First Variable Rate Fund for Government Income/MD · 485BPOS · On 4/30/97

Filed On 4/30/97   ·   SEC Files 2-56809, 811-02633   ·   Accession Number 205355-97-5

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Post-Effective Amendment                             128±   534K 
 2: EX-23       Consent of Experts or Counsel                          1      6K 
 3: EX-23       Consent of Experts or Counsel                          1      7K 
 4: EX-24       Power of Attorney                                     11     32K 
 5: EX-27       Financial Data Schedule                                2±     8K 
 6: EX-27       Financial Data Schedule                                2±     8K 

485BPOS   ·   Post-Effective Amendment
Document Table of Contents

485BPOS
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                                                      Page 1 of ____

SEC Registration Nos.       
2-56809 and 811-2633          

SECURITIES AND EXCHANGE COMMISSION      
Washington, D.C. 20549      

FORM N-1A       

REGISTRATION STATEMENT UNDER THE                                                
SECURITIES ACT OF 1933                                                          

Post-Effective Amendment No. 34              XX               

and/or      

REGISTRATION STATEMENT UNDER THE                                                
INVESTMENT COMPANY ACT OF 1940                                                  

Amendment No. 34                             XX               

First Variable Rate Fund for Government Income      
(Exact Name of Registrant as Specified in Charter)      

4550 Montgomery Avenue      
Suite 1000N       
Bethesda, Maryland 20814      
(Address of Principal Executive Offices)      

Registrant's Telephone Number: (301) 951-4800       

William M. Tartikoff, Esq.      
4550 Montgomery Avenue      
Suite 1000N       
Bethesda, Maryland 20814      
(Name and Address of Agent for Service)       

It is proposed that this filing will become effective                           

Immediately upon filing                          XX  on April 30, 1997
pursuant to paragraph (b)                             pursuant to paragraph (b) 

60 days after filing                                 on (date)        
pursuant to paragraph (a)                             pursuant to paragraph (a) 

of Rule 485.                                                                    

Pursuant to the provisions of Rule 24f-2 under the Investment Company           
Act of 1940, an indefinite number of shares of beneficial interest is           
being registered by this Registration Statement.  On February 26, 1997,         
Registrant filed a Rule 24f-2 Notice for its fiscal year ended December         
31, 1996.                                                                       

485BPOS
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First Variable Rate Fund for Government Income
Form N-1A Cross Reference Sheet       

Item number                        Prospectus Caption                           

1.                                  Cover Page                  
2.                                  Fund Expenses               
3.                                  Financial Highlights        
             Yield
     4.                                  Investment Objective and Policies
                              Management of the Fund
5.                                  Management of the Fund      
6.                                  Alternative Sales Options   
                              Management of the Fund
                           Dividends and Taxes
7.                                  How to Buy Shares           
                              Management of the Fund
                       Net Asset Value
                                          When Your Account Will Be Credited
                 Exchanges
8.                                  Alternative Sales Options   
                               How to Sell Your Shares
9.                                  *                           

                                  Statement of AdditionalIn formation Captions

10.                          Cover Page                         
11.                          Table of Contents                  
             General Information
13.                          Investment Objective and Strategies
                 Investment Restrictions
                Portfolio Transactions
14.                          Trustees and Officers              
15.                          Trustees and Officers              
16.                          Investment Advisor                 
                                  Transfer and Shareholder Servicing Agent
                                Independent Accountants and Custodians
17.                          Portfolio Transactions             
18.                          General Information                
19.                          Purchase and Redemption of Shares  
         Net Asset Value
              Financial Statements
20.                          Tax Matters                        
21.                          *                                  
22.                          Calculation of Yield               
23.                        Financial Statements                 

*  Inapplicable or negative answer                                              

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PROSPECTUS --                                                                   
April 30, 1997                                                                  

FIRST VARIABLE RATE FUND:       
CALVERT FIRST GOVERNMENT MONEY MARKET FUND      
4550 Montgomery Avenue, Bethesda, Maryland 20814      
==========================================================================      

INTRODUCTION TO THE FUND                                                        

CALVERT  FIRST  GOVERNMENT  MONEY  MARKET  FUND  (the  "Fund")  is a  U.S.      
Government-only   money  market  fund  that  seeks  to  earn  the  highest      
possible yield  consistent  with safety,  liquidity,  and  preservation of      
capital.  In  pursuing  its  objective,  the  Fund  invests  only  in U.S.      
Government-backed  obligations,  including  such  obligations  subject  to      
repurchase  agreements with recognized  securities  dealers and banks. The      
Fund seeks to maintain a constant  net asset value of $1.00 per share.  An      
investment  in the Fund is  neither  insured  nor  guaranteed  by the U.S.      
Government.  There can be no  assurance  that the Fund will be  successful      
in meeting its  investment  objective or  maintaining a constant net asset      
value of $1.00 per share.                                                       

TO OPEN AN ACCOUNT                                                              

Call  your  broker,   or  complete   and  return  the   enclosed   Account      
Application. Minimum investment is $2,000.                                      

ABOUT THIS PROSPECTUS                                                           

Please read this Prospectus  before  investing.  It is designed to provide      
you with  information  you ought to know before  investing and to help you      
decide if the Fund's goals match your own.  Keep this  document for future      
reference.                                                                      

A  Statement  of  Additional  Information  for the Fund  (dated  April 30,      
1997) has been filed with the  Securities  and Exchange  Commission and is      
incorporated  by reference.  This free Statement is available upon request      
from the Fund: 800-368-2748.                                                    

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES      
AND EXCHANGE  COMMISSION OR ANY STATE SECURITIES  COMMISSION,  NOR HAS THE      
FEDERAL  OR ANY STATE  SECURITIES  COMMISSION  PASSED ON THE  ACCURACY  OR      
ADEQUACY  OF THIS  PROSPECTUS.  ANY  REPRESENTATION  TO THE  CONTRARY IS A      
CRIMINAL OFFENSE.                                                               

SHARES OF THE FUND ARE NOT DEPOSITS OR  OBLIGATIONS  OF, OR  GUARANTEED OR      
ENDORSED  BY, ANY BANK,  AND ARE NOT  FEDERALLY  INSURED BY THE FDIC,  THE      
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.                                     

                                                                · Download Table


FUND EXPENSES                                                             

                                                                          

A.   Shareholder Transaction Costs                                        
==========================================================================
     Sales Load on Purchases                                  None        
     Sales Load on Reinvested Dividends                       None        
     Deferred Sales Load                                      None        
     Redemption Fees                                          None        
     Exchange Fees                                            None        

B.   Annual Fund Operating Expenses - Fiscal Year 1996                    
       (as a percentage of average net assets)                            
     Management Fees                                          0.50%       
     Rule 12b-1 Service and Distribution Fees                 None        
     Other Expenses                                           0.36%       
     Total Fund Operating Expenses<F1>                        0.86%       
<FN>                                                                      
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly 
were 0.85%.                                                               
</FN>                                                                     

                                                                · Download Table


C.       Example:     You would pay the following expenses on a $1,000    
                      investment, assuming (1) 5% annual return and (2)   
                      redemption at the end of each period:               
                                                                          

                  1 Year            3 Years          5 Years    10 Years  
==========================================================================

                  $9                $27              $48         $106     


The  example,   which  is   hypothetical,   should  not  be  considered  a      
representation  of past or future expenses.  Actual expenses may be higher      
or lower than those shown.                                                      

Explanation  of  Table:  The  purpose  of the  table is to  assist  you in      
understanding  the  various  costs and  expenses  that an  investor in the      
Fund may bear  directly  (shareholder  transaction  costs)  or  indirectly      
(annual fund operating expenses).                                               

A.  Shareholder  Transaction  Costs  are  charges  you pay when you buy or      
sell  shares of the Fund.  If you request a wire  redemption  of less than      
$1,000, you will be charged a $5 wire fee.                                      

B.  Annual  Fund  Operating  Expenses  are based on the Fund's  historical      
expenses.   Management  Fees  are  paid  by  the  Fund  to  Calvert  Asset      
Management Company,  Inc.  ("Investment  Advisor") for managing the Fund's      
investments  and  business  affairs.  The Fund incurs  Other  Expenses for      
maintaining  shareholder records,  furnishing  shareholder  statements and      
reports,  and other  services.  Management  Fees and Other  Expenses  have      
already  been  reflected  in the Fund's  yield or share  price and are not      
charged  directly to  individual  shareholder  accounts.  Please  refer to      
"Management of the Fund" for further information.                               

FINANCIAL HIGHLIGHTS                                                            

The following table provides  information  about the financial  history of      
the Fund's  shares.  It  expresses  the  information  in terms of a single      
share  outstanding  throughout  each year.  The table has been  audited by      
those  independent  accountants  whose  report is  included  in the Annual      
Report  to  Shareholders  of the  Fund.  The  tables  should  be  read  in      
conjunction  with the financial  statements and their related  notes.  The      
current Annual Report to  Shareholders  is  incorporated by reference into      
the Statement of Additional Information.                                        

                                                                · Download Table


Year Ended December 31,                          1996                     

                                                                          

Net asset value, beginning of year               $1.00                    
Income from investment operations                                         
     Net investment income                         .047                   
Distributions from                                                        
     Net investment income                        (.047)                  
Net asset value, end of year                     $1.00                    

Total return<F2>                                  4.79%                   

Ratio to average net assets                                               
     Net investment income                        4.69%                   
     Total expenses<F3>                            .86%                   
     Net expenses                                  .85%                   

Net assets, end of year (in thousands)          $239,420                  

Number of shares outstanding at end                                       
of year (in thousands)                           239,910                  

<FN>                                                                      
<F2>Total return has not been audited prior to 1994.                      
<F3>Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the   
ratio of net expenses.                                                    
</FN>                                                                     

                                                                · Download Table


Year Ended December 31,                          1995             1994    

                                                                          

Net asset value, beginning of year               $1.000           $1.000  
Income from investment operations                                         
     Net investment income                         .051             .036  
Distributions from                                                        
     Net investment income                       (.051(.036)              
Net asset value, end of year                     $1.000           $1.000  

Total return<F4>                                  5.22 %            3.66% 

Ratio to average net assets                                               
     Net investment income                        5.04%              3.56%
     Total expenses<F5>                            .89%              --   

     Net expenses                                  .88%               .81%

Net assets, end of year (in thousands)           $241,150         $230,183

Number of shares outstanding at end                                       
of year (in thousands)                           241,685           230,618

<FN>                                                                      
<F4>Total return has not been audited prior to 1994.                      
<F5> Effective December 31, 1995, this ratio reflects total               
expenses before reduction for fees paid indirectly; such                  
reductions are included in the ratio of net expenses.                     
</FN>                                                                     

                                                                · Download Table


 Year Ended December 31,                         1993             1992    
                                                                          
Net asset value, beginning of year               $1.000           $1.000  
Income from investment operations                                         
     Net investment income                       .027               .033  
Distributions from                                                        
     Net investment income                       (.027)            (.033) 
Net asset value, end of year                     $1.000           $1.000  

Total return<F6>                                 2.70%             3.40%  

Ratio to average net assets                                               
     Net investment income                       2.66%             3.30%  
     Total expenses<F7>                            --                --   
     Net expenses                                .81%               .82%  

Net assets, end of year (in thousands)        $263,260            $314,999

Number of shares outstanding at end                                       
of year (in thousands)                        263,930             315,667 

<FN>                                                                      
<F6>Total return has not been audited prior to 1994.                      
<F7> Effective December 31, 1995, this ratio reflects total               
expenses before reduction for fees paid indirectly; such                  
reductions are included in the ratio of net expenses.                     
</FN>                                                                     

                                                                · Download Table


Year Ended December 31,                          1991             1990   

                                                                         
Net asset value, beginning of year               $1.000           $1.000 
Income from investment operations                                        
     Net investment income                       .055               .073 
Distributions from                                                       
     Net investment income                       (.055)            (.073)
Net asset value, end of year                     $1.000           $1.000 

Total return<F8>                                    5.65%          7.61% 

Ratio to average net assets                                              
     Net investment income                       5.49%             7.36% 
     Total expenses<F9>                             --               --  
     Net expenses                                .82%               .83% 

Net assets, end of year (in thousands)         $353,339          $342,206

Number of shares outstanding at end                                      
of year (in thousands)                         353,851           342,527 

<FN>                                                                     
<F8>Total return has not been audited prior to 1994.                     
<F9> Effective December 31, 1995, this ratio reflects total              
expenses before reduction for fees paid indirectly; such                 
reductions are included in the ratio of net expenses.                    
</FN>                                                                    

                                                                · Download Table


Year Ended December 31,                          1989             1988   

                                                                         
Net asset value, beginning of year               $1.000           $1.000 
Income from investment operations                                        
     Net investment income                       .082               .067 
Distributions from                                                       
     Net investment income                       (.082)            (.067)
Net asset value, end of year                     $1.000           $1.000 

Total return<F10>                                 6.57%             6.91%

Ratio to average net assets                                              
     Net investment income                       8.21%             6.65% 
     Total expenses<F11>                         --                  --  
     Net expenses                                .85%               .92% 

Net assets, end of year (in thousands)         $359,274          $367,321

Number of shares outstanding at end                                      
of year (in thousands)                         359,654            367,725

<FN>                                                                     
<F10>Total return has not been audited prior to 1994.                    
<F11> Effective December 31, 1995, this ratio reflects total             
expenses before reduction for fees paid indirectly; such                 
reductions are included in the ratio of net expenses.                    
</FN>                                                                    

                                                                · Download Table


Year Ended December 31,                          1987       

                                                            
Net asset value, beginning of year               $1.000     
Income from investment operations                           
     Net investment income                       .059       
Distributions from                                          
     Net investment income                       (.059)     
Net asset value, end of year                     $1.000     

Total return<F12>                                 5.88%     

Ratio to average net assets                                 
     Net investment income                       5.70%      
     Total expenses<F13>                           --       
     Net expenses                                .89%       

Net assets, end of year (in thousands)           $393,272   

Number of shares outstanding at end                         
of year (in thousands)                           393,590    

<FN>                                                        
<F12>Total return has not been audited prior to 1994.       
<F13> Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such    
reductions are included in the ratio of net expenses.       
</FN>                                                       

INVESTMENT OBJECTIVE AND POLICIES                                               

The Fund seeks to earn the  highest  possible  yield  consistent                
with  safety,   liquidity,   and  preservation  of  capital.  In                
pursuing  its  objective,   the  Fund  invests  solely  in  debt                
obligations  issued or  guaranteed  by the  United  States,  its                
agencies or  instrumentalities,  assignments of interest in such                
obligations,   and  commitments  to  purchase  such  obligations                
("U.S. Government-backed  obligations").  The Fund may invest in                
U.S.   Government-backed   obligations   subject  to  repurchase                
agreements with the recognized securities dealers and banks.                    

U.S. Government Obligations                                                     

Obligations issued by the U.S.  Treasury,  such as U.S. Treasury                
bills,  notes and  bonds,  are  supported  by the full faith and                
credit of the U.S. Government.                                                  

Securities  issued by the U.S.  Government  include a variety of                
Treasury  securities  which differ only in their interest rates,                
maturities,   and  time  of  issuance.  In  addition,   numerous                
agencies  (such as  Government  National  Mortgage  Association,                
Farmers Home  Administration,  Federal  Housing  Administration,                
and Small Business  Administration) and instrumentalities  (such                
as Federal  Home Loan  Mortgage  Corporation,  Federal  National                
Mortgage  Association,  Student Loan Marketing  Association  and                
Federal  Home Loan Bank) issue or  guarantee  obligations.  Some                
of these  securities  are supported by the full faith and credit                
of the U.S.  Treasury;  others are supported by the right of the                
issuer to borrow from the  Treasury;  still others are supported                
only by the credit of the instrumentality.                                      

Repurchase Agreements                                                           

The Fund may enter into repurchase  agreements.  In a repurchase                
agreement,  the Fund buys a  security  subject  to the right and                
obligation   to  sell  it  back  at  a   higher   price.   These                
transactions  must be  fully  secured  at all  times,  but  they                
involve  some  credit  risk  to  the  Fund  if the  other  party                
defaults  on  its   obligation   and  the  Fund  is  delayed  or                
prevented from liquidating the collateral.                                      

Bank CDs                                                                        

The Fund may also  invest in  certificates  of deposit and other                
debt  obligations  of  commercial  banks,   savings  banks,  and                
savings  and loan  associations  having  assets  of less than $1                
billion,   provided   that   the   principal   amount   of  such                
certificate   is  insured  in  full  by  the   Federal   Deposit                
Insurance  Corporation  ("FDIC").  The  FDIC  presently  insures                
accounts up to $100,000;  interest  earned above $100,000 is not                
insured by the FDIC.                                                            

Variable Rate Obligations                                                       

The Fund may invest in variable and floating  rate  obligations.                
Variable  rate  obligations  have  a  yield  which  is  adjusted                
periodically  based  upon  changes  in the  level of  prevailing                
interest  rates.  Floating  rate  obligations  have an  interest                
rate  fixed to a known  lending  rate,  such as the prime  rate,                
and  are   automatically   adjusted   when  that  rate  changes.                
Variable  and  floating  rate  obligations  lessen  the  capital                
fluctuations  usually inherent in fixed income  investments,  to                
diminish the risk of capital  depreciation  of  investments  and                
shares;   but  this  also  means  that  should   interest  rates                
decline,  the yield of each class of the Fund will  decline  and                
the  Fund  would  not  have as many  opportunities  for  capital                
appreciation of Fund investments.                                               

Other Policies                                                                  

Investments  in  Government-backed  securities  are  subject  to                
certain  market  risks,  and there is, of course,  no  assurance                
that the Fund  will be  successful  in  meeting  its  investment                
objective.                                                                      

The Fund may  temporarily  borrow  money from banks (and  pledge                
its  assets  to  secure  such   borrowing)  to  meet  redemption                
requests.  Such  borrowing  may not  exceed  25% of the value of                
the  Fund's  total   assets.   The  Fund  has  adopted   certain                
fundamental  investment  restrictions  which  are  discussed  in                
detail  in  the  Statement  of  Additional  Information.  Unless                
specifically   noted   otherwise,   the  investment   objective,                
policies and  restrictions  of the Fund are  fundamental and may                
not be changed without shareholder approval.                                    

YIELD                                                                           

Yield refers to income generated by an investment over a                        
period of time.                                                                 

The Fund may  advertise  "yield" and  "effective  yield."  Yield                
figures are based on  historical  earnings  and are not intended                
to indicate future  performance.  The "yield" of the Fund refers                
to the actual  income  generated  by an  investment  in the Fund                
over a particular base period,  stated in the advertisement.  If                
the  base  period  is less  than one  year,  the  yield  will be                
"annualized."  That is,  the amount of income  generated  by the                
investment  during the base  period is  assumed to be  generated                
over a  one-year  period  and is  shown as a  percentage  of the                
investment.  The  "effective  yield" is  calculated  like yield,                
but  assumes  reinvestment  of  earned  income  and  accordingly                
produces a higher figure.  The effective  yield will be slightly                
higher  than the  yield  because  of the  compounding  effect of                
this assumed reinvestment.                                                      

MANAGEMENT OF THE FUND                                                          

The Board of Trustees supervises the activities and reviews                     
its contracts with companies that provide the Fund with                         
services.                                                                       

Calvert  First  Government  Money  Market  Fund is a  series  of                
First  Variable  Rate Fund for  Government  Income,  an open-end                
diversified  management  investment  company,   organized  as  a                
Massachusetts  business  trust.  Since  September  1, 1991,  the                
series  has been doing  business  as  Calvert  First  Government                
Money Market Fund.                                                              

The Fund is not  required to hold annual  shareholder  meetings,                
but special  meetings  may be called for certain  purposes  such                
as  electing  Trustees,   changing  fundamental   policies,   or                
approving a management contract.  As a shareholder,  you receive                
one vote for each share you own.                                                

Calvert Group is one of the largest investment management                       
firms in the Washington, D.C. area.                                             

Calvert Group,  Ltd., parent of the Fund's  investment  advisor,                
transfer  agent,  and  distributor,  is a  subsidiary  of Acacia                
Mutual  Life  Insurance  Company  of  Washington,  D.C.  Calvert                
Group is one of the largest  investment  management firms in the                
Washington,   D.C.   area.   Calvert   Group,   Ltd.   and   its                
subsidiaries  are  located  at  4550  Montgomery  Avenue,  Suite                
1000N,  Bethesda,  Maryland  20814.  As of  December  31,  1996,                
Calvert  Group  managed  and  administered  assets  in excess of                
$5.2 billion and more than  200,000  shareholder  and  depositor                
accounts.                                                                       

Calvert Asset Management serves as Advisor to the Fund.                         

Calvert Asset  Management  Company,  Inc. (the "Advisor") is the                
Fund's  investment  advisor.  The Advisor provides the Fund with                
investment supervision and management,  administrative  services                
and office space;  furnishes  executive  and other  personnel to                
the Fund;  and pays the  salaries  and fees of all  Trustees who                
are  affiliated  persons of the  Advisor.  The  Advisor may also                
assume and pay certain  advertising and promotional  expenses of                
the Fund and  reserves  the right to  compensate  broker-dealers                
in return for their promotional or administrative services.                     

The Advisor receives a fee based on a percentage of the Fund's                  
assets.                                                                         

For its  services  during  fiscal  year 1996,  the  Advisor  was                
entitled,  pursuant  to the  Investment  Advisory  Agreement  to                
receive,  and did receive 0.50% of the Fund's  average daily net                
assets as investment advisory fees.                                             

Calvert Distributors, Inc. serves as underwriter to market the                  
Fund's shares.                                                                  

Calvert  Distributors,  Inc.  ("CDI")  is the  Fund's  principal                
underwriter   and   distributor.   Under   the   terms   of  its                
underwriting   agreement   with  the  Fund,   CDI   markets  and                
distributes  the Fund's shares and is responsible  for preparing                
advertising  and sales  literature,  and  printing  and  mailing                
prospectuses  to  prospective  investors.  CDI does not  receive                
any   compensation   from  the  Fund,   although  from  its  own                
resources the Distributor may pay  broker-dealer  firms at rates                
up to 0.20% of the average  daily net assets  maintained in Fund                
accounts administered by the respective firms.                                  

Arrangements with Broker-Dealers and Others                                     

CDI may  also pay  additional  concessions,  including  non-cash                
promotional  incentives,   such  as  merchandise  or  trips,  to                
dealers employing  registered  representatives  who have sold or                
are  expected to sell a minimum  dollar  amount of shares of the                
Fund and/or shares of other Funds  underwritten  by CDI. CDI may                
make expense  reimbursements  for special training of a dealer's                
registered  representatives,  advertising  or  equipment,  or to                
defray the expenses of sales contests.                                          

The transfer agent keeps your account records.                                  

Calvert  Shareholder  Services,  Inc.  is the Fund's  transfer,                 
dividend disbursing and shareholder servicing agent.                            

SHAREHOLDER GUIDE                                                               

Opening An Account                                                              

You can buy shares of the Fund in several ways which are                        
described here.                                                                 

An  account   application   accompanies   this   prospectus.   A                
completed  and  signed  application  is  required  for  each new                
account  you open,  regardless  of the  method  you  choose  for                
making  your  initial   investment.   Additional  forms  may  be                
required   from   corporations,    associations,   and   certain                
fiduciaries.   If  you  have  any   questions   or  need   extra                
applications,   call   your   broker,   or   Calvert   Group  at                
800-368-2748.                                                                   

To invest in any of  Calvert's  tax-deferred  retirement  plans,                
please   call   Calvert   Group  at   800-368-2748   to  receive                
information and the required separate application.                              

NET ASSET VALUE                                                                 

The Fund's shares are sold without a sales charge.                              

Net asset  value,  or "NAV",  refers to the worth of one  share.                
NAV is  computed  by adding  the  value of a Fund's  investments                
plus  cash and  other  assets,  deducting  liabilities  and then                
dividing  the  result by the number of shares  outstanding.  The                
NAV is  calculated  at the  close of the  Fund's  business  day,                
which  coincides with the closing of the regular  session of the                
New York Stock Exchange  (normally 4:00 p.m.  Eastern time). The                
Fund is open for business  each day the New York Stock  Exchange                
is  open.  The  Fund  securities  are  valued  according  to the                
"amortized  cost"  method,  which is intended to  stabilize  the                
NAV at $1.00 per share.                                                         

All  purchases  of Fund shares will be  confirmed  and credited                 
to your account in full and fractional  shares  (rounded to the                 
nearest   1/100  of  a  share).   The  Fund  may  send  monthly                 
statements  in lieu of  immediate  confirmations  of  purchases                 
and redemptions.                                                                

HOW TO BUY SHARES                 

Method                     New Accounts              Additional Investments     

By Mail                    $2,000 minimum            $250 minimum               

                      Please make your check    Please make your check
                   payable to the Fund       payable to the Fund
                     and mail it with your     and mail it with your
                   application to:           investment slip to:

             Calvert Group             Calvert Group
               P.O. Box 419544           P.O. Box 419739
               Kansas City, MO           Kansas City, MO
          64141-6544                64141-6739

By Registered, Certified, or Overnight Mail:                                    
             Calvert Group             Calvert Group
                   c/o NFDS, 6th Floor       c/o NFDS, 6th Floor
              1004 Baltimore            1004 Baltimore
               Kansas City, MO           Kansas City, MO
          64105-1807                64105-1807

Through Your Broker        $2,000 minimum            $250 minimum               

At the Calvert             Visit the Calvert Branch Office to make investments  
Branch Office              by check. See back cover page for the address.       

FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT                      
GROUP AT 800-368-2745                                                           

By Exchange                $2,000 minimum            $250 minimum               
(From your account in another Calvert Group Fund)                               

When opening an account by exchange, your new account must be                   
established with the same name(s), address and taxpayer                         
identification number as your existing Calvert account.                         

By Bank Wire               $2,000 minimum            $250 minimum               

By Calvert Money           Not Available for         $50 minimum                
Controller*                Initial Investment                                   

*Please allow sufficient time for Calvert Group to process                      
your initial request for this service, normally 10 business                     
days. The maximum transaction amount is $300,000, and your                      
purchase request must be received by 4:00 p.m. Eastern time.                    

WHEN YOUR ACCOUNT WILL BE CREDITED                                              

Before you buy  shares,  please read the  following  information                
to make sure your investment is accepted and credited properly.                 

All of your  purchases  must be made in U.S.  dollars and checks                
must be drawn  on U.S.  banks.  No cash  will be  accepted.  The                
Fund  reserves  the right to suspend the  offering of shares for                
a period of time or to reject any specific  purchase  order.  If                
your check is not paid,  your  purchase will be canceled and you                
will be  charged  a $10 fee plus  costs  incurred  by the  Fund.                
When you  purchase by check or with  Calvert  Money  Controller,                
those  funds  will be on hold for up to 10  business  days  from                
the date of receipt.  During that  period,  redemptions  against                
those funds  (including  drafts)  will not be honored.  To avoid                
this  collection  period,  you can wire federal  funds from your                
bank, which may charge you a fee.                                               

Your purchase will be processed at the net asset value                          
calculated after your order is received and accepted. The                       
Portfolio attempts to maintain a constant net asset value of                    
$1.00 per share. Except in the case of telephone orders,                        
investors whose payments are received in or converted into                      
federal funds by 12:30 p.m. Eastern time by the custodian will                  
receive the dividend declared that day. If your wire purchase                   
is received after 12:30 p.m. Eastern time, your account will                    
begin earning dividends on the next business day. A telephone                   
order placed to Calvert Institutional Marketing Services by                     
12:30 p.m. Eastern time will become effective at the price                      
determined at 5 p.m. Eastern time and the shares purchased                      
will receive the dividend declared on Fund shares that day if                   
federal funds are received by the custodian by 5 p.m. Eastern                   
time. Exchanges begin earning dividends the next business day                   
after the exchange request is received by mail or by                            
telephone. Purchases received by check will begin earning                       
dividends the next business day. As a convenience, check                        
purchases can be received at Calvert's offices for overnight                    
mail delivery to the transfer agent and will be credited the                    
next business day. Any check purchase received without an                       
investment slip may cause delayed crediting.                                    

EXCHANGES                                                                       

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 on the transaction.                              

If your investment  goals change,  the Calvert Group Funds has a                
variety of investment  alternatives  that includes  common stock                
funds,  tax-exempt  and corporate  bond funds,  and money market                
funds.  The  exchange  privilege  is a  convenient  way  to  buy                
shares  in other  Calvert  Group  Funds in order to  respond  to                
changes in your goals or in market  conditions.  Before you make                
an  exchange  from  a  Fund  or   Portfolio,   please  note  the                
following:                                                                      

Call  your   broker  or  a  Calvert   representative   for          
information  and a prospectus  for any of  Calvert's  other           
Funds  registered  in your state.  Read the  prospectus  of           
the Fund or  Portfolio  into which you want to exchange for           
relevant information, including class offerings.                      

Complete  and sign an  application  for an account in that          
Fund  or  Portfolio,  taking  care  to  register  your  new           
account  in  the  same  name  and  taxpayer  identification           
number  as  your  existing  Calvert  account(s).   Exchange           
instructions  may then be given by  telephone  if telephone           
redemptions  have been  authorized  and the  shares are not           
in certificate form.                                                  

Shares on which you have  already  paid a sales  charge or          
shares   acquired   by   reinvestment   of   dividends   or           
distributions  at  Calvert  Group  may  be  exchanged  into           
another Fund at no additional charge.                                 

For  purposes  of  the  exchange  privilege,  the  Portfolio  is                
related  to  Summit  Cash  Reserves   Fund  by  investment   and                
investor  services.  The Fund reserves the right to terminate or                
modify the exchange privilege with 60 days written notice.                      

OTHER CALVERT GROUP SERVICES                                                    

Calvert Information Network                                                     

Calvert  Group  has a  round-the-clock  telephone  service  that                
lets   existing    customers    obtain    prices,    performance                
information,    account   balances,    and   authorize   certain                
transactions.                                                                   

Calvert Money Controller                                                        

Calvert Money Controller eliminates the delay of mailing a                      
check or the expense of wiring funds. You can request this                      
free service on your application.                                               

This service  allows you to authorize  electronic  transfers of                 
money  to  purchase  or  sell  shares.  You use  Calvert  Money                 
Controller  like an  "electronic  check" to move  money ($50 to                 
$300,000)  between  your bank  account and your  Calvert  Group                 
account  with one phone  call.  Allow two  business  days after                 
the call for the  transfer  to take place;  for money  recently                 
invested,  allow normal check  clearing time (up to 10 business                 
days) before redemption proceeds are sent to your bank.                         

You  may  also   arrange   systematic   monthly  or   quarterly                 
investments  (minimum  $50) into your  Calvert  Group  account.                 
After  you give us  proper  authorization,  your  bank  account                 
will be debited to  purchase  Fund  shares.  A debit entry will                 
appear  on  your  bank  statement.  If you  would  like to make                 
arrangements  for systematic  monthly or quarterly  redemptions                 
from your Calvert  Group  account,  call your broker or Calvert                 
for more information.                                                           

Telephone Transactions                                                          

Calvert may record all telephone calls.                                         

You may purchase,  redeem,  or exchange  shares,  wire funds and                
use  Calvert   Money   Controller   by  telephone  if  you  have                
pre-authorized  service  instructions.  You  automatically  have                
telephone  privileges unless you elect otherwise.  The Fund, the                
transfer  agent and their  affiliates  are not liable for acting                
in  good  faith  on  telephone  instructions  relating  to  your                
account,  so  long  as  they  follow  reasonable  procedures  to                
determine  that the  telephone  instructions  are genuine.  Such                
procedures  may  include   recording  the  telephone  calls  and                
requiring  some  form of  personal  identification.  You  should                
verify the accuracy of telephone  transactions  immediately upon                
receipt of your confirmation statement.                                         

Optional Services                                                               

Complete the application for the easiest way to establish                       
services.                                                                       

The easiest way to establish  optional  services on your Calvert                
Group  account is to select  the  options  you  desire  when you                
complete  your  account  application.  If you wish to add  other                
options  later,  you may  have  to  provide  us with  additional                
information and a signature  guarantee.  Please call your broker                
or  Calvert  Investor  Relations  at  800-368-2745  for  further                
assistance.   For  our  mutual  protection,  we  may  require  a                
signature guarantee on certain written transaction  requests.  A                
signature   guarantee   verifies   the   authenticity   of  your                
signature,  and may be obtained from any bank,  savings and loan                
association,  credit union,  trust company,  broker-dealer  firm                
or member of a domestic stock  exchange.  A signature  guarantee                
cannot be provided by a notary public.                                          

Householding of General Mailings                                                

Householding reduces Fund expenses while saving  paper and                      
postage expense.                                                                

If you have  multiple  accounts  with  Calvert,  you may receive                
combined  mailings  of  some  shareholder  information,  such as                
statements,  confirms,  prospectuses,   semi-annual  and  annual                
reports.   Please   contact   Calvert   Investor   Relations  at                
800-368-2745 to receive additional copies of information.                       

Special Services and Charges                                                    

The  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 research fee for these special services.                      

