/37. ADDRESS: 4823 PRESTWICK DRIVE, FAIRFAX, VIRGINIA 22030.
*DAVID R. ROCHAT, SENIOR VICE PRESIDENT AND TRUSTEE/DIRECTOR. MR.
ROCHAT IS EXECUTIVE VICE PRESIDENT OF CALVERT ASSET MANAGEMENT COMPANY,
INC., DIRECTOR AND SECRETARY OF GRADY, BERWALD AND CO., INC., AND DIRECTOR
AND PRESIDENT OF CHELSEA SECURITIES, INC. HE IS THE SENIOR VICE PRESIDENT OF
FIRST VARIABLE RATE FUND, CALVERT TAX-FREE RESERVES, CALVERT MUNICIPAL FUND,
INC., CALVERT CASH RESERVES, AND THE CALVERT FUND. DOB: 10/07/37. ADDRESS:
BOX 93, CHELSEA, VERMONT 05038.
*D. WAYNE SILBY, ESQ., TRUSTEE/DIRECTOR. MR. SILBY IS A
TRUSTEE/DIRECTOR OF EACH OF THE INVESTMENT COMPANIES IN THE CALVERT GROUP OF
FUNDS, EXCEPT FOR CALVERT VARIABLE SERIES, INC. AND CALVERT NEW WORLD FUND.
MR. SILBY IS EXECUTIVE CHAIRMAN OF GROUP SERVE, INC., AN INTERNET COMPANY
FOCUSED ON COMMUNITY BUILDING COLLABORATIVE TOOLS, AND AN OFFICER, DIRECTOR
AND SHAREHOLDER OF SILBY, GUFFEY & COMPANY, INC., WHICH SERVES AS GENERAL
PARTNER OF CALVERT SOCIAL VENTURE PARTNERS ("CSVP"). CSVP IS A VENTURE
CAPITAL FIRM INVESTING IN SOCIALLY RESPONSIBLE SMALL COMPANIES. HE IS ALSO A
DIRECTOR OF ACACIA MUTUAL LIFE INSURANCE COMPANY. DOB: 07/20/48. ADDRESS:
1715 18TH STREET, N.W., WASHINGTON, D.C. 20009.
RENO J. MARTINI, SENIOR VICE PRESIDENT. MR. MARTINI IS A DIRECTOR
AND SENIOR VICE PRESIDENT OF CALVERT GROUP, LTD., AND SENIOR VICE PRESIDENT
AND CHIEF INVESTMENT OFFICER OF CALVERT ASSET MANAGEMENT COMPANY, INC. MR.
MARTINI IS ALSO A DIRECTOR AND PRESIDENT OF CALVERT-SLOAN ADVISERS, L.L.C.,
AND A DIRECTOR AND OFFICER OF CALVERT NEW WORLD FUND. DOB: 1/13/50.
RONALD M. WOLFSHEIMER, CPA, TREASURER. MR. WOLFSHEIMER IS SENIOR
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF CALVERT GROUP, LTD. AND ITS
SUBSIDIARIES AND AN OFFICER OF EACH OF THE OTHER INVESTMENT COMPANIES IN THE
CALVERT GROUP OF FUNDS. MR. WOLFSHEIMER IS VICE PRESIDENT AND TREASURER OF
CALVERT-SLOAN ADVISERS, L.L.C., AND A DIRECTOR OF CALVERT DISTRIBUTORS, INC.
DOB: 07/24/47.
WILLIAM M. TARTIKOFF, ESQ., VICE PRESIDENT AND SECRETARY. MR.
TARTIKOFF IS AN OFFICER OF EACH OF THE INVESTMENT COMPANIES IN THE CALVERT
GROUP OF FUNDS, AND IS SENIOR VICE PRESIDENT, SECRETARY, AND GENERAL COUNSEL
OF CALVERT GROUP, LTD., AND EACH OF ITS SUBSIDIARIES. MR. TARTIKOFF IS ALSO
VICE PRESIDENT AND SECRETARY OF CALVERT-SLOAN ADVISERS, L.L.C., A DIRECTOR
OF CALVERT DISTRIBUTORS, INC., AND IS AN OFFICER OF ACACIA NATIONAL LIFE
INSURANCE COMPANY. DOB: 08/12/47.
DANIEL K. HAYES, VICE PRESIDENT. MR. HAYES IS VICE PRESIDENT OF
CALVERT ASSET MANAGEMENT COMPANY, INC., AND IS AN OFFICER OF EACH OF THE
OTHER INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS, EXCEPT FOR CALVERT
NEW WORLD FUND, INC. DOB: 09/09/50.
SUSAN WALKER BENDER, ESQ., ASSISTANT SECRETARY. MS. BENDER IS
ASSOCIATE GENERAL COUNSEL OF CALVERT GROUP, LTD. AND AN OFFICER OF EACH OF
ITS SUBSIDIARIES AND CALVERT-SLOAN ADVISERS, L.L.C. SHE IS ALSO AN OFFICER
OF EACH OF THE OTHER INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS.
DOB: 01/29/59.
KATHERINE STONER, ESQ., ASSISTANT SECRETARY. MS. STONER IS
ASSOCIATE GENERAL COUNSEL OF CALVERT GROUP, LTD. AND AN OFFICER OF EACH OF
ITS SUBSIDIARIES AND CALVERT-SLOAN ADVISERS, L.L.C. SHE IS ALSO AN OFFICER
OF EACH OF THE OTHER INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS.
DOB: 10/21/56.
IVY WAFFORD DUKE, ESQ., ASSISTANT SECRETARY. MS. DUKE IS ASSOCIATE
GENERAL COUNSEL OF CALVERT GROUP AND AN OFFICER OF EACH OF ITS SUBSIDIARIES
AND CALVERT-SLOAN ADVISERS, L.L.C. SHE IS ALSO AN OFFICER OF EACH OF THE
OTHER INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS AND SECRETARY AND
PROVIDES COUNSEL TO THE CALVERT SOCIAL INVESTMENT FOUNDATION. PRIOR TO
WORKING AT CALVERT GROUP, MS. DUKE WAS AN ASSOCIATE IN THE INVESTMENT
MANAGEMENT GROUP OF THE BUSINESS AND FINANCE DEPARTMENT AT DRINKER BIDDLE &
REATH. DOB: 09/07/68.
VICTOR FRYE, ESQ., ASSISTANT SECRETARY AND COMPLIANCE OFFICER. MR.
FRYE IS COUNSEL AND COMPLIANCE OFFICER OF CALVERT GROUP AND AN OFFICER OF
EACH OF ITS SUBSIDIARIES AND CALVERT-SLOAN ADVISERS, L.L.C. HE IS ALSO AN
OFFICER OF EACH OF THE OTHER INVESTMENT COMPANIES IN THE CALVERT GROUP OF
FUNDS. PRIOR TO WORKING AT CALVERT GROUP, MR. FRYE WAS COUNSEL AND MANAGER
OF THE COMPLIANCE DEPARTMENT AT THE ADVISORS GROUP. DOB: 10/15/58.