If you are  purchasing  shares of the Fund  through a program of                
services  offered by a broker-dealer  or financial  institution,                
you should read the program  materials in conjunction  with this                
Prospectus.   Certain   features   may  be   modified  in  these                
programs,  and  administrative  charges  may be  imposed  by the                
broker-dealer   or  financial   institution   for  the  services                
rendered.                                                                       

Tax-Saving Retirement Plans                                                     

Contact Calvert Group for complete information kits                             
discussing the plans, and their benefits, provisions and                        
fees.                                                                           

Calvert  Group can set up your new account  under one of several                
tax-deferred  plans.  These plans let you invest for  retirement                
and  shelter  your   investment   income  from  current   taxes.                
Minimums  may  differ  from  those  listed  in the  "How  to Buy                
Shares" chart.                                                                  

Individual   retirement  accounts  (IRAs):   available  to          
anyone  who has  earned  income.  You  may  also be able to           
make  investments  in the  name  of  your  spouse,  if your           
spouse has no earned income.                                          

Qualified    Profit-Sharing   and   Money-Purchase   Plans          
(including   401(k)  Plans):   available  to  self-employed           
people and their  partners,  or to  corporations  and their           
employees.                                                            

Simplified  Employee Pension Plan (SEP-IRA):  available to          
self-employed   people   and   their   partners,    or   to           
corporations.                                                         

403(b)(7)  Custodial  Accounts:  available to employees of          
most  non-profit   organizations  and  public  schools  and           
universities.                                                         

SELLING YOUR SHARES                                                             

You may redeem all or a portion of your  shares on any  business                
day.  Your  shares  will be redeemed at the next net asset value                
calculated  after  your  redemption   request  is  received  and                
accepted.  See  below for  specific  requirements  necessary  to                
make sure your redemption  request is acceptable.  Remember that                
the Fund may  hold  payment  on the  redemption  of your  shares                
until  it is  reasonably  satisfied  that  investments  made  by                
check  or  by  Calvert  Money  Controller  have  been  collected                
(normally up to 10 business days).                                              

Redemption Requirements To Remember                                             

To ensure acceptance of your redemption request, please follow                  
the procedures described here and below.                                        

Once your shares are  redeemed,  the proceeds  will  normally be                
sent to you on the next  business  day, but if making  immediate                
payment  could  adversely  affect  the  Fund,  it may take up to                
seven (7) days. Calvert Money Controller  redemptions  generally                
will be  credited  to your bank  account on the second  business                
day after your phone call.  When the New York Stock  Exchange is                
closed (or when  trading  is  restricted)  for any reason  other                
than its  customary  weekend or holiday  closings,  or under any                
emergency  circumstances  as  determined by the  Securities  and                
Exchange  Commission,  redemptions  may be  suspended or payment                
dates postponed.                                                                

If you sell shares by  telephone  or written  request,  you will                
receive  dividends  through the date the request is received and                
processed.  If you  write a draft  to sell  shares,  the  shares                
will earn  dividends  until the draft is  presented  to the Fund                
to be paid.                                                                     

Minimum account balance is $1,000.                                              

Please  maintain a balance in each of your  accounts of at least                
$1,000.  If the  balance  in your  money  market  account  falls                
below  the  $1,000  minimum  during  a  month,  a $3 fee will be                
charged to your  account.  This fee is paid to the  portfolio to                
offset the generally higher costs of small dollar accounts.                     

HOW TO SELL YOUR SHARES                                                         

Draftwriting                                                                    

You may redeem shares in your account by writing a draft for                    
at least $250. If you complete and return a signature card for                  
Draftwriting, the Fund will mail bank drafts to you, printed                    
with your name and address. Generally, there is no charge to                    
you for the maintenance of this service or the clearance of                     
drafts, but the Fund will charge a service fee for drafts                       
returned for insufficient funds. The Fund will charge $25 for                   
any stop payments on drafts. As a service to shareholders,                      
shares may be automatically transferred between your Calvert                    
accounts to cover drafts you have written.  The signature of                    
only one authorized signer is required to honor a draft.                        

By Mail To:                                                                     

Calvert Group                                                                   
P.O. Box 419544                                                                 
Kansas City, MO                                                                 
64179-6544                                                                      

You may redeem  available  shares from your  account at any time                
by  sending  a  letter  of  instruction,  including  your  name,                
account  and  Fund  number,  the  number  of  shares  or  dollar                
amount,  and  where  you want the  money to be sent.  Additional                
requirements,  below,  may apply to your account.  The letter of                
instruction must be signed by all required  authorized  signers.                
If you  want the  money  to be  wired  to a bank not  previously                
authorized,  then a voided  bank  check  must be  enclosed  with                
your  letter.  If you do not have a voided check or if you would                
like funds sent to a different address or another person,  your                 
letter must be signature guaranteed.                                            

Type of                             Requirements                                
Registration                                                                    

Corporations, Associations          Letter of instruction  and a                
                    corporate resolution, signed
                      by person(s) authorized to act
                      on the account, accompanied by
               signature guarantee(s).

Trusts                              Letter    of     instruction                
                    signed  by  the   Trustee(s)
                    (as    Trustee),    with   a
                    signature   guarantee.   (If
                    the  Trustee's  name  is not
                    registered  on your account,
                    provide  a copy of the trust
                    document,  certified  within
          the last 60 days.)

By Telephone                                                                    

Please  call  800-368-2745.  You may  redeem  shares  from  your                
account  by  telephone  and  have  your  money  mailed  to  your                
address  of  record  or  wired  to a bank  you  have  previously                
authorized.  A charge  of $5 is  imposed  on wire  transfers  of                
less than $1,000. See "Telephone Transactions."                                 

Calvert Money Controller                                                        

Please allow  sufficient  time for Calvert Group to process your                
initial  request for this service  (normally 10 business  days).                
You may also  authorize  automatic  fixed amount  redemptions by                
Calvert  Money  Controller.  All  requests  must be  received by                
4:00  p.m.  Eastern  time.  Accounts  cannot  be  closed by this                
service.                                                                        

Exchange to Another Calvert Group Fund                                          

You must meet the minimum  investment  requirement  of the other                
Calvert Group Fund or Portfolio.  You can only exchange  between                
accounts   with   identical   names,   addresses   and  taxpayer                
identification  number,  unless  previously  authorized  with  a                
signature-guaranteed letter.                                                    

Systematic Check Redemptions                                                    

If you  maintain  an account  with a balance of $10,000 or more,                
you  may  have  up to two  (2)  redemption  checks  for a  fixed                
amount  sent  to  you on the  15th  of  each  month,  simply  by                
sending a letter with all  information,  including  your account                
number,  and the  dollar  amount  ($100  minimum).  If you would                
like a regular  check  mailed to another  person or place,  your                
letter must be signature guaranteed.                                            

Through your Broker                                                             

If your account is held in your broker's  name ("street  name"),                
you should  contact your broker  directly to transfer,  exchange                
or redeem shares.                                                               

DIVIDENDS AND TAXES                                                             

Each year, the Fund distributes substantially all of its net                    
investment income to shareholders.                                              

Dividends  from the Fund's net  investment  income are  declared                
daily  and paid  monthly.  Net  investment  income  consists  of                
interest  income,  net  short-term  capital  gains,  if any, and                
dividends  declared  and  paid on  investments,  less  expenses.                
Dividend and  distribution  payments will vary between  classes;                
dividend payments will generally be higher for Class A shares.                  

Dividend payment options                                                        

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).  Dividends and  distributions  from the Fund                
may also be invested in shares of any other  Calvert  Group Fund                
or  Portfolio,  at no  additional  charge.  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                
U.S.  Postal Service cannot deliver the check,  or if it remains                
uncashed  for six months,  it, as well as future  dividends  and                
distributions, will be reinvested in additional shares.                         

Federal Taxes                                                                   

In  January,  the Fund  will mail you Form  1099-DIV  indicating                
the  federal  tax  status  of  dividends  and any  capital  gain                
distributions  paid to you by the Fund  during  the  past  year.                
Dividends  and  distributions  are taxable to you  regardless of                
whether  they  are  taken  in  cash  or  reinvested.  Dividends,                
including  short-term  capital  gains,  are  taxable as ordinary                
income.  Distributions  from long-term capital gains are taxable                
as  long-term  capital  gains,  regardless  of how long you have                
owned Fund shares.                                                              

Other Tax Information                                                           

In  addition  to federal  taxes,  you may be subject to state or                
local taxes on your  investment,  depending  on the laws in your                
area.  You  will  be  notified  to  the  extent,  if  any,  that                
dividends  reflect  interest   received  from  U.S.   government                
securities.  Such  dividends  may be exempt from  certain  state                
income taxes.                                                                   

Taxpayer Identification Number                                                  

If we do not have  your  correct  Social  Security  or  Taxpayer                
Identification   Number   ("TIN")   and   a   signed   certified                
application  or Form  W-9,  Federal  law  requires  the  Fund to                
withhold  31%  of  your  dividends.  In  addition,  you  may  be                
subject  to a fine.  You will also be  prohibited  from  opening                
another  account by  exchange.  If this TIN  information  is not                
received  within 60 days  after  your  account  is  established,                
your  account  may be redeemed at the current NAV on the date of                
redemption.  The  Fund  reserves  the  right to  reject  any new                
account  or  any   purchase   order  for  failure  to  supply  a                
certified TIN.                                                                  

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TABLE OF  Fund Expenses                      Net Asset Value                    
CONTENTS  Financial Highlights               When Your Account Will Be Credited 
Investment Objectives and Policies Exchanges                
   Yield                              Other Calvert Group Services
Management of the Fund             Selling Your Shares      
SHAREHOLDER GUIDE:                 How to Sell Your Shares  
How to Buy Shares                  Dividends and Taxes      

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To Open an Account:                          Prospectus                         
800-368-2748                            April 30, 1997                

Performance and Prices:                                                         
Calvert Information Network                  CALVERT FIRST GOVERNMENT           
24 hours, 7 days a week                      MONEY MARKET FUND                  
800-368-2745                                                          

Service for Existing Account:                                                   
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, 6th Floor                                                             
1004 Baltimore                                                                  
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                                                        

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PROSPECTUS                                                                      

April 30, 1997                                                                
 CALVERT MUNICIPAL INTERMEDIATE FUNDS:
ARIZONA CALIFORNIA FLORIDA MARYLAND MICHIGAN
NEW YORK PENNSYLVANIA VIRGINIA
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
4550 Montgomery Avenue, Bethesda, Maryland 20814

INTRODUCTION TO THE FUNDS                                                       

     The Calvert National  Municipal  Intermediate  Fund ("National  Municipal")
seeks to earn the highest level of interest  income  exempt from federal  income
taxes as is  consistent  with prudent  investment  management,  preservation  of
capital, and the stated quality and maturity characteristics.                   

     The  state-specific  Calvert Municipal  Intermediate  Funds ("State Funds")
seek to earn the  highest  level of  interest  income  exempt  from  federal and
specific state income taxes as is consistent with prudent investment management,
preservation of capital, and the stated quality and maturity characteristics.   

     The National  Municipal and the State Funds  (collectively,  the "Funds" or
"Municipal  Funds")  each  invest  in  nondiversified  portfolios  of  municipal
obligations,  including  some with  interest  that may be subject to the federal
alternative minimum tax. The average dollar-weighted  maturity of investments is
between  3 and 10  years.  The net  asset  value  per  share of each  Fund  will
fluctuate in response to changes in the value of its investments.               

TO OPEN AN ACCOUNT                                                              

     Call your broker, or complete and return the enclosed Account  Application.
Minimum initial  investment is $2,000.  Shares of each State Fund are being made
available  primarily  to  persons  residing  in the  state for which the Fund is
named.  PLEASE CONFIRM THE  AVAILABILITY  OF A FUND IN YOUR STATE BEFORE SENDING
MONEY.                                                                          

ABOUT THIS PROSPECTUS                                                           

     Please read this Prospectus before investing. It is designed to provide you
with  information you ought to know before investing and to help you decide if a
Fund's goals match your own. Keep this document for future reference.           

 A Statement of  Additional  Information  for the Funds (April 30, 1997)
has been filed with the Securities and Exchange  Commission and is  incorporated
by reference. This free Statement is available by calling: 800-368-2748.        

     THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,  NOR HAS THE FEDERAL
OR ANY STATE  SECURITIES  COMMISSION  PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.           

     SHARES OF THE FUNDS ARE NOT DEPOSITS OR  OBLIGATIONS  OF, OR  GUARANTEED OR
ENDORSED BY, ANY BANK,  AND ARE NOT FEDERALLY  INSURED BY THE FDIC,  THE FEDERAL
RESERVE  BOARD,  OR ANY OTHER AGENCY.  WHEN INVESTORS OF THE FUND SELL SHARES OF
THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY PAID.     

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FUND EXPENSES                                                                   

                                                                · Download Table

National Municipal Intermediate Fund                                           
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.34%                       
     Total Fund Operating Expenses<F1>             1.04%                       

California Municipal Intermediate Fund                                         
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.27%                       
     Total Fund Operating Expenses<F1>             0.97%                       
<FN>                                                                           
<F1> Net Fund Operating Expenses after reduction for fees paid indirectly were:
         National 1.01%, California .94%                                       
</FN>                                                                          

                                                                · Download Table

Arizona Municipal Intermediate Fund                                            
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.67%                       
     Total Fund Operating Expenses<F2>             1.37%                       

Florida Municipal Intermediate Fund                                            
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.25%                       
     Total Fund Operating Expenses<F2>             0.95%                       
<FN>                                                                           
<F2> Net Fund Operating Expenses after reduction for fees paid indirectly were:
         Arizona 1.00%, Florida .81%                                           
</FN>                                                                          

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Maryland Municipal Intermediate Fund                                           
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.34%                       
     Total Fund Operating Expenses<F3>             1.04%                       

Michigan Municipal Intermediate Fund                                           
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.34%                       
     Total Fund Operating Expenses<F3>             1.04%                       
<FN>                                                                           
<F3> Net Fund Operating Expenses after reduction for fees paid indirectly were:
         Maryland .94%, Michigan .94%                                          
</FN>                                                                          

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New York Municipal Intermediate Fund                                           
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.46%                       
     Total Fund Operating Expenses<F4>            1.16%                        

Pennsylvania Municipal Intermediate Fund                                       
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.46%                       
     Total Fund Operating Expenses<F4>             1.16%                       
<FN>                                                                           
<F4> Net Fund Operating Expenses after reduction for fees paid indirectly were:
         New York .98%, Pennsylvania .93%                                      
</FN>                                                                          

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Virginia Municipal Intermediate Fund                                           
                                                                               
A.   Shareholder Transaction Costs                                             
     Maximum Sales Charge on Purchases                                         
     (as a percentage of offering price)           2.75%                       
     Contingent Deferred Sales Charge              None                        
B.   Annual Fund Operating Expenses -                                          
     Fiscal Year 1996                                                          
     (as a percentage of average net assets)                                   
     Management Fees                               0.70%                       
     Rule 12b-1 Service and Distribution Fees      0.00%                       
     Other Expenses                                0.33%                       
     Total Fund Operating Expenses<F5>             1.03%                       
<FN>                                                                           
<F5> Net Fund Operating Expenses after reduction for fees paid indirectly were:
         Virginia .92%                                                         
</FN>                                                                          

     C. Example:  You would pay the following  expenses on a $1,000  investment,
assuming (1) 5% annual return; (2) redemption at the end of each period; and (3)
payment of maximum initial sales charge at time of purchase:                    

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Fund                  1 Year            3 Years           5 Years      10 Years
                                                                               
National              $38               $60               $83              $151
Arizona               $40               $68               $97              $181
California            $37               $58               $80              $143
Florida               $37               $57               $78              $140
Maryland              $37               $58               $81              $147
Michigan              $38               $59               $82              $149
New York              $39               $62               $88              $161
Pennsylvania          $39               $62               $87              $159
Virginia              $37               $58               $81              $147

     The  example,   which  is   hypothetical,   should  not  be   considered  a
representation  of past or future  expenses.  Actual  expenses  may be higher or
lower than those shown.                                                         

     Explanation  of  Table:  The  purpose  of the  table  is to  assist  you in
understanding  the various costs and expenses that an investor may bear directly
(shareholder transaction costs) or indirectly (annual fund operating expenses). 

     A. Shareholder  Transaction  Costs are charges you pay when you buy or sell
shares of your Fund.  See  "Reduced  Sales  Charges"  at Exhibit A to see if you
qualify  for  possible  reductions  in the sales  charge.  If you request a wire
redemption of less than $1,000, you will be charged a $5 wire fee.              

 B.  Annual Fund  Operating  Expenses.  Management  Fees are paid by the
Funds to Calvert Asset Management Company, Inc. for managing the investments and
business  affairs  of each  Fund and  paid to  Calvert  Administrative  Services
Company,  Inc. The Funds will incur Other Expenses for  maintaining  shareholder
records,  furnishing  shareholder  statements and reports,  and other  services.
Management  Fees and Other  Expenses  have already  been  reflected in the share
price and are not charged directly to individual  shareholder  accounts.  Please
refer to "Management of the Funds" for further information.                     

 The  National  Municipal  Intermediate  Fund  commenced  operations  on
September 30, 1992,  and the  California  Fund  commenced  operations on May 29,
1992. The Maryland,  Michigan,  New York and Virginia Funds commenced  operation
September  30,  1993.  The Arizona,  Florida and  Pennsylvania  Funds  commenced
operation December 31, 1993. For the first five years of operation of each Fund,
Rule 12b-1 will be limited to 0.15% and may thereafter be 0.25%. The Advisor may
voluntarily  defer fees or assume  expenses of the Funds.  The  following  table
shows what Total Fund Operating  Expenses would have been, without the voluntary
reimbursement of expenses:                                                      
Fund Name                      Total Expenses                                   
Arizona                             1.37%                                       
Florida                             .95%                                        
Maryland                            1.04%                                       
Michigan                            1.04%                                       
New York                            1.16%                                       
Pennsylvania                        1.16%                                       
Virginia                            1.03%                                       

     The Investment  Advisory  Agreement provides that the Advisor may later, to
the extent  permitted  by law,  recapture  any fees it  deferred  or expenses it
assumed  during  the two prior  years;  provided,  however,  that  Total  Annual
Operating  Expenses  for each Fund shall not exceed  2.00% of average net assets
during any year in which the Advisor elects to exercise the recapture provision.
The above table reflects these agreements.                                      

 The Funds' Rule 12b-1 fees include an asset-based  sales charge.  Thus,
it is possible that  long-term  shareholders  in the Funds may pay more in total
sales charges than the economic equivalent of the maximum front-end sales charge
permitted by rules of the National  Association of Securities  Dealers,  Inc. In
addition to the compensation itemized above (sales charge and Rule 12b-1 service
and distribution  fees),  certain  broker/dealers  and/or their salespersons may
receive certain  compensation for the sale and distribution of the securities or
for services to the Fund. See the Statement of Additional  Information,  "Method
of Distribution".                                                               

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FINANCIAL HIGHLIGHTS                                                            

 The following  table provides  information  about the Funds'  financial
history.  It expresses the  information  in terms of a single share  outstanding
throughout the period. The table has been audited by Coopers & Lybrand,  L.L.P.,
independent accountants, whose report on the period from the Funds' commencement
of  operations  through  December 31, 1996,  is included in the Annual Report to
Shareholders for each of the respective periods  presented.  The table should be
read in conjunction  with the financial  statements and their related notes. The
Annual Report to Shareholders is incorporated by reference into the Statement of
Additional Information.                                                         

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National Municipal Shares                                                       
Year Ended December 31,                          1996                           
                                                                                

Net asset value, beginning                       $10.62                         
Income from investment operations                                               
     Net investment income                       .50                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.06)                          
         Total from investment operations         .44                           

Distributions from                                                              
     Net investment income                       (.50)                          
     Net realized gains                          --                             
         Total distributions                     (.50)                          

Total increase (decrease) in net asset value     (.06)                          

Net asset value, ending                          $10.56                         

Total return<F6>                                4.32%                           

Ratio to average net assets                                                     
     Net investment income                       4.83%                          
     Total expenses<F7>                          1.04%                          
     Net expenses                                1.01%                          
     Expenses reimbursed                         --                             

Portfolio turnover                               23%                            

Net assets, ending (in thousands)                $45,612                        

Number of shares outstanding,                                                   
ending (in thousands)                            4,319                          

<FN>                                                                            
<F6>Total return does not reflect deduction of front-end sales charge.          
<F7>Effective  December 31, 1995, this ratio reflects total expenses before     
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           


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National Municipal Shares                                                       
Year Ended 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)                                    
         on investments                          .80                 (.62)      
         Total from investment operations        1.31                (.12)      

Distributions from                                                              
     Net investment income                       (.50)               (.49)      
     Net realized gains                          --                  --         
         Total distributions                     (.50)               (.49)      

Total increase (decrease) in net asset value     .81                 (.61)      

Net asset value, ending                          $10.62              $9.81      

Total return<F8>                                 13.64%              (1.18%)    

Ratio to average net assets                                                     
     Net investment income                       4.97%               4.88%      
     Total expenses<F9>                          .96%                --         
     Net expenses                                .94%                .69%       
     Expenses reimbursed                         --                  .32%       

Portfolio turnover                               57%                 122%       

Net assets, ending (in thousands)                $40,146             $36,159    

Number of shares outstanding,                                                   
ending (in thousands)                            3,780               3,686      

<FN>                                                                            
<F8>Total return does not reflect deduction of front-end sales charge.          
<F9>Effective  December 31, 1995, this ratio reflects total expenses before     
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           


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                                                                  From Inception
                                                 Year Ended     (Sept. 30, 1992)
                                                 December 31,   through Dec. 31,
National Municipal Shares                        1993                1992       
                                                                                
Net asset value, beginning                       $10.01              $10.00     
Income from investment operations                                               
     Net investment income                       .48                 .13        
     Net realized and unrealized gain (loss)                                    
         on investments                          .45                 .01        
         Total from investment operations        .93                 .14        

Distributions from                                                              
     Net investment income                       (.48)               (.13)      
     Net realized gains                          (.04)               --         
         Total distributions                     (.52)               (.13)      

Total increase (decrease) in net asset value     .41                 .01        

Net asset value, ending                          $10.42              $10.01     

Total return<F10>                                9.47%               5.40%      

Ratio to average net assets                                                     
     Net investment income                       5.01%               5.36%(a)   
     Total expenses<F11>                         --                  --         
     Net expenses                                .10%                --         
     Expenses reimbursed                         .45%                4.34%(a)   

Portfolio turnover                               162%                12%        

Net assets, ending (in thousands)                $37,467             $1,542     

Number of shares outstanding,                                                   
ending (in thousands)                            3,596               154        

(a) Annualized                                                                  

<FN>                                                                            
<F10>Total return does not reflect deduction of front-end sales charge.         
<F11>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           


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California Shares                                                               
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $10.51                         
Income from investment operations                                               
     Net investment income                       .48                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.07)                          
         Total from investment operations        .41                            

Distributions from                                                              
     Net investment income                       (.48)                          
     Net realized gains                          --                             
         Total distributions                     (.48)                          

Total increase (decrease) in net asset value     (.07)                          

Net asset value, ending                          $10.44                         

Total return<F12>                                4.04%                          

Ratio to average net assets                                                     
     Net investment income                       4.59%                          
     Total expenses<F13>                         .97%                           
     Net expenses                                .94%                           
     Expenses reimbursed                         --                             

Portfolio turnover                               25%                            

Net assets, ending (in thousands)                $35,693                        

Number of shares outstanding,                                                   
ending (in thousands)                            3,419                          

<FN>                                                                            
<F12>Total return does not reflect deduction of front-end sales charge.         
<F13>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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California Shares                                                               
Year Ended 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)                                    
         on investments                          .69                 (.76)      
         Total from investment operations        1.16                (.28)      

Distributions from                                                              
     Net investment income                       (.46)               (.47)      
     Net realized gains                          --                  --         
         Total distributions                     (.46)               (.47)      

Total increase (decrease) in net asset value     .70                 (.75)      

Net asset value, ending                          $10.51              $9.81      

Total return<F14>                                12.07%              (2.57%)    

Ratio to average net assets                                                     
     Net investment income                       4.59%               4.67%      
     Total expenses<F15>                         .91%                --         
     Net expenses                                .89%                .76%       
     Expenses reimbursed                         --                  .13%       

Portfolio turnover                               47%                 68%        

Net assets, ending (in thousands)                $34,424             $34,111    

Number of shares outstanding,                                                   
ending (in thousands)                            3,276               3,476      

<FN>                                                                            
<F14>Total return does not reflect deduction of front-end sales charge.         
<F15>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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                                                                  From Inception
                                                 Year Ended       (May 29, 1992)
                                                 December 31,   through Dec. 31,
California Shares                                1993                1992       
                                                                                
Net asset value, beginning                       $10.24              $10.00     
Income from investment operations                                               
     Net investment income                       .53                 .29        
     Net realized and unrealized gain (loss)                                    
         on investments                          .36                 .24        
         Total from investment operations        .89                 .53        

Distributions from                                                              
     Net investment income                       (.53)               (.29)      
     Net realized gains                          (.04)               --         
         Total distributions                     (.57)               (.29)      

Total increase (decrease) in net asset value     .32                 .24        

Net asset value, ending                          $10.56              $10.24     

Total return<F16>                                8.88%               10.00%     

Ratio to average net assets                                                     
     Net investment income                       5.12%               5.24%(a)   
     Total expenses<F17>                         --                  --         
     Net expenses                                .21%                --         
     Expenses reimbursed                         .12%                .38%(a)    

Portfolio turnover                               21%                 3%         

Net assets, ending (in thousands)                $35,726             $16,046    

Number of shares outstanding,                                                   
ending (in thousands)                            3,383               1,567      

(a) Annualized                                                                  

<FN>                                                                            
<F16>Total return does not reflect deduction of front-end sales charge.         
<F17>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Arizona Shares                                                                  
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.07                          
Income from investment operations                                               
     Net investment income                       .19                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.03)                          
         Total from investment operations        .16                            

Distributions from                                                              
     Net investment income                       (.20)                          

Total increase (decrease) in net asset value     (.04)                          

Net asset value, ending                          $5.03                          

Total return<F18>                                3.17%                          

Ratio to average net assets                                                     
     Net investment income                       3.96%                          
     Total expenses<F19>                         1.31%                          
     Net expenses                                1.00%                          
     Expenses reimbursed                         .06%                           

Portfolio turnover                               18%                            

Net assets, ending (in thousands)                $2,635                         

Number of shares outstanding,                                                   
ending (in thousands)                            524                            

<FN>                                                                            
<F18>Total return does not reflect deduction of front-end sales charge.         
<F19>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Arizona Shares                                                                  
Year Ended December 31,                          1995                1994       
                                                                                
Net asset value, beginning                       $4.71               $5.00      
Income from investment operations                                               
     Net investment income                       .22                 .19        
     Net realized and unrealized gain (loss)                                    
         on investments                          .36                 (.29)      
         Total from investment operations        .58                 (.10)      

Distributions from                                                              
     Net investment income                       (.22)               (.19)      

Total increase (decrease) in net asset value     .36                 (.29)      

Net asset value, ending                          $5.07               $4.71      

Total return<F20>                                12.44%              (1.84%)    

Ratio to average net assets                                                     
     Net investment income                       4.43%               4.13%      
     Total expenses<F21>                         .53%                --         
     Net expenses                                .41%                .38%       
     Expenses reimbursed                         .54%                .97%       

Portfolio turnover                               10%                 22%        

Net assets, ending (in thousands)                $2,045              $2,004     

Number of shares outstanding,                                                   
ending (in thousands)                            403                 426        

<FN>                                                                            
<F20>Total return does not reflect deduction of front-end sales charge.         
<F21>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Florida Shares                                                                  
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.06                          
Income from investment operations                                               
     Net investment income                       .21                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.04)                          
         Total from investment operations        .17                            

Distributions from                                                              
     Net investment income                       (.21)                          

Total increase (decrease) in net asset value     (.04)                          

Net asset value, ending                          $5.02                          

Total return<F22>                                3.53%                          
Ratio to average net assets                                                     
     Net investment income                       4.28%                          
     Total expenses<F23>                         .94%                           
     Net expenses                                .81%                           
     Expenses reimbursed                         .01%                           

Portfolio turnover                               19%                            

Net assets, ending (in thousands)                $5,516                         

Number of shares outstanding,                                                   
ending (in thousands)                            1,098                          

<FN>                                                                            
<F22>Total return does not reflect deduction of front-end sales charge.         
<F23>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           


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Florida Shares                                                                  
Year Ended December 31,                          1995                1994       
                                                                                
Net asset value, beginning                       $4.67               $5.00      
Income from investment operations                                               
     Net investment income                       .24                 .21        
     Net realized and unrealized gain (loss)                                    
         on investments                          .38                 (.33)      
         Total from investment operations        .62                 (.12)      

Distributions from                                                              
     Net investment income                       (.23)               (.21)      

Total increase (decrease) in net asset value     .39                 (.33)      

Net asset value, ending                          $5.06               $4.67      

Total return<F24>                                13.48%              (2.44%)    

Ratio to average net assets                                                     
     Net investment income                       4.73%               4.64%      
     Total expenses<F25>                         .43%                --         
     Net expenses                                .35%                .21%       
     Expenses reimbursed                         .43%                .80%       

Portfolio turnover                               44%                 93%        

Net assets, ending (in thousands)                $3,892              $3,387     

Number of shares outstanding,                                                   
ending (in thousands)                            769                 725        

<FN>                                                                            
<F24>Total return does not reflect deduction of front-end sales charge.         
<F25>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Maryland Shares                                                                 
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.06                          
Income from investment operations                                               
     Net investment income                       .23                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.04)                          
         Total from investment operations        .19                            

Distributions from                                                              
     Net investment income                       (.22)                          

Total increase (decrease) in net asset value     (.03)                          

Net asset value, ending                          $5.03                          

Total return<F26>                                3.96%                          

Ratio to average net assets                                                     
     Net investment income                       4.59%                          
     Total expenses<F27>                         1.00%                          
     Net expenses                                .94%                           
     Expenses reimbursed                         .04%                           

Portfolio turnover                               8%                             

Net assets, ending (in thousands)                $12,023                        

Number of shares outstanding,                                                   
ending (in thousands)                            2,338                          

<FN>                                                                            
<F26>Total return does not reflect deduction of front-end sales charge.         
<F27>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Maryland Shares                                                                 
Year Ended 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)                                    
         on investments                          .39                 (.39)      
         Total from investment operations        .63                 (.15)      

Distributions from                                                              
     Net investment income                       (.24)               (.23)      

Total increase (decrease) in net asset value     .39                 (.38)      

Net asset value, ending                          $5.06               $4.67      

Total return<F28>                                13.66%              (2.94%)    

Ratio to average net assets                                                     
     Net investment income                       4.87%               5.01%      
     Total expenses<F29>                         .51%                --         
     Net expenses                                .48%                .17%       
     Expenses reimbursed                         .43%                .86%       

Portfolio turnover                               11%                 77%        

Net assets, ending (in thousands)                $9,411              $7,429     

Number of shares outstanding,                                                   
ending (in thousands)                            1,860               1,589      

<FN>                                                                            
<F28>Total return does not reflect deduction of front-end sales charge.         
<F29>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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                                                 From Inception                 
                                                 (October 1, 1993)              
Maryland Shares                                  through Dec. 31, 1993          
                                                                                
Net asset value, beginning                       $5.00                          
Income from investment operations                                               
     Net investment income                       .04                            
     Net realized and unrealized gain (loss)                                    
         on investments                          .05                            
         Total from investment operations        .09                            

Distributions from                                                              
     Net investment income                       (.04)                          

Total increase (decrease) in net asset value     .05                            

Net asset value, ending                          $5.05                          

Total return<F30>                                7.46%                          

Ratio to average net assets                                                     
     Net investment income                       4.42%(a)                       
     Total expenses<F31>                         --                             
     Net expenses                                --                             
     Expenses reimbursed                         .80%(a)                        

Portfolio turnover                               14%                            

Net assets, ending (in thousands)                $5,401                         

Number of shares outstanding,                                                   
ending (in thousands)                            1,070                          

(a) Annualized                                                                  

<FN>                                                                            
<F30>Total return does not reflect deduction of front-end sales charge.         
<F31>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Michigan Shares                                                                 
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.12                          
Income from investment operations                                               
     Net investment income                       .22                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.01)                          
         Total from investment operations        .21                            

Distributions from                                                              
     Net investment income                       (.23)                          

Total increase (decrease) in net asset value     (.02)                          

Net asset value, ending                          $5.10                          

Total return<F32>                                4.19%                          

Ratio to average net assets                                                     
     Net investment income                       4.37%                          
     Total expenses<F33>                         1.02%                          
     Net expenses                                .93%                           
     Expenses reimbursed                         .02%                           

Portfolio turnover                               18%                            

Net assets, ending (in thousands)                $5,804                         

Number of shares outstanding,                                                   
ending (in thousands)                            1,137                          

<FN>                                                                            
<F32>Total return does not reflect deduction of front-end sales charge.         
<F33>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Michigan Shares                                                                 
Year Ended December 31,                          1995                1994       
                                                                                