THE ADDRESS OF DIRECTORS AND OFFICERS, UNLESS OTHERWISE NOTED, IS
4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND 20814.
TRUSTEE/DIRECTORS AND OFFICERS OF THE FUND AS A GROUP OWN LESS THAN 1% OF
THE FUND'S OUTSTANDING SHARES. TRUSTEE/DIRECTORS MARKED WITH AN *, ABOVE,
ARE "INTERESTED PERSONS" OF THE FUND, UNDER THE INVESTMENT COMPANY ACT OF
1940. DIRECTORS AND OFFICERS OF THE FUND AS A GROUP OWN LESS THAN 1% OF EACH
PORTFOLIO'S OUTSTANDING SHARES.
EACH OF THE ABOVE PERSONS IS A TRUSTEE/DIRECTOR OR OFFICER OF OTHER
INVESTMENT COMPANIES IN THE CALVERT GROUP OF FUNDS EXCEPT CALVERT SOCIAL
INVESTMENT FUND, AND CALVERT WORLD VALUES FUND, INC., OF WHICH ONLY MESSRS.
BAIRD, GUFFEY, AND SILBY AND MS. KRUMSIEK ARE AMONG THE TRUSTEES/DIRECTORS;
CALVERT VARIABLE SERIES, INC., OF WHICH ONLY MESSRS. BLATZ, DIEHL, AND PUGH
AND MMES. KRUMSIEK AND KRUVANT ARE AMONG THE DIRECTORS, AND CALVERT NEW
WORLD FUND, INC., OF WHICH ONLY AND MS. KRUMSIEK AND MR. MARTINI ARE AMONG
THE DIRECTORS.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS IS COMPOSED OF
MESSRS. BAIRD, BLATZ, FELDMAN, GUFFEY AND PUGH, AND MS. KRUVANT. THE BOARD'S
INVESTMENT POLICY COMMITTEE IS COMPOSED OF MESSRS. BORTS, DIEHL, GAVIAN,
ROCHAT, AND SILBY, AND MS. KRUMSIEK.
DURING FISCAL 1998, TRUSTEE/DIRECTORS OF THE PORTFOLIOS NOT
AFFILIATED WITH THE FUND'S ADVISOR WERE PAID $8,377, $4,299, $1,578, AND
$1,796, FROM THE NATIONAL, CALIFORNIA, MARYLAND, AND VIRGINIA PORTFOLIOS,
RESPECTIVELY. TRUSTEES/DIRECTORS OF THE FUND NOT AFFILIATED WITH THE ADVISOR
CURRENTLY RECEIVE AN ANNUAL FEE OF $20,500 FOR SERVICE AS A MEMBER OF THE
BOARD OF TRUSTEES/DIRECTORS OF THE CALVERT GROUP OF FUNDS PLUS A FEE OF $750
TO $1,500 FOR EACH BOARD AND COMMITTEE MEETING ATTENDED; SUCH FEES ARE
ALLOCATED AMONG THE FUNDS ON THE BASIS OF THEIR NET ASSETS.
TRUSTEES/DIRECTORS NOT AFFILIATED WITH THE ADVISOR MAY ELECT TO
DEFER RECEIPT OF ALL OR A PERCENTAGE OF THEIR FEES AND INVEST THEM IN ANY
FUND IN THE CALVERT OF FUNDS THROUGH THE TRUSTEES/DIRECTORS DEFERRED
COMPENSATION PLAN (SHOWN AS "PENSION OR RETIREMENT BENEFITS ACCRUED AS PART
OF FUND EXPENSES," BELOW). DEFERRAL OF THE FEES IS DESIGNED TO MAINTAIN THE
PARTIES IN THE SAME POSITION AS IF THE FEES WERE PAID ON A CURRENT BASIS.
MANAGEMENT BELIEVES THIS WILL HAVE A NEGLIGIBLE EFFECT ON THE FUND'S ASSETS,
LIABILITIES, NET ASSETS, AND NET INCOME PER SHARE.
TRUSTEE/DIRECTOR COMPENSATION TABLE
FISCAL YEAR 1998 AGGREGATE PENSION OR TOTAL COMPENSATION
COMPENSATION RETIREMENT FROM BENEFITS
(UNAUDITED NUMBERS) FROM REGISTRANT ACCRUED AS REGISTRANT AND FUND
FOR SERVICE PART OF COMPLEX PAID TO
AS DIRECTOR OF REGISTRANT DIRECTOR **
EXPENSES*
NAME OF TRUSTEE/DIRECTOR
RICHARD L. BAIRD, JR. $1,496 $0 $39,550
FRANK H. BLATZ, JR. $1,327 $1,327 $42,100
FREDERICK T. BORTS $1,220 $0 $33,250
CHARLES E. DIEHL $1,327 $1,327 $41,500
DOUGLAS E. FELDMAN $1,327 $0 $36,250
PETER W. GAVIAN $1,326 $663 $36,250
JOHN G. GUFFEY, JR. $1,272 $0 $62,665
M. CHARITO KRUVANT $1,328 $532 $36,250
ARTHUR J. PUGH $1,327 $0 $41,500
D. WAYNE SILBY $1,274 $0 $67,780
*MESSRS. BLATZ, DIEHL, GAVIAN AND PUGH AND MS. KRUVANT HAVE CHOSEN TO DEFER
A PORTION OF THEIR COMPENSATION. AS OF DECEMBER 31, 1998, TOTAL DEFERRED
COMPENSATION, INCLUDING DIVIDENDS AND CAPITAL APPRECIATION, WAS $644,247.37,
$672,374.09, $172,445.85, $216,322.53, AND $23,295.55, FOR EACH
TRUSTEE/DIRECTOR, RESPECTIVELY.
**THE FUND COMPLEX CONSISTS OF NINE (9) REGISTERED INVESTMENT COMPANIES.
INVESTMENT ADVISOR
THE FUND'S INVESTMENT ADVISOR IS CALVERT ASSET MANAGEMENT COMPANY,
INC., 4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND 20814, A
SUBSIDIARY OF CALVERT GROUP, LTD., WHICH IS A CONTROLLED SUBSIDIARY OF
AMERITAS ACACIA MUTUAL HOLDING COMPANY OF LINCOLN, NEBRASKA.