Net asset value, beginning                       $4.74               $5.09      
Income from investment operations                                               
     Net investment income                       .24                 .23        
     Net realized and unrealized gain (loss)                                    
         on investments                          .37                 (.35)      
         Total from investment operations        .61                 (.12)      

Distributions from                                                              
     Net investment income                       (.23)               (.23)      

Total increase (decrease) in net asset value     .38                 (.35)      

Net asset value, ending                          $5.12               $4.74      

Total return<F34>                                13.08%              (2.42%)    

Ratio to average net assets                                                     
     Net investment income                       4.76%               4.76%      
     Total expenses<F35>                         .52%                --         
     Net expenses                                .48%                .18%       
     Expenses reimbursed                         .39%                .84%       

Portfolio turnover                               22%                 65%        

Net assets, ending (in thousands)                $4,556              $5,255     

Number of shares outstanding,                                                   
ending (in thousands)                            890                 1,109      

<FN>                                                                            
<F34>Total return does not reflect deduction of front-end sales charge.         
<F35>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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                                                 From Inception                 
                                                 (October 1, 1993)              
Michigan Shares                                  through Dec. 31, 1993          
                                                                                
Net asset value, beginning                       $5.00                          
Income from investment operations                                               
     Net investment income                       .04                            
     Net realized and unrealized gain (loss)                                    
         on investments                          .09                            
         Total from investment operations        .13                            

Distributions from                                                              
     Net investment income                       (.04)                          

Total increase (decrease) in net asset value     .09                            

Net asset value, ending                          $5.09                          

Total return<F36>                                10.28%                         

Ratio to average net assets                                                     
     Net investment income                       4.27%(a)                       
     Total expenses<F37>                         --                             
     Net expenses                                --                             
     Expenses reimbursed                         .89%(a)                        

Portfolio turnover                               --                             

Net assets, ending (in thousands)                $4,287                         

Number of shares outstanding,                                                   
ending (in thousands)                            842                            

(a) Annualized                                                                  

<FN>                                                                            
<F36>Total return does not reflect deduction of front-end sales charge.         
<F37>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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New York Shares                                                                 
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.12                          
Income from investment operations                                               
     Net investment income                       .21                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.02)                          
         Total from investment operations        .19                            

Distributions from                                                              
     Net investment income                       (.22)                          
     Net realized gain                           --                             
         Total distributions                     (.22)                          

Total increase (decrease) in net asset value     (.03)                          

Net asset value, ending                          $5.09                          

Total return<F38>                                3.79%                          

Ratio to average net assets                                                     
     Net investment income                       4.20%                          
     Total expenses<F39>                         1.13%                          
     Net expenses                                .98%                           
     Expenses reimbursed                         .03%                           

Portfolio turnover                               19%                            

Net assets, ending (in thousands)                $6,218                         

Number of shares outstanding,                                                   
ending (in thousands)                            1,222                          

<FN>                                                                            
<F38>Total return does not reflect deduction of front-end sales charge.         
<F39>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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New York Shares                                                                 
Year Ended December 31,                          1995                1994       
                                                                                
Net asset value, beginning                       $4.71               $5.05      
Income from investment operations                                               
     Net investment income                       .22                 .23        
     Net realized and unrealized gain (loss)                                    
         on investments                          .41                 (.34)      
         Total from investment operations        .63                 (.11)      

Distributions from                                                              
     Net investment income                       (.22)               (.23)      

Total increase (decrease) in net asset value     .41                 (.34)      

Net asset value, ending                          $5.12               $4.71      

Total return<F40>                                13.72%              (2.26%)    

Ratio to average net assets                                                     
     Net investment income                       4.47%               4.77%      
     Total expenses<F41>                         .58%                --         
     Net expenses                                .50%                .18%       
     Expenses reimbursed                         .49%                1.13%      

Portfolio turnover                               13%                 56%        

Net assets, ending (in thousands)                $3,573              $2,648     

Number of shares outstanding,                                                   
ending (in thousands)                            698                 562        

<FN>                                                                            
<F40>Total return does not reflect deduction of front-end sales charge.         
<F41>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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                                                 From Inception                 
                                                 (October 1, 1993)              
New York Shares                                  through Dec. 31, 1993          
                                                                                
Net asset value, beginning                       $5.00                          
Income from investment operations                                               
     Net investment income                       .04                            
     Net realized and unrealized gain (loss)                                    
         on investments                          .05                            
         Total from investment operations        .09                            

Distributions from                                                              
     Net investment income                       (.04)                          

Total increase (decrease) in net asset value     .05                            

Net asset value, ending                          $5.05                          

Total return<F42>                                7.22%                          

Ratio to average net assets                                                     
     Net investment income                       3.81%(a)                       
     Total expenses<F43>                         --                             
     Net expenses                                --                             
     Expenses reimbursed                         2.00%(a)                       

Portfolio turnover                               --                             

Net assets, ending (in thousands)                $2,236                         

Number of shares outstanding,                                                   
ending (in thousands)                            433                            

(a) Annualized                                                                  

<FN>                                                                            
<F42>Total return does not reflect deduction of front-end sales charge.         
<F43>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Pennsylvania Shares                                                             
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.10                          
Income from investment operations                                               
     Net investment income                       .21                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.02)                          
         Total from investment operations        .19                            

Distributions from                                                              
     Net investment income                       (.21)                          

Total increase (decrease) in net asset value     (.02)                          

Net asset value, ending                          $5.08                          

Total return<F44>                                3.92%                          

Ratio to average net assets                                                     
     Net investment income                       4.45%                          
     Total expenses<F45>                         1.11%                          
     Net expenses                                .93%                           
     Expenses reimbursed                         .05%                           

Portfolio turnover                               9%                             

Net assets, ending (in thousands)                $4,486                         

Number of shares outstanding,                                                   
ending (in thousands)                            883                            

<FN>                                                                            
<F44>Total return does not reflect deduction of front-end sales charge.         
<F45>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Pennsylvania Shares                                                             
Year Ended December 31,                          1995                1994       
                                                                                
Net asset value, beginning                       $4.71               $5.00      
Income from investment operations                                               
     Net investment income                       .25                 .22        
     Net realized and unrealized gain (loss)                                    
         on investments                          .37                 (.29)      
         Total from investment operations        .62                 (.07)      

Distributions from                                                              
     Net investment income                       (.23)               (.22)      

Total increase (decrease) in net asset value     .39                 (.29)      

Net asset value, ending                          $5.10               $4.71      

Total return<F46>                                13.51%              (1.29%)    

Ratio to average net assets                                                     
     Net investment income                       5.10%               4.94%      
     Total expenses<F47>                         .49%                --         
     Net expenses                                .41%                .26%       
     Expenses reimbursed                         .54%                .94%       

Portfolio turnover                               17%                 96%        

Net assets, ending (in thousands)                $2,522              $1,872     

Number of shares outstanding,                                                   
ending (in thousands)                            495                 398        

<FN>                                                                            
<F46>Total return does not reflect deduction of front-end sales charge.         
<F47>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Virginia Shares                                                                 
Year Ended December 31,                          1996                           
                                                                                
Net asset value, beginning                       $5.13                          
Income from investment operations                                               
     Net investment income                       .22                            
     Net realized and unrealized gain (loss)                                    
         on investments                          (.03)                          
         Total from investment operations        .19                            

Distributions from                                                              
     Net investment income                       (.22)                          

Total increase (decrease) in net asset value     (.03)                          

Net asset value, ending                          $5.10                          

Total return<F48>                                3.82%                          

Ratio to average net assets                                                     
     Net investment income                       4.35%                          
     Total expenses<F49>                         1.00%                          
     Net expenses                                .92%                           
     Expenses reimbursed                         .03%                           

Portfolio turnover                               4%                             

Net assets, ending (in thousands)                $12,618                        

Number of shares outstanding,                                                   
ending (in thousands)                            2,475                          

<FN>                                                                            
<F48>Total return does not reflect deduction of front-end sales charge.         
<F49>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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Virginia Shares                                                                 
Year Ended 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)                                    
         on investments                          .39                 (.32)      
         Total from investment operations        .63                 (.09)      

Distributions from                                                              
     Net investment income                       (.24)               (.23)      

Total increase (decrease) in net asset value     .39                 (.32)      

Net asset value, ending                          $5.13               $4.74      

Total return<F50>                                13.54%              (2.04%)    

Ratio to average net assets                                                     
     Net investment income                       4.86%               4.87%      
     Total expenses<F51>                         .54%                --         
     Net expenses                                .51%                .19%       
     Expenses reimbursed                         .38%                .86%       

Portfolio turnover                               11%                 65%        

Net assets, ending (in thousands)                $7,295              $5,866     

Number of shares outstanding,                                                   
ending (in thousands)                            1,423               1,239      

<FN>                                                                            
<F50>Total return does not reflect deduction of front-end sales charge.         
<F51>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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                                                 From Inception                 
                                                 (October 1, 1993)              
Virginia Shares                                  through Dec. 31, 1993          
                                                                                
Net asset value, beginning                       $5.00                          
Income from investment operations                                               
     Net investment income                       .05                            
     Net realized and unrealized gain (loss)                                    
         on investments                          .06                            
         Total from investment operations        .11                            

Distributions from                                                              
     Net investment income                       (.05)                          

Total increase (decrease) in net asset value     .06                            

Net asset value, ending                          $5.06                          

Total return<F52>                                8.65%                          

Ratio to average net assets                                                     
     Net investment income                       4.81%(a)                       
     Total expenses<F53>                         --                             
     Net expenses                                --                             
     Expenses reimbursed                         1.54%(a)                       

Portfolio turnover                               28%                            

Net assets, ending (in thousands)                $2,720                         

Number of shares outstanding,                                                   
ending (in thousands)                            537                            

(a) Annualized                                                                  

<FN>                                                                            
<F52>Total return does not reflect deduction of front-end sales charge.         
<F53>Effective  December 31, 1995, this ratio reflects total expenses before    
reduction for fees paid indirectly; such reductions are included in the ratio of
net expenses.                                                                   
</FN>                                                                           

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INVESTMENT OBJECTIVE AND POLICIES                                               

Investment Objectives                                                           

     National  Municipal  seeks to earn the  highest  level of  interest  income
exempt from  federal  income  taxes as is  consistent  with  prudent  investment
management,  preservation of capital, and the quality and maturity objectives of
the Fund.                                                                       

     National  Municipal  will  invest  at  least  65% of its  total  assets  in
municipal obligations.                                                          

     National   Municipal  is  a  nondiversified   (effective  upon  shareholder
approval)  mutual fund that  invests  primarily in  municipal  obligations  with
interest that, for most investors,  is exempt from federal income tax. Municipal
obligations  in which the Series may invest  include,  but are not  limited  to,
general obligation bonds and notes of state and local issuers,  revenue bonds of
various transportation, housing, utilities (e.g., water and sewer), hospital and
other state and local government authorities, tax and revenue anticipation notes
and bond anticipation notes, municipal leases, and certificates of participation
therein,  and private activity bonds. See further  description  below and in the
Statement of Additional  Information.  The municipal  obligations  are fixed and
variable rate. Fixed rate investments are limited to obligations normally having
remaining  maturities of 12 years or less;  variable rate  investments  may have
longer maturities. The average dollar-weighted maturity will be between 3 and 10
years.  Because the Fund may invest in private  activity bonds, a portion of its
dividends may be subject to the federal  alternative minimum tax. See "Dividends
and Taxes."                                                                     

     The State Funds seek to earn the highest  level of interest  income  exempt
from federal and  specific  state  income  taxes as is  consistent  with prudent
investment  management,  preservation  of capital,  and the quality and maturity
objectives of each Fund.                                                        

The State Funds invest in state-specific municipal obligations.                 

     Each  State Fund  invests  primarily  in a  nondiversified  portfolio  of a
specific state's  municipal  obligations with interest that, for most investors,
is exempt from federal and that state's  income tax.  Municipal  obligations  in
which the Funds invest are fixed and variable rate obligations. The Advisor will
maintain the average dollar-weighted maturity between 3 and 10 years.           

     Each  State Fund  invests  at least 65% of its  assets in debt  obligations
issued by or on behalf of the state for which the Fund is named.                

     Under normal market  conditions,  each State Fund will attempt to invest at
least 65% of its total assets in municipal  obligations  with  interest  that is
exempt from federal and specific state income tax,  including those issued by or
on  behalf  of the  state  for  which  the  Fund  is  named  and  its  political
subdivisions.  Each State Fund will also attempt to invest its remaining  assets
in  these  obligations,  but  may  invest  the  remaining  assets  in  municipal
obligations of other states,  territories  and possessions of the United States,
the  District  of  Columbia,   and  their  respective   authorities,   agencies,
instrumentalities and political subdivisions.  Dividends you receive from a Fund
that are derived from interest on tax-exempt  obligations of other  governmental
issuers  will be exempt from  federal  income tax,  but will be subject to state
income taxes.  Because the State Funds may invest in private  activity  bonds, a
portion  of the Fund's  dividends  may be  subject  to the  federal  alternative
minimum tax. See "Dividends and Taxes."                                         

Credit Quality                                                                  

 As an operating policy, each Municipal Fund will invest at least 65% of
its total assets in  investment-grade  municipal  obligations.  Investment-grade
obligations  are those which,  at the date of  investment,  are rated within the
four highest grades established by Moody's Investors Services, Inc. (Aaa, Aa, A,
or Baa) or by Standard and Poor's  Corporation (AAA, AA, A, or BBB).  Securities
that are not rated may be purchased by the Funds as part of the 65% total if the
Advisor  determines  that they are of  quality  comparable  to  investment-grade
securities.  Bonds rated BBB or Baa, while still  considered  investment  grade,
have certain  speculative  characteristics and may be more subject to changes in
economic conditions.                                                            

 The  remaining  35% of each  Municipal  Fund's  total  may  consist  of
noninvestment-grade  municipal  obligations (rated below Baa or BBB), or unrated
obligations  that the Advisor has  determined  are not  investment  grade.  With
noninvestment-grade  securities  there is a greater  possibility that an adverse
change in the financial  condition of the issuer may affect the issuer's ability
to  pay   principal  and   interest.   There  is  also  a  greater  risk,   with
noninvestment-grade securities, of price declines due to changes in the issuer's
creditworthiness.  Because  the market for  lower-rated  securities  may be less
active ("thinner") than for higher-rated  securities,  market prices may be more
volatile and liquidity in the resale market may be limited.                     

     The credit quality of municipal obligations is determined by reference to a
commercial  credit rating service,  such as Moody's Investors  Service,  Inc. or
Standard & Poor's Corporation.  Please refer to the Appendix in the Statement of
Additional  Information  for a  description  of the ratings used by these rating
services.   The  Funds'  Advisor   determines  the  credit  quality  of  unrated
instruments under the supervision of the Funds' Board of Directors/Trustees. See
Management of the Funds. There is no limitation on the percentage of assets that
may be  invested  in unrated  obligations,  which may be less  liquid than rated
obligations of comparable quality.                                              

     Determinations as to credit quality are made at the time of investment.  If
a change in credit quality  occurs,  the Advisor,  under the  supervision of the
Fund's Board of Directors,  will consider  whether it is in the best interest of
the Funds' shareholders to hold or to dispose of the obligation.                

Variable and Floating Rate Obligations                                          

     The Funds may invest in variable and floating  rate  obligations.  Variable
rate obligations have a yield that adjusts  periodically based on changes in the
level of prevailing  interest rates.  Floating rate obligations have an interest
rate tied to a known lending rate, such as the prime rate, and are automatically
adjusted  when the known rate  changes.  These  obligations  lessen the  capital
fluctuations usually inherent in fixed income investments,  which diminishes the
risk of capital depreciation of portfolio  investments and of the Funds' shares.
However,  this also means that if interest  rates  decline,  a Fund's yield will
decline,  causing each Fund and its  shareholders  to forego the opportunity for
capital appreciation of the portfolio investments.                              

Demand Notes                                                                    

     Each Fund may invest in  floating  rate and  variable  rate  demand  notes.
Demand notes  provide that the holder may demand  payment of the note at its par
value  plus  accrued  interest  by giving  notice to the  issuer.  To ensure the
ability of the issuer to make  payment  upon such  demand,  such notes are often
supported by an unconditional bank letter of credit. Notes with a demand feature
of more than seven days are  considered  illiquid  and are  subject to  purchase
restrictions.  See "Nonfundamental  Investment Restrictions" in the Statement of
Additional Information.                                                         

Nondiversified                                                                  

     There  may  be  risks  associated  with  each  Fund  being  nondiversified.
Specifically,  since a relatively high percentage of the assets of each Fund may
be invested in the obligations of a limited number of issuers,  the value of the
shares of each Fund may be more susceptible to any single economic, political or
regulatory event than the shares of a diversified fund would be.                

Interest-Rate Risk                                                              

     All fixed income instruments are subject to interest-rate risk; that is, if
the market  interest  rates  rise,  the current  principal  value of a bond will
decline.  In  general,  the longer the  maturity  of the bond,  the  greater the
decline in value. Because the Funds' respective average dollar-weighted maturity
is between 3 and 10 years, the investments would be expected to be more affected
than by a rise in market interest rates than a short-term money market fund, but
less adversely  affected by a rise in market interest rates than those of a fund
which invests in longer-term bonds.                                             

Obligations with Puts Attached                                                  

     Each Fund has  authority  to  purchase  securities  at a price  which would
result in a yield to maturity lower than that generally offered by the seller at
the time of purchase, when it can acquire at the same time the right to sell the
securities  back to the seller at an agreed on price at any time during a stated
period or on a certain date. Such a right is generally  denoted as a "put." Puts
may be either  conditional  or  unconditional.  Unconditional  puts are  readily
exercisable in the event of a default in payment of principal or interest on the
underlying securities.                                                          

Municipal Leases                                                                

     Each  Fund  may  invest  in  municipal  leases.  A  municipal  lease  is an
obligation  of a  government  or  governmental  authority,  not subject to voter
approval, used to finance capital projects or equipment acquisitions and payable
through  periodic  rental  payments.  There are  additional  risks  inherent  in
investing in this type of municipal security.  Unlike municipal notes and bonds,
where a municipality is obligated by law to make interest and principal payments
when due,  funding for lease payments needs to be appropriated  each fiscal year
in the budget. It is possible that a municipality will not appropriate funds for
lease  payments.  The Advisor  considers risk of  cancellation in its investment
analysis.  The Funds may purchase unrated municipal leases.  The Advisor,  under
supervision of the Boards of Directors/Trustees,  is responsible for determining
the credit  quality of such  leases on an ongoing  basis.  The Funds will invest
only in municipal  leases that meet their credit quality  restrictions.  Certain
municipal leases may be considered  illiquid and subject to the Funds' limits on
illiquid  investments.   The  Boards  of  Directors/Trustees   have  established
guidelines  for  determining  whether a lease is liquid.  See the  Statement  of
Additional  Information  for the factors  considered by the Board in determining
liquidity and valuation of leases.                                              

When-Issued Purchases                                                           

     New issues of municipal  obligations  are offered on a  when-issued  basis;
that is,  delivery and payment for the  securities  normally take place 15 to 45
days after the date of the  transaction.  The payment  obligation  and the yield
that will be  received  on the  securities  are each fixed at the time the buyer
enters into the  commitment.  The Funds will only make  commitments  to purchase
such securities with the intention of actually acquiring the securities, but may
sell these securities  before the settlement date if it is deemed advisable as a
matter of investment strategy.                                                  

Temporary Investments                                                           

     For  liquidity  purposes or pending the  investment  of the proceeds of the
sale of its shares,  a Fund may invest in and derive up to 35% (20% for National
Municipal and  California)  of its income from taxable  short-term  money market
type investments.  Interest earned from such taxable investments will be taxable
to you as ordinary  income unless you are otherwise  exempt from taxation.  Such
investments  will be of investment  grade,  or, if unrated,  determined to be of
equivalent credit quality by the Advisor.                                       

Financial Futures, Options, and Other Investment Techniques                     

     Each Municipal Fund can use various  techniques to increase or decrease its
exposure to changing  security  prices,  interest  rates,  or other factors that
affect security  values.  These techniques may involve  derivative  transactions
such as buying and selling  options and futures  contracts and leveraged  notes,
entering into swap agreements,  and purchasing indexed securities. The Funds can
use these  practices  either as a substitution  for or as protection  against an
adverse   move  in  the  Fund's   portfolio   to  adjust  the  risk  and  return
characteristics of the Fund's portfolio. If the Advisor judges market conditions
incorrectly  or employs a strategy that does not correlate  well with the Fund's
investments,  or if the  counterparty  to the  transaction  does not  perform as
promised, these techniques could result in a loss. These techniques may increase
the volatility of a Fund and may involve a small  investment of cash relative to
the magnitude of the risk assumed. Any instruments determined to be illiquid are
subject to the Fund's 15% restriction on illiquid securities.  See the Statement
of Additional Information for more detail about these strategies.               

     Under  certain  circumstances,  the  Municipal  Funds may purchase and sell
certain  financial futures contracts and certain options on futures contracts to
hedge  investments  in  municipal  securities.   A  financial  futures  contract
obligates the seller of a contract to deliver -- and the purchaser of a contract
to take delivery of -- the type of financial instrument covered by the contract.
In the case of index-based futures contracts, the obligation is in the form of a
cash settlement at a specific time for a specific price.                        

     The Funds may only  engage  in  futures  transactions  for the  purpose  of
hedging their investments in municipal  securities against declines in value and
to hedge  against  increases  in the cost of  securities  the  Funds  intend  to
purchase.  A sale of financial  futures  contracts may provide a hedge against a
decline in the value of portfolio  securities  because such  depreciation may be
offset,  in whole or in part, by an increase in the value of the position in the
futures  contracts.  Similarly,  a purchase of financial  futures  contracts may
provide a hedge  against an  increase in the cost of  securities  intended to be
purchased,  because such  appreciation may be offset, in whole or in part, by an
increase in the value of the position in the futures contracts.                 

Types of Futures Contracts Purchased                                            

     The Advisor intends to deal, on behalf of the Funds,  in futures  contracts
based on The Bond Buyer  Municipal Bond Index, a  price-weighted  measure of the
market value of 40 large,  recently-issued  tax-exempt  bonds,  and to engage in
transactions in exchange-listed  futures contracts on U.S. Treasury  securities.
The Funds may also engage in  transactions in other futures  contracts,  such as
futures contracts on other municipal bond indices that become available,  if the
Advisor  believes such  contracts  would be  appropriate  for hedging the Funds'
investments in municipal securities.                                            

     When a Fund  purchases a futures  contract,  it will  maintain an amount of
cash,  cash  equivalents  (for  example,   commercial  paper  and  daily  tender
adjustable  notes)  or  short-term  high  grade  fixed  income  securities  in a
segregated account with the Fund's custodian, so that the segregated amount plus
the amount of initial  and  variation  margin  held in the account of its broker
equals the market value of the futures  contract,  thereby ensuring that the use
of such futures contract is unleveraged. It is not anticipated that transactions
in futures will have the effect of increasing portfolio turnover.               

Closing out a Futures Position -- Risks                                         

     A Fund may close out its  position in a futures  contract or an option on a
futures contract only by entering into an offsetting transaction on the exchange
on which the position was  established  and only if there is a liquid  secondary
market  for the  futures  contract.  If it is not  possible  to close a  futures
position entered into by the Fund, the Fund could be required to make continuing
daily cash payments of variation margin in the event of adverse price movements.
In such  situations,  if the Fund  has  insufficient  cash,  it may have to sell
portfolio  securities to meet daily margin  requirements at a time when it would
be disadvantageous to do so. The inability to close futures or options positions
could have an adverse effect on the Fund's ability to hedge  effectively.  There
is also risk of loss by the Fund of margin  deposits in the event of  bankruptcy
of a broker with whom the Fund has an open position in a futures  contract.  The
success of a hedging  strategy  depends on the Advisor's  ability to predict the
direction of interest  rates and other  economic  factors.  The  correlation  is
imperfect between movements in the prices of futures or options  contracts,  and
the movements of prices of the securities  which are subject to the hedge.  If a
Fund  used a futures  or  options  contract  to hedge  against a decline  in the
market,  and the market later  advances (or  vice-versa),  the Fund may suffer a
greater loss than if it had not hedged.                                         

     Please  refer  to the  Statement  of  Additional  Information  for  further
information on futures contracts.                                               

Special considerations regarding single-state municipal obligations             

     There is risk inherent in investing primarily in the obligations of any one
state,  since  economic  and  political  changes in the state may  affect  those
obligations. Since each State Fund invests primarily in municipal obligations of
individual states and is thereby limited in its alternative  investment choices,
the  performance of a State Fund may be affected by local  economic  conditions,
generally   and  the   fiscal/budgetary   condition   of  the  State  and  other
municipalities in which a State Fund may invest.  With respect to any state, you
should be aware that certain proposed state or local constitutional  amendments,
legislative  measures,  executive  orders,  administrative  regulations or voter
initiatives,  in addition to local economic conditions,  could result in adverse
consequences  affecting the ability of the state or its  municipalities  to meet
their  obligations  in a timely  manner,  which,  in turn,  could affect a State
Fund's performance.                                                             

Other Policies                                                                  

     Each  Fund may  temporarily  borrow  money  from  banks to meet  redemption
requests,  but such  borrowing may not exceed 10% of the value of a Fund's total
assets. The Funds have adopted certain fundamental investment restrictions which
are discussed in detail in the Statement of Additional Information.             

YIELD AND TOTAL RETURN                                                          

  Yield refers to income generated by an investment over a period of time.

Yield  measures  the current  investment  performance,                
which is the rate of income on portfolio investments divided by the share price.
To  determine  yield,  (1) net  investment  income is  computed  by  adding  all
investment  income  earned  by a  Fund  over a  30-day  period  and  subtracting
expenses,  (2) dividing by the average number of  outstanding  shares during the
period,  and (3) annualizing the result based on the maximum  offering price per
share on the last day of the period.  Yields are calculated  separately for each
series  according to accounting  methods that are standardized for all stock and
bond funds.                                                                     

Taxable Equivalent Yield                                                        

A Fund may  advertise its "taxable  equivalent  yield."               
The taxable  equivalent  yield is the yield that you would be required to obtain
from taxable  investments to equal the yield of the Fund,  all or a portion of  
which may be exempt from federal income taxes.  The federal  taxable  equivalent
yield is computed by taking the portion of the Fund's  yield exempt from regular
federal income tax and multiplying the exempt yield by a factor based on a given
income tax rate,  then  adding the  portion of the yield that is not exempt from
such income tax.  The double  (combined  state and federal)  taxable  equivalent
yield is computed by taking the portion of the Fund's  yield exempt from regular
federal and state income tax and  multiplying the exempt yield by a factor based
on a given  income tax rate,  then  adding the  portion of the yield that is not
exempt from such income tax.  The factor that is used to  calculate  the taxable
equivalent  yield  is the  reciprocal  of the  difference  between  one  and the
applicable income tax rate, which will be stated in the advertisement.          

A Fund may  advertise  its total  return.  Total return is            
based on historical results and is not intended to indicate future performance. 

   Total return  includes not only the effect of income dividends but also
any  change in net asset  value,  or  principal  amount,  during the stated   
period.  Total return shows overall change in value,  including  changes in   
share price and assuming  reinvestment  of all  dividends  and capital gain   
distributions.  Cumulative total return reflects  performance over a stated   
period of time.  Average  annual  total return  reflects  the  hypothetical   
annual compounded return that would have produced the same cumulative total   
return if  performance  had been constant over the entire  period.  Because   
average annual returns tend to smooth out variations in returns, you should   
recognize that they are not the same as actual year-by-year  results.  Both   
types  of total  returns  usually  will  include  the  effect  of  paying a   
front-end  sales charge.  Of course,  total returns will be higher if sales   
charges are not taken into account.  Quotations of "return  without maximum   
load" do not reflect  deduction of the sales  charge.  You should  consider   
these  figures  only if you  qualify  for a reduced  sales  charge,  or for   
purposes of comparison  with  comparable  figures which also do not reflect   
sales charges,  such as mutual fund averages  compiled by Lipper Analytical   
Services,  Inc. Further  information  about performance is contained in the   
Annual Report to Shareholders, which may be obtained without charge.          

MANAGEMENT OF THE FUNDS                                                         

     The  Boards of  Directors/Trustees  supervise  the  activities  and  review
contracts with companies that provide the Funds with services.                  

     The  Arizona,   California,   Maryland,   Michigan,   National,  New  York,
Pennsylvania  and Virginia  Municipal  Intermediate  Funds are series of Calvert
Municipal Fund, Inc., an open-end management  investment company incorporated in
Maryland.  The Florida Municipal Intermediate Fund is a series of First Variable
Rate Fund for Government  Income, an open-end  management company organized as a
Massachusetts Business Trust.                                                   

 The Funds are not  required to hold annual  shareholder  meetings,  but
special meetings may be called for certain purposes such as electing or removing
Directors/Trustees,  changing fundamental  policies,  or approving an investment
advisory contract. As a shareholder,  you receive one vote for each share of the
Fund you own.                                                                   

     Calvert  Group is one of the  largest  investment  management  firms in the
Washington, D.C. area.                                                          

 Calvert Group, Ltd., parent of the Funds' Advisor,  transfer agent, and
distributor,  is a  subsidiary  of  Acacia  Mutual  Life  Insurance  Company  of
Washington,  D.C., and is one of the largest investment  management firms in the
Washington,  D.C. area.  Calvert Group, Ltd. and its subsidiaries are located at
4550 Montgomery Avenue,  Suite 1000N,  Bethesda,  Maryland 20814. As of December
31,  1996,  Calvert  Group  managed  and  administered  assets in excess of $5.2
billion in more than 220,000 shareholder and depositor accounts.                

Portfolio Managers                                                              

 The Funds are managed by Reno J.  Martini,  Senior Vice  President  and
Chief Investment Officer of Calvert Asset Management  Company,  Inc.  ("CAMCO");
and Daniel K. Hayes, Vice President, Investments (CAMCO). Mr. Martini has served
as the  Manager of the  Portfolio  Investments  Department  since  1985,  and as
portfolio  manager for CAMCO since 1982.  Mr.  Hayes serves as head of Portfolio
Research and has been a portfolio manager for CAMCO since 1984.                 

Calvert Asset Management serves as Advisor to the Funds.                        

 Calvert Asset Management Company,  Inc. is each Fund's Advisor,  and is
entitled to an annual fee, payable monthly,  of 0.60% of each Fund's average net
assets.  The Advisor may in its discretion and on a voluntary basis only,  waive
or defer  its fees or  assume  each  Fund's  operating  expenses.  During  1996,
National  and  California  each paid  investment  advisory  fees of  0.60%.  The
Investment Advisory Agreement provides that the Advisor may later, to the extent
permitted by law,  recapture  any fees it waived,  or expenses it assumed  under
this limitation.  The Advisor provides each Fund with investment supervision and
management,  administrative  services and office space;  furnishes executive and
other  personnel  to  the  Funds;   and  pays  the  salaries  and  fees  of  all
Directors/Trustees  who are affiliated  persons of the Advisor.  The Advisor may
also assume and pay certain  advertising and  promotional  expenses of the Funds
and  reserves  the  right to  compensate  broker-dealers  in  return  for  their
promotional or administrative services.                                         

     Calvert Administrative  Services Company provides  administrative  services
for the Funds.                                                                  

 Calvert  Administrative  Services Company ("CASC"), an affiliate of the
Advisor,  provides certain administrative  services for the Funds, including the
preparation  of  regulatory   filings  and   shareholder   reports,   the  daily
determination  of each Fund's net asset value per share and  dividends,  and the
maintenance of its portfolio and general accounting records.  For providing such
services,  CASC received an annual fee, payable monthly, of 0.10% of each Fund's
average net assets per year.                                                    

Calvert Distributors, Inc. serves as underwriter to market shares of the Funds. 

     Calvert Distributors,  Inc. ("CDI") is the Funds' principal underwriter and
distributor,  and is an  affiliate  of  the  Advisor.  Under  the  terms  of its
underwriting  agreements for the Funds,  CDI markets and distributes each Fund's
shares and is responsible for preparing  advertising and sales  literature,  and
printing and mailing prospectuses to prospective investors.                     

The transfer agent keeps your account records.                                  

     Calvert  Shareholder  Services,  Inc., an affiliate of the Advisor,  is the
transfer, dividend disbursing and shareholder servicing agent for the Funds.    

SHAREHOLDER GUIDE                                                               

Opening An Account                                                              

 You can buy shares in several ways which are described  here and in the
chart below.                                                                    

 An account  application  accompanies this  prospectus.  A completed and
signed application is required for each new account you open,  regardless of the
method you choose for making your initial  investment.  Additional  forms may be
required from corporations,  associations,  and certain fiduciaries. If you have
any questions or need extra applications,  call your broker, or Calvert Group at
800-368-2748.                                                                   

Sales Charge                                                                    

 Fund  shares are  offered at net asset  value  plus a  front-end  sales
charge as follows:                                                              

                                                                · Download Table


Amount of                  As a % of        As a % of         Allowed to Dealers
Investment                 offering         net amount        as a % of offering
                           price            invested          price             
                                                                                

Less than $50,000          2.75%            2.83%             2.25%             
$50,000 but less                                                                
than $100,000              2.25%            2.30%             1.75%             
$100,000 but less                                                               
than $250,000              1.75%            1.78%             1.25%             
$250,000 but less                                                               
than $500,000              1.25%            1.27%             0.95%             
$500,000 but less                                                               
than $1,000,000            1.00%            1.01%             0.80%             
$1,000,000 and over        0.00%            0.00%             0.10%*            

 *Payments will be made less redemptions.  For either choice,  quarterly
trailing  commissions will begin in the thirteenth month. CDI reserves the right
to recoup any portion of the amount paid to the dealer if the  investor  redeems
some or all of the shares  from the Funds  within  twelve  months of the time of
purchase.                                                                       

 Sales  charges on Fund shares may be reduced or  eliminated  in certain
cases. See Exhibit A to this prospectus.                                        

     The sales charge is paid to CDI, which in turn normally  reallows a portion
to your  broker-dealer.  Upon written  notice to dealers with whom it has dealer
agreements,  CDI may reallow up to the full applicable sales charge.  Dealers to
whom 90% or more of the entire  sales  charge is  reallowed  may be deemed to be
underwriters under the Securities Act of 1933.                                  

 In addition to any sales  charge  reallowance  or  finder's  fee,  your
broker-dealer,  or other  financial  service firm through  which your account is
held,  currently  will be paid periodic  service fees at an annual rate of up to
0.15% of the  average  daily net asset  value of Fund  shares  held in  accounts
maintained by that firm.                                                        

Distribution Plan                                                     

 Each Fund has adopted a Distribution Plan, which provides for payments,
which are limited to an annual rate of 0.15% for each Fund's first five years of
operation  (and 0.25%  thereafter)  of the average daily net asset value of Fund
shares,  to pay expenses  associated with the distribution and servicing of Fund
shares. Amounts paid by the Funds to CDI under the Distribution Plan are used to
pay to dealers and others,  including  CDI  salespersons  who service  accounts,
service  fees,  and to pay CDI  for its  marketing  and  distribution  expenses,
including,  but not limited to,  preparation of advertising and sales literature
and the printing and mailing of  prospectuses to prospective  investors.  During
the 1996 fiscal period, the Funds paid no Distribution Plan expenses.           

Arrangements with Broker-Dealers and Others                                     

     CDI may also pay additional  concessions,  including  non-cash  promotional
incentives,  such as  merchandise  or trips,  to  dealers  employing  registered
representatives who have sold or are expected to sell a minimum dollar amount of
shares of the Funds and/or  shares of other Funds  underwritten  by CDI. CDI may
make  expense  reimbursements  for  special  training  of a dealer's  registered
representatives,  advertising  or equipment,  or to defray the expenses of sales
contests.  Eligible marketing and distribution  expenses may be paid pursuant to
the Funds' Rule 12b-1 Distribution Plans.                                       

 HOW TO BUY SHARES

Method            New Accounts                       Additional Investments     

By Mail           $2,000 minimum                     $250 minimum               

             Please make your check             Please make your check
                 payable to the appropriate         payable to the appropriate
                 Fund and mail it with your         Fund and mail it with your
          application to:                    investment slip to:

    Calvert Group                      Calvert Group
      P.O. Box 419544                    P.O. Box 419739
      Kansas City, MO                    Kansas City, MO
 64141-6544                         64141-6739

By Registered, Certified, or Overnight Mail:                                    
    Calvert Group                      Calvert Group
          c/o NFDS, 6th Floor                c/o NFDS, 6th Floor
     1004 Baltimore                     1004 Baltimore
      Kansas City, MO                    Kansas City, MO
 64105-1807                         64105-1807

Through Your Broker      $2,000 minimum              $250 minimum               

At the Calvert    Visit the Calvert Branch Office to make investments by check. 
Branch Office     See back cover page for the address.                          

FOR ALL OPTIONS BELOW, PLEASE CALL YOUR BROKER, OR CALVERT GROUP AT 800-368-2745

By Exchange       $2,000 minimum                     $250 minimum               
(From your account in another Calvert Group Fund)                               

     When opening an account by exchange,  your new account must be  established
with the same  name(s),  address  and  taxpayer  identification  number  as your
existing Calvert account.                                                       

By Bank Wire      $2,000 minimum                     $250 minimum               

By Calvert Money`   Not Available for                $50 minimum                
Controller*         Initial Investment                                          

     *Please  allow  sufficient  time for Calvert  Group to process your initial
request for this service,  normally 10 business  days.  The maximum  transaction
amount is  $300,000,  and your  purchase  request  must be received by 4:00 p.m.
Eastern time.                                                                   

NET ASSET VALUE                                                                 

How share price is determined.                                                  

 Net  asset  value  ("NAV")  refers to the  worth of one  share.  NAV is
computed  by  adding  the value of all  portfolio  holdings  and  other  assets,
deducting  liabilities  and then  dividing  the  result by the  number of shares
outstanding.  The NAV will vary daily  based on the market  values of the Funds'
investments.  These values are  calculated  at the close of each  business  day,
which  coincides  with the closing of the regular  session of the New York Stock
Exchange (normally 4:00 p.m. Eastern time). The Funds are open for business each
day the New York Stock Exchange is open.                                        

     All share  purchases will be confirmed and credited to your account in full
and fractional shares (rounded to the nearest 1/1000 of a share).               

     Portfolio   securities   and  other  assets  are  valued  based  on  market
quotations.  If quotations are not available,  securities are valued by a method
that the  appropriate  Fund's Board of  Directors/Trustees  believes  accurately
reflects fair value.                                                            

WHEN YOUR ACCOUNT WILL BE CREDITED                                              

     Before you buy shares,  please read the following  information to make sure
your investment is accepted and credited properly.                              

 All of your purchases  must be made in U.S.  dollars and checks must be
drawn on U.S.  banks.  No cash will be accepted.  The Fund reserves the right to
suspend the  offering  of shares for a period of time or to reject any  specific
purchase  order.  If your check is not paid,  your purchase will be canceled and
you will be charged a $10 fee plus costs incurred by the Fund. When you purchase
by check or with Calvert Money Controller, those funds will be on hold for up to
10 business days from the date of receipt.  During that period,  the proceeds of
redemptions  against  those  funds  will be held  until  the  transfer  agent is
reasonably satisfied that the purchase payment has been collected. To avoid this
collection  period,  you can wire federal funds from your bank, which may charge
you a fee. As a  convenience,  check  purchases  can be  received  at  Calvert's
offices for overnight  mail delivery to the transfer  agent and will be credited
the next business day. Any check purchase  received  without an investment  slip
may cause delayed crediting.                                                    

     Certain financial  institutions or broker-dealers  that have entered into a
sales  agreement with the  Distributor  may enter  confirmed  purchase orders on
behalf of customers by phone,  with payment to follow within a number of days of
the order as specified  by the  program.  If payment is not received in the time
specified,  the financial institution could be held liable for resulting fees or
losses.                                                                         

EXCHANGES                                                                       

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 on the transaction.                                                        

 If your  investment  goals  change,  the  Calvert  Group of Funds has a
variety of investment  alternatives that includes common stock funds, tax-exempt
and corporate bond funds,  and money market funds.  The exchange  privilege is a
convenient way to buy shares in other Calvert Group Funds in order to respond to
changes in your goals or in market conditions.  However,  to protect your Fund's
performance and to prevent additional costs,  Calvert Group discourages frequent
exchanges.  Shareholders  (and those  managing  multiple  accounts) who make two
purchases  and two  exchange  redemptions  of shares of the same fund during any
6-month  period will be given written  notice that they may be  prohibited  from
making additional investments. These policies do not prohibit you from redeeming
shares of the funds and do not apply to trades  solely among money market funds.
Before you make an exchange from a Fund or Portfolio, please note the following:

     o Call your  broker  or a  Calvert  representative  for  information  and a
prospectus for any of Calvert's other Funds  registered in your state.  Read the
prospectus of the Fund or Portfolio into which you want to exchange for relevant
information, including class offerings.                                         

     o  Complete  and  sign  an  application  for an  account  in  that  Fund or
Portfolio,  taking  care to  register  your new  account  in the  same  name and
taxpayer  identification  number as your existing Calvert  account(s).  Exchange
instructions  may then be given by telephone if telephone  redemptions have been
authorized and the shares are not in certificate form. See "Selling Your Shares"
and "How to Sell Your  Shares -- By  Telephone,  and -- By  Exchange  To Another
Calvert Group Fund."                                                            

o                                                                     
You may exchange shares on which you have already paid a sales charge 
at  Calvert  Group  and  shares   acquired  by   reinvestment  of  dividends  or
distributions  into another fund at no additional charge. You may exchange Class
C shares  for  shares of another  fund,  but you will have to pay the  front-end
sales charge, if applicable.                                                    

 For  purposes of the exchange  privilege  the Fund is related to Summit
Cash Reserves Fund by investment and investor  services.  Each Fund reserves the
right to terminate or modify the exchange  privilege in the future with 60 days'
written notice.                                                                 

OTHER CALVERT GROUP SERVICES                                                    

Calvert Information Network                                                     

24 hour yield and prices                                                        

Calvert  Group  has a  round-the-clock  telephone  service  that  lets
existing  customers  obtain  prices,  yields  and  account  balances.   Complete
instructions for this service may be found on the back of each statement.       

Calvert Money Controller                                                        

     Calvert  Money  Controller  eliminates  the delay of mailing a check or the
expense of wiring funds. You can request this free service on your application. 

     This  service  allows you to  authorize  electronic  transfers  of money to
purchase or sell shares.  You use Calvert Money  Controller  like an "electronic
check" to move money ($50 to  $300,000)  between your bank account and your Fund
account  with one phone  call.  Allow two  business  days after the call for the
transfer to take place; for money recently invested, allow normal check clearing
time (up to 10 business days) before redemption proceeds are sent to your bank. 

 You may  also  arrange  systematic  monthly  or  quarterly  investments
(minimum  $50)  into  your  Calvert  Group  account.  After  you give us  proper
authorization,  your bank  account will be debited to purchase  Fund  shares.  A
debit  entry  will  appear on your  bank  statement.  If you would  like to make
arrangements for systematic  monthly or quarterly  redemptions from your Calvert
account, call your broker or Calvert for more information.                      

Telephone Transactions                                                          

Calvert Group may record all telephone calls.                                   

     You may purchase,  redeem,  or exchange shares,  wire funds and use Calvert
Money Controller by telephone if you have pre-authorized  service  instructions.
You  automatically  have telephone  privileges  unless you elect otherwise.  The
Funds,  the transfer  agent and their  affiliates  are not liable if they act in
good faith on telephone  instructions  relating to your account, so long as they
follow  reasonable  procedures to determine that the telephone  instructions are
genuine. Such procedures may include recording the telephone calls and requiring
some  form of  personal  identification.  You  should  verify  the  accuracy  of
telephone transactions immediately upon receipt of your confirmation statement. 

Optional Services                                                               

Complete the application for the easiest way to establish services.             

     The easiest  way to  establish  optional  services  on your  Calvert  Group
account is to select the  options  you desire  when you  complete  your  account
application.  If you wish to add other options later, you may have to provide us
with additional  information and a signature guarantee.  Please call your broker
or Calvert Investor  Relations at 800-368-2745 for further  assistance.  For our
mutual  protection,  we may require a  signature  guarantee  on certain  written
transaction  requests.  A signature  guarantee verifies the authenticity of your
signature,  and may be obtained  from any bank,  savings  and loan  association,
credit union,  trust company,  broker-dealer  firm or member of a domestic stock
exchange. A signature guarantee cannot be provided by a notary public.          

Householding of General Mailings                                                

Householding reduces Fund expenses while saving paper postage expense.          

 If you have multiple  accounts with Calvert,  you may receive  combined
mailings  of  some  shareholder  information,  such  as  statements,   confirms,
prospectuses,  semi-annual and annual reports.  Please contact Calvert  Investor
Relations at 800-368-2745 to receive additional copies of information.          

Special Services and Charges                                                    

     The Funds pay for  shareholder  services but not for special  services that
are  required  by a  few  shareholders,  such  as a  request  for  a  historical
transcript  of an account.  You may be required to pay a research  fee for these
special services.                                                               

     If you are  purchasing  shares  of a Fund  through a  program  of  services
offered by a  securities  dealer or financial  institution,  you should read the
program  materials in conjunction with this Prospectus.  Certain features may be
modified in these  programs,  and  administrative  charges may be imposed by the
broker-dealer or financial institution for the services rendered.               

SELLING YOUR SHARES                                                             

     You may redeem all or a portion of your shares on any  business  day.  Your
shares  will be  redeemed  at the next net asset  value  calculated  after  your
redemption request is received and accepted. See below for specific requirements
necessary to make sure your redemption request is acceptable. Remember that your
Fund may hold payment on the  redemption  of your shares until it is  reasonably
satisfied that  investments  made by check or by Calvert Money  Controller  have
been collected (normally up to 10 business days).                               

Redemption Requirements to Remember                                             

     To  ensure  acceptance  of  your  redemption  request,  please  follow  the
procedures described here and below.                                            

     Once your shares are redeemed, the proceeds will normally be sent to you on
the next business day, but if making immediate  payment could adversely affect a
Fund,  it may take up to seven (7) days.  Calvert Money  Controller  redemptions
generally will be credited to your bank account on the second business day after
your phone call.  When the New York Stock Exchange is closed (or when trading is
restricted) for any reason other than its customary weekend or holiday closings,
or under  any  emergency  circumstances  as  determined  by the  Securities  and
Exchange Commission, redemptions may be suspended or payment dates postponed.   

Minimum account balance is $1,000.                                              

     Please  maintain a balance in your account of at least $1,000 per Fund, per
class. If, due to redemptions, your account falls below $1,000, it may be closed
and the  proceeds  mailed to you at the  address  of  record.  You will be given
notice that your account will be closed after 30 days unless you make additional
investments to increase your account balance to the $1,000 minimum.             
HOW TO SELL YOUR SHARES                                                         

By Mail To:                                                                     

Calvert Group                                                                   
P.O. Box 419544                                                                 
Kansas City, MO                                                                 
64141-6544                                                                      

     You may redeem  available  funds from your account at any time by sending a
letter of instruction,  including your name, account and Fund number, the number
of shares or dollar amount, and where you want the money to be sent.  Additional
requirements,  below, may apply to your account.  The letter of instruction must
be signed by all required  authorized signers. If you want the money to be wired
to a bank not previously  authorized,  then a voided bank check must be enclosed
with your  letter.  If you do not have a voided check or if you would like funds
sent to a different  address or another  person,  your letter must be  signature
guaranteed.                                                                     

Type of                    Requirements                                         
Registration                                                                    

Corporations               Letter of instruction and a corporate resolution,    
Associations               signed by person(s) authorized to act on the account,
            accompanied by signature guarantee(s).

Trusts                Letter of instruction signed by the Trustee(s)  
                 (as Trustee),  with a signature  guarantee.
                      (If the Trustee's name is not registered on your
                    account, provide a copy of the trust document,
         certified within the last 60 days.)

By Telephone                                                                    

 Please call  800-368-2745.  You may redeem  shares from your account by
telephone  and have your  money  mailed to your  address of record or wired to a
bank you have previously authorized. A charge of $5 is imposed on wire transfers
of less than $1,000.  See  "Telephone  Transactions".  If for any reason you are
unable to reach the Funds by telephone,  whether due to mechanical difficulties,
heavy market volume, or otherwise,  you may send a written redemption request to
the Funds by overnight  mail, or, if your account is held through a broker,  see
"Through Your Broker" below.                                                    

Calvert Money Controller                                                        

     Please  allow  sufficient  time for Calvert  Group to process  your initial
request for this service  (normally 10 business  days).  You may also  authorize
automatic  fixed amount  redemptions by Calvert Money  Controller.  All requests
must  received  by 4:00 p.m.  Eastern  time.  Accounts  cannot be closed by this
service.                                                                        

Exchange to Another Calvert Group Fund                                          

     You must meet the minimum investment requirement of the other Calvert Group
Fund or Portfolio.  You can only exchange between accounts with identical names,
addresses and taxpayer  identification number, unless previously authorized with
a signature-guaranteed letter. See "Exchanges."                                 

Systematic Check Redemptions                                                    

 If you maintain an account  with a balance of $10,000 or more,  you may
have up to two (2) redemption  checks for a fixed amount sent to you on the 15th
of 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.                                                                     

Through your Broker                                                             

     If your account is held in your broker's name ("street  name"),  you should
contact your broker directly to transfer, exchange or redeem shares.            

DIVIDENDS AND TAXES                                                             

Dividends from net investment income are paid monthly.                          

 Net  investment  income  consists of interest  income,  net  short-term
capital  gains,  if any, and dividends  declared and paid on  investments,  less
expenses.  Each  year,  the  Funds  distribute  substantially  all of their  net
investment income to shareholders.                                              

Dividend payment options                                                        

     Dividends and any distributions  are automatically  reinvested at net asset
value in  additional  shares of the Funds unless you elect to have the dividends
of $10 or more paid in cash (by check or by Calvert Money Controller). Dividends
and  distributions  may be automatically  invested in an identically  registered
account  with the  same  account  number  in any  other  Calvert  Group  Fund or
Portfolio at net asset value. If reinvested in the same Fund account, new shares
will be  purchased  at net  asset  value  on the  reinvestment  date,  which  is
generally 1 to 3 days prior to the payment date.  You must be a  shareholder  on
the record date to receive dividends. You must notify the Funds in writing prior
to the  record  date to  change  your  payment  options.  If you  elect  to have
dividends and/or  distributions paid in cash, and the U.S. Postal Service cannot
deliver the check,  or if it remains  uncashed  for six  months,  it, as well as
future dividends and distributions, will be reinvested in additional shares.    

"Buying a Dividend"                                                             

     At the  time of  purchase,  the  share  price  of  your  Fund  may  reflect
undistributed  income,  capital gains or unrealized  appreciation of securities.
Any income or capital gains from these amounts  which are later  distributed  to
you are fully taxable. On the record date for a distribution,  your Fund's share
value is  reduced  by the amount of the  distribution.  If you buy  shares  just
before the record date ("buying a dividend") you will pay the full price for the
shares and then receive a portion of the price back as a taxable distribution.  

Federal Taxes                                                                   

     Dividends  derived  from  interest  on  municipal  obligations   constitute
exempt-interest  dividends,  on which you are not subject to federal income tax.
However,  dividends  which are from taxable  interest and any  distributions  of
short-term  capital  gains are taxable to you as ordinary  income.  If the Funds
make any distributions of long-term capital gains, then these are taxable to you
as long-term capital gains, regardless of how long you held your shares.        

     If any taxable  income or gains are paid,  in January,  the Funds will mail
you Form 1099-DIV indicating the federal tax status of dividends and any capital
gain distributions paid to you by the Funds during the past year.               

     You may realize a capital  gain or loss when you redeem  (sell) or exchange
shares.                                                                         

     If you sell or  exchange  your  shares  you will have a short or  long-term
capital gain or loss,  depending  on how long you owned the shares.  In January,
your Fund will mail you Form  1099-B  indicating  the  proceeds  from all sales,
including exchanges.  You should keep your annual year-end account statements to
determine the cost (basis) of your shares to report on your tax returns.        

Alternative Minimum Tax                                                         

     Each Fund may invest in  municipal  obligations,  such as  certain  private
activity bonds,  that earn interest subject to the federal  alternative  minimum
tax  ("AMT").  AMT is a method of  computing  tax that helps ensure that certain
corporations and high-income  individual  taxpayers pay a minimum amount of tax.
Since the Funds are likely to invest in  obligations  that are taxable under the
AMT method of computing  income tax,  taxpayers  who are required to pay AMT may
not receive as high an after-tax  yield as investors who are not subject to AMT.
You should  consult your tax advisor if you have any  questions  regarding  your
status.                                                                         

State Taxes                                                                     

     To the extent that  exempt-interest  dividends  are derived  from  earnings
attributable to municipal  obligations of a state, they will also be exempt from
state and local personal income tax in that state.  The dividends may be subject
to  franchise  taxes and  corporate  income  taxes if received by a  corporation
subject to such taxes.  A letter will be mailed to you  shortly  after  year-end
informing  you of the  percentage  of  exempt-interest  dividends  derived  from
earnings on state municipal obligations.                                        

Taxpayer Identification Number                                                  

     Federal law  requires  that you provide  your  correct  Social  Security or
Taxpayer Identification Number ("TIN") on a signed certified application or Form
W-9. If not provided, the Funds may be required to withhold 31% of any dividends
or  redemptions,  and you may be subject to a fine.  You will also be prohibited
from  opening  another  account  by  exchange.  If this TIN  information  is not
received within 60 days after your account is  established,  your account may be
redeemed  at the current NAV on the date of  redemption.  The Funds  reserve the
right to reject any new  account or any  purchase  order for failure to supply a
certified TIN.                                                                  
 EXHIBIT A

REDUCED SALES CHARGES                                                           

     You may qualify for a reduced sales charge through  several  purchase plans
available.  You must notify the Funds at the time of purchase to take  advantage
of the reduced sales charge.                                                    

Right of Accumulation                                                           
     The sales charge is  calculated  by taking into account not only the dollar
amount of a new purchase of shares, but also the higher of cost or current value
of shares previously purchased in Calvert Group Funds that impose sales charges.
This automatically applies to your account for each new purchase.               

Letter of Intent                                                                

 If you plan to purchase $50,000 or more of Fund shares over the next 13
months,  your sales charge may be reduced  through a "Letter of Intent." You pay
the lower sales  charge  applicable  to the total amount you plan to invest over
the 13-month  period,  excluding any money market fund  purchases.  Part of your
shares  will  be held  in  escrow,  so  that  if you do not  invest  the  amount
indicated,  you will  have to pay the sales  charge  applicable  to the  smaller
investment actually made. For more information,  see the Statement of Additional
Information.                                                                    

Group Purchases                                                                 
     If you are a member of a qualified  group,  you may purchase  shares of the
Funds at the reduced sales charge  applicable to the group taken as a whole. The
sales charge is  calculated by taking into account not only the dollar amount of
the shares you purchase,  but also the higher of cost or current value of shares
previously purchased and currently held by other members of your group.         

     A "qualified  group" is one which (i) has been in  existence  for more than
six months,  (ii) has a purpose other than  acquiring Fund shares at a discount,
and (iii) satisfies  uniform criteria which enable CDI and dealers offering Fund
shares to realize  economies of scale in distributing  such shares.  A qualified
group must have more than 10  members,  must be  available  to arrange for group
meetings  between  representatives  of CDI or  dealers  distributing  the Funds'
shares,  must agree to include sales and other materials related to each Fund in
its  publications  and  mailings  to  members  at  reduced  or no cost to CDI or
dealers.                                                                        

Other Circumstances                                                             

 There is no sales charge on shares of any fund of the Calvert  Group of
Funds sold to (i)  Directors,  Trustees,  Officers,  Advisory  Council  Members,
employees of the Calvert  Group of Funds or affiliated  companies,  employees of
broker dealers  distributing  the Fund's shares and family members of the above,
(ii)  Purchases  made  through a  Registered  Investment  Advisor,  (iii)  Trust
departments of banks or savings  institutions  for trust clients of such bank or
institution, (iv) Purchases through a broker maintaining an omnibus account with
the Fund and the  purchases  are made by (a)  investment  advisors or  financial
planners  placing  trades  for  their own  accounts  (or the  accounts  of their
clients)  and who  charge  a  management,  consulting,  or other  fee for  their
services;  or (b) clients of such investment  advisors or financial planners who
place  trades for their own  accounts if such  accounts are linked to the master
account of such investment advisor or financial planner on the books and records
of the broker or agent;  or (c) retirement and deferred  compensation  plans and
trusts,  including,  but not  limited  to,  those  defined in section  401(a) or
section 403(b) of the I.R.C., and "rabbi trusts."                               

Dividends and Capital Gain Distributions from other Calvert Group Funds         
     You may  prearrange to have your  dividends and capital gain  distributions
from another Calvert Group Fund  automatically  invested in another account with
no additional sales charge.                                                     

Purchases made at net asset value ("NAV")                                       
     Except  for money  market  funds,  if you make a purchase  at NAV,  you may
exchange that amount to another fund at no additional sales charge.             

Reinstatement Privilege                                                         
     If you redeem Fund shares and then within 30 days decide to reinvest in the
same  Fund,  you  may do so at the net  asset  value  next  computed  after  the
reinvestment  order  is  received,  without  a  sales  charge.  You  may use the
reinstatement  privilege  only once.  The Funds  reserve  the right to modify or
eliminate this privilege.                                                       

TABLE OF CONTENTS                                                               

Fund Expenses                                                                   
Financial Highlights                                                            
Investment Objective and Policies                                               
Yield and Total Return                                                          
Management of the Funds                                                         
SHAREHOLDER GUIDE:                                                              
How to Buy Shares                                                               
Net Asset Value                                                                 
Alternative Sales Options                                                       
When Your Account Will Be Credited                                              
Exchanges                                                                       
Other Calvert Group Services                                                    
Selling Your Shares                                                             
How to Sell Your Shares                                                         
Dividends and Taxes                                                             
Exhibit A - Reduced Sales Charges                                               

Prospectus                

April 30, 1997            

                 Calvert Arizona Municipal Intermediate Fund
                    Calvert California Municipal Intermediate Fund
                 Calvert Florida Municipal Intermediate Fund
                  Calvert Maryland Municipal Intermediate Fund
                  Calvert Michigan Municipal Intermediate Fund
                  Calvert National Municipal Intermediate Fund
                  Calvert New York Municipal Intermediate Fund
                      Calvert Pennsylvania Municipal Intermediate Fund
                  Calvert Virginia Municipal Intermediate Fund

To Open an Account:                                                             
800-368-2748                                                                    

Yields 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                                                          

Registered, Certified and                                                       
Overnight Mail:                                                                 
Calvert Group                                                                   
c/o NFDS, 6th Floor                                                             
1004 Baltimore                                                                  
Kansas City, MO 64105                                                           

Branch Office:                                                                  
4550 Montgomery Avenue                                                          
Suite 1000N                                                                     
Bethesda, Maryland 20814                                                        

Calvert Group Web-Site                                                          
Address: http://www.calvertgroup.com                                            

PRINCIPAL UNDERWRITER                                                           
Calvert Distributors, Inc.                                                      
4550 Montgomery Avenue                                                          
Suite 1000N                                                                     
Bethesda, Maryland 20814                                                        

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First Variable Rate Fund:       
Calvert First Government Money Market Fund      

Statement of Additional Information       
April 30, 1997      

INVESTMENT ADVISOR                                              TRANSFER AGENT  
Calvert Asset Management Company, Inc.       Calvert Shareholder Services, Inc. 
4550 Montgomery Avenue                                  4550 Montgomery Avenue  
Suite 1000N                                                        Suite 1000N  
Bethesda, Maryland 20814                              Bethesda, Maryland 20814  

INDEPENDENT ACCOUNTANTS                                  PRINCIPAL UNDERWRITER  
Coopers & Lybrand, L.L.P.                           Calvert Distributors, Inc.  
217 Redwood Street                                      4550 Montgomery Avenue  
Baltimore, Maryland 21202-3316                                     Suite 1000N  
                                                    Bethesda, Maryland 20814

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TABLE OF CONTENTS       

Investment Objective and  
             Strategy                              1
             Investment Restrictions               1
             Dividends and Distributions           2
             Tax Matters                           2
             Net Asset Value                       3
             Calculation of Yield                  3
             Advertising                           3
Purchases and Redemption  
             of Shares                             4
             Trustees and Officers                 4
             Investment Advisor                    6
Transfer and Shareholder  
             Servicing Agent                       7
             Portfolio Transactions                7
Independent Accountants   
             and Custodians                        7
             General Information                   7
             Financial Statements                  8

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STATEMENT OF ADDITIONAL INFORMATION-April 30, 1997                              

FIRST VARIABLE RATE FUND:       
CALVERT FIRST GOVERNMENT MONEY MARKET FUND      
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814       

==========================================================================      
New Account      (800)   368-2748     Shareholder   (800)    368-2745   
Information:     (301)   951-4820     Services:     (301)    951-4810   
==========================================================================      
Broker           (800)   368-2746     TDD for the Hearing-              
==========================================================================      
==========================================================================      
Services:        (301)   951-4850      Impaired:     (800)    541-1524    
==========================================================================      

   This  Statement of  Additional  Information  is not a prospectus.
Investors   should  read  the  Statement  of  Additional   Information  in      
conjunction  with the First  Variable Rate Fund Calvert  First  Government      
Money Market Fund (the  "Fund")  Prospectus,  dated April 30, 1997,  which      
may be  obtained  free of charge by  writing  or  calling  the Fund at the      
telephone numbers listed above.                                                 

==========================================================================      
INVESTMENT OBJECTIVE AND STRATEGY       
==========================================================================      

   In pursuing its objective of earning the highest  possible  yield
consistent with safety,  liquidity,  and preservation of capital, the Fund      
invests  solely in debt  obligations  issued or  guaranteed  by the United      
States,  its  agencies or  instrumentalities,  assignments  of interest in      
such  obligations,  and  commitments to purchase such  obligations  ("U.S.      
Government-backed   obligations").   The   Fund   may   invest   in   U.S.      
Government-backed   obligations  subject  to  repurchase  agreements  with      
recognized securities dealers and banks.                                        
   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.  Repurchase      
agreements  are not,  however,  without risk. If the seller were to become      
bankrupt,  the Fund  might  realize a loss if the value of the  underlying      
security  did not  equal  or  exceed  the  repurchase  price.  In order to      
minimize  the  risk  of  investing  in  repurchase  agreements,  the  Fund      
engages in such transactions only with recognized  securities  dealers and      
banks  and in all  instances  holds  underlying  securities  with a  value      
equal to the total  repurchase  price  such  dealer or bank has  agreed to      
pay.  Repurchase  agreements  are always for periods of less than one year      
and no more than 10% of the Fund's  assets may be invested  in  repurchase      
agreements not terminable within seven days.                                    
   Although   all  the   securities   purchased   by  the  Fund  are
Government-backed  as to principal or secured by such securities,  some of      
the  types  of  Government  securities  the  Fund  buys  may be  sold at a      
premium  which is not backed by a Government  guarantee.  The premiums are      
amortized  over the life of the security;  however,  if a security  should      
default or be prepaid,  the Fund could  realize as a loss the  unamortized      
portion of such premium.                                                        
   In the  Government-guaranteed  loan market, most purchases of new
issues are made under firm (forward) commitment  agreements.  Purchases of      
long-term  fixed rate debt  securities  under such  agreements can involve      
risk of loss due to changes in the market  rate of  interest  between  the      
commitment date and the settlement  date.  Forward  commitment  agreements      
for  variable  rate  securities,  unlike  such  agreements  for fixed rate      
securities,  are stable in value;  the Fund's Advisor believes the risk of      
loss  under  forward   commitment   agreements   involving  variable  rate      
obligations to be insignificant.                                                
   All the Fund's  investments  maturing  in more than one year will
have  a  variable   rate  feature   under  which  the  yield  is  adjusted      
periodically  based  upon  changes  in money  market  rates such as prime.      
Such  adjustments  will be  made at  least  semi-annually.  Variable  rate      
securities   minimize  the  wide   fluctuations   in  capital  value  that      
represent the  traditional  drawback to such  long-term  investments;  but      
this also means that should  interest rates decline,  the amount of return      
paid by the Fund will  decline  and the Fund will  forego the  opportunity      
of capital appreciation on its portfolio securities.                            
   The foregoing  objective and policies may not be altered  without
the  prior  approval  of the  holders  of a  majority  of the  outstanding      
shares of the Fund.  There is, of course,  no assurance that the Fund will      
be successful in meeting the above investment objective.                        