THE ADVISORY CONTRACT BETWEEN THE FUND AND THE ADVISOR WILL REMAIN
IN EFFECT INDEFINITELY, PROVIDED CONTINUANCE IS APPROVED AT LEAST ANNUALLY
BY THE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF THE
FUND, OR BY THE DIRECTORS OF THE FUND; AND FURTHER PROVIDED THAT SUCH
CONTINUANCE IS ALSO APPROVED ANNUALLY BY THE VOTE OF A MAJORITY OF THE
DIRECTORS OF THE FUND WHO ARE NOT PARTIES TO THE CONTRACT OR INTERESTED
PERSONS OF SUCH PARTIES, CAST IN PERSON AT A MEETING CALLED FOR THE PURPOSE
OF VOTING ON SUCH APPROVAL. THE CONTRACT MAY BE TERMINATED WITHOUT PENALTY
BY EITHER PARTY ON 60 DAYS' PRIOR WRITTEN NOTICE; IT AUTOMATICALLY
TERMINATES IN THE EVENT OF ITS ASSIGNMENT.
UNDER THE CONTRACT, THE ADVISOR MANAGES THE INVESTMENT AND
REINVESTMENT OF THE FUND'S ASSETS, SUBJECT TO THE DIRECTION AND CONTROL OF
THE FUND'S BOARD OF DIRECTORS. FOR ITS SERVICES, THE ADVISOR RECEIVES AN
ANNUAL FEE OF 0.60% OF THE FIRST $500 MILLION OF EACH PORTFOLIO'S AVERAGE
DAILY NET ASSETS, 0.50% OF THE NEXT $500 MILLION OF SUCH ASSETS, AND 0.40%
OF ALL ASSETS OVER $1 BILLION.
THE ADVISORY FEE IS PAYABLE MONTHLY. THE ADVISOR RESERVES THE RIGHT
(I) TO WAIVE ALL OR A PART OF ITS FEE AND (II) TO COMPENSATE, AT ITS
EXPENSE, BROKER-DEALERS IN CONSIDERATION OF THEIR PROMOTIONAL AND
ADMINISTRATIVE SERVICES. DURING FISCAL YEARS 1996, 1997, AND 1998, THE
PORTFOLIOS PAID ADVISORY FEES AS SHOWN:
1996 1997 1998
NATIONAL $275,574 $285,023 $396,802
CALIFORNIA $217,159 $204,019 $205,130
MARYLAND $72,423 $70,899 $74,404
VIRGINIA $72,322 $79,695 $84,448
THE ADVISOR PROVIDES THE FUND WITH INVESTMENT ADVICE AND RESEARCH,
PAYS THE SALARIES AND FEES OF ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE
FUND WHO ARE PRINCIPALS OF THE ADVISOR, AND PAYS CERTAIN FUND ADVERTISING
AND PROMOTIONAL EXPENSES. THE FUND PAYS OTHER ADMINISTRATIVE AND OPERATING
EXPENSES, INCLUDING: CUSTODIAL FEES; SHAREHOLDER SERVICING, DIVIDEND
DISBURSING AND TRANSFER AGENCY FEES; ADMINISTRATIVE SERVICE FEES; FEDERAL
AND STATE SECURITIES REGISTRATION FEES; INSURANCE PREMIUMS; TRADE
ASSOCIATION DUES; INTEREST, TAXES AND OTHER BUSINESS FEES; LEGAL AND AUDIT
FEES; AND BROKERAGE COMMISSIONS AND OTHER COSTS ASSOCIATED WITH THE PURCHASE
AND SALE OF PORTFOLIO SECURITIES.
ADMINISTRATIVE SERVICES
CALVERT ADMINISTRATIVE SERVICES COMPANY, A WHOLLY-OWNED SUBSIDIARY
OF CALVERT GROUP, LTD., HAS BEEN RETAINED BY THE FUND TO PROVIDE CERTAIN
ADMINISTRATIVE SERVICES NECESSARY TO THE CONDUCT OF EACH PORTFOLIO'S
AFFAIRS. SUCH SERVICES INCLUDE THE PREPARATION OF CORPORATE AND REGULATORY
REPORTS AND FILINGS, AND THE OVERSIGHT OF PORTFOLIO ACCOUNTING AND THE DAILY
DETERMINATION OF NET INVESTMENT INCOME AND NET ASSET VALUE PER SHARE.
CALVERT ADMINISTRATIVE SERVICES COMPANY IS ENTITLED TO RECEIVE AN ANNUAL FEE
OF 0.10% OF EACH PORTFOLIO'S AVERAGE NET ASSETS FOR PROVIDING SUCH SERVICES.
THE FEES PAID BY EACH PORTFOLIO TO CALVERT ADMINISTRATIVE SERVICES COMPANY,
INC. FOR FISCAL YEARS 1996, 1997, AND 1998 ARE SHOWN BELOW:
1996 1997 1998
NATIONAL $45,929 $47,504 $66,134
CALIFORNIA $36,193 $34,003 $34,188
MARYLAND $12,071 $11,816 $12,401
VIRGINIA $12,054 $13,283 $14,075
METHOD OF DISTRIBUTION
THE FUND HAS ENTERED INTO AN AGREEMENT WITH CALVERT DISTRIBUTORS,
INC. ("CDI"), 4550 MONTGOMERY AVENUE, BETHESDA. MARYLAND 20814, WHEREBY CDI,
ACTING AS PRINCIPAL UNDERWRITER, MAKES A CONTINUOUS OFFERING OF EACH
PORTFOLIO'S SECURITIES ON A "BEST EFFORTS" BASIS. UNDER THE TERMS OF THE
AGREEMENT, CDI BEARS ALL ITS EXPENSES OF PROVIDING SERVICES PURSUANT TO THE
AGREEMENT, INCLUDING PAYMENT OF ANY COMMISSIONS AND SERVICE FEES. CDI
RECEIVES ALL SALES CHARGES IMPOSED ON THE PORTFOLIOS' SHARES AND COMPENSATES
BROKER-DEALER FIRMS FOR SALES OF SUCH SHARES. CDI IS ENTITLED TO RECEIVE A
DISTRIBUTION FEE PURSUANT TO THE DISTRIBUTION PLAN (SEE BELOW). FOR FISCAL
YEARS 1996, 1997, AND 1998, CDI RECEIVED AGGREGATE SALES CHARGES (GROSS) AND
SALES CHARGES IN EXCESS OF THE DEALER REALLOWANCE (NET) AS SHOWN BELOW:
1996 1997 1998
GROSS/NET GROSS/NET GROSS/NET
NATIONAL $45,813/$13,952 $40,981/$11,597 $49,679/$8,864
CALIFORNIA $50,884/$14,066 $49,851/$15,411 $37,645/$7,762
MARYLAND $12,032/$4,214 $18,892/$7,100 $15,037/$6,053
VIRGINIA $20,776/$9,039 $20,163/$7,697 $12,662/($30)
PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"), THE FUND HAS ADOPTED A DISTRIBUTION PLAN (THE "PLAN") WHICH
PERMIT IT TO PAY CERTAIN EXPENSES ASSOCIATED WITH THE DISTRIBUTION OF ITS
SHARES, BASED ON EACH PORTFOLIO'S AVERAGE DAILY NET ASSETS. SUCH EXPENSES
MAY NOT EXCEED, ON AN ANNUAL BASIS, 0.25% OF THE NATIONAL AND CALIFORNIA
PORTFOLIOS, AND 0.15% FOR THE MARYLAND AND VIRGINIA PORTFOLIOS. NO
DISTRIBUTION PLAN EXPENSES WERE PAID BY ANY OF THE PORTFOLIOS IN FISCAL
1996, 1997, AND 1998.
THE PLAN WAS APPROVED BY THE BOARD OF TRUSTEES/DIRECTORS, INCLUDING
THE TRUSTEES/DIRECTORS WHO ARE NOT "INTERESTED PERSONS" OF THE FUNDS (AS
THAT TERM IS DEFINED IN THE 1940 ACT) AND WHO HAVE NO DIRECT OR INDIRECT
FINANCIAL INTEREST IN THE OPERATION OF THE PLAN OR IN ANY AGREEMENTS RELATED
TO THE PLAN. THE SELECTION AND NOMINATION OF THE TRUSTEES/DIRECTORS WHO ARE
NOT INTERESTED PERSONS OF THE FUND IS COMMITTED TO THE DISCRETION OF SUCH
DISINTERESTED TRUSTEES/DIRECTORS. IN ESTABLISHING THE PLAN, THE
TRUSTEES/DIRECTORS CONSIDERED VARIOUS FACTORS INCLUDING THE AMOUNT OF THE
DISTRIBUTION FEE. THE TRUSTEES/DIRECTORS DETERMINED THAT THERE IS A
REASONABLE LIKELIHOOD THAT THE PLAN WILL BENEFIT THE FUNDS AND THEIR
SHAREHOLDERS.
THE PLAN MAY BE TERMINATED BY VOTE OF A MAJORITY OF THE
NON-INTERESTED TRUSTEES/DIRECTORS WHO HAVE NO DIRECT OR INDIRECT FINANCIAL
INTEREST IN THE PLAN, OR BY VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF
THE PORTFOLIO. ANY CHANGE IN THE PLAN THAT WOULD MATERIALLY INCREASE THE
DISTRIBUTION COST TO THE PORTFOLIO REQUIRES APPROVAL OF THE SHAREHOLDERS;
OTHERWISE, THE PLAN MAY BE AMENDED BY THE TRUSTEES/DIRECTORS, INCLUDING A
MAJORITY OF THE NON-INTERESTED TRUSTEES/DIRECTORS AS DESCRIBED ABOVE.
THE PLAN WILL CONTINUE IN EFFECT FOR SUCCESSIVE ONE-YEAR TERMS,
PROVIDED THAT SUCH CONTINUANCE IS SPECIFICALLY APPROVED BY (I) THE VOTE OF A
MAJORITY OF THE TRUSTEES/DIRECTORS WHO ARE NOT PARTIES TO THE PLAN OR
INTERESTED PERSONS OF ANY SUCH PARTY AND WHO HAVE NO DIRECT OR INDIRECT
FINANCIAL INTEREST IN THE PLAN, AND (II) THE VOTE OF A MAJORITY OF THE
ENTIRE BOARD OF TRUSTEES/DIRECTORS.
APART FROM THE PLAN, THE ADVISOR, AT ITS EXPENSE, MAY INCUR COSTS
AND PAY EXPENSES ASSOCIATED WITH THE DISTRIBUTION OF SHARES OF THE FUND.
CERTAIN BROKER/DEALERS, AND/OR OTHER PERSONS MAY RECEIVE
COMPENSATION FROM THE INVESTMENT ADVISOR, UNDERWRITER, OR THEIR AFFILIATES
FOR THE SALE AND DISTRIBUTION OF THE SECURITIES OR FOR SERVICES TO THE FUND.
SUCH COMPENSATION MAY INCLUDE ADDITIONAL COMPENSATION BASED ON ASSETS HELD
THROUGH THAT FIRM BEYOND THE REGULARLY SCHEDULED RATES, AND FINDERS' FEE
PAYMENTS TO FIRMS WHOSE REPRESENTATIVES ARE RESPONSIBLE FOR SOLICITING A NEW
ACCOUNT WHERE THE ACCOUNTHOLDER DOES NOT CHOOSE TO PURCHASE THROUGH THAT
FIRM.
TRANSFER AND SHAREHOLDER SERVICING AGENT
NATIONAL FINANCIAL DATA SERVICES, INC. ("NFDS"), 330 W. 9TH STREET,
KANSAS CITY, MISSOURI 64105, A SUBSIDIARY OF STATE STREET BANK & TRUST, HAS
BEEN RETAINED BY THE FUND TO ACT AS TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT. THESE RESPONSIBILITIES INCLUDE: RESPONDING TO CERTAIN SHAREHOLDER
INQUIRIES AND INSTRUCTIONS, CREDITING AND DEBITING SHAREHOLDER ACCOUNTS FOR
PURCHASES AND REDEMPTIONS OF FUND SHARES AND CONFIRMING SUCH TRANSACTIONS, AND
DAILY UPDATING OF SHAREHOLDER ACCOUNTS TO REFLECT DECLARATION AND PAYMENT OF
DIVIDENDS.
CALVERT SHAREHOLDER SERVICES, INC. ("CSSI"), 4550 MONTGOMERY
AVENUE, BETHESDA, MARYLAND 20814, A SUBSIDIARY OF CALVERT GROUP, LTD., HAS
BEEN RETAINED BY THE FUND TO ACT AS SHAREHOLDER SERVICING AGENT. SHAREHOLDER
SERVICING RESPONSIBILITIES INCLUDE RESPONDING TO SHAREHOLDER INQUIRIES AND
INSTRUCTIONS CONCERNING THEIR ACCOUNTS, ENTERING ANY TELEPHONED PURCHASES OR
REDEMPTIONS INTO THE NFDS SYSTEM, MAINTENANCE OF BROKER-DEALER DATA, AND
PREPARING AND DISTRIBUTING STATEMENTS TO SHAREHOLDERS REGARDING THEIR
ACCOUNTS. CALVERT SHAREHOLDER SERVICES, INC. WAS THE SOLE TRANSFER AGENT
PRIOR TO JANUARY 1, 1998.
FOR THESE SERVICES, NFDS AND CALVERT SHAREHOLDER SERVICES, INC.
RECEIVE A FEE BASED ON THE NUMBER OF SHAREHOLDER ACCOUNTS AND SHAREHOLDER
TRANSACTIONS, PER PORTFOLIO.