==========================================================================      
INVESTMENT RESTRICTIONS       
==========================================================================      

   The Fund has adopted the following  investment  restrictions  and
fundamental  policies.  These  restrictions  cannot be changed without the      
approval  of the holders of a majority  of the  outstanding  shares of the      
Fund. The Fund may not:                                                         
(1) Purchase common stocks,  preferred stocks, warrants,      
other equity securities,  corporate bonds or debentures,      
state bonds,  municipal  bonds,  or  industrial  revenue      
bonds;                                                        
(2)  Borrow  money,  except  from  banks as a  temporary      
measure for emergency  (not  leveraging)  purposes in an      
amount not  greater  than 25% of the value of the Fund's      
total  assets  (including  the amount  borrowed)  at the      
time the borrowing is made.  Investment  securities will      
not  be  purchased  while  borrowings  are  outstanding.      
Borrowings  will only be undertaken  to  facilitate  the      
meeting of redemption requests;                               
(3) Pledge its assets,  except to secure  borrowing  for      
temporary  or  emergency  purposes  and then  only in an      
amount up to 25% of its total assets.  Although the Fund      
has the  right to  pledge  in excess of 10% of the value      
of  its  assets,  it  will  not  do  so as a  matter  of      
operating  policy in order to comply with certain  state      
investment restrictions;                                      
(4) Sell securities short;                                    
(5) Write or purchase put or call options;                    
(6) Underwrite the securities of other issuers;               
(7)  Purchase  a  security  which is subject to legal or      
contractual  restrictions  on resale,  i.e.,  restricted      
securities;                                                   
(8)  Purchase  or  sell  real  estate  investment  trust      
securities, commodities, or oil and gas interests;            
(9)  Make  loans  to  others,   except  for   repurchase      
transactions  (the  purchase  of a portion  of  publicly      
distributed   debt  securities  is  not  considered  the      
making of a loan);                                            
(10) Invest in companies  for the purpose of  exercising      
control;   or   invest  in  the   securities   of  other      
investment companies,  except as they may be acquired as      
part  of  a  merger,  consolidation  or  acquisition  of      
assets,  or in  connection  with  a  trustee's  deferred      
compensation plan.                                            

==========================================================================      
DIVIDENDS AND DISTRIBUTIONS       
==========================================================================      

   Dividends  from the Fund's  net  investment  income are  declared
daily and paid monthly.  Net  investment  income  consists of the interest      
income  earned on  investments  (adjusted  for  amortization  of  original      
issue  or  market  discount  or  premium),  less  expenses.  Realized  and      
unrealized  gains and losses are not  included in net  investment  income.      
Net  short-term   capital  gains  will  be  distributed  once  each  year,      
although  the Fund may  distribute  them more  frequently  if necessary in      
order  to  maintain  the  Fund's  net  asset  value at  $1.00  per  share.      
Distributions  of net capital  gains,  if any, are  normally  declared and      
paid by the Fund once a year;  however,  the Fund does not  intend to make      
any such  distributions  from  securities  profits  unless  available loss      
carryovers, if any, have been used or have expired.                             
   Purchasers  of Fund shares  begin  receiving  dividends  from the
date  federal  funds  are  received  by the Fund.  Purchases  by bank wire      
received  by the  Fund's  custodian  prior to 12:30  p.m.,  Eastern  time,      
represent  immediately  available  federal funds.  Shareholders  redeeming      
shares by telephone,  electronic  funds  transfer or written  request will      
receive  dividends  through  the  date  that  the  redemption  request  is      
received;  shareholders  redeeming shares by draft will receive  dividends      
up to the date such draft is presented to the Fund for payment.                 

==========================================================================      
TAX MATTERS       
==========================================================================      

   In 1996,  the Fund did qualify and in 1997,  the Fund  intends to
qualify as a  "regulated  investment  company"  under  Subchapter M of the      
Internal  Revenue Code, as amended.  By so  qualifying,  the Fund will not      
be  subject  to  federal  income  taxes,  nor to the  federal  excise  tax      
imposed by the Tax Reform Act of 1986,  to the extent that it  distributes      
its net investment income and net capital gains.                                

   Dividends  of net  investment  income  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.  Net      
long-term   capital  gain   distributions,   if  any,  will  generally  be      
includable as long-term  capital gain in the gross income of  shareholders      
who  are  citizens  or  residents  of  the  United  States.  Whether  such      
realized  securities  gains and losses are long-or  short-term  depends on      
the period the  securities  are held by the Fund, not the period for which      
the shareholder holds shares of the Fund.                                       
   The  Fund  is  required  to   withhold   31%  of  any   dividends
(including  long-term  capital  gain  dividends,   if  any)  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 Internal Revenue Code because of  underreporting;  or      
(c) the Fund is  notified by the  Internal  Revenue  Service  that the TIN      
provided  by  the   shareholder  is  incorrect  or  that  there  has  been      
underreporting  of  interest or  dividends  by the  shareholder.  Affected      
shareholders  will receive  statements at least  annually  specifying  the      
amount of dividends withheld.                                                   
   Shareholders    exempt   from   backup    withholding    include:
corporations;    financial   institutions,    tax-exempt    organizations;      
individual   retirement   plans;  the  U.S.,  a  state,  the  District  of      
Columbia,  a U.S.  possession,  a  foreign  government,  an  international      
organization,  or any political subdivision,  agency or instrumentality of      
any of the foregoing;  U.S. registered  commodities or securities dealers;      
real estate  investment  trusts;  registered  investment  companies;  bank      
common trust funds;  certain  charitable trusts; and foreign central banks      
of issue.  Non-resident  aliens also are  generally  not subject to backup      
withholding  but,  along with  certain  foreign  partnerships  and foreign      
corporations,  may instead be subject to  withholding  under  section 1441      
of  the  Internal  Revenue  Code.  Shareholders  claiming  exemption  from      
backup withholding should call or write the Fund for further information.       
   Many  states  do not  tax the  portion  of the  Fund's  dividends
which is derived from  interest on U.S.  Government  obligations.  The law      
of the states varies  concerning the tax status of dividends  derived from      
U.S.  Government  obligations.  Accordingly,  shareholders  should consult      
their tax  advisors  about the tax status of dividends  and  distributions      
from the Fund in their respective jurisdictions.                                

==========================================================================      
NET ASSET VALUE       
==========================================================================      

   The net asset  value  per  share of the Fund,  the price at which
shares are continuously  issued and redeemed,  is computed by dividing the      
value of the  Fund's  total  assets,  less its  liabilities,  by the total      
number  of  shares  outstanding.  Net  asset  value  is  determined  every      
business  day at the  close of the New  York  Stock  Exchange  (generally,      
4:00 p.m.  Eastern  time),  and at such other times as may be  appropriate      
or  necessary.  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,  Presidents'  Day,  Good  Friday,  Memorial  Day,      
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.               
   The Fund's  assets,  including  securities  subject to repurchase
agreements,  are normally  valued at their  amortized  cost which does not      
take into  account  unrealized  capital  gains or  losses.  This  involves      
valuing  an  instrument  at its cost and  thereafter  assuming  a constant      
amortization  to maturity of any  discount or premium,  regardless  of the      
impact  of  fluctuating   interest  rates  on  the  market  value  of  the      
instrument.  While this method  provides  certainty in  valuation,  it may      
result in periods  during which value,  as determined  by amortized  cost,      
is higher or lower  than the price  that  would be  received  upon sale of      
the  instrument.  During periods of declining  interest  rates,  the daily      
yield  on  shares  of  the  Fund  may  tend  to  be  higher  than  a  like      
computation made by a fund with identical  investments  utilizing a method      
of valuation  based upon market  prices and estimates of market prices for      
all of its portfolio  instruments.  Thus, if the use of amortized  cost by      
the Fund  resulted in a lower  aggregate  portfolio  value on a particular      
day,  a  prospective  investor  in the  Fund  would  be able to  obtain  a      
somewhat  higher  yield  than  would  result  from  investment  in a  fund      
utilizing solely market values,  and existing  investors in the Fund would      
receive less  investment  income.  The converse would apply in a period of      
rising interest rates.                                                          
   Rule 2a-7 under the  Investment  Company Act of 1940  permits the
Fund to  value  its  assets  at  amortized  cost if the Fund  maintains  a      
dollar-weighted  average  maturity  of 90 days or less and only  purchases      
obligations  having  remaining  maturities of 13 months or less. Rule 2a-7      
further  requires,  as a condition  of its use,  that the Fund invest only      
in  obligations  determined  by the  Trustees to be of high  quality  with      
minimal  credit risks and  requires  the Trustees to establish  procedures      
designed  to  stabilize,  to the extent  reasonably  possible,  the Fund's      
price per share as computed  for the purpose of sales and  redemptions  at      
$1.00. Such procedures  include review of the Fund's  investment  holdings      
by the  Trustees,  at such  intervals  as they  may deem  appropriate,  to      
determine   whether  the  Fund's  net  asset  value  calculated  by  using      
available  market  quotations  or  equivalents  deviates  from  $1.00  per      
share.  If such  deviation  exceeds l/2 of 1%, the Trustees  will promptly      
consider  what  action,  if  any,  will be  initiated.  In the  event  the      
Trustees  determine  that a deviation  exists which may result in material      
dilution or other unfair  results to  investors or existing  shareholders,      
the  Trustees  will  take  such  corrective   action  as  they  regard  as      
necessary and appropriate,  including:  the sale of portfolio  instruments      
prior to  maturity  to  realize  capital  gains or  losses  or to  shorten      
average  portfolio  maturity;  the  withholding of dividends or payment of      
distributions  from  capital or capital  gains;  redemptions  of shares in      
kind;  or the  establishment  of a net asset  value per share  based  upon      
available market quotations.                                                    

Net Asset Value and Offering Price Per Share                                    
($239,419,609/239,909,937 shares) $1.00                     

==========================================================================      
CALCULATION OF YIELD      
==========================================================================      

   Yield is  calculated  by  dividing  the net change  exclusive  of
capital  changes in the value of a share during a  particular  base period      
by the net asset  value  per share at the  beginning  of such  period  and      
annualizing the result.  Capital changes  excluded from the calculation of      
yield are:  (1)  realized  gains and losses  from the sale of  securities,      
and (2) unrealized  appreciation  and  depreciation.  The Fund's effective      
yield for a seven-day  period is its annualized  compounded  average yield      
during the period, calculated according to the following formula:               

Effective yield = [(base period return + 1)365/7] - 1       

For the seven day period ended  December  31,  1996,  the Fund's yield was      
4.74% and effective yield was 4.86%.                                            
   The Fund's  yield  fluctuates  in response to changes in interest
rates  and  general  economic  conditions,  portfolio  quality,  portfolio      
maturity,  and  operating  expenses.  Yield is not  fixed or  insured  and      
therefore is not  comparable  to a savings or other  similar type account.      
Yield  during any  particular  time  period  should not be  considered  an      
indication  of future yield.  It is,  however,  useful in  evaluating  the      
Fund's performance in meeting its investment objective.                         

==========================================================================      
ADVERTISING       
==========================================================================      

   The Fund or its affiliates may provide  information  such as, but
not limited to, the economy,  investment climate,  investment  principles,      
sociological  conditions  and political  ambiance.  Discussion may include      
hypothetical  scenarios or lists of relevant  factors  designed to aid the      
investor  in  determining   whether  the  Fund  is  compatible   with  the      
investor's  goals.  The Fund may list portfolio  holdings or give examples      
or  securities  that may have been  considered  for inclusion in the Fund,      
whether held or not.                                                            
   The Fund or its  affiliates  may supply  comparative  performance
data and rankings from  independent  sources such as Donoghue's Money Fund      
Report,  Bank Rate Monitor,  Money,  Forbes,  Lipper Analytical  Services,      
Inc.,  CDA  Investment   Technologies,   Inc.,   Wiesenberger   Investment      
Companies  Service,  Russell  2000/Small  Stock Index,  Mutual Fund Values      
Morningstar  Ratings,  Mutual Fund Forecaster,  Barron's,  The Wall Street      
Journal,  and  Schabacker  Investment   Management,   Inc.  Such  averages      
generally  do not reflect any front- or back-end  sales  charges  that may      
be  charged  by Funds  in that  grouping.  The  Fund may also  cite to any      
source,  whether  in  print or  on-line,  such as  Bloomberg,  in order to      
acknowledge  origin of  information.  The Fund may  compare  itself or its      
portfolio  holdings  to  other  investments,  whether  or  not  issued  or      
regulated  by the  securities  industry,  including,  but not  limited to,      
certificates  of deposit and Treasury  notes.  The Fund, its Advisor,  and      
its  affiliates  reserve the right to update  performance  rankings as new      
rankings become available.                                                      
   Calvert  Group  is  the  nation's   leading  family  of  socially
responsible  mutual funds,  both in terms of socially  responsible  mutual      
fund assets under management,  and number of socially  responsible  mutual      
fund portfolios  offered (source:  Social Investment  Forum,  December 31,      
1996).  Calvert  Group was also the  first to offer a family  of  socially      
responsible mutual fund portfolios.                                             

==========================================================================      
PURCHASES AND REDEMPTION OF SHARES      
==========================================================================      

   Share  certificates  will  not  be  issued  unless  requested  in
writing  by the  investor.  No charge  will be made for share  certificate      
requests.  No  certificates  will be issued  for  fractional  shares  (see      
Prospectus, "How to Sell Your Shares").                                         
   Shareholders  wishing  to use the draft  writing  service  should
complete the  signature  card enclosed  with the  Investment  Application.      
The draft  writing  service  will be  subject to the  customary  rules and      
regulations  governing checking accounts,  and the Fund reserves the right      
to change or suspend  the  service.  Generally,  there is no charge to you      
for the  maintenance  of this service or the clearance of drafts,  but the      
Fund  reserves  the right to charge a service fee for drafts  returned for      
uncollected  or  insufficient   funds,   and  will  charge  $25  for  stop      
payments.  As a  service  to  shareholders,  the  Fund  may  automatically      
transfer the dollar  amount  necessary to cover drafts you have written on      
the  Fund to  your  Fund  account  from  any  other  of  your  identically      
registered  accounts  in Calvert  money  market  funds or Calvert  Insured      
Plus. The Fund may charge a fee for this service.                               
   When a payable  through  draft is presented to the  Custodian for
payment,  a  sufficient  number  of full and  fractional  shares  from the      
shareholder's  account to cover the  amount of the draft will be  redeemed      
at the net asset value next determined.  If there are insufficient  shares      
in  the  shareholder's   account,  the  draft  may  be  returned.   Drafts      
presented  for  payment  which  would  require  the  redemption  of shares      
purchased by check or  electronic  funds  transfer  within the previous 10      
business days may not be honored.                                               
   Existing  shareholders  who at any time desire to arrange for the
telephone redemption  procedure,  or to change instructions already given,      
must send a written  notice to Calvert  Group,  P.O.  Box  419544,  Kansas      
City,  MO  64141-6544,  with a voided  copy of a check for the bank wiring      
instructions  to be  added.  If a  voided  check  does not  accompany  the      
request,  then the request  must be signature  guaranteed  by a commercial      
bank,  savings and loan  association,  trust  company,  member firm of any      
national securities exchange,  or credit union. Further  documentation may      
be required from corporations, fiduciaries, and institutional investors.        
   The right of  redemption  may be suspended or the date of payment
postponed  for any  period  during  which the New York Stock  Exchange  is      
closed (other than customary weekend and holiday  closings),  when trading      
on the New York Stock Exchange is restricted,  or an emergency  exists, as      
determined  by  the  SEC,  or  if  the   Commission  has  ordered  such  a      
suspension for the  protection of  shareholders.  Redemption  proceeds are      
normally  mailed or wired the next business day after a proper  redemption      
request has been  received,  unless  redemptions  have been  suspended  or      
postponed as described above.                                                   

==========================================================================      
TRUSTEES AND OFFICERS       
==========================================================================      

   RICHARD  L.  BAIRD,  JR.,  Trustee.  Mr.  Baird  is  Director  of
Finance for the Family Health Council,  Inc. in Pittsburgh,  Pennsylvania,      
a  non-profit   corporation  which  provides  family  planning   services,      
nutrition,  maternal/child  health  care,  and  various  health  screening      
services.  Mr.  Baird  is a  trustee/director  of each  of the  investment      
companies  in the  Calvert  Group of  Funds,  except  for  Acacia  Capital      
Corporation,  Calvert New World Fund and Calvert  World Values Fund.  DOB:      
05/09/48. Address: 211 Overlook Drive, Pittsburgh, Pennsylvania 15216.          
   FRANK H. BLATZ,  JR.,  Esq.,  Trustee.  Mr. Blatz is a partner in
the  law  firm  of  Snevily,  Ely,  Williams,  Gurrieri  &  Blatz.  He was      
formerly a partner  with  Abrams,  Blatz,  Gran,  Hendricks & Reina,  P.A.      
DOB:  10/29/35.  Address:  308 East Broad Street, PO Box 2007,  Westfield,      
New Jersey 07091.                                                               
   FREDERICK T. BORTS,  M.D.,  Trustee.  Dr. Borts is a  radiologist
with Kaiser  Permanente.  Prior to that, he was a radiologist at Bethlehem      
Medical Imaging in Allentown,  Pennsylvania.  DOB: 07/23/49. Address: 2040      
Nuuanu Avenue #1805, Honolulu, Hawaii, 96817.                                   
   1 CHARLES E. DIEHL,  Trustee.  Mr.  Diehl is Vice  President  and
Treasurer  Emeritus of the George Washington  University,  and has retired      
from University Support Services,  Inc. of Herndon,  Virginia.  He is also      
a  Director  of Acacia  Mutual  Life  Insurance  Company.  DOB:  10/13/22.      
Address: 1658 Quail Hollow Court, McLean, Virginia 22101.                       
   DOUGLAS E. FELDMAN,  M.D.,  Trustee.  Dr. Feldman  practices head
and neck  reconstructive  surgery in the  Washington,  D.C.,  metropolitan      
area. DOD: 05/23/48.  Address:  7536 Pepperell Drive,  Bethesda,  Maryland      
20817.                                                                          
   PETER W.  GAVIAN,  CFA,  Trustee.  Mr.  Gavian was a principal of
Gavian De Vaux  Associates,  an  investment  banking firm. He continues to      
be  President  of  with  Corporate   Finance  of  Washington,   Inc.  DOB:      
12/08/32. Address: 3005 Franklin Road North, Arlington, Virginia 22201.         
   JOHN G.  GUFFEY,  JR.,  Trustee.  Mr.  Guffey is  chairman of the
Calvert  Social  Investment   Foundation,   organizing   director  of  the      
Community Capital Bank in Brooklyn,  New York, and a financial  consultant      
to various  organizations.  In addition, he is a Director of the Community      
Bankers  Mutual Fund of Denver,  Colorado,  and the Treasurer and Director      
of Silby,  Guffey,  and Co., Inc., a venture capital firm. Mr. Guffey is a      
trustee/director  of  each  of  the  other  investment  companies  in  the      
Calvert  Group  of  Funds,  except  for  Acacia  Capital  Corporation  and      
Calvert  New World Fund.  DOB:  05/15/48.  Address:  7205  Pomander  Lane,      
Chevy Chase, Maryland 20815.                                                    
   M.  CHARITO  KRUVANT,   Trustee.  Ms.  Kruvant  is  President  of
Creative  Associates  International,  Inc.,  a firm  that  specializes  in      
human resources development,  information  management,  public affairs and      
private enterprise  development.  DOB: 12/08/45.  Address:  5301 Wisconsin      
Avenue, N.W., Washington, D.C. 20015.                                           
   ARTHUR  J.  PUGH,  Trustee.  Mr.  Pugh  serves as a  Director  of
Acacia  Federal  Savings Bank.  DOB:  09/24/37.  Address:  4823  Prestwick      
Drive, Fairfax, Virginia 22030.                                                 
   1 DAVID  R.  ROCHAT,  Senior  Vice  President  and  Trustee.  Mr.
Rochat is Executive  Vice President of Calvert Asset  Management  Company,      
Inc.,  Director  and  Secretary  of  Grady,  Berwald  and Co.,  Inc.,  and      
Director  and  President  of  Chelsea  Securities,   Inc.  DOB:  10/07/37.      
Address: Box 93, Chelsea, Vermont 05038.                                        
   1   D.   WAYNE   SILBY,   Esq.,   Trustee.   Mr.   Silby   is   a
trustee/director  of  each  of the  investment  companies  in the  Calvert      
Group of Funds,  except for Acacia  Capital  Corporation  and  Calvert New      
World Fund.  Mr. Silby is an officer,  director and  shareholder of Silby,      
Guffey &  Company,  Inc.,  which  serves as  general  partner  of  Calvert      
Social  Venture  Partners  ("CSVP").   CSVP  is  a  venture  capital  firm      
investing in socially  responsible small companies.  He is also a Director      
of Acacia Mutual Life Insurance  Company.  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  Controller  of Calvert  Group,  Ltd.  and its      
subsidiaries and an officer of each of the other  investment  companies in      
the  Calvert  Group  of  Funds.  Mr.  Wolfsheimer  is Vice  President  and      
Treasurer of  Calvert-Sloan  Advisers,  L.L.C.,  and a director of Calvert      
Distributors, Inc. DOB: 07/24/47.                                               
 WILLIAM  M.  TARTIKOFF,  Esq.,  Vice  President  and  Assistant
Secretary.  Mr.  Tartikoff  is  an  officer  of  each  of  the  investment      
companies  in the Calvert  Group of Funds,  and is Senior Vice  President,      
Secretary,  and General  Counsel of Calvert  Group,  Ltd., and each of its      
subsidiaries.  Mr.  Tartikoff  is also Vice  President  and  Secretary  of      
Calvert-Sloan  Advisers,  L.L.C.,  a  director  of  Calvert  Distributors,      
Inc., and is an officer of Acacia  National Life Insurance  Company.  DOB:      
08/12/47.                                                                       
 EVELYNE S. STEWARD,  Vice President.  Ms. Steward is a director
and Senior  Vice  President  of Calvert  Group,  Ltd.,  and a director  of      
Calvert-Sloan  Advisers,  L.L.C. She is the sister of Philip J. Schewetti,      
the portfolio manager of the CSIF Equity Portfolio. DOB: 11/14/52.              
 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     
Assistant Counsel of Calvert Group and an officer of each of its                
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer          
of each of the other investment companies in the Calvert Group of Funds.        
DOB: 10/21/56.                                                                  
LISA CROSSLEY, Esq., Assistant Secretary and Compliance       
Officer. Ms. Crossley is Assistant Counsel of Calvert Group and an              
officer of each of its subsidiaries and Calvert-Sloan Advisers, L.L.C.          
She is also an officer of each of the other investment companies in the         
Calvert Group of Funds. DOB: 12/31/61.                                          
IVY  WAFFORD  DUKE,  Esq,  Assistant  Secretary  Ms.  Duke  is
Assistant  Counsel  of  Calvert  Group  and  an  officer  of  each  of its      
subsidiaries  and  Calvert-Sloan  Advisers,  L.L.C. She is also an officer      
of each of the other  investment  companies in the Calvert Group of Funds.      
DOB: 09/07/68.                                                                  

        1  Officers and trustees deemed to be "interested persons" of the Fund
under the Investment Company Act of 1940, by virtue of their affiliation        
with the Fund's Advisor.                                                        

   Each of the above  named  trustees  and  officers is a trustee or
officer  of each of the  investment  companies  in the  Calvert  Group  of      
Funds with the  exception  of Calvert  Social  Investment  Fund,  of which      
only  Messrs.  Baird,  Guffey  and Silby are  among the  Trustees,  Acacia      
Capital  Corporation,  of which  only  Messrs.  Blatz,  Diehl and Pugh are      
among the  Directors,  Calvert  World  Values  Fund,  Inc.,  of which only      
Messrs.  Guffey and Silby are among the  Directors,  and Calvert New World      
Fund,  Inc.,  of  which  only Mr.  Martini  is among  the  Directors.  The      
address  of  Trustees  and  Officers,  unless  otherwise  noted,  is  4550      
Montgomery Avenue,  Suite 1000N,  Bethesda,  Maryland 20814.  Trustees and      
Officers  as a  group  own  less  than 1% of the  Portfolio's  outstanding      
shares.                                                                         
   The  Board's  Audit  Committee  is  composed  of  Messrs.  Baird,
Blatz,  Feldman,  Guffey and Pugh.  The  Investment  Policy  Committee  is      
composed of Messrs. Borts, Diehl, Gavian, Rochat and Silby.                     
   During  fiscal  1996,  trustees of the Fund not  affiliated  with
the  Fund's   Advisor  were  paid  $24,721.   Trustees  of  the  Fund  not      
affiliated  with the  Advisor  presently  receive an annual fee of $20,500      
for service as a member of the Board of  Trustees of the Calvert  Group of      
Funds,  and a fee of $750 to $1500  for each  regular  Board or  Committee      
meeting  attended;  such fees are allocated among the respective  Funds on      
the basis of net assets.                                                        
   Trustees of the Fund not  affiliated  with the Fund's Advisor may
elect to defer  receipt  of all or a  percentage  of their fees and invest      
them in any fund in the  Calvert  Family  of Funds  through  the  Trustees      
Deferred  Compensation  Plan  (shown as "Pension  or  Retirement  Benefits      
Accrued  as  part of  Fund  Expenses,"  below).  Deferral  of the  fees is      
designed  to  maintain  the  parties in the same  position  as if the fees      
were  paid on a  current  basis.  Management  believes  this  will  have a      
negligible effect on the Fund's assets,  liabilities,  net assets, and net      
income  per  share,  and  will  ensure  that  there is no  duplication  of      
advisory fees.                                                                  

Trustee Compensation Table

                                                                · Download Table


Fiscal Year 1996         Aggregate          Pension or       Total              
(unaudited numbers)      Compensation       Retirement       Compensation from  
Name of Trustee          from Registrant    Benefits         Registrant and Fund
                         for service as     Accrued as part  Complex paid to    
                         Trustee            of Registrant    Trustees<F3>       
                                            Expenses <F2>                       
                                                                                

Richard L. Baird, Jr.    $1898              $0                    $34,925       
Frank H. Blatz, Jr.      $1935              $1935                 $37,875       
Frederick T. Borts       $1793              $0                    $32,675       
Charles E. Diehl         $1807              $1807                 $35,475       
Douglas E. Feldman       $1873              $0                    $34,175       
Peter W. Gavian          $1872              $560                  $34,175       
M. Charito Kruvant       $905               $0                    $24,313       
John G. Guffey, Jr.      $1816              $0                    $49,433       
Arthur J. Pugh           $2011              $0                    $36,736       
D. Wayne Silby           $1710              $0                    $56,398       

<FN>                                                                            
<F2> Messrs. Blatz, Diehl, and Gavian have chosen to defer a portion of         
their compensation. As of December 31, 1996, total deferred compensation,       
including dividends and capital appreciation, was $428,689.46, $428,442.42, and 
$96,332.93, for each named Trustee, respectively.                               
<F3> As of December 31, 1996, the Fund Complex consists of nine (9)             
registered investment companies.                                                
</FN>                                                                           

==========================================================================      
INVESTMENT ADVISOR      
==========================================================================      

   The  Fund's  Investment   Advisor  is  Calvert  Asset  Management
Company,  Inc., 4550 Montgomery Avenue,  Suite 1000N,  Bethesda,  Maryland      
20814,  a subsidiary  of Calvert  Group,  Ltd.,  which is a subsidiary  of      
Acacia Mutual Life Insurance Company of Washington, D.C.                        
   The Advisory  Contract (the "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 Board of  Trustees  of the      
Fund;  and  further  provided  that  such  continuance  is  also  approved      
annually  by the vote of a majority  of the  Trustees  of the Fund who are      
not  parties  to  the  Contract,  interested  persons  of  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 upon 60 days'  prior      
written  notice;   it  automatically   terminates  in  the  event  of  its      
assignment.                                                                     
   Under the Contract,  the Advisor  provides  investment  advice to
the fund and  oversees  its  day-to-day  operations,  subject to direction      
and  control  by the  Fund's  Board of  Trustees.  For its  services,  the      
Advisor  receives a fee of 0.50% of the first $500  million of the average      
daily  net  assets of the Fund,  0.45% of the next  $400  million  of such      
assets,  0.40% of the next $400 million of such assets,  0.35% of the next      
$700  million  of such  assets,  and  0.30% on all  assets in excess of $2      
billion. Such fee is payable monthly.                                           
   The  Advisor  provides  the  Fund  with  investment   advice  and
research, office space,  administrative services,  furnishes executive and      
other  personnel  to the Fund,  pays the salaries and fees of all trustees      
who are affiliated  persons of the Advisor,  and pays all Fund advertising      
and  promotional  expenses.  The Advisor  reserves the right to compensate      
broker-dealers  in  consideration of their  promotional or  administrative      
services for Class O shares.  The Fund pays all other operating  expenses,      
including   custodial  and  transfer   agency  fees,   federal  and  state      
securities   registration  fees,  legal  and  audit  fees,  and  brokerage      
commissions  and other  costs  associated  with the  purchase  and sale of      
portfolio  securities.  However,  the Advisor has agreed to reimburse  the      
Fund  for  all  expenses  (excluding  brokerage,   taxes,   interest,  and      
extraordinary  items)  exceeding,  on a pro rata  basis,  1% of the Fund's      
average daily net assets.                                                       
   The  advisory  fees  paid  to  the  Advisor  under  the  Advisory
Contract  for the 1994,  1995,  and 1996  fiscal  years  were  $1,254,516,      
$1,182,171, and $1,238,849,  respectively.  No expense reimbursements have      
been required under the Contract.                                               

==========================================================================      
TRANSFER AND SHAREHOLDER SERVICING AGENT      
==========================================================================      

   Calvert  Shareholder  Services,  Inc.,  a  subsidiary  of Calvert
Group,  Ltd., and Acacia  Mutual,  has been retained by the Fund to act as      
transfer  agent,  dividend  disbursing  agent  and  shareholder  servicing      
agent.   These   responsibilities   include:   responding  to  shareholder      
inquiries  and  instructions  concerning  their  accounts;  crediting  and      
debiting  shareholder  accounts  for  purchases  and  redemptions  of Fund      
shares and  confirming  such  transactions;  daily updating of shareholder      
accounts to reflect  declaration  and payment of dividends;  and preparing      
and  distributing  quarterly  statements to  shareholders  regarding their      
accounts. For such services,  Calvert Shareholder Services,  Inc. receives      
compensation  based on the number of  shareholder  accounts and the number      
of  transactions.  For its fiscal years ended December 31, 1994, 1995, and      
1996, the Fund paid Calvert Shareholder  Services,  Inc. fees of $509,155,      
$556,450, and $561,279, respectively.                                           

==========================================================================      
PORTFOLIO TRANSACTIONS      
==========================================================================      

   Portfolio  transactions  are  undertaken  on the  basis  of their
desirability  from an  investment  standpoint.  Investment  decisions  and      
choice of brokers  and dealers  are made by the Fund's  Advisor  under the      
direction and supervision of the Fund's Board of Trustees.                      
   It is  intended  that all  securities  maturing  in more than one
year will be held to  maturity.  Sales of  securities  to  facilitate  the      
redemption  of  Fund  shares  is  contemplated,  but  such  sales  will be      
primarily  from the  short-term  instruments  in the Fund's  portfolio  on      
which brokerage  charges,  if any, are minimal.  The Fund anticipates that      
its portfolio  turnover rate with respect to  securities  with  maturities      
in excess of one year will be no more than 5%.                                  
   Broker-dealers  who execute  portfolio  transactions on behalf of
the Fund are selected on the basis of their  professional  capability  and      
the value and quality of their  services.  The Advisor  reserves the right      
to place  orders for the  purchase of sale of  portfolio  securities  with      
dealers who provide it with  statistical,  research,  or other information      
and services.  Although any statistical,  research,  or other  information      
and  services  provided  by  dealers  may be  useful to the  Advisor,  the      
dollar  value of such  information  is generally  indeterminable,  and its      
availability   or  receipt  does  not  serve  to  materially   reduce  the      
Advisor's   normal   research   activities   or  expenses.   No  brokerage      
commissions have been paid to any  broker-dealer  that provided the Fund's      
Advisor with research or other services.                                        
   The  Advisor  may also  execute  portfolio  transactions  with or
through  broker-dealers  who have sold shares of the Fund.  However,  such      
sales   will  not  be  a   qualifying   or   disqualifying   factor  in  a      
broker-dealer's  selection nor will the selection of any  broker-dealer be      
based on the volume of Fund shares sold.  The Advisor may  compensate,  at      
its expense,  such  broker-dealers  in consideration of their  promotional      
and administrative services.                                                    

==========================================================================      
INDEPENDENT ACCOUNTANTS AND CUSTODIANS      
==========================================================================      

    Coopers & Lybrand,  L.L.P.,  has been  selected  by the Board of
Trustees to serve as independent  accountants for fiscal year 1997.  State      
Street  Bank  &  Trust  Company,   N.A.,  225  Franklin  Street,   Boston,      
Massachusetts  02110,  currently  serves as custodian  of the  Portfolio's      
investments.  First  National Bank of Maryland,  25 South Charles  Street,      
Baltimore,  Maryland  21203  also  serves as  custodian  of certain of the      
Portfolio's  cash assets.  Neither  custodian has any part in deciding the      
Portfolio's  investment  policies or the choice of securities  that are to      
be purchased or sold for the Portfolio.                                         

==========================================================================      
GENERAL INFORMATION       
==========================================================================      

   The Fund is  organized as a  Massachusetts  business  trust,  and
has two series.  The first series,  Calvert First  Government Money Market      
Fund,  was known as First  Variable  Rate Fund prior to September 1, 1991.      
The second series is Calvert Florida  Municipal  Intermediate  Fund. Prior      
to April 30, 1984, the Fund was organized as a Maryland  corporation.  The      
Fund's   Declaration   of  Trust   contains  an  express   disclaimer   of      
shareholder   liability  for  acts  or   obligations   of  the  Fund.  The      
shareholders  of  Massachusetts   business  trust  might,  however,  under      
certain  circumstances,  be held  personally  liable as  partners  for its      
obligations.  The  Declaration of Trust provides for  indemnification  and      
reimbursement  of  expenses  out of Fund assets for any  shareholder  held      
personally  liable for  obligations of the Fund. The  Declaration of Trust      
provides  that the Fund  shall,  upon  request,  assume the defense of any      
claim made against any  shareholder  for any act or obligation of the Fund      
and  satisfy  any  judgment  thereon.  The  Declaration  of Trust  further      
provides that the Fund may maintain  appropriate  insurance  (for example,      
fidelity  bonding and errors and omissions  insurance)  for the protection      
of the Fund, its shareholders,  trustees,  officers,  employees and agents      
to  cover  possible  tort  and  other  liabilities.  Thus,  the  risk of a      
shareholder  incurring financial loss on account of shareholder  liability      
is limited to  circumstances  in which both  inadequate  insurance  exists      
and the Fund itself is unable to meet its obligations.                          
   The Fund will send its  shareholders  confirmations  of  purchase
and redemption  transactions,  as well as periodic transaction  statements      
and unaudited  semi-annual and audited annual financial  statements of the      
Fund's  investment   securities,   assets  and  liabilities,   income  and      
expenses, and changes in net assets.                                            
   The Prospectus  and this  Statement of Additional  Information do
not  contain all the  information  in the Fund's  registration  statement.      
The  registration  statement is on file with the  Securities  and Exchange      
Commission and is available to the public.                                      

==========================================================================      
FINANCIAL STATEMENTS      
==========================================================================      

The  audited  financial  statements  included  in the  Fund's  Annual 
Report  to   Shareholders   dated   December   31,   1996  are   expressly      
incorporated   by  reference  and  made  a  part  of  this   Statement  of      
Additional  Information.  A copy of the Annual Report may be obtained free      
of charge by writing or calling the Fund.                                       

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STATEMENT OF ADDITIONAL INFORMATION                                             

April 30, 1997                                                                  

CALVERT MUNICIPAL INTERMEDIATE FUNDS: 
ARIZONA, FLORIDA, MARYLAND, 
MICHIGAN, NEW YORK, PENNSYLVANIA AND VIRGINIA 
4550 Montgomery Avenue, Bethesda, Maryland 20814

New Account     (800) 368-2748                                                  
Information:    (301) 951-4820                                                  

Shareholder                                                                     
Services:       (800) 368-2745                                                  

Broker          (800) 368-2746                                                  
Services:       (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 Fund's
Prospectus,  dated  April  30,  1997,  which may be  obtained  free of charge by
writing the Fund at the above  address or calling the telephone  numbers  listed
above.                                                                          

INVESTMENT OBJECTIVE

         The  Calvert  Municipal  Intermediate  Funds  ("Funds"  or "Fund")  are
designed to provide  individual  and  institutional  investors  with the highest
level of interest  income  exempt from federal and  specific  state income taxes
as is consistent with prudent  investment  management,  preservation of capital,
and the quality and maturity  characteristics  of the Fund. There is, of course,
no  assurance  that the Funds will be  successful  in meeting  their  investment
objectives; there are inherent risks in the ownership of any investment.        
         Dividends  paid by the  Funds  will  fluctuate  with  income  earned on
investments.  In addition,  dividends  and  distributions  paid and the value of
each share will vary by class of shares:  the share  values  will  fluctuate  to
reflect  changes in the market  value of  investments.  Each Fund will  attempt,
through   careful   management,   to  reduce   these   risks  and   enhance  the
opportunities for higher income and greater price stability.                    