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
PRICEWATERHOUSECOOPERS LLP, 250 WEST PRATT STREET, BALTIMORE,
MARYLAND 21201, HAS BEEN SELECTED BY THE BOARD OF DIRECTORS TO SERVE AS
INDEPENDENT ACCOUNTANTS OF THE FUND FOR FISCAL YEAR 1999. STATE STREET BANK
& TRUST COMPANY, N.A., 225 FRANKLIN STREET, BOSTON, MA 02110, SERVES AS
CUSTODIAN OF THE PORTFOLIOS' INVESTMENTS. FIRST NATIONAL BANK OF MARYLAND,
25 SOUTH CHARLES STREET, BALTIMORE, MARYLAND 21203 ACTS AS CUSTODIAN OF
CERTAIN OF CASH ASSETS. NEITHER CUSTODIAN HAS ANY PART IN DECIDING THE
PORTFOLIO INVESTMENT POLICIES OR THE CHOICE OF SECURITIES THAT ARE TO BE
PURCHASED OR SOLD BY EACH PORTFOLIO.
PORTFOLIO TRANSACTIONS
PORTFOLIO TRANSACTIONS ARE UNDERTAKEN ON THE BASIS OF THEIR
DESIRABILITY FROM AN INVESTMENT STANDPOINT. INVESTMENT DECISIONS AND THE
CHOICE OF BROKERS AND DEALERS ARE MADE BY THE ADVISOR UNDER THE DIRECTION
AND SUPERVISION OF THE BOARD OF TRUSTEES/DIRECTORS.
BROKER-DEALERS WHO EXECUTE PORTFOLIO TRANSACTIONS ON BEHALF OF EACH
PORTFOLIO ARE SELECTED ON THE BASIS OF THEIR PROFESSIONAL CAPABILITY AND THE
VALUE AND QUALITY OF THEIR SERVICES. THE ADVISOR RESERVES THE RIGHT TO PLACE
ORDERS FOR THE PURCHASE OR SALE OF PORTFOLIO SECURITIES WITH BROKER-DEALERS
WHO HAVE SOLD SHARES OF EACH PORTFOLIO OR WHO PROVIDE IT WITH STATISTICAL,
RESEARCH, OR OTHER INFORMATION AND SERVICES. ALTHOUGH ANY STATISTICAL
RESEARCH OR OTHER INFORMATION AND SERVICES PROVIDED BY BROKER-DEALERS MAY BE
USEFUL TO THE ADVISOR, THE DOLLAR VALUE OF SUCH INFORMATION AND SERVICES IS
GENERALLY INDETERMINABLE, AND ITS AVAILABILITY OR RECEIPT DOES NOT SERVE TO
MATERIALLY REDUCE THE ADVISOR'S NORMAL RESEARCH ACTIVITIES OR EXPENSES.
WHILE THE ADVISOR SELECTS BROKERS PRIMARILY ON THE BASIS OF BEST
EXECUTION, IN SOME CASES THE ADVISOR MAY DIRECT TRANSACTIONS TO BROKERS
BASED ON THE QUALITY AND AMOUNT OF THE RESEARCH AND RESEARCH-RELATED
SERVICES WHICH THE BROKERS PROVIDE TO THEM. THESE SERVICES ARE OF THE TYPE
DESCRIBED IN SECTION 28(E) OF THE SECURITIES EXCHANGE ACT OF 1934 AND MAY
INCLUDE ANALYSES OF THE BUSINESS OR PROSPECTS OF A COMPANY, INDUSTRY OR
ECONOMIC SECTOR, OR STATISTICAL AND PRICING SERVICES.
IF, IN THE JUDGMENT OF THE ADVISOR, THE FUND OR OTHER ACCOUNTS
MANAGED BY THEM WILL BE BENEFITED BY SUPPLEMENTAL RESEARCH SERVICES, THEY
ARE AUTHORIZED TO PAY BROKERAGE COMMISSIONS TO A BROKER FURNISHING SUCH
SERVICES WHICH ARE IN EXCESS OF COMMISSIONS WHICH ANOTHER BROKER MAY HAVE
CHARGED FOR EFFECTING THE SAME TRANSACTION. THESE RESEARCH SERVICES INCLUDE
ADVICE, EITHER DIRECTLY OR THROUGH PUBLICATIONS OR WRITINGS, AS TO THE VALUE
OF SECURITIES, THE ADVISABILITY OF INVESTING IN, PURCHASING OR SELLING
SECURITIES, AND THE AVAILABILITY OF SECURITIES OR PURCHASERS OR SELLERS OF
SECURITIES; FURNISHING OF ANALYSES AND REPORTS CONCERNING ISSUERS,
SECURITIES OR INDUSTRIES; PROVIDING INFORMATION ON ECONOMIC FACTORS AND
TRENDS; ASSISTING IN DETERMINING PORTFOLIO STRATEGY; PROVIDING COMPUTER
SOFTWARE USED IN SECURITY ANALYSES; PROVIDING PORTFOLIO PERFORMANCE
EVALUATION AND TECHNICAL MARKET ANALYSES; AND PROVIDING OTHER SERVICES
RELEVANT TO THE INVESTMENT DECISION MAKING PROCESS. IT IS THE POLICY OF THE
ADVISOR THAT SUCH RESEARCH SERVICES WILL BE USED FOR THE BENEFIT OF THE FUND
AS WELL AS OTHER CALVERT GROUP FUNDS AND MANAGED ACCOUNTS.
THE ADVISOR MAY ALSO EXECUTE PORTFOLIO TRANSACTIONS WITH OR THROUGH
BROKER-DEALERS WHO HAVE SOLD SHARES OF EACH PORTFOLIO. HOWEVER, SUCH SALES
WILL NOT BE A QUALIFYING OR DISQUALIFYING FACTOR IN A BROKER-DEALER'S
SELECTION NOR WILL THE SELECTION OF ANY BROKER-DEALER BE BASED ON THE VOLUME
OF SHARES SOLD. THE ADVISOR OR ITS AFFILIATE MAY COMPENSATE, AT ITS EXPENSE,
BROKER-DEALERS IN CONSIDERATION OF THEIR PROMOTIONAL AND ADMINISTRATIVE
SERVICES.
THE PORTFOLIO TURNOVER IS SHOWN BELOW FOR FISCAL YEARS 1997 AND
1998:
1997 1998
NATIONAL 29% 44%
CALIFORNIA 48% 12%
MARYLAND 13% 24%
VIRGINIA 8% 36%
GENERAL INFORMATION
THE FUND WAS ORGANIZED AS A CORPORATION UNDER THE GENERAL
CORPORATION LAW OF THE STATE OF MARYLAND ON FEBRUARY 4, 1992. THE FUND HAS
FOUR PORTFOLIOS: CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND, CALVERT
CALIFORNIA MUNICIPAL INTERMEDIATE FUND, CALVERT MARYLAND MUNICIPAL
INTERMEDIATE FUND, AND CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND. PRIOR
TO MARCH 1, 1994, CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND WAS KNOWN AS
CALVERT INTERMEDIATE MUNICIPAL FUND.
EACH PORTFOLIO WILL SEND ITS SHAREHOLDERS UNAUDITED SEMI-ANNUAL AND
AUDITED ANNUAL REPORTS THAT WILL INCLUDE THE PORTFOLIO'S NET ASSET VALUE PER
SHARE, PORTFOLIO SECURITIES, INCOME AND EXPENSES, AND OTHER FINANCIAL
INFORMATION.
EACH SHARE OF THE PORTFOLIO REPRESENTS AN EQUAL PROPORTIONATE
INTEREST IN THAT PORTFOLIO WITH EACH OTHER SHARE AND IS ENTITLED TO SUCH
DIVIDENDS AND DISTRIBUTIONS OUT OF THE INCOME BELONGING TO THE PORTFOLIO AS
DECLARED BY THE BOARD. UPON ANY LIQUIDATION OF THE PORTFOLIO, SHAREHOLDERS
ARE ENTITLED TO SHARE PRO RATA IN THE NET ASSETS AVAILABLE FOR DISTRIBUTION.
THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONTAIN ALL THE
INFORMATION IN THE FUND'S REGISTRATION STATEMENT. THE REGISTRATION STATEMENT
IS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS AVAILABLE TO
THE PUBLIC.
CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES
AS OF APRIL 20, 1999, THE FOLLOWING SHAREHOLDER(S) OWNED OF RECORD
5% OR MORE OF SHARES AS SHOWN BELOW:
NAME AND ADDRESS % OF OWNERSHIP
NATIONAL
ROBERT TAISHOFF, TRUSTEE 7.14%
L. TAISHOFF FLINT TRUST
ANNAPOLIS, MARYLAND
JOHN SWANSON 8.93%
MCMURRAY, PENNSYLVANIA
CALIFORNIA
CATALYST PRODUCTIONS 13.43%
OAKLAND, CALIFORNIA
NATIONAL CITY BANK KENTUCKY 7.31%
TRUSTEE ANCHORAGE TRUST
CLEVELAND, OHIO
JAMES BOCHNOWSKI 5.47%
ATHERTON, CALIFORNIA
APPENDIX
MUNICIPAL OBLIGATIONS
MUNICIPAL OBLIGATIONS ARE DEBT OBLIGATIONS ISSUED BY STATES,
CITIES, MUNICIPALITIES, AND THEIR AGENCIES TO OBTAIN FUNDS FOR VARIOUS
PUBLIC PURPOSES. SUCH PURPOSES INCLUDE THE CONSTRUCTION OF A WIDE RANGE OF
PUBLIC FACILITIES, THE REFUNDING OF OUTSTANDING OBLIGATIONS, THE OBTAINING
OF FUNDS FOR GENERAL OPERATING EXPENSES, AND THE LENDING OF FUNDS TO OTHER
PUBLIC INSTITUTIONS AND FACILITIES. IN ADDITION, CERTAIN TYPES OF INDUSTRIAL
DEVELOPMENT BONDS ARE ISSUED BY OR ON BEHALF OF PUBLIC AUTHORITIES TO OBTAIN
FUNDS FOR MANY TYPES OF LOCAL, PRIVATELY OPERATED FACILITIES. SUCH DEBT
INSTRUMENTS ARE CONSIDERED MUNICIPAL OBLIGATIONS IF THE INTEREST PAID ON
THEM IS EXEMPT FROM FEDERAL INCOME TAX IN THE OPINION OF BOND COUNSEL TO THE
ISSUER. ALTHOUGH THE INTEREST PAID ON THE PROCEEDS FROM PRIVATE ACTIVITY
BONDS USED FOR THE CONSTRUCTION, EQUIPMENT, REPAIR OR IMPROVEMENT OF
PRIVATELY OPERATED INDUSTRIAL OR COMMERCIAL FACILITIES MAY BE EXEMPT FROM
FEDERAL INCOME TAX, CURRENT FEDERAL TAX LAW PLACES SUBSTANTIAL LIMITATIONS
ON THE SIZE OF SUCH ISSUES.
MUNICIPAL OBLIGATIONS ARE GENERALLY CLASSIFIED AS EITHER "GENERAL
OBLIGATION" OR "REVENUE" BONDS. GENERAL OBLIGATION BONDS ARE SECURED BY THE
ISSUER'S PLEDGE OF ITS FAITH, CREDIT AND TAXING POWER FOR THE PAYMENT OF
PRINCIPAL AND INTEREST. REVENUE BONDS ARE PAYABLE FROM THE REVENUES DERIVED
FROM A PARTICULAR FACILITY OR CLASS OF FACILITIES OR, IN SOME CASES, FROM
THE PROCEEDS OF A SPECIAL EXCISE TAX OR OTHER SPECIFIC REVENUE SOURCE, BUT
NOT FROM THE GENERAL TAXING POWER. TAX-EXEMPT INDUSTRIAL DEVELOPMENT BONDS
ARE IN MOST CASES REVENUE BONDS AND DO NOT GENERALLY CARRY THE PLEDGE OF THE
CREDIT OF THE ISSUING MUNICIPALITY. THERE ARE, OF COURSE, VARIATIONS IN THE
SECURITY OF MUNICIPAL OBLIGATIONS, BOTH WITHIN A PARTICULAR CLASSIFICATION
AND AMONG CLASSIFICATIONS.
MUNICIPAL OBLIGATIONS ARE GENERALLY TRADED ON THE BASIS OF A QUOTED
YIELD TO MATURITY, AND THE PRICE OF THE SECURITY IS ADJUSTED SO THAT
RELATIVE TO THE STATED RATE OF INTEREST IT WILL RETURN THE QUOTED RATE TO
THE PURCHASER.
SHORT-TERM AND LIMITED-TERM MUNICIPAL OBLIGATIONS INCLUDE TAX
ANTICIPATION NOTES, REVENUE ANTICIPATION NOTES, BOND ANTICIPATION NOTES,
CONSTRUCTION LOAN NOTES, AND DISCOUNT NOTES. THE MATURITIES OF THESE
INSTRUMENTS AT THE TIME OF ISSUE GENERALLY WILL RANGE BETWEEN THREE MONTHS
AND ONE YEAR. PRE-REFUNDED BONDS WITH LONGER NOMINAL MATURITIES THAT ARE DUE
TO BE RETIRED WITH THE PROCEEDS OF AN ESCROWED SUBSEQUENT ISSUE AT A DATE
WITHIN ONE YEAR AND THREE YEARS OF THE TIME OF ACQUISITION ARE ALSO
CONSIDERED SHORT-TERM AND LIMITED-TERM MUNICIPAL OBLIGATIONS.