INVESTMENT POLICIES 

         Each  Fund  invests   primarily  in  a   nondiversified   portfolio  of
municipal  obligations,  including  some with  interest  that may be  subject to
alternative  minimum tax. A complete  explanation of municipal  obligations  and
municipal bond and note ratings appears in the Appendix.                        
         Under  normal  market  conditions,  each Fund will attempt to invest at
least 65% of its total assets in municipal  obligations  with  interest  that is
exempt from federal and specific  state  income tax,  including  those issued by
or on  behalf  of the  state  for  which  the  Fund is  named  and  the  state's
political  subdivisions.  Each Fund will also  attempt to invest  the  remaining
35% of its total  assets in these  obligations,  but may invest it in  municipal
obligations of other states,  territories  and possessions of the United States,
the  District  of  Columbia,   and  their  respective   authorities,   agencies,
instrumentalities  and  political  subdivisions.  Dividends you receive from the
Fund  that  are  derived  from  interest  on  tax-exempt  obligations  of  other
governmental  issuers  will be  exempt  from  federal  income  tax,  but will be
subject to state income taxes.                                                  

Variable Rate Demand Notes                                                      
         The  Boards  of   Directors/Trustees   have  approved   investments  in
floating and  variable  rate demand notes upon the  following  conditions:  each
Fund has right of demand,  upon notice not to exceed  thirty  days,  against the
issuer to receive  payment;  the issuer will be able to make  payment  upon such
demand,  either  from its own  resources  or through an  unqualified  commitment
from a third party;  and the rate of interest  payable is  calculated  to ensure
that  the  market  value  of  such  notes  will  approximate  par  value  on the
adjustment  dates.  The  remaining  maturity of such demand  notes is deemed the
period  remaining  until  such time as the Fund has the right to  dispose of the
notes at a price which  approximates  par and market  value.  Notes with a right
of demand  exceeding  seven  days are  considered  illiquid  and are  subject to
purchase restrictions.                                                          

Municipal Leases                                                                
         The Funds may invest in municipal  leases,  or  structured  instruments
where the  underlying  security is a municipal  lease.  A municipal  lease is an
obligation  of a  government  or  governmental  authority,  not subject to voter
approval,  used to  finance  capital  projects  or  equipment  acquisitions  and
payable  through  periodic  rental  payments.  The  Funds may  purchase  unrated
leases.   The  Funds'   Advisor,   under  the   supervision  of  the  Boards  of
Directors/Trustees,  is responsible  for  determining the credit quality of such
leases on an ongoing basis,  including an assessment of the likelihood  that the
lease  will  not  be  canceled.  Certain  municipal  leases  may  be  considered
illiquid  and subject to a Fund's  limit on illiquid  securities.  The Boards of
Directors/Trustees  have  directed  the Advisor to treat a municipal  lease as a
liquid  security if it satisfies the following  conditions:  (A) such  treatment
must be  consistent  with the Fund's  investment  restrictions;  (B) the Advisor
should be able to conclude  that the  obligation  will  maintain  its  liquidity
throughout  the time it is held by the  Fund,  based on the  following  factors:
(1)  whether  the lease  may be  terminated  by the  lessee;  (2) the  potential
recovery,  if any, from a sale of the leased  property upon  termination  of the
lease;   (3)  the   lessee's   general   credit   strength   (e.g.,   its  debt,
administrative,  economic and financial characteristics and prospects);  (4) the
likelihood  that the  lessee  will  discontinue  appropriating  funding  for the
leased  property  because the  property  is no longer  deemed  essential  to its
operations  (e.g.,  the potential for an "event of  nonappropriation"),  and (5)
any  credit   enhancement   or  legal   recourse   provided  upon  an  event  of
nonappropriation  or other  termination  of the lease;  (C) the  Advisor  should
determine  whether the  obligation  can be disposed of within  seven days in the
ordinary  course of business at  approximately  the amount at which the Fund has
valued it for purposes of  calculating  the Fund's net asset value,  taking into
account the following  factors:  (1) the frequency of trades and quotes; (2) the
volatility of quotations  and trade  prices;  (3) the number of dealers  willing
to purchase or sell the  security and the number of  potential  purchasers;  (4)
dealer  undertakings  to make a market in the  security;  (5) the  nature of the
security  and the nature of the  marketplace  trades  (e.g.,  the time needed to
dispose of the security,  the method of soliciting  offers, and the mechanics of
the  transfer);  (6) the rating of the security and the financial  condition and
prospects of the issuer;  and (7) other factors  relevant to the Fund's  ability
to  dispose  of the  security;  and  (D)  the  Advisor  should  have  reasonable
expectations  that the municipal  lease  obligation  will maintain its liquidity
throughout the time the instrument is held by the Fund.                         

Temporary Investments                                                           
         Short-term  money market type  investments  consist of:  obligations of
the  U.S.  Government,  its  agencies  and  instrumentalities;  certificates  of
deposit of banks with assets of one billion  dollars or more;  commercial  paper
or other  corporate  notes of investment  grade  quality;  and any of such items
subject to short-term repurchase agreements.                                    

When-Issued Purchases                                                           
         Securities  purchased on a when-issued  basis and the  securities  held
in a Fund's  portfolio  are  subject  to changes  in market  value  based on the
public's  perception  of the  creditworthiness  of the issuer and changes in the
level of interest rates (which will  generally  result in both changing in value
in the same way,  i.e.,  both  experiencing  appreciation  when  interest  rates
decline and depreciation  when interest rates rise).  Therefore,  if in order to
achieve higher interest income,  the Funds remain  substantially  fully invested
at the same  time  that it has  purchased  securities  on a  when-issued  basis,
there will be a greater  possibility  that the market  value of their assets may
vary. No new when-issued  commitments  will be made if more than 50% of a Fund's
net assets would become so committed.                                           
         The  Funds  will  meet  their   obligations  to  pay  for   when-issued
securities  from then-  available cash flow, sale of securities or, although the
Funds  would  not  normally  expect  to do so,  from  sale  of  the  when-issued
securities  themselves  (which may have a market value  greater or less than the
Fund's  payment  obligation).  Sale  of  securities  to  meet  such  obligations
carries with it a greater  potential for the  realization  of capital losses and
capital gains which are not exempt from federal income tax.                     

Transactions in Futures Contracts                                               
         The Funds may engage in the purchase  and sale of futures  contracts on
an index of municipal bonds or on U.S. Treasury  securities,  or options on such
futures  contracts,  for hedging  purposes  only.  A Fund may sell such  futures
contracts in  anticipation  of a decline in the cost of municipal bonds it holds
or may purchase  such futures  contracts in  anticipation  of an increase in the
value of  municipal  bonds the Fund  intends  to  acquire.  The  Funds  also are
authorized to purchase and sell other financial  futures  contracts which in the
opinion of the Investment  Advisor provide an appropriate  hedge for some or all
of the Funds' securities.                                                       
         Because  of low  initial  margin  deposits  made upon the  opening of a
futures  position,  futures  transactions  involve  substantial  leverage.  As a
result,  relatively  small  movements  in the price of the futures  contract can
result in  substantial  unrealized  gains or  losses.  Because  the  Funds  will
engage in the  purchase  and sale of  financial  futures  contracts  solely  for
hedging purposes,  however,  any losses incurred in connection therewith should,
if the  hedging  strategy  is  successful,  be  offset  in  whole  or in part by
increases  in the value of  securities  held by a Fund or decreases in the price
of securities the Fund intends to acquire.                                      
         Municipal  bond  index  futures  contracts  commenced  trading  in June
1985,  and it is possible  that trading in such futures  contracts  will be less
liquid than that in other futures  contracts.  The trading of futures  contracts
and options  thereon is subject to certain market risks,  such as trading halts,
suspensions,   exchange  or  clearing  house  equipment   failures,   government
intervention  or other  disruptions of normal trading  activity,  which could at
times make it difficult or impossible to liquidate existing positions.          
         The  liquidity  of a  secondary  market  in  futures  contracts  may be
further adversely  affected by "daily price fluctuation  limits"  established by
contract  markets,  which  limit  the  amount of  fluctuation  in the price of a
futures  contract or option  thereon during a single trading day. Once the daily
limit has been  reached in the  contract,  no trades  may be  entered  into at a
price beyond the limit,  thus  preventing  the  liquidation  of open  positions.
Prices  of  existing  contracts  have in the past  moved  the  daily  limit on a
number of  consecutive  trading days. A Fund will enter into a futures  position
only if, in the  judgment  of the  Investment  Advisor,  there  appears to be an
actively traded secondary market for such futures contracts.                    
         The successful  use of  transactions  in futures  contracts and options
thereon depends on the ability of the Investment  Advisor to correctly  forecast
the direction  and extent of price  movements of these  instruments,  as well as
price  movements of the securities  held by a Fund within a given time frame. To
the extent these prices  remain  stable  during the period in which a futures or
option  contract  is held by a Fund,  or move in a  direction  opposite  to that
anticipated,  a Fund may realize a loss on the hedging  transaction which is not
fully  or  partially   offset  by  an  increase  in  the  value  of  the  Fund's
securities.  As a result,  the Fund's  total  return for such period may be less
than if it had not engaged in the hedging transaction.                          

Description of Financial Futures Contracts                                      
         Futures  Contracts.  A  futures  contract  obligates  the  seller  of a
contract to deliver  and the  purchaser  of a contract  to take  delivery of the
type of financial  instrument  called for in the contract or, in some instances,
to make a cash  settlement,  at a specified  future time for a specified  price.
Although  the terms of a contract  call for actual  delivery  or  acceptance  of
securities,  or for a cash  settlement,  in most cases the  contracts are closed
out before the delivery  date without the delivery or  acceptance  taking place.
The Funds intend to close out any futures  contracts  prior to the delivery date
of such contracts.                                                              
         A Fund may sell futures  contracts in  anticipation of a decline in the
value of its investments in municipal  bonds.  The loss associated with any such
decline  could be  reduced  without  employing  futures  as a hedge  by  selling
long-term  securities  and either  reinvesting  the proceeds in securities  with
shorter  maturities  or by  holding  assets  in cash.  This  strategy,  however,
entails  increased  transaction  costs in the form of brokerage  commissions and
dealer spreads and will  typically  reduce the Fund's average yields as a result
of the shortening of maturities.                                                
         The  purchase or sale of a futures  contract  differs from the purchase
or sale  of a  security,  in  that no  price  or  premium  is paid or  received.
Instead,  an amount  of cash or  securities  acceptable  to the  Fund's  futures
commission  merchant  and the  relevant  contract  market,  which  varies but is
generally  about 5% or less of the contract  amount,  must be deposited with the
broker.  This  amount  is known as  "initial  margin,"  and  represents  a "good
faith"  deposit  assuring the  performance  of both the purchaser and the seller
under the futures contract.  Subsequent  payments to and from the broker,  known
as  "variation  margin,"  are  required to be made on a daily basis as the price
of the futures  contract  fluctuates,  making the long or short positions in the
futures  contract  more or less  valuable,  a process  known as  "marking to the
market."  Prior to the  settlement  date of the futures  contract,  the position
may be  closed  out by  taking  an  opposite  position  which  will  operate  to
terminate  the  position  in the  futures  contract.  A final  determination  of
variation  margin is then made,  additional  cash is  required  to be paid to or
released  by the  broker,  and  the  purchaser  realizes  a  loss  or  gain.  In
addition, a commission is paid on each completed purchase and sale transaction. 
         The sale of financial futures  contracts  provides an alternative means
of  hedging  a  Fund  against  declines  in the  value  of  its  investments  in
municipal  bonds.  As such values  decline,  the value of the Fund's position in
the futures  contracts will tend to increase,  thus  offsetting all or a portion
of the  depreciation in the market value of the Fund's fixed income  investments
which  are  being  hedged.  While  a Fund  will  incur  commission  expenses  in
establishing  and  closing  out  futures   positions,   commissions  on  futures
transactions may be significantly  lower than transaction  costs incurred in the
purchase and sale of fixed  income  securities.  In  addition,  the ability of a
Fund to trade in the  standardized  contracts  available  in the futures  market
may  offer a more  effective  hedging  strategy  than a program  to  reduce  the
average  maturing of portfolio  securities,  due to the unique and varied credit
and technical  characteristics  of the municipal debt  instruments  available to
the  Fund.  Employing  futures  as a hedge  may also  permit a Fund to  assume a
hedging  posture  without  reducing  the yield on its  investments,  beyond  any
amounts required to engage in futures trading.                                  
         The Funds may engage in the purchase  and sale of futures  contracts on
an index of municipal  securities.  These  instruments  provide for the purchase
or sale of a  hypothetical  portfolio of  municipal  bonds at a fixed price in a
stated  delivery  month.  Unlike  most  other  futures  contracts,   however,  a
municipal  bond index  futures  contract  does not  require  actual  delivery of
securities but results in a cash  settlement  based upon the difference in value
of the index  between the time the  contract was entered into and the time it is
liquidated.                                                                     
         The municipal  bond index  underlying the futures  contracts  traded by
the  Portfolio  is The Bond Buyer  Municipal  Bond Index,  developed by The Bond
Buyer and the Chicago Board of Trade ("CBT"),  the contract  market on which the
futures  contracts are traded. As currently  structured,  the index is comprised
of 40 tax-exempt  term  municipal  revenue and general  obligation  bonds.  Each
bond  included  in the index  must be rated  either A- or higher by  Standard  &
Poor's or A or higher by Moody's  Investors  Service  and must have a  remaining
maturity  of 19  years  or  more.  Twice  a  month  new  issues  satisfying  the
eligibility  requirements  are added to, and an equal  number of old issues will
be deleted from, the index.  The value of the index is computed daily  according
to a formula  based upon the price of each bond in the index,  as  evaluated  by
four dealer-to-dealers brokers.                                                 
         The  Funds  may  also  purchase  and  sell  futures  contracts  on U.S.
Treasury  bills,  notes and bonds for the same types of hedging  purposes.  Such
futures  contracts  provide  for  delivery  of  the  underlying  security  at  a
specified  future time for a fixed price,  and the value of the futures contract
therefore generally fluctuates with movements in interest rates.                
         The municipal bond index futures  contract,  futures  contracts on U.S.
Treasury  securities  and options on such  futures  contracts  are traded on the
CBT,  which,  like  other  contract  markets,  assures  the  performance  of the
parties to each futures  contract  through a clearing  corporation,  a nonprofit
organization managed by the exchange  membership,  which is also responsible for
handling daily accounting of deposits or withdrawals of margin.                 
         The  Funds  may also  purchase  financial  futures  contracts  when not
fully invested in municipal  bonds,  in  anticipation of an increase in the cost
of securities a Fund intends to purchase.  As such securities are purchased,  an
equivalent  amount of futures  contracts  will be closed out.  In a  substantial
majority  of these  transactions,  a Fund will  purchase  municipal  bonds  upon
termination  of the futures  contracts.  Due to changing  market  conditions and
interest rate forecasts,  however,  a futures position may be terminated without
a corresponding purchase of securities.  Nevertheless,  all purchases of futures
contracts by a Fund will be subject to certain restrictions, described below.   
         Options  on  Futures  Contracts.   An  option  on  a  futures  contract
provides the purchaser with the right,  but not the obligation,  to enter into a
long  position  in the  underlying  futures  contract  (that  is,  purchase  the
futures  contract),  in the case of a "call"  option,  or a short position (sell
the futures  contract),  in the case of a "put" option,  for a fixed price up to
a stated  expiration  date.  The option is purchased for a  non-refundable  fee,
known as the  "premium."  Upon  exercise  of the  option,  the  contract  market
clearing  house  assigns  each party to the option an  opposite  position in the
underlying futures contract.  In the event of exercise,  therefore,  the parties
are subject to all of the risks of futures  trading,  such as payment of initial
and variation  margin.  In addition,  the seller,  or "writer," of the option is
subject  to margin  requirements  on the  option  position.  Options  on futures
contracts  are traded on the same  contract  markets as the  underlying  futures
contracts.                                                                      
         The  Funds may  purchase  options  on  futures  contracts  for the same
types  of  hedging   purposes   described   above  in  connection  with  futures
contracts.  For example,  in order to protect against an anticipated  decline in
the value of securities it holds,  a Fund could  purchase put options on futures
contracts,  instead of selling the underlying futures contracts.  Conversely, in
order to protect  against the adverse  effects of  anticipated  increases in the
costs of  securities  to be  acquired,  a Fund could  purchase  call  options on
futures contracts,  instead of purchasing the underlying futures contracts.  The
Funds  generally  will sell  options on futures  contracts  only to close out an
existing position.                                                              
         The Funds will not engage in  transactions in such  instruments  unless
and until the  Investment  Advisor  determines  that market  conditions  and the
circumstances  of the Fund  warrant such  trading.  To the extent a Fund engages
in the purchase and sale of futures  contracts  or options  thereon,  it will do
so only at a level which is reflective of the  Investment  Advisor's view of the
hedging needs of a Fund,  the liquidity of the market for futures  contracts and
the  anticipated  correlation  between  movements in the value of the futures or
option contract and the value of securities held by the Portfolio.              
         Restrictions  on the Use of Futures  Contracts  and  Options on Futures
Contracts.  Under  regulations  of  the  Commodity  Futures  Trading  Commission
("CFTC"),  the futures trading activities  described herein will not result in a
Fund being deemed to be a "commodity  pool," as defined under such  regulations,
provided that certain trading  restrictions are adhered to. In particular,  CFTC
regulations  require  that all futures and option  positions  entered  into by a
Fund  qualify  as  bona  fide  hedge   transactions,   as  defined   under  CFTC
regulations,  or,  in the  case  of  long  positions,  that  the  value  of such
positions  not exceed an amount of segregated  funds  determined by reference to
certain cash and securities  positions  maintained by a Fund and accrued profits
on such  positions.  In  addition,  a Fund  may not  purchase  or sell  any such
instruments  if,  immediately  thereafter,  the  sum of the  amount  of  initial
margin  deposits on the Fund's  existing  futures  positions  would exceed 5% of
the market value of its net assets.                                             
         When a Fund  purchases a futures  contract,  it will maintain an amount
of cash,  cash  equivalents  (for  example,  commercial  paper and daily  tender
adjustable  notes)  or  short-term  high-grade  fixed  income  securities  in  a
segregated  account with the Fund's custodian,  so that the amount so segregated
plus the amount of  initial  and  variation  margin  held in the  account of its
broker equals the market value of the futures  contract,  thereby  ensuring that
the use of such futures is unleveraged.                                         
         Risk  Factors in  Transactions  in Futures  Contracts.  The  particular
municipal  bonds  comprising  the index  underlying  the  municipal  bond  index
futures  contract  may vary  from the bonds  held by a Fund.  In  addition,  the
securities  underlying  futures contracts on U.S.  Treasury  securities will not
be the same as  securities  held by the  Fund.  As a  result,  a Fund's  ability
effectively  to hedge  all or a  portion  of the  value of its  municipal  bonds
through  the use of  futures  contracts  will  depend  in part on the  degree to
which price  movements in the index  underlying the municipal bond index futures
contract,  or the U.S.  Treasury  securities  underlying other futures contracts
trade, correlate with price movements of the municipal bonds held by the Fund.  
         For example,  where prices of  securities  in a Fund do not move in the
same  direction or to the same extent as the values of the  securities  or index
underlying a futures  contract,  the trading of such futures  contracts  may not
effectively hedge the Fund's  investments and may result in trading losses.  The
correlation  may be affected by  disparities in the average  maturity,  ratings,
geographical  mix or  structure of the Fund's  investments  as compared to those
comprising the index,  and general economic or political  factors.  In addition,
the  correlation  between  movements  in the  value of the  index  underlying  a
futures  contract  may be  subject  to change  over time,  as  additions  to and
deletions from the index alter its structure.  In the case of futures  contracts
on U.S.  Treasury  securities and options thereon,  the anticipated  correlation
of price movements between the U.S. Treasury  securities  underlying the futures
or  options  and  municipal  bonds  may  be  adversely   affected  by  economic,
political,  legislative or other  developments  that have a disparate  impact on
the  respective  markets for such  securities.  In the event that the Investment
Advisor  determines to enter into  transactions in financial  futures  contracts
other  than the  municipal  bond  index  futures  contract  or  futures  on U.S.
Treasury  securities,  the risk of imperfect  correlation  between  movements in
the prices of such futures  contracts and the prices of municipal  bonds held by
a Fund may be greater.                                                          
         The trading of futures  contracts  on an index also entails the risk of
imperfect  correlation  between  movements in the price of the futures  contract
and the value of the  underlying  index.  The  anticipated  spread  between  the
prices may be distorted due to  differences  in the nature of the markets,  such
as margin  requirements,  liquidity and the  participation of speculators in the
futures  markets.  The  risk  of  imperfect  correlation,   however,   generally
diminishes as the delivery month specified in the futures contract approaches.  
         Prior to exercise or  expiration,  a position in futures  contracts  or
options  thereon may be terminated  only by entering into a closing  purchase or
sale  transaction.  This  requires a secondary  market on the relevant  contract
market.  The Funds will enter  into a futures or option  position  only if there
appears  to be a liquid  secondary  market  therefor,  although  there can be no
assurance  that such a liquid  secondary  market  will exist for any  particular
contract  at any  specific  time.  Thus,  it may not be  possible to close out a
position once it has been established.  Under such  circumstances,  a Fund could
be required to make  continuing  daily cash payments of variation  margin in the
event  of  adverse  price   movements.   In  such  situation,   if  a  Fund  has
insufficient  cash,  it may be required  to sell  portfolio  securities  to meet
daily variation  margin  requirements  at a time when it may be  disadvantageous
to do so. In  addition,  a Fund may be  required  to perform  under the terms of
the futures or option  contracts  it holds.  The  inability to close out futures
or options  positions  also could have an adverse  impact on the Fund's  ability
effectively to hedge its portfolio.                                             
         When a Fund  purchases  an option on a  futures  contract,  its risk is
limited to the amount of the premium,  plus related transaction costs,  although
this  entire  amount  may be lost.  In  addition,  in order to  profit  from the
purchase  of an  option  on a  futures  contract,  the Fund may be  required  to
exercise the option and liquidate the underlying  futures  contract,  subject to
the  availability  of a liquid  secondary  market.  The  trading  of  options on
futures  contracts  also  entails  the risk  that  changes  in the  value of the
underlying  futures  contract  will not be fully  reflected  in the value of the
option,  although the risk of imperfect  correlation generally tends to diminish
as the maturity date of the futures  contract or  expiration  date of the option
approaches.                                                                     
         "Trading  Limits"  or  "Position  Limits"  may also be  imposed  on the
maximum  number  of  contracts  which any  person  may hold at a given  time.  A
contract  market  may  order  the  liquidation  of  positions  found  to  be  in
violation  of these limits and it may impose  other  sanctions or  restrictions.
The  Investment  Advisor  does not  believe  that  trading  limits will have any
adverse impact on the strategies for hedging the Portfolio's investments.       
         Further,  the  trading of futures  contracts  is subject to the risk of
the  insolvency of a brokerage  firm or clearing  corporation,  which could make
it  difficult  or  impossible  to  liquidate  existing  positions  or to recover
excess variation margin payments.                                               
         In  addition  to the  risks  of  imperfect  correlation  and  lack of a
liquid   secondary  market  for  such   instruments,   transactions  in  futures
contracts  involve risks  related to leveraging  and the potential for incorrect
forecasts  of the  direction  and extent of  interest  rate  movements  within a
given time frame.                                                               

Noninvestment-Grade Debt Securities                                             
         The  Funds may  invest  in lower  quality  debt  securities  (generally
those  rated  BB or lower by S&P or Ba or  lower  by  Moody's),  subject  to the
Funds'  investment  policy which provides that they may not invest more than 35%
of their assets in securities  rated below BBB by either rating  service,  or in
unrated  securities  determined  by the Advisor to be  comparable  to securities
rated below BBB by either  rating  service.  These  securities  have moderate to
poor  protection  of  principal  and  interest  payments  and  have  speculative
characteristics.  These  securities  involve  greater  risk of  default or price
declines due to changes in the issuer's  creditworthiness  than investment-grade
debt  securities.  Because the market for lower-rated  securities may be thinner
and less  active than for  higher-rated  securities,  there may be market  price
volatility  for these  securities  and limited  liquidity in the resale  market.
Market  prices for these  securities  may  decline  significantly  in periods of
general  economic  difficulty or rising interest rates.  Unrated debt securities
may fall into the lower quality  category.  Unrated  securities  usually are not
attractive to as many buyers as are rated  securities,  which may make them less
marketable.                                                                     
         The  quality   limitation  set  forth  in  the  investment   policy  is
determined  immediately after a Fund's  acquisition of a security.  Accordingly,
any later change in ratings will not be considered when  determining  whether an
investment complies with the Fund's investment policy.                          
         When  purchasing  high-yielding  securities,   rated  or  unrated,  the
Advisors  prepare  their own  careful  credit  analysis  to attempt to  identify
those issuers whose financial  condition is adequate to meet future  obligations
or is expected to be adequate in the future.  Through portfolio  diversification
and credit  analysis,  investment risk can be reduced,  although there can be no
assurance that losses will not occur.                                           

INVESTMENT RESTRICTIONS 

Fundamental Investment Restrictions                                             
         The following  investment  restrictions  and  fundamental  policies may
not be changed  without  the  consent of the  holders of a majority  of a Fund's
outstanding  shares.  Shares have equal  rights as to voting.  A majority of the
shares  means the  lesser of (i) 67% of the shares  represented  at a meeting at
which  more than 50% of the  outstanding  shares  are  represented  or (ii) more
than 50% of the outstanding shares. The Funds may not:                          
         (1)  Purchase  common  stocks,  preferred  stocks,  warrants,  or other
equity securities;                                            
         (2) Issue senior  securities,  borrow money,  or pledge,  mortgage,  or
         hypothecate   its  assets,   except  as  may  be  necessary  to  secure
         borrowings  from banks for  temporary  or  emergency  (not  leveraging)
         purposes  and then in an amount  not  greater  than 10% of the value of
         the  Fund's  total  assets  at the  time of the  borrowing.  Investment
        securities will not be purchased while any borrowings are outstanding;
         (3) Sell  securities  short,  purchase  securities on margin,  or write
         put  or  call   options,   except  to  the   extent   permitted   under
         "Transactions  in Futures  Contracts" or elsewhere in the Prospectus or
         SAI.  The Funds  reserve  the right to  purchase  securities  with puts
attached. See "Obligations with Puts Attached";               
         (4) Underwrite  the  securities of other issuers,  except to the extent
         that the  purchase of  municipal  obligations  in  accordance  with the
         Fund's  investment  objective  and policies,  either  directly from the
         issuer,  or  from  an  underwriter  for an  issuer,  may be  deemed  an
underwriting;                                                 
         (5)  Make  loans to  others,  except  in  accordance  with  the  Fund's
         investment  objective  and policies or pursuant to contracts  providing
     for the compensation of service providers by compensating balances;
         (6)  Purchase  or  sell  real  estate,  real  estate  investment  trust
         securities,  commodities,  or  commodity  contracts,  or  oil  and  gas
         interests,  but  this  shall  not  prevent  a Fund  from  investing  in
    municipal obligations secured by real estate or interests therein;
         (7)  Invest  25% or more of its  assets  in the  securities  of any one
         issuer.  Each  Funds  may  invest  more  than  25%  of  its  assets  in
         obligations issued or guaranteed by the U.S.  Government,  its agencies
         or  instrumentalities  but  will  invest  in  more  than  20%  of  such
         obligations  only during  abnormal market  conditions.  For purposes of
         this limitation,  the entity which has the ultimate  responsibility for
         the payment of principal  and interest on a  particular  security  will
be treated as its issuer;                                     
         (8)  Invest  25% or more of its assets in any  particular  industry  or
         industries.  Each  Fund  may  invest  more  than 25% of its  assets  in
         obligations issued or guaranteed by the U.S.  Government,  its agencies
         or  instrumentalities  but  will  invest  in  more  than  20%  of  such
         obligations   only  during  abnormal  market   conditions.   Industrial
         development  bonds,  where the payment of principal and interest is the
         responsibility  of  companies  within the same  industry,  are  grouped
together as an "industry."                                    

Nonfundamental Investment Restrictions                                          
         Each Fund has adopted the following  operating  (i.e.,  nonfundamental)
investment  policies  and  restrictions  which  may be  changed  by the Board of
Directors/Trustees without shareholder approval. The Funds may not:             
         (1) Purchase  illiquid  securities if more than 15% of the value of its
net assets would be invested in such securities;              
         (2)  Invest  more  than  5%  of  the  value  of  its  total  assets  in
         securities   where  the  payment  of  principal  and  interest  is  the
         responsibility  of a company or  companies  with less than three years'
operating history.                                            
         (3) Purchase or retain  securities  of an issuer if those  directors of
         the Fund,  each of whom  owns  more  than 1/2 of 1% of the  outstanding
         securities  of  such  issuer,   together  own  more  than  5%  of  such
outstanding securities;                                       
         (4) Invest in  companies  for the  purpose of  exercising  control;  or
         invest  in  securities  of  other  investment   companies,   except  as
         permitted  under the  Investment  Company Act or in  connection  with a
         director's/trustee's  deferred  compensation  plan, as long as there is
no duplication of advisory fees.                              