MUNICIPAL BOND AND NOTE RATINGS
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS OF STATE AND
MUNICIPAL NOTES:
MOODY'S RATINGS FOR STATE AND MUNICIPAL NOTES AND OTHER SHORT-TERM
OBLIGATIONS ARE DESIGNATED MOODY'S INVESTMENT GRADE ("MIG"). THIS
DISTINCTION IS IN RECOGNITION OF THE DIFFERENCES BETWEEN SHORT-TERM CREDIT
RISK AND LONG-TERM RISK.
MIG 1: NOTES BEARING THIS DESIGNATION ARE OF THE BEST QUALITY,
ENJOYING STRONG PROTECTION FROM ESTABLISHED CASH FLOWS OF FUNDS FOR THEIR
SERVICING OR FROM ESTABLISHED AND BROAD-BASED ACCESS TO THE MARKET FOR
REFINANCING, OR BOTH.
MIG2: NOTES BEARING THIS DESIGNATION ARE OF HIGH QUALITY, WITH
MARGINS OF PROTECTION AMPLE ALTHOUGH NOT SO LARGE AS IN THE PRECEDING GROUP.
MIG3: NOTES BEARING THIS DESIGNATION ARE OF FAVORABLE QUALITY, WITH
ALL SECURITY ELEMENTS ACCOUNTED FOR BUT LACKING THE UNDENIABLE STRENGTH OF
THE PRECEDING GRADES. MARKET ACCESS FOR REFINANCING, IN PARTICULAR, IS
LIKELY TO BE LESS WELL ESTABLISHED.
MIG4: NOTES BEARING THIS DESIGNATION ARE OF ADEQUATE QUALITY,
CARRYING SPECIFIC RISK BUT HAVING PROTECTION COMMONLY REGARDED AS REQUIRED
OF AN INVESTMENT SECURITY AND NOT DISTINCTLY OR PREDOMINANTLY SPECULATIVE.
DESCRIPTION OF MOODY'S INVESTORS SERVICE INC.'S/STANDARD & POOR'S MUNICIPAL
BOND RATINGS:
AAA/AAA: BEST QUALITY. THESE BONDS CARRY THE SMALLEST DEGREE OF
INVESTMENT RISK AND ARE GENERALLY REFERRED TO AS "GILT EDGE." INTEREST
PAYMENTS ARE PROTECTED BY A LARGE OR BY AN EXCEPTIONALLY STABLE MARGIN AND
PRINCIPAL IS SECURE. THIS RATING INDICATES AN EXTREMELY STRONG CAPACITY TO
PAY PRINCIPAL AND INTEREST.
AA/AA: BONDS RATED AA ALSO QUALIFY AS HIGH-QUALITY DEBT
OBLIGATIONS. CAPACITY TO PAY PRINCIPAL AND INTEREST IS VERY STRONG, AND IN
THE MAJORITY OF INSTANCES THEY DIFFER FROM AAA ISSUES ONLY IN SMALL DEGREE.
THEY ARE RATED LOWER THAN THE BEST BONDS BECAUSE MARGINS OF PROTECTION MAY
NOT BE AS LARGE AS IN AAA SECURITIES, FLUCTUATION OF PROTECTIVE ELEMENTS MAY
BE OF GREATER AMPLITUDE, OR THERE MAY BE OTHER ELEMENTS PRESENT WHICH MAKE
LONG-TERM RISKS APPEAR SOMEWHAT LARGER THAN IN AAA SECURITIES.
A/A: UPPER-MEDIUM GRADE OBLIGATIONS. FACTORS GIVING SECURITY TO
PRINCIPAL AND INTEREST ARE CONSIDERED ADEQUATE, BUT ELEMENTS MAY BE PRESENT
WHICH MAKE THE BOND SOMEWHAT MORE SUSCEPTIBLE TO THE ADVERSE EFFECTS OF
CIRCUMSTANCES AND ECONOMIC CONDITIONS.
BAA/BBB: MEDIUM GRADE OBLIGATIONS; ADEQUATE CAPACITY TO PAY
PRINCIPAL AND INTEREST. WHEREAS THEY NORMALLY EXHIBIT ADEQUATE PROTECTION
PARAMETERS, ADVERSE ECONOMIC CONDITIONS OR CHANGING CIRCUMSTANCES ARE MORE
LIKELY TO LEAD TO A WEAKENED CAPACITY TO PAY PRINCIPAL AND INTEREST FOR
BONDS IN THIS CATEGORY THAN FOR BONDS IN THE A CATEGORY.
BA/BB, B/B, CAA/CCC, CA/CC: DEBT RATED IN THESE CATEGORIES IS
REGARDED AS PREDOMINANTLY SPECULATIVE WITH RESPECT TO CAPACITY TO PAY
INTEREST AND REPAY PRINCIPAL. THERE MAY BE SOME LARGE UNCERTAINTIES AND
MAJOR RISK EXPOSURE TO ADVERSE CONDITIONS. THE HIGHER THE DEGREE OF
SPECULATION, THE LOWER THE RATING.
C/C: THIS RATING IS ONLY FOR NO-INTEREST INCOME BONDS.
D: DEBT IN DEFAULT; PAYMENT OF INTEREST AND/OR PRINCIPAL IS IN
ARREARS.
LETTER OF INTENT
DATE
CALVERT DISTRIBUTORS, INC.
4550 MONTGOMERY AVENUE
BETHESDA, MD 20814
LADIES AND GENTLEMEN:
BY SIGNING THIS LETTER OF INTENT, OR AFFIRMATIVELY MARKING THE
LETTER OF INTENT OPTION ON MY FUND ACCOUNT APPLICATION FORM, I AGREE TO BE
BOUND BY THE TERMS AND CONDITIONS APPLICABLE TO LETTERS OF INTENT APPEARING
IN THE PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION FOR THE FUND
AND THE PROVISIONS DESCRIBED BELOW AS THEY MAY BE AMENDED FROM TIME TO TIME
BY THE FUND. SUCH AMENDMENTS WILL APPLY AUTOMATICALLY TO EXISTING LETTERS OF
INTENT.