PURCHASES AND REDEMPTIONS OF SHARES 

         Share  certificates  will  be  issued  at no  charge  if  requested  in
writing by the investor.  No certificates will be issued for fractional  shares.
Purchases  by bank wire  received  by 4:00 p.m.,  Eastern  time are  immediately
available  federal  funds.  Your  purchases  must be made  in U.S.  dollars  and
checks must be drawn on U.S. banks.                                             
         Amounts  redeemed  by check  redemption  may be mailed to the  investor
without  charge.  Amounts  of  more  than  $50 and  less  than  $300,000  may be
transferred  electronically  at no charge to the investor.  Amounts of $1,000 or
more will be transmitted by wire,  without charge by Calvert,  to the investor's
account at a domestic  commercial  bank that is a member of the Federal  Reserve
System or to a  correspondent  bank. A charge of $5 is imposed on wire transfers
of less than $1,000.  If the  investor's  bank is not a Federal  Reserve  System
member,  failure of  immediate  notification  to that bank by the  correspondent
bank  could  result in a delay in  crediting  the funds to the  investor's  bank
account.                                                                        
         Telephone  redemption  requests  that would  require the  redemption of
shares  purchased by check or electronic  funds transfer  within the previous 10
business  days may not be  honored.  The Funds  reserve  the right to modify the
telephone redemption privilege.                                                 
         To  change  redemption  instructions  already  given,  you must  send a
written  notice  addressed  to  Calvert  Group,   c/o  NFDS,  6th  Floor,   1004
Baltimore,  Kansas  City,  MO 64105,  with a voided copy of a check for the bank
wiring  instructions  to be added.  If a voided  check  does not  accompany  the
request,  then the request must be signature  guaranteed  by a commercial  bank,
savings  and  loan  association,  trust  company,  member  firm of any  national
securities exchange, or certain credit unions.  Additional  documentation may be
required from corporations, fiduciaries, and institutional investors.           
         The  right  of  redemption  may be  suspended  or the  date of  payment
postponed  for any period  during  which the New York Stock  Exchange  is closed
(other than  customary  weekend and holiday  closings),  when trading on the New
York Stock  Exchange is  restricted,  or an emergency  exists,  as determined by
the SEC, or if the  Commission  has ordered such a suspension for the protection
of  shareholders.  Redemption  proceeds  are  normally  mailed or wired the next
business  day  after a  proper  redemption  request  has been  received,  unless
redemptions have been suspended or postponed as described above.                
         Redemption  proceeds are  normally  paid in cash.  However,  a Fund has
the right to redeem  shares in assets  other  than cash for  redemption  amounts
exceeding,  in any 90-day  period,  $250,000 or 1% of the net asset value of the
Fund, whichever is less.                                                        

Reduced Sales Charges                                                           

Each Fund imposes  reduced sales  charges for Fund shares in certain  situations
in  which  the   Principal   Underwriter   (which   offers  the  Fund's   shares
continuously  and on a "best  efforts"  basis)  and  the  dealers  selling  Fund
shares may  expect to realize  significant  economies  of scale with  respect to
such sales.  Generally,  sales costs do not increase in proportion to the dollar
amount of the shares  sold;  the  per-dollar  transaction  cost for a sale to an
investor of shares  worth,  for example,  $5,000 is  generally  much higher than
the  per-dollar  cost  for  a  sale  of  shares  worth  $1,000,000.   Thus,  the
applicable  sales  charge  declines  as a  percentage  of the  dollar  amount of
shares sold as the dollar amount increases.                                     
         When a  shareholder  agrees to make  purchases  of shares over a period
of time  totaling a certain  dollar amount  pursuant to a Letter of Intent,  the
Underwriter  and selling  dealers can expect to realize the  economies  of scale
applicable to that stated goal amount.  Thus,  the Fund imposes the sales charge
applicable to the goal amount.  Similarly,  the  Underwriter and selling dealers
also experience cost savings when dealing with existing  shareholders,  enabling
the  Fund to  afford  existing  shareholders  the  Right  of  Accumulation.  The
Underwriter  and selling  dealers can also expect to realize  economies of scale
when making  sales to the  members of certain  qualified  groups  which agree to
facilitate  distribution  of Fund's  shares to their  members.  See "Exhibit A -
Reduced Sales Charges" in the Prospectus.                                       

DIVIDENDS AND DISTRIBUTIONS 

Each  Fund   declares  and  pays   monthly   dividends  of  its  net  income  to
shareholders  of record as of the close of business on each  designated  monthly
record date. Net  investment  income  consists of the interest  income earned on
investments  (adjusted for  amortization of original issue discounts or premiums
or market  premiums),  less  estimated  expenses.  Capital  gains,  if any,  are
normally  paid  once a year and will be  automatically  reinvested  at net asset
value in additional  shares.  Dividends and any  distributions are automatically
reinvested  in  additional  shares  of the  Fund,  unless  you elect to have the
dividends  of  $10  or  more  paid  in  cash  (by  check  or  by  Calvert  Money
Controller).  You may also  request  to have your  dividends  and  distributions
from  the  Fund  invested  in  shares  of any  other  Calvert  Group  Fund at no
additional  charge. If you elect to have dividends and/or  distributions paid in
cash, and the U.S.  Postal  Service  cannot deliver the check,  or if it remains
uncashed  for six months,  it, as well as future  dividends  and  distributions,
will be reinvested in additional shares.                                        

TAX MATTERS 

         Each Fund  intends  to  qualify  as a  "regulated  investment  company"
under  Subchapter  M  of  the  Internal   Revenue  Code  (the  "Code").   By  so
qualifying,  the Fund will not be  subject  to federal  income  tax,  nor to the
federal  excise tax  imposed by the Tax Reform Act of 1986 (the  "Act"),  to the
extent  that it  distributes  its net  investment  income and  realized  capital
gains.                                                                          
         The   Funds'   dividends   of   net   investment    income   constitute
exempt-interest  dividends on which  shareholders  are not generally  subject to
federal income tax;  however under the Act,  dividends  attributable to interest
on certain  private  activity  bonds  must be  included  in federal  alternative
minimum  taxable  income for the purpose of  determining  liability (if any) for
individuals and for  corporations.  Further,  for  corporations,  all tax-exempt
income must be taken into account in  calculating  "adjusted  current  earnings"
for purposes of the federal  alternative  minimum tax.  Fund  dividends  derived
from  taxable  interest  and  distributions  of net  short-term  capital  gains,
whether  taken in cash or  reinvested  in  additional  shares,  are  taxable  to
shareholders  as ordinary  income and do not qualify for the dividends  received
deduction for  corporations.  If you held shares for six months or less,  losses
must be offset by the amount of  exempt-interest  dividends you  received,  and,
to the extent of capital gain  distributions  you received,  the loss amount not
offset  (disallowed)  must be treated as long-term  capital  loss. A shareholder
may  also  be  subject  to  some  state  and  local  taxes  on   dividends   and
distributions  from the  Funds.  The Funds  will  notify  shareholders  annually
about the tax status of  dividends  and  distributions  paid by the Fund and the
amount of dividends withheld, if any, during the previous year.                 
         The Code provides that interest on  indebtedness  incurred or continued
in order to purchase or carry  shares of a regulated  investment  company  which
distributes  exempt-interest  dividends  during  the  year  is  not  deductible.
Entities  or  persons  who  are  "substantial  users"  (or  persons  related  to
"substantial  users") of facilities  financed by private  activity  bonds should
consult their tax advisors before  purchasing  shares of the Fund.  "Substantial
user" is generally  defined as  including a  "non-exempt  person" who  regularly
uses in trade or  business a part of a facility  financed  from the  proceeds of
private activity bonds.                                                         
         Investors should note that the Revenue  Reconciliation  Act of 1989 may
require  investors  to exclude the initial  sales  charge,  if any,  paid on the
purchase  of Fund  shares  from the tax basis of those  shares if the shares are
exchanged  for shares of another  Calvert Group Fund within 90 days of purchase.
This  requirement  applies  only to the extent that the payment of the  original
sales  charge on the shares of the Fund causes a reduction  in the sales  charge
otherwise  payable  on the shares of the  Calvert  Group  Fund  acquired  in the
exchange,  and investors may treat sales charges  excluded from the basis of the
original sales as incurred to acquire the new shares.                           
         The Funds may be  required  to withhold  31% of any  long-term  capital
gain dividends and 31% of each  redemption  transaction  occurring in a Fund if:
(a) the  shareholder's  social security number or other taxpayer  identification
number  ("TIN") is not provided or an obviously  incorrect TIN is provided;  (b)
the  shareholder  does not  certify  under  penalties  of  perjury  that the TIN
provided  is the  shareholder's  correct  TIN and  that the  shareholder  is not
subject to backup  withholding  under section  3406(a)(1)(C) of the Code because
of  underreporting  (however,   failure  to  provide  certification  as  to  the
application of section  3406(a)(1)(C)  will result only in backup withholding on
capital gain dividends,  not on  redemptions);  or (c) a Fund is notified by the
Internal  Revenue  Service that the TIN provided by the shareholder is incorrect
or  that  there  has  been  underreporting  of  interest  or  dividends  by  the
shareholder.  Affected  shareholders  will receive  statements at least annually
specifying the amount withheld.                                                 
         In addition,  each Fund is required to report to the  Internal  Revenue
Service the following  information  with respect to redemption  transactions  in
the Fund:  (a) the  shareholder's  name,  address,  account  number and taxpayer
identification  number;  (b) the total dollar value of the redemptions;  and (c)
the Fund's identifying CUSIP number.                                            
         Certain  shareholders are, however,  exempt from the backup withholding
and broker reporting  requirements.  Exempt shareholders include:  corporations;
financial institutions;  tax-exempt organizations;  individual retirement plans;
the U.S.,  a State,  the  District of  Columbia,  a U.S.  possession,  a foreign
government,  an  international  organization,   or  any  political  subdivision,
agency,  or   instrumentality   of  any  of  the  foregoing;   U.S.   registered
commodities or securities  dealers;  real estate investment  trusts;  registered
investment  companies;  bank common trust funds;  certain charitable trusts; and
foreign  central  banks of issue.  Non-resident  aliens also are  generally  not
subject to either  requirement but, along with certain foreign  partnerships and
foreign  corporations,  may instead be subject to withholding under section 1441
of the  Code.  Shareholders  claiming  exemption  from  backup  withholding  and
broker reporting should call or write the Funds for further information.        

VALUATION OF SHARES 

         Fund  assets  are  valued  utilizing  the  average  bid  dealer  market
quotation as furnished by an independent  pricing service.  Securities and other
assets for which market  quotations  are not readily  available are valued based
on the current  market for similar  securities or assets,  as determined in good
faith  by  the  Fund's   Advisor   under  the   supervision   of  the  Board  of
Directors/Trustees.                                                             

Each Fund  determines  the net asset value for its shares every  business day at
the close of the  regular  session  of the New York Stock  Exchange  (generally,
4:00  p.m.  Eastern  time),  and at such  other  times  as may be  necessary  or
appropriate.  They  do  not  determine  net  asset  value  on  certain  national
holidays  or other day on which  the New York  Stock  Exchange  is  closed:  New
Year's Day,  Presidents'  Day,  Good Friday,  Memorial  Day,  Independence  Day,
Labor Day, Thanksgiving Day and Christmas Day.                                  
         Valuations,  market quotations and market  equivalents are provided the
Funds by Kenny S&P Evaluation  Services,  a subsidiary of  McGraw-Hill.  The use
of Kenny as a pricing  service by the Funds has been  approved  by the Boards of
Directors/Trustees.   Valuations   provided  by  Kenny  are  determined  without
exclusive  reliance  on quoted  prices and take into  consideration  appropriate
factors  such as  institution-size  trading  in  similar  groups of  securities,
yield, quality, coupon rate, maturity,  type of issue, trading  characteristics,
and other market data.                                                          

Net Asset Value and Offering Price Per Share                                    

                                                                · Download Table


Arizona                                          
                                                 

         Net asset value per share               
         ($2,634,802/523,621 shares)        $5.03
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.17

Florida                                          
         Net asset value per share               
         ($5,516,388/1,098,333 shares)      $5.02
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.16

Maryland                                         
         Net asset value per share               
         ($12,023,007/2,388,381 shares)     $5.03
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.17

Michigan                                         
         Net asset value per share               
         ($5,803,799/1,137,278 shares)      $5.10
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.24

New York                                         
         Net asset value per share               
         ($6,217,955/1,221,688 shares)      $5.09
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.23

Pennsylvania                                     
         Net asset value per share               
         ($4,486,116/883,146 shares)        $5.08
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.22

Virginia                                         
         Net asset value per share               
         ($12,617,575/2,475,015 shares)     $5.10
         Maximum sales charge                    
         (2.75% of offering price)           0.14
         Offering price per share           $5.24

CALCULATION OF YIELD AND TOTAL RETURN 

Each  Fund  may  advertise  its  "total  return."  Total  return  is  calculated
separately  for each  series.  Total return is  historical  in nature and is not
intended to indicate  future  performance.  Total  return will be quoted for the
most recent  one-year  period,  five-year  period,  and period from inception of
the Fund's  offering of shares.  Return  quotations for periods in excess of one
year  represent the average  annual total return for the period  included in the
particular  quotation.  Total  return  is a  computation  of a  Fund's  dividend
yield,   plus  or  minus  realized  or  unrealized   capital   appreciation   or
depreciation,  less fees and  expenses.  Total  return  quotations  reflect  the
deduction of the Fund's  maximum  sales  charge  ("return  with maximum  load"),
except  quotations  of "return  without  maximum  load"  which do not deduct the
sales  charge.  Note:  "Total  Return"  as  quoted in the  Financial  Highlights
section  of  the  Funds'  Annual  Report  to  Shareholders,   however,  per  SEC
instructions,  does not reflect  deduction of the sales charge,  and corresponds
to "return without  maximum load" as referred to herein.  Return without maximum
load should be considered  only by investors,  such as  participants  in certain
pension  plans,  to whom the sales  charge  does not apply,  or for  purposes of
comparison  only  with  comparable  figures  which  also  do not  reflect  sales
charges,  such as Lipper  averages.  Total  return is computed  according to the
following formula:                                                              

P(1 + T)n = ERV 

where P = a  hypothetical  initial  payment of  $1,000;  T = total  return;  n =
number  of  years;  and ERV = the  ending  redeemable  value  of a  hypothetical
$1,000  payment made at the  beginning of the 1, 5 or 10 year periods at the end
of such periods (or portions thereof, if applicable).                           

Returns with maximum load (average annual total returns) are as follows:        

                                                                · Download Table


Periods Ended                                                    
December 31, 1996          One Year              Since Inception 
                                                                 

Arizona                     .40%                 3.27% (12/31/93)
Florida                     .74%                 3.58% (12/31/93)
Maryland                   1.16%                 3.90% (9/30/93) 
Michigan                   1.42%                 4.19% (9/30/93) 
New York                   1.03%                 4.06% (9/30/93) 
Pennsylvania               1.14%                 4.10% (12/31/93)
Virginia                    .87%                 4.27% (9/30/93) 

Returns without maximum load are as follows:                                    

                                                                · Download Table


Periods Ended                                                    
December 31, 1996          One Year              Since Inception 
                                                                 

Arizona                    3.17%                 4.23% (12/31/93)
Florida                    3.53%                 4.54% (12/31/93)
Maryland                   3.96%                 4.78% (9/30/93) 
Michigan                   4.19%                 5.08% (9/30/93) 
New York                   3.79%                 4.95% (9/30/93) 
Pennsylvania               3.92%                 5.06% (12/31/93)
Virginia                   3.82%                 5.16% (9/30/93) 

A Fund may also  advertise its "yield" and "taxable  equivalent  yield." As with
total  return,  both  yield  figures  are  historical  and are not  intended  to
indicate future  performance.  "Yield" quotations refer to the aggregate imputed
yield-to-maturity  of each of the Fund's  investments  based on the market value
as of the  last day of a given  thirty-day  or  one-month  period  less  accrued
expenses  (net  of  reimbursement),  divided  by the  average  daily  number  of
outstanding  shares  times  the  maximum  offering  price on the last day of the
period  (so  that  the  effect  of  the  sales   charge  is   included   in  the
calculation),  compounded on a "bond  equivalent," or semi-annual,  basis. Yield
is computed according to the following formula:                                 

Yield = 2[(a-b/cd +1)6 - 1] 

where a =  dividends  and  interest  earned  during  the  period;  b =  expenses
accrued for the period (net of  reimbursement);  c = the average daily number of
shares  outstanding  during the period that were entitled to receive  dividends;
and d = the maximum offering price per share on the last day of the period.     

         The  taxable  equivalent  yield  is the  yield  an  investor  would  be
required to obtain from taxable  investments  to equal the Fund's yield,  all or
a portion of which may be exempt from federal  income taxes.  The double taxable
equivalent  yield for the combined  federal and state level is computed for each
class by taking the  portion of the yield  exempt from  regular  federal and the
specific state income taxes and  multiplying  the exempt yield by a factor based
on a stated  income tax rate,  then  adding the portion of the yield that is not
exempt from  regular  federal  and  specific  state  income  taxes.  The taxable
equivalent  yield for the  federal  level  only is  computed  for each  class by
taking  the  portion  of  the  yield  exempt  from  federal   income  taxes  and
multiplying  the  exempt  yield by a factor  based on a stated  income tax rate,
then  adding the  portion of the yield that is not exempt  from  federal  income
taxes.  The factor which is used to calculate  the tax  equivalent  yield is the
reciprocal  of the  difference  between 1 and the  applicable  income  tax rate,
which will be stated in the advertisement.                                      

The  yield  and tax  equivalent  yield  for the  Fund's  Class A shares  for the
thirty days ending December 31, 1996 is as follows:                             

                                                                · Download Table

                      SEC             Tax Equivalent          Tax Equivalent
                      Yield           Yield at 36%            Yield at 39.6%
                                      Federal Tax RateFederal Tax Rate      
                                                                            

Arizona               3.78%           5.90%                   6.26%         
Florida               4.55%           7.11%                   7.53%         
Maryland              4.23%           6.61%                   7.00%         
Michigan              4.06%           6.34%                   6.72%         
New York              4.11%           6.42%                   6.80%         
Pennsylvania          4.24%           6.63%                   7.02%         
Virginia              3.80%           5.94%                   6.29%         

ADVERTISING 

         The Funds or their  affiliates  may  provide  information  such as, but
not  limited  to,  the  economy,   investment  climate,  investment  principles,
sociological   conditions  and  political   ambiance.   Discussion  may  include
hypothetical  scenarios  or  lists  of  relevant  factors  designed  to aid  the
investor in  determining  whether the Funds are  compatible  with the investor's
goals.  The Funds may list  portfolio  holdings or give  examples or  securities
that may have been considered for inclusion in the Funds, whether held or not.  
         The Funds or their affiliates may supply  comparative  performance data
and rankings  from  independent  sources such as  Donoghue's  Money Fund Report,
Bank  Rate  Monitor,  Money,  Forbes,  Lipper  Analytical  Services,  Inc.,  CDA
Investment  Technologies,   Inc.,  Wiesenberger  Investment  Companies  Service,
Russell 2000/Small Stock Index, Mutual Fund Values Morningstar  Ratings,  Mutual
Fund Forecaster,  Barron's,  The Wall Street Journal, and Schabacker  Investment
Management,  Inc. Such averages  generally do not reflect any front- or back-end
sales  charges  that may be  charged  by Funds in that  grouping.  The Funds may
also cite to any source,  whether in print or  on-line,  such as  Bloomberg,  in
order to acknowledge  origin of  information.  The Funds may compare  themselves
or their  portfolio  holdings  to other  investments,  whether  or not issued or
regulated  by  the  securities   industry,   including,   but  not  limited  to,
certificates  of deposit and  Treasury  notes.  The Funds,  their  Advisor,  and
their  affiliates  reserve  the  right to  update  performance  rankings  as new
rankings become available.                                                      

DIRECTORS/TRUSTEES AND OFFICERS 

RICHARD L.  BAIRD,  JR.,  Trustee.  Mr.  Baird is  Director  of Finance  for the
Family  Health  Council,   Inc.  in  Pittsburgh,   Pennsylvania,   a  non-profit
corporation which provides family planning services,  nutrition,  maternal/child
health  care,  and  various   health   screening   services.   Mr.  Baird  is  a
trustee/director  of each of the  investment  companies in the Calvert  Group of
Funds,  except  for  Acacia  Capital  Corporation,  Calvert  New World  Fund and
Calvert  World  Values  Fund.  DOB:  05/09/48.   Address:  211  Overlook  Drive,
Pittsburgh, Pennsylvania 15216.                                                 

FRANK H. BLATZ,  JR., Esq.,  Trustee.  Mr. Blatz is a partner in the law firm of
Snevily,  Ely,  Williams,  Gurrieri  & Blatz.  He was  formerly  a partner  with
Abrams,  Blatz, Gran,  Hendricks & Reina, P.A. DOB: 10/29/35.  Address: 308 East
Broad Street, PO Box 2007, Westfield, New Jersey 07091.                         

FREDERICK  T. BORTS,  M.D.,  Trustee.  Dr.  Borts is a  radiologist  with Kaiser
Permanente.  Prior to that, he was a radiologist  at Bethlehem  Medical  Imaging
in Allentown,  Pennsylvania.  DOB: 07/23/49.  Address: 2040 Nuuanu Avenue #1805,
Honolulu, Hawaii, 96817.                                                        

     1 CHARLES E. DIEHL,  Trustee.  Mr. Diehl is Vice  President  and  Treasurer
Emeritus of the George  Washington  University,  and has retired from University
Support  Services,  Inc. of Herndon,  Virginia.  He is also a Director of Acacia
Mutual Life Insurance Company. DOB: 10/13/22.  Address: 1658 Quail Hollow Court,
McLean, Virginia 22101.                                                         

DOUGLAS  E.  FELDMAN,  M.D.,  Trustee.  Dr.  Feldman  practices  head  and  neck
reconstructive  surgery  in  the  Washington,   D.C.,  metropolitan  area.  DOB:
05/23/48. Address: 7536 Pepperell Drive, Bethesda, Maryland 20817.              

PETER W.  GAVIAN,  CFA,  Trustee.  Mr.  Gavian was a principal of Gavian De Vaux
Associates,  an  investment  banking  firm. He continues to be President of with
Corporate  Finance of Washington,  Inc. DOB:  12/08/32.  Address:  3005 Franklin
Road North, Arlington, Virginia 22201.                                          

JOHN G.  GUFFEY,  JR.,  Trustee.  Mr.  Guffey is chairman of the Calvert  Social
Investment  Foundation,  organizing  director of the  Community  Capital Bank in
Brooklyn,  New York,  and a financial  consultant to various  organizations.  In
addition,  he is a Director  of the  Community  Bankers  Mutual  Fund of Denver,
Colorado,  and the Treasurer  and Director of Silby,  Guffey,  and Co.,  Inc., a
venture  capital  firm.  Mr. Guffey is a  trustee/director  of each of the other
investment  companies in the Calvert Group of Funds,  except for Acacia  Capital
Corporation and Calvert New World Fund. DOB:  05/15/48.  Address:  7205 Pomander
Lane, Chevy Chase, Maryland 20815.                                              

M. CHARITO  KRUVANT,  Trustee.  Ms. Kruvant is President of Creative  Associates
International,  Inc., a firm that  specializes in human  resources  development,
information  management,  public  affairs  and private  enterprise  development.
DOB: 12/08/45.  Address:  5301 Wisconsin Avenue, N.W.,  Washington,  D.C. 20015.

ARTHUR J.  PUGH,  Trustee.  Mr.  Pugh  serves as a  Director  of Acacia  Federal
Savings Bank. DOB: 09/24/37.  Address: 4823 Prestwick Drive,  Fairfax,  Virginia
22030.                                                                          

     1 DAVID R.  ROCHAT,  Senior  Vice  President  and  Trustee.  Mr.  Rochat is
Executive Vice President of Calvert Asset Management Company, Inc., Director and
Secretary of Grady, Berwald and Co., Inc., and Director and President of Chelsea
Securities, Inc. DOB: 10/07/37. Address: Box 93, Chelsea, Vermont 05038.        

     1 D. WAYNE SILBY, Esq., Trustee. Mr. Silby is a trustee/director of each of
the  investment  companies  in the  Calvert  Group of Funds,  except  for Acacia
Capital  Corporation  and  Calvert  New World  Fund.  Mr.  Silby is an  officer,
director  and  shareholder  of Silby,  Guffey & Company,  Inc.,  which serves as
general partner of Calvert Social Venture Partners  ("CSVP").  CSVP is a venture
capital firm investing in socially  responsible  small  companies.  He is also a
Director of Acacia Mutual Life Insurance Company.  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  Controller of Calvert  Group,  Ltd. and its  subsidiaries  and an
officer  of each of the  other  investment  companies  in the  Calvert  Group of
Funds.  Mr.  Wolfsheimer  is  Vice  President  and  Treasurer  of  Calvert-Sloan
Advisers,  L.L.C., and a director of Calvert  Distributors,  Inc. DOB: 07/24/47.

WILLIAM  M.  TARTIKOFF,  Esq.,  Vice  President  and  Assistant  Secretary.  Mr.
Tartikoff  is an  officer of each of the  investment  companies  in the  Calvert
Group of Funds,  and is Senior Vice  President,  Secretary,  and General Counsel
of Calvert Group,  Ltd.,  and each of its  subsidiaries.  Mr.  Tartikoff is also
Vice President and Secretary of  Calvert-Sloan  Advisers,  L.L.C., a director of
Calvert  Distributors,   Inc.,  and  is  an  officer  of  Acacia  National  Life
Insurance Company. DOB: 08/12/47.                                               

EVELYNE S. STEWARD,  Vice  President.  Ms. Steward is a director and Senior Vice
President of Calvert  Group,  Ltd.,  and a director of  Calvert-Sloan  Advisers,
L.L.C.  She is the sister of Philip J. Schewetti,  the portfolio  manager of the
CSIF Equity Portfolio. DOB: 11/14/52.                                           

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 Assistant Counsel    
of Calvert Group and an officer of each of its subsidiaries and Calvert-Sloan   
Advisers, L.L.C. She is also an officer of each of the other investment         
companies in the Calvert Group of Funds. DOB: 10/21/56.                         

LISA CROSSLEY, Esq., Assistant Secretary and Compliance Officer. Ms. Crossley   
is Assistant Counsel of Calvert Group and an officer of each of its             
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer of each  
of the other investment companies in the Calvert Group of Funds. DOB:           
12/31/61.                                                                       

IVY WAFFORD DUKE,  Esq.,  Assistant  Secretary Ms. Duke is Assistant  Counsel of
Calvert  Group and an  officer  of each of its  subsidiaries  and  Calvert-Sloan
Advisers.  L.L.C.  She is  also an  officer  of  each  of the  other  investment
companies in the Calvert Group of Funds. DOB: 09/07/68.                         

     1  Directors  deemed  to be  "interested  persons"  of the Fund  under  the
Investment  Company Act of 1940, by virtue of their  affiliation with the Fund's
Advisor.                                                                        

Each of the above  directors/trustees  and  officers  is a  director/trustee  or
officer of each of the  investment  companies in the Calvert Group of Funds with
the exception of Calvert Social  Investment  Fund, of which only Messrs.  Baird,
Guffey and Silby are among the trustees,  Acacia Capital  Corporation,  of which
only  Messrs.  Blatz,  Diehl  and Pugh are among the  directors,  Calvert  World
Values  Fund,  Inc.,  of which  only  Messrs.  Guffey  and  Silby  are among the
directors,  and  Calvert  New World  Fund,  Inc.,  of which only Mr.  Martini is
among the  directors.  The address of directors and officers,  unless  otherwise
noted, is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.        

The Audit  Committee of the Board of  Directors/Trustees  is composed of Messrs.
Baird,  Blatz,   Feldman,   Guffey  and  Pugh.  The  Board's  Investment  Policy
Committee is composed of Messrs. Borts, Diehl, Gavian, Rochat and Silby.        
         Directors/Trustees  and  officers  of the Fund as a group own less than
1% of each Fund's outstanding shares.                                           

Directors/Trustees  of the  Fund  not  affiliated  with  the  Advisor  currently
receive  an  annual  fee of  $20,500  for  service  as a member  of the Board of
Directors/Trustees  of the  Calvert  Group of Funds plus a fee of $750 to $1,500
for each Board and Committee  meeting  attended;  such fees are allocated  among
the Funds on the basis of their net  assets.  For the 1996  fiscal  period,  the
Funds paid  director/trustee  fees of $279, $501, $1,205,  $600, $635, $444, and
$1,190, for the Arizona,  Florida,  Maryland,  Michigan, New York, Pennsylvania,
and Virginia Portfolios, respectively.                                          

Directors/Trustees  of the  Fund not  affiliated  with the  Fund's  Advisor  may
elect to defer  receipt of all or a percentage  of their fees and invest them in
any  fund in the  Calvert  of  Funds  through  the  Directors/Trustees  Deferred
Compensation  Plan (shown as "Pension or Retirement  Benefits Accrued as part of
Fund  Expenses,"  below).  Deferral  of the fees is  designed  to  maintain  the
parties  in the same  position  as if the fees  were  paid on a  current  basis.
Management  believes  this will have a negligible  effect on the Fund's  assets,
liabilities,  net assets,  and net income per share,  and will ensure that there
is no duplication of advisory fees.                                             

Director Compensation Table 

                                                                · Download Table


Fiscal Year 1996         Aggregate          Pension or            Total         
(unaudited numbers)      Compensation       Retirement         Compensation from
Name of Director         from Registrant    Benefits         Registrant and Fund
                         for service as     Accrued as part      Complex paid to
                         Director           of Registrant         Directors<F3> 
                                            Expenses <F2>                       
                                                                                
Richard L. Baird, Jr.    $1898              $0                    $34,925       
Frank H. Blatz, Jr.      $1935              $1935                 $37,875       
Frederick T. Borts       $1793              $0                    $32,675       
Charles E. Diehl         $1807              $1807                 $35,475       
Douglas E. Feldman       $1873              $0                    $34,175       
Peter W. Gavian          $1872              $560                  $34,175       
M. Charito Kruvant       $905               $0                    $24,313       
John G. Guffey, Jr.      $1816              $0                    $49,433       
Arthur J. Pugh           $2011              $0                    $36,736       
D. Wayne Silby           $1710              $0                    $56,398       

<FN>                                                                            
<F2> Messrs.  Blatz,  Diehl,  and Gavian have chosen to defer a portion of their
compensation.  As of December 31, 1996, total deferred  compensation,  including
dividends  and  capital   appreciation,   was  $428,689.46,   $428,442.42,   and
$96,332.93, for each named director, respectively.                              
<F3> As of December 31, 1996,  the Fund Complex  consists of nine (9) registered
investment companies.                                                           
</FN>                                                                           

INVESTMENT ADVISOR

         The Fund's  Investment  Advisor is Calvert  Asset  Management  Company,
Inc.,  4550  Montgomery  Avenue,  Suite  1000N,  Bethesda,   Maryland  20814,  a
subsidiary of Calvert Group,  Ltd.,  which is a subsidiary of Acacia Mutual Life
Insurance Company of Washington, D.C.                                           
         The  Investment  Advisory  Agreement  between  the Fund and the Advisor
will remain in effect  indefinitely,  provided  continuance is approved at least
annually by the vote of the holders of a majority of the  outstanding  shares of
the Funds,  or by the  directors/trustees  of the Funds;  and  further  provided
that such  continuance  is also  approved  annually by the vote of a majority of
the  directors/trustees  of the Funds who are not  parties to the  Agreement  or
interested  persons of such parties,  cast in person at a meeting called for the
purpose of voting on such  approval.  The Agreement  may be  terminated  without
penalty by either  party on 60 days'  prior  written  notice;  it  automatically
terminates in the event of its assignment.                                      
         Under  the   Agreement,   the  Advisor   manages  the   investment  and
reinvestment  of the Fund's assets,  subject to the direction and control of the
Funds' Boards of  Directors/Trustees.  For its services, the Advisor receives an
annual fee of 0.60% of the first $500  million of the Fund's  average  daily net
assets,  0.50% of the next $500 million of such assets,  and 0.40% of all assets
over $1 billion.                                                                

The  advisory  fee is payable  monthly.  The Advisor  reserves  the right (i) to
waive  all  or a part  of its  fee  and  (ii)  to  compensate,  at its  expense,
broker-dealers  in  consideration  of  their   promotional  and   administrative
services.  The Advisor may recapture in later years, to the extent  permitted by
law,  fees it waived and  expenses  it paid in prior  years.  Specifically,  the
Advisor may  recapture any fees waived or deferred and expenses  reimbursed  for
the prior  two-year  period,  but in no event may it recapture  fees or expenses
for any  period  later  than the  two-year  period  ending  December  31,  1996.
Recapture  is  permitted  only to the  extent it does not  result in the  Fund's
aggregate  expenses  exceeding an annual  expense  limit of 2.00% of its average
daily net assets.  The  advisory  fee incurred in any given year will be paid in
full before any recapture fees are paid for a prior year.  Recaptured  fees will
apply  to the  most  recent  suspension/reimbursement  period.  During  the 1994
fiscal period,  the Advisor received  advisory fees of $0, $43, $2,444,  $1,690,
$659,  $109,  and $2,392,  for the Arizona,  Florida,  Maryland,  Michigan,  New
York,  Pennsylvania,  and Virginia Portfolios,  respectively,  and, for the same
period, waived advisory fees of $12,272,  $19,011,  $50,168,  $42,150,  $19,257,
$12,665, and $41,569, for the Arizona,  Florida,  Maryland,  Michigan, New York,
Pennsylvania,  and  Virginia  Portfolios,  respectively.  For  the  1995  fiscal
period,  the  Advisor  received  advisory  fees of $17,286,  $25,034,  $270,912,
$37,455,  $29,584,  $21,720,  and $59,769, for the Arizona,  Florida,  Maryland,
Michigan, New York, Pennsylvania,  and Virginia Portfolios,  respectively,  and,
for the  same  period,  waived  advisory  fees  of  $14,027,  $15,204,  $38,349,
$19,899,  $21,022,  $16,922,  and $29,520, for the Arizona,  Florida,  Maryland,
Michigan, New York,  Pennsylvania,  and Virginia Portfolios,  respectively.  For
the  1996  fiscal  period,  the  Advisor  received  advisory  fees  of  $16,538,
$30,771,  $72,423,  $36,078,  $38,381,  $27,180,  and $72,322,  for the Arizona,
Florida,  Maryland,  Michigan, New York, Pennsylvania,  and Virginia Portfolios,
respectively.                                                                   
         The Advisor  provides  each Fund with  investment  advice and research,
pays the salaries and fees of all  directors/trustees  and executive officers of
the Fund who are  principals of the Advisor,  and pays certain Fund  advertising
and promotional  expenses.  The Funds pay all other administrative and operating
expenses,   including:   custodial   fees;   shareholder   servicing,   dividend
disbursing and transfer agency fees;  administrative  service fees;  federal and
state  securities  registration  fees;  insurance  premiums;  trade  association
dues;  interest,  taxes and other  business  fees;  legal  and audit  fees;  and
brokerage  commissions and other costs  associated with the purchase and sale of
portfolio securities.                                                           
 The Advisor has agreed to reimburse the Funds for all expenses,
excluding brokerage, taxes, interest, and extraordinary items exceeding, on a   
pro rata basis, the most restrictive expense limitation in those states which   
the Fund's shares are qualified for sale.                                       