I INTEND TO INVEST IN THE SHARES OF:________________ (FUND OR
PORTFOLIO NAME) DURING THE THIRTEEN (13) MONTH PERIOD FROM THE DATE OF MY
FIRST PURCHASE PURSUANT TO THIS LETTER (WHICH CANNOT BE MORE THAN NINETY
(90) DAYS PRIOR TO THE DATE OF THIS LETTER OR MY FUND ACCOUNT APPLICATION
FORM, WHICHEVER IS APPLICABLE), AN AGGREGATE AMOUNT (EXCLUDING ANY
REINVESTMENTS OF DISTRIBUTIONS) OF AT LEAST FIFTY THOUSAND DOLLARS ($50,000)
WHICH, TOGETHER WITH MY CURRENT HOLDINGS OF THE FUND (AT PUBLIC OFFERING
PRICE ON DATE OF THIS LETTER OR MY FUND ACCOUNT APPLICATION FORM, WHICHEVER
IS APPLICABLE), WILL EQUAL OR EXCEED THE AMOUNT CHECKED BELOW:
__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000
SUBJECT TO THE CONDITIONS SPECIFIED BELOW, INCLUDING THE TERMS OF
ESCROW, TO WHICH I HEREBY AGREE, EACH PURCHASE OCCURRING AFTER THE DATE OF
THIS LETTER WILL BE MADE AT THE PUBLIC OFFERING PRICE APPLICABLE TO A SINGLE
TRANSACTION OF THE DOLLAR AMOUNT SPECIFIED ABOVE, AS DESCRIBED IN THE FUND'S
PROSPECTUS. "FUND" IN THIS LETTER OF INTENT SHALL REFER TO THE FUND OR
PORTFOLIO, AS THE CASE MAY BE, HERE INDICATED. NO PORTION OF THE SALES
CHARGE IMPOSED ON PURCHASES MADE PRIOR TO THE DATE OF THIS LETTER WILL BE
REFUNDED.
I AM MAKING NO COMMITMENT TO PURCHASE SHARES, BUT IF MY PURCHASES
WITHIN THIRTEEN MONTHS FROM THE DATE OF MY FIRST PURCHASE DO NOT AGGREGATE
THE MINIMUM AMOUNT SPECIFIED ABOVE, I WILL PAY THE INCREASED AMOUNT OF SALES
CHARGES PRESCRIBED IN THE TERMS OF ESCROW DESCRIBED BELOW. I UNDERSTAND THAT
4.75% OF THE MINIMUM DOLLAR AMOUNT SPECIFIED ABOVE WILL BE HELD IN ESCROW IN
THE FORM OF SHARES (COMPUTED TO THE NEAREST FULL SHARE). THESE SHARES WILL
BE HELD SUBJECT TO THE TERMS OF ESCROW DESCRIBED BELOW.
FROM THE INITIAL PURCHASE (OR SUBSEQUENT PURCHASES IF NECESSARY),
4.75% OF THE DOLLAR AMOUNT SPECIFIED IN THIS LETTER SHALL BE HELD IN ESCROW
IN SHARES OF THE FUND BY THE FUND'S TRANSFER AGENT. FOR EXAMPLE, IF THE
MINIMUM AMOUNT SPECIFIED UNDER THE LETTER IS $50,000, THE ESCROW SHALL BE
SHARES VALUED IN THE AMOUNT OF $2,375 (COMPUTED AT THE PUBLIC OFFERING PRICE
ADJUSTED FOR A $50,000 PURCHASE). ALL DIVIDENDS AND ANY CAPITAL GAINS
DISTRIBUTION ON THE ESCROWED SHARES WILL BE CREDITED TO MY ACCOUNT.
IF THE TOTAL MINIMUM INVESTMENT SPECIFIED UNDER THE LETTER IS
COMPLETED WITHIN A THIRTEEN MONTH PERIOD, ESCROWED SHARES WILL BE PROMPTLY
RELEASED TO ME. HOWEVER, SHARES DISPOSED OF PRIOR TO COMPLETION OF THE
PURCHASE REQUIREMENT UNDER THE LETTER WILL BE DEDUCTED FROM THE AMOUNT
REQUIRED TO COMPLETE THE INVESTMENT COMMITMENT.
UPON EXPIRATION OF THIS LETTER, IF THE TOTAL PURCHASES PURSUANT TO
THE LETTER ARE LESS THAN THE AMOUNT SPECIFIED IN THE LETTER AS THE INTENDED
AGGREGATE PURCHASES, CALVERT DISTRIBUTORS, INC. ("CDI") WILL BILL ME FOR AN
AMOUNT EQUAL TO THE DIFFERENCE BETWEEN THE LOWER LOAD I PAID AND THE DOLLAR
AMOUNT OF SALES CHARGES WHICH I WOULD HAVE PAID IF THE TOTAL AMOUNT
PURCHASED HAD BEEN MADE AT A SINGLE TIME. IF NOT PAID BY THE INVESTOR WITHIN
20 DAYS, CDI WILL DEBIT THE DIFFERENCE FROM MY ACCOUNT. FULL SHARES, IF ANY,
REMAINING IN ESCROW AFTER THE AFOREMENTIONED ADJUSTMENT WILL BE RELEASED
AND, UPON REQUEST, REMITTED TO ME.
I IRREVOCABLY CONSTITUTE AND APPOINT CDI AS MY ATTORNEY-IN-FACT,
WITH FULL POWER OF SUBSTITUTION, TO SURRENDER FOR REDEMPTION ANY OR ALL
ESCROWED SHARES ON THE BOOKS OF THE FUND. THIS POWER OF ATTORNEY IS COUPLED
WITH AN INTEREST.
THE COMMISSION ALLOWED BY CALVERT DISTRIBUTORS, INC. TO THE
BROKER-DEALER NAMED HEREIN SHALL BE AT THE RATE APPLICABLE TO THE MINIMUM
AMOUNT OF MY SPECIFIED INTENDED PURCHASES.
THE LETTER MAY BE REVISED UPWARD BY ME AT ANY TIME DURING THE
THIRTEEN-MONTH PERIOD, AND SUCH A REVISION WILL BE TREATED AS A NEW LETTER,
EXCEPT THAT THE THIRTEEN-MONTH PERIOD DURING WHICH THE PURCHASE MUST BE MADE
WILL REMAIN UNCHANGED AND THERE WILL BE NO RETROACTIVE REDUCTION OF THE
SALES CHARGES PAID ON PRIOR PURCHASES.
IN DETERMINING THE TOTAL AMOUNT OF PURCHASES MADE HEREUNDER, SHARES
DISPOSED OF PRIOR TO TERMINATION OF THIS LETTER WILL BE DEDUCTED. MY
BROKER-DEALER SHALL REFER TO THIS LETTER OF INTENT IN PLACING ANY FUTURE
PURCHASE ORDERS FOR ME WHILE THIS LETTER IS IN EFFECT.
DEALER
NAME OF INVESTOR(S)
BY
AUTHORIZED SIGNER
ADDRESS
SIGNATURE OF INVESTOR(S)
DATE
SIGNATURE OF INVESTOR(S)
DATE
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