ADMINISTRATIVE SERVICES 

Calvert  Administrative  Services Company, a wholly-owned  subsidiary of Calvert
Group,  Ltd.,  has been retained by the Fund to provide  certain  administrative
services  necessary to the conduct of the Fund's affairs.  Such services include
the  preparation  of corporate  and  regulatory  reports and filings,  portfolio
accounting,  and the daily  determination of net investment income and net asset
value per share.  Calvert  Administrative  Services  Company  receives an annual
fee of 0.10% of each Fund's  average  net assets for  providing  such  services.
The Funds  waived  the fee for the 1994 and 1995  fiscal  periods.  For the 1996
fiscal period,  Calvert  Administrative  Services Company received an annual fee
of $2,756,  $5,128,  $12,071,  $6,013,  $6,397, $4,530, $12,054 for the Arizona,
Florida,  Maryland,  Michigan, New York, Pennsylvania,  and Virginia Portfolios,
respectively.                                                                   

METHOD OF DISTRIBUTION

The Funds  have  entered  into an  agreement  with  Calvert  Distributors,  Inc.
("CDI"),  whereby CDI, acting as principal  underwriter for the Series,  makes a
continuous  offering of the Series'  securities on a "best efforts" basis. Prior
to April 1, 1995, the principal  underwriter was Calvert Securities  Corporation
("CSC").  Under  the terms of the  agreement,  CDI  bears  all its  expenses  of
providing  services  pursuant  to  the  agreement,   including  payment  of  any
commissions  and service  fees.  CDI receives all sales  charges  imposed on the
Funds'  shares  and  compensates  broker-dealer  firms for sales of such  shares
(see  "Alternative  Sales  Options"  in  the  Prospectus).  CDI is  entitled  to
receive  reimbursement  of distribution  expenses  pursuant to the  Distribution
Plans (see below).  For the 1994,  1995, and 1996 fiscal periods,  the Fund paid
no  Distribution  Plan  expenses.  In fiscal 1994, CSC received sales charges in
excess of the  dealer  reallowance  of $7,757,  $20,467,  $29,470,  $0,  $7,872,
$718,  and $43,471,  for the Arizona,  Florida,  Maryland,  Michigan,  New York,
Pennsylvania,  and  Virginia  Portfolios,  respectively.  For fiscal  1995,  CDI
received  sales  charges in excess of the dealer  reallowance  of $3,016,  $287,
$6,482, $1,441, $3,925, $2,788, and $6,479, for the Arizona, Florida,  Maryland,
Michigan, New York,  Pennsylvania,  and Virginia Portfolios,  respectively.  For
fiscal 1996, CDI received  sales charges in excess of the dealer  reallowance of
$1,262,  $849,  $4,214,  $670,  $1,977,  $1,228,  and $9,039,  for the  Arizona,
Florida,  Maryland,  Michigan, New York, Pennsylvania,  and Virginia Portfolios,
respectively.                                                                   

Pursuant to Rule 12b-1 under the  Investment  Company Act of 1940 ("1940  Act"),
the Funds have adopted  Distribution  Plans (the  "Plans")  which permit them to
pay certain  expenses  associated  with the  distribution  of its  shares.  Such
expenses may not exceed,  on an annual basis,  0.15% of the Funds' average daily
net  assets.  As of October  1,  1998,  expenses  may not  exceed,  on an annual
basis, 0.25% of the Funds' average daily net assets.                            
         The Plans were approved by the Board of  Directors/Trustees,  including
the  Directors/Trustees  who are not "interested  persons" of the Funds (as that
term is  defined in the 1940 Act) and who have no direct or  indirect  financial
interest  in the  operation  of the Plans or in any  agreements  related  to the
Plans.  The  selection  and  nomination  of the  Directors/Trustees  who are not
interested  persons  of  the  Fund  is  committed  to  the  discretion  of  such
disinterested    Directors/Trustees.    In   establishing    the   Plans,    the
Directors/Trustees  considered  various  factors  including  the  amount  of the
distribution fee. The  Directors/Trustees  determined that there is a reasonable
likelihood that the Plans will benefit the Funds and their shareholders.        

The  Plans  may be  terminated  by  vote  of a  majority  of the  non-interested
Directors/Trustees  who have no direct or  indirect  financial  interest  in the
Plans,  or by vote of a majority of the  outstanding  shares.  Any change in the
Plans  that  would  materially  increase  the  distribution  cost  to the  Funds
requires  approval of the shareholders;  otherwise,  the Plans may be amended by
the   Directors/Trustees,   including   a   majority   of   the   non-interested
Directors/Trustees as described above.                                          
         The Plans will continue in effect successive  one-year terms,  provided
that such  continuance  is  specifically  approved by (i) the vote of a majority
of the  Directors/Trustees  who are  not  parties  to the  Plans  or  interested
persons  of any  such  party  and  who  have no  direct  or  indirect  financial
interest in the Plans,  and (ii) the vote of a majority  of the entire  Board of
Directors/Trustees.                                                             
         Apart from the Plans,  the  Advisor,  at its  expense,  may incur costs
and pay expenses associated with the distribution of shares of the Funds.       

TRANSFER AND SHAREHOLDER SERVICING AGENT

Calvert  Shareholder  Services,  Inc.  ("CSSI"),  a subsidiary of Calvert Group,
Ltd.,  and Acacia  Mutual,  has been  retained  by the Funds to act as  transfer
agent,   dividend  disbursing  agent  and  shareholder  servicing  agent.  These
responsibilities  include:  responding to shareholder inquiries and instructions
concerning  their  accounts;  crediting  and debiting  shareholder  accounts for
purchases  and  redemptions  of Fund shares and  confirming  such  transactions;
daily updating of  shareholder  accounts to reflect  declaration  and payment of
dividends;   and   preparing   and   distributing   semi-annual   statements  to
shareholders  regarding their accounts.  For such services,  Calvert Shareholder
Services,  Inc.,  receives  compensation  based  on the  number  of  shareholder
accounts  and the  number  of  transactions.  The  fees  paid by the  Series  to
Calvert  Shareholder  Services,  Inc.  In fiscal  1994,  CSSI  received  $1,495,
$1,143, $6,690,  $2,771,  $3,207, $2,022, and $5,258, for the Arizona,  Florida,
Maryland,   Michigan,   New  York,   Pennsylvania,   and  Virginia   Portfolios,
respectively.  For  the  1995  fiscal  period,  CSSI  received  $4,131,  $3,389,
$9,630, $5,414, $6,915, $4,711, and $8,735, for the Arizona, Florida,  Maryland,
Michigan, New York,  Pennsylvania,  and Virginia Portfolios,  respectively.  For
the 1996 fiscal period, CSSI received $2,759,  $2,162,  $9,807,  $4,739, $7,183,
$3,841,  and $8,953, for the Arizona,  Florida,  Maryland,  Michigan,  New York,
Pennsylvania, and Virginia Portfolios, respectively.                            

INDEPENDENT ACCOUNTANTS AND CUSTODIANS

Coopers and  Lybrand  L.L.P.  has been  selected  by the Board of  Directors  to
serve as  independent  accountants  for all  portfolios  of the Fund for  fiscal
year 1997.  State  Street  Bank & Trust  Company,  N.A.,  225  Franklin  Street,
Boston,  MA 02110,  serves  as  custodian  of the  Series's  investments.  First
National Bank of Maryland,  25 South Charles Street,  Baltimore,  Maryland 21203
acts as  custodian of certain of the Series's  cash  assets.  Neither  custodian
has any part in  deciding  the  Fund's  investment  policies  or the  choice  of
securities that are to be purchased or sold by the Series.                      

PORTFOLIO TRANSACTIONS

         Portfolio   transactions   are   undertaken   on  the  basis  of  their
desirability  from  an  investment  standpoint.  Investment  decisions  and  the
choice  of  brokers  and  dealers  are  made by the  Fund's  Advisor  under  the
direction and supervision of the Fund's Board of Directors/Trustees.            
         Broker-dealers  who  execute  portfolio  transactions  on behalf of the
Funds are selected on the basis of their  professional  capability and the value
and quality of their services.  The Advisor may execute  portfolio  transactions
with or through  broker-dealers who have sold shares of the Fund. However,  such
sales will not be a  qualifying  or  disqualifying  factor in a  broker-dealer's
selection  nor will the  selection of any  broker-dealer  be based on the volume
of Fund shares  sold.  The Advisor or its  affiliate  may  compensate,  at their
expense,   such   broker-dealers  in  consideration  of  their  promotional  and
administrative services.                                                        

In fiscal 1994,  the  portfolio  turnover was 22%,  93%, 77%, 65%, 56%, 96%, and
65%, for the Arizona, Florida, Maryland,  Michigan, New York, Pennsylvania,  and
Virginia  Portfolios,  respectively.  For the 1995 fiscal period,  the portfolio
turnover was 10%, 44%,  11%,  22%, 13%, 17%, and 11%, for the Arizona,  Florida,
Maryland,   Michigan,   New  York,   Pennsylvania,   and  Virginia   Portfolios,
respectively.  For the 1996 fiscal period,  the portfolio turnover was 18%, 19%,
8%, 18%,  19%, 9%, and 4%, for the Arizona,  Florida,  Maryland,  Michigan,  New
York, Pennsylvania, and Virginia Portfolios, respectively.                      

GENERAL INFORMATION 

         Calvert  Municipal  Fund,  Inc.,  was organized as a corporation  under
the General  Corporation  Law of the State of Maryland on February 4, 1992.  The
Fund includes the following  series:  (list all except Florida) Calvert National
Municipal  Intermediate  Fund  and  Calvert  California  Municipal  Intermediate
Fund,  Calvert  Maryland  Municipal  Intermediate  Fund. Prior to March 1, 1994,
Calvert National Municipal  Intermediate Fund was known as Calvert  Intermediate
Municipal Fund.                                                                 
         First  Variable  Rate  Fund  for   Government   Income  was  originally
organized as a Maryland corporation,  and became a Massachusetts  business trust
on April 30,  1984.  It has two  series,  one doing  business  as Calvert  First
Government  Money  Market  Fund,  and  the  other,   Calvert  Florida  Municipal
Intermediate Fund.                                                              

Each  share of each Fund  represents  an equal  proportionate  interest  in that
Fund with each other share and is entitled to such  dividends and  distributions
out of the income  belonging  to such series as declared by the Board.  Upon any
liquidation  of the Funds,  shareholders  are  entitled to share pro rata in the
net assets belonging to that Fund available for distribution.                   
         The Funds will send  shareholders  unaudited  semi-annual  and  audited
annual  reports  that  will  include  the  Funds'  net asset  value  per  share,
portfolio securities, income and expenses, and other financial information.     
         The   Funds'    registration    statements,    containing    additional
information,  are on file with the  Securities  and Exchange  Commission and are
available to the public.                                                        

FINANCIAL STATEMENTS

The audited  financial  statements in the Funds' Annual Report to  Shareholders,
dated  December 31, 1996,  are  expressly  incorporated  by reference and made a
part of this  Statement of Additional  Information.  A copy of the Annual Report
may be obtained free of charge by writing or calling the Funds.                 

APPENDIX

Municipal Obligations                                                           
         Municipal  obligations are debt obligations  issued by states,  cities,
municipalities,   and  their   agencies  to  obtain  funds  for  various  public
purposes.  Such  purposes  include  the  construction  of a wide range of public
facilities,  the refunding of  outstanding  obligations,  the obtaining of funds
for  general  operating  expenses,  and the  lending  of funds  to other  public
institutions   and  facilities.   In  addition,   certain  types  of  industrial
development  bonds are  issued by or on behalf of public  authorities  to obtain
funds  for  many  types of  local,  privately  operated  facilities.  Such  debt
instruments  are considered  municipal  obligations if the interest paid on them
is  exempt  from  federal  income  tax in the  opinion  of bond  counsel  to the
issuer.  Although the interest paid on the proceeds from private  activity bonds
used  for the  construction,  equipment,  repair  or  improvement  of  privately
operated  industrial or commercial  facilities may be exempt from federal income
tax,  current  federal  tax law places  substantial  limitations  on the size of
such issues.                                                                    
         Municipal  obligations  are  generally  classified  as either  "general
obligation" or "revenue''  bonds.  General  obligation  bonds are secured by the
issuer's  pledge of its  faith,  credit  and  taxing  power for the  payment  of
principal  and  interest.  Revenue  bonds are payable from the revenues  derived
from a particular  facility or class of facilities  or, in some cases,  from the
proceeds  of a special  excise tax or other  specific  revenue  source,  but not
from the general taxing power.  Tax-exempt  industrial  development bonds are in
most cases  revenue  bonds and do not  generally  carry the pledge of the credit
of the issuing  municipality.  There are, of course,  variations in the security
of  municipal  obligations,  both within a particular  classification  and among
classifications.                                                                
         Municipal  obligations  are  generally  traded on the basis of a quoted
yield to maturity,  and the price of the  security is adjusted so that  relative
to the stated rate of interest it will return the quoted rate to the purchaser. 
         Short-term  and   limited-term   municipal   obligations   include  Tax
Anticipation  Notes,   Revenue  Anticipation  Notes,  Bond  Anticipation  Notes,
Construction   Loan  Notes,   and  Discount  Notes.   The  maturities  of  these
instruments  at the time of issue  generally will range between three months and
one year.  Pre-Refunded  Bonds with longer nominal maturities that are due to be
retired with the proceeds of an escrowed  subsequent  issue at a date within one
year and three years of the time of acquisition are also  considered  short-term
and limited-term municipal obligations.                                         

Municipal Note and Bond Ratings                                                 
Description  of  Moody's  Investors   Service,   Inc.'s  ratings  of  state  and
municipal notes:                                                                
         Moody's  ratings  for state and  municipal  notes and other  short-term
obligations are designated  Moody's  Investment Grade ("MIG").  This distinction
is in  recognition  of  the  differences  between  short-term  credit  risk  and
long-term risk.                                                                 
         MIG  1:  Notes  bearing  this  designation  are of  the  best  quality,
enjoying  strong  protection  from  established  cash  flows of funds  for their
servicing  or  from  established  and  broad-based  access  to  the  market  for
refinancing, or both.                                                           
         MIG2:  Notes  bearing  this  designation  are  of  high  quality,  with
margins of protection ample although not so large as in the preceding group.    
         MIG3:  Notes bearing this  designation are of favorable  quality,  with
all security elements  accounted for but lacking the undeniable  strength of the
preceding  grades.  Market access for refinancing,  in particular,  is likely to
be less well established.                                                       
         MIG4:  Notes  bearing  this   designation  are  of  adequate   quality,
carrying  specific risk but having  protection  commonly regarded as required of
an investment security and not distinctly or predominantly speculative.         

Description of Moody's  Investors  Service  Inc.'s/Standard  & Poor's  municipal
bond ratings:                                                                   
         Aaa/AAA:  Best  quality.  These  bonds  carry  the  smallest  degree of
investment  risk  and  are  generally  referred  to  as  "gilt  edge."  Interest
payments  are  protected  by a large or by an  exceptionally  stable  margin and
principal is secure.  This rating  indicates an extremely strong capacity to pay
principal and interest.                                                         
         Aa/AA:  Bonds rated AA also qualify as high-quality  debt  obligations.
Capacity to pay  principal  and interest is very strong,  and in the majority of
instances  they  differ  from AAA issues  only in small  degree.  They are rated
lower than the best bonds because  margins of protection  may not be as large as
in  Aaa  securities,  fluctuation  of  protective  elements  may  be of  greater
amplitude,  or there may be other elements  present which make  long-term  risks
appear somewhat larger than in Aaa securities.                                  
         A/A:  Upper-medium  grade  obligations.   Factors  giving  security  to
principal  and interest  are  considered  adequate,  but elements may be present
which  make the  bond  somewhat  more  susceptible  to the  adverse  effects  of
circumstances and economic conditions.                                          
         Baa/BBB:  Medium grade obligations;  adequate capacity to pay principal
and interest.  Whereas they normally  exhibit  adequate  protection  parameters,
adverse economic  conditions or changing  circumstances  are more likely to lead
to a  weakened  capacity  to pay  principal  and  interest  for  bonds  in  this
category than for bonds in the A category.                                      
         Ba/BB,  B/B,  Caa/CCC,   Ca/CC:  Debt  rated  in  these  categories  is
regarded as  predominantly  speculative with respect to capacity to pay interest
and  repay  principal.  There may be some  large  uncertainties  and major  risk
exposure  to adverse  conditions.  The higher  the  degree of  speculation,  the
lower the rating.                                                               
C/C: This rating is only for no-interest income bonds.        
         D:  Debt  in  default;  payment  of  interest  and/or  principal  is in
arrears.                                                                        

LETTER OF INTENT

Date                                                                            

Calvert Distributors, Inc.                                                      
4550 Montgomery Avenue                                                          
Bethesda, MD 20814                                                              

Ladies and Gentlemen:                                                           

       By signing this Letter of Intent, or affirmatively marking the Letter
of Intent option on my Fund Account Application Form, I agree to be bound by    
the terms and conditions applicable to Letters of Intent appearing in the       
Prospectus and the Statement of Additional Information for the Fund and the     
provisions described below as they may be amended from time to time by the      
Fund. Such amendments will apply automatically to existing Letters of Intent.   

      I intend to invest in the shares of:(Fund or Portfolio name*) during
the thirteen (13) month period from the date of my first purchase               
pursuant to this Letter (which cannot be more than ninety (90) days prior to    
the date of this Letter or my Fund Account Application Form, whichever is       
applicable), an aggregate amount (excluding any reinvestments of                
distributions) of at least fifty thousand dollars ($50,000) which, together     
with my current holdings of the Fund (at public offering price on date of this  
Letter or my Fund Account Application Form, whichever is applicable), will      
equal or exceed the amount checked below:                                       

__ $50,000 __ $100,000 __ $250,000 __ $500,000 __ $1,000,000  

   Subject to the conditions specified below, including the terms of
escrow, to which I hereby agree, each purchase occurring after the date of      
this Letter will be made at the public offering price applicable to a single    
transaction of the dollar amount specified above, as described in the Fund's    
prospectus. No portion of the sales charge imposed on purchases made prior to   
the date of this Letter will be refunded.                                       

   I am making no commitment to purchase shares, but if my purchases
within thirteen months from the date of my first purchase do not aggregate the  
minimum amount specified above, I will pay the increased amount of sales        
charges prescribed in the terms of escrow described below. I understand that    
4.75% of the minimum dollar amount specified above will be held in escrow in    
the form of shares (computed to the nearest full share). These shares will be   
held subject to the terms of escrow described below.                            

   From the initial purchase (or subsequent purchases if necessary),
4.75% of the dollar amount specified in this Letter shall be held in escrow in  
shares of the Fund by the Fund's transfer agent. For example, if the minimum    
amount specified under the Letter is $50,000, the escrow shall be shares        
valued in the amount of $2,375 (computed at the public offering price adjusted  
for a $50,000 purchase). All dividends and any capital gains distribution on    
the escrowed shares will be credited to my account.                             

If the total minimum investment specified under the Letter is 
completed within a thirteen month period, escrowed shares will be promptly      
released to me. However, shares disposed of prior to completion of the          
purchase requirement under the Letter will be deducted from the amount          
required to complete the investment commitment.                                 

     Upon expiration of this Letter, the total purchases pursuant to the
Letter are less than the amount specified in the Letter as the intended         
aggregate purchases, Calvert Distributors, Inc. ("CDI") will bill me for an     
amount equal to the difference between the lower load I paid and the dollar     
amount of sales charges which I would have paid if the total amount purchased   
had been made at a single time. If not paid by the investor within 20 days,     
CDI will debit the difference from my account. Full shares, if any, remaining   
in escrow after the aforementioned adjustment will be released and, upon        
request, remitted to me.                                                        

       I irrevocably constitute and appoint CDI as my attorney-in-fact, with
full power of substitution, to surrender for redemption any or all escrowed     
shares on the books of the Fund. This power of attorney is coupled with an      
interest.                                                                       

The commission allowed by Calvert Distributors, Inc. to the   
broker-dealer named herein shall be at the rate applicable to the minimum       
amount of my specified intended purchases.                                      

The Letter may be revised upward by me at any time during the 
thirteen-month period, and such a revision will be treated as a new Letter,     
except that the thirteen-month period during which the purchase must be made    
will remain unchanged and there will be no retroactive reduction of the sales   
charges paid on prior purchases.                                                

     In determining the total amount of purchases made hereunder, shares
disposed of prior to termination of this Letter will be deducted. My            
broker-dealer shall refer to this Letter of Intent in placing any future        
purchase orders for me while this Letter is in effect.                          

Dealer                                                                          

Name of Investor(s)                                                             

By                                                                              
Authorized Signer                                                               

Address                                                                         

Date                                                                            

Signature of Investor(s)                                                        

Date                                                                            

Signature of Investor(s)                                                        

* "Fund" in this Letter of Intent shall refer to the Fund or Portfolio, as      
the case may be, here indicated.                                                

CALVERT ARIZONA MUNICIPAL INTERMEDIATE FUND 
CALVERT FLORIDA MUNICIPAL INTERMEDIATE FUND 
CALVERT MARYLAND MUNICIPAL INTERMEDIATE FUND
CALVERT MICHIGAN MUNICIPAL INTERMEDIATE FUND
CALVERT NEW YORK MUNICIPAL INTERMEDIATE FUND
CALVERT PENNSYLVANIA MUNICIPAL INTERMEDIATE FUND
CALVERT VIRGINIA MUNICIPAL INTERMEDIATE FUND

Statement of Additional Information 

April 30, 1997      

INVESTMENT ADVISOR                                                              
Calvert Asset Management Company, Inc.                                          
4550 Montgomery Avenue                                                          
Suite 1000N                                                                     
Bethesda, Maryland 20814                                                        

INDEPENDENT ACCOUNTANTS                                                         
Coopers & Lybrand L.L.P.                                                        
217 E. Redwood Street                                                           
Baltimore, Maryland 21202-3316                                                  

TRANSFER AGENT                                                                  
Calvert Shareholder Services, Inc.                                              
4550 Montgomery Avenue                                                          
Suite 1000N                                                                     
Bethesda, Maryland 20814                                                        

PRINCIPAL UNDERWRITER                                                           
Calvert Distributors, Inc.                                                      
4550 Montgomery Avenue                                                          
Suite 1000N                                                                     
Bethesda, Maryland 20814                                                        

TABLE OF CONTENTS                                   

     Investment Objective                                    1
     Investment Policies                                     1
     Investment Restrictions                                 7
     Purchases and Redemptions of Shares                     8
     Dividends and Distributions                            10
     Tax Matters                                            10
     Valuation of Shares                                    11
     Calculation of Yield and Total Return                  11
     Advertising                                            14
     Directors and Officers                                 15
     Investment Advisor                                     17
     Administrative Services                                18
     Method of Distribution                                 18
     Transfer and Shareholder Servicing Agent               19
     Independent Accountants and Custodians                 19
     Portfolio Transactions                                 20
     General Information                                    20
     Financial Statements                                   20
     Appendix                                               21

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PART C. OTHER INFORMATION       

Item 24.  Financial Statements and Exhibits                                     

(a)      Financial statements                                 

  Financial statements incorporated by reference
to:                                         

         Registrant's audited Annual Report to Shareholders of
     Calvert First Government Money Market Fund, dated
December 31, 1996, and filed March 5, 1997. 

             Registrant's Annual Report to Shareholders of the Calvert
            Municipal Fund, Inc., dated December 31, 1996, and filed
March 5, 1997.                              

       Schedules II-VII, inclusive, for which provision is
       made in the applicable accounting regulation of the
           Securities and Exchange Commission, are omitted because
         they are not required under the related instructions,
         or they are inapplicable, or the required information
     is presented in the financial statements or notes
thereto.                                    

(b)      Exhibits:                                            

         1. Declaration of Trust (incorporated by reference to
                   Registrant's Post-Effective Amendment No. 11,
May 1, 1984).             

         2. By-Laws (incorporated by reference to Registrant's
                    Post-Effective Amendment No. 11, May 1, 1984).

   4. Specimen Stock Certificate, (incorporated by
              reference to Registrant's Post-Effective
        Amendment No. 19, April 30, 1992).

      5. Advisory Contract (incorporated by reference to
                   Registrant's Post-Effective Amendment No. 11,
May 1, 1984).             

          6. Underwriting and Dealer Agreements (incorporated by
              reference to Registrant's Post-Effective
        Amendment No. 16, April 28, 1989).

 7. Trustees' Deferred Compensation Agreement,
   (incorporated by reference to
           Registrant's Post-Effective Amendment
No. 19, April 30, 1992).  

        8. Custodial Contract, (incorporated by reference to
                  Registrant's Post-Effective Amendment No. 4,
April 21, 1980).          

          9. Transfer Agency Contract (incorporated by reference
                  to Registrant's Post-Effective Amendment No.
11, May 1, 1984).         

        10. Opinion and Consent of Counsel as to Legality of
Shares Being Registered.  

            11. Consent of Independent Accountants to Use of Report.

              12. Retirement Plans Calvert First Government Money Market
             Fund only (incorporated by reference to
                   Registrant's Post-Effective Amendment No. 19,
                   April 30, 1992, and incorporated by reference
                  to Registrant's Post-Effective Amendment No.
16, April 28, 1989).      

      15. Plan of Distribution for the Florida Municipal
             Intermediate Fund only (incorporated by
                  reference to the Registrant's Post-Effective
        Amendment No. 33, April 29, 1996).

         16. Schedule for Computation of Performance Quotation
                (incorporated by reference to Registrant's
                Post-Effective Amendment No. 15, April 30,
1988).                    

17  Financial Data Schedules.               

Exhibits 3, 12, 13 and 15 are omitted because they are        
inapplicable.                                                 

Item 25.  Persons Controlled By or Under Common Control With Registrant         

Registrant is controlled by its Board of Trustees, which is a 
common Board with five registered investment companies, First Variable          
Rate Fund, Calvert Tax-Free Reserves, Calvert Cash Reserves, The Calvert        
Fund, and Calvert Municipal Fund, Inc.  In addition, several members of         
Registrant's Board of Trustees also serve on the Boards of Calvert              
Social Investment Fund, Acacia Capital Corporation, Calvert New World           
Fund, Inc., and Calvert World Values Fund, Inc.                                 

Item 26.  Number of Holders of Securities                                       

 As of February 28, 1997, there were 14,753 holders of record of
Registrant's shares of beneficial interest for the Calvert    
First Government Money Market Fund series of First Variable   
Rate Fund for Government Income.                              

As of February 28, 1997, there were 78 holders of record of   
Registrant's shares of beneficial interest for the of Calvert 
   Florida Municipal Intermediate Fund series of First Variable Rate
Fund for Government Income.                                   

Item 27.  Indemnification                                                       

 Registrant's Declaration of Trust, which Declaration is Exhibit
1 of this Registration Statement, provides, in summary, that officers,          
trustees, employees, and agents shall be indemnified by Registrant              
against liabilities and expenses incurred by such persons in connection         
with actions, suits, or proceedings arising out of their offices or             
duties of employment, except that no indemnification can be made to such        
a person if he has been adjudged liable of willful misfeasance, bad             
faith, gross negligence, or reckless disregard of his duties.  In the           
absence of such an adjudication, the determination of eligibility for           
indemnification shall be made by independent counsel in a written               
opinion or by the vote of a majority of a quorum of trustees who are            
neither "interested persons" of Registrant, as that term is defined in          
Section 2(a)(19) of the Investment Company Act of 1940, nor parties to          
the proceeding.                                                                 

 Registrant's Declaration of Trust also provides that Registrant
may purchase and maintain liability insurance on behalf of any officer,         
trustee, employee or agent against any liabilities arising from such            
status.  In this regard, Registrant maintains a Directors & Officers            
(Partners) Liability Insurance Policy with Chubb Group of Insurance             
Companies, 15 Mountain View Road, Warren, New Jersey  07061, providing          
Registrant with $5 million in directors and officers liability coverage,        
plus $3 million in excess directors and officers liability coverage for         
the independent trustees/directors only.  Registrant also maintains a $9        
million Investment Company Blanket Bond issued by ICI Mutual Insurance          
Company, P.O. Box 730, Burlington, Vermont, 05402, and an additional $5         
million in excess of $9 million blanket bond with Chubb Group of                
Insurance Companies, 15 Mountain View Road, Warren, New Jersey  07061.          

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Ronald M.             First Variable Rate Fund for Government Income            
Wolfsheimer         Calvert Tax-Free Reserves                        Officer
Money Management Plus               
Calvert Social Investment Fund      
The Calvert Fund                    
Acacia Capital Corporation          
Calvert Municipal Fund, Inc.        
Calvert World Values Fund, Inc.     
Calvert New World Fund, Inc.        

Investment Companies                
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
--------------                      
                    Calvert Asset Management                         Officer
Company, Inc.                   
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                    Calvert Group, Ltd.                              Officer
Holding Company                     
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                    Calvert Shareholder                              Officer
Services, Inc.                  
Transfer Agent                      
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                    Calvert Administrative                           Officer
                  Services Company                               and
                     Service Company                                  Director
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                     Calvert Distributors, Inc.                       Director
                Broker-Dealer                                    and
                    4550 Montgomery Avenue                           Officer
Bethesda, Maryland 20814            
---------------                     
                    Calvert-Sloan Advisers, LLC                      Officer
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Md. 20814                 
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

David R. Rochat       First Variable Rate Fund for Government Income            
                    Calvert Tax-Free Reserves                        Officer
                Money Management Plus                            and
                    The Calvert Fund                                 Trustee

Investment Companies                
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                    Calvert Municipal Fund, Inc.                     Officer
                Investment Company                               and
                     4550 Montgomery Avenue                           Director
Bethesda, Maryland 20814            
---------------                     
                    Calvert Asset Management                         Officer
                  Company, Inc.                                  and
                     Investment Advisor                               Director
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
---------------                     
                    Chelsea Securities, Inc.                         Officer
                Securities Firm                                  and
                     Post Office Box 93                               Director
Chelsea, Vermont  05038             
---------------                     
                    Grady, Berwald & Co.                             Officer
                Holding Company                                  and
                     43A South Finley Avenue                          Director
Basking Ridge, NJ  07920            
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Reno J. Martini       Calvert Asset Management                         Officer  
Company, Inc.                   
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Group, Ltd.                              Officer
Holding Company                     
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
          First Variable Rate Fund for Government Income
                    Calvert Tax-Free Reserves                        Officer
Money Management Plus               
Calvert Social Investment Fund      
The Calvert Fund                    
Acacia Capital Corporation          
Calvert Municipal Fund, Inc.        
Calvert World Values Fund, Inc.     

Investment Companies                
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                     Calvert New World Fund, Inc.                     Director
                Investment Company                               and
                    4550 Montgomery Avenue                           Officer
Bethesda, Maryland 20814            
---------------                     
                     Calvert-Sloan Advisers, LLC                      Director
                Investment Advisor                               and
                    4550 Montgomery Avenue                           Officer
Bethesda, Md. 20814                 
---------------                     

Charles T. Nason      Acacia Mutual Life Insurance                     Officer  
                Acacia National Life Insurance                   and
                                                                      Director
Insurance Companies                 
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
---------------                     
                    Acacia Financial Corporation                     Officer
                Holding Company                                  and
                     51 Louisiana Avenue, NW                          Director
Washington, D.C.  20001             
---------------                     
                     Gardner Montgomery Company                       Director
Tax Return Preparation Services     
51 Louisiana Avenue, NW             
Washington, D.C. 20001              
----------------                    

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Charles T. Nason      Acacia Federal Savings Bank                      Director 
(continued)         Savings Bank                                            
7600-B Leesburg Pike                
Falls Church, Virginia 22043        
---------------                     
                     Enterprise Resources, Inc.                       Director
Business Support Services           
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
---------------                     
Acacia Insurance Management         
                      Services Corporation                           Officer
                Service Corporation                              and
                     51 Louisiana Avenue, N.W.                        Director
Washington, D.C.  20001             
---------------                     
                     Calvert Group, Ltd.                              Director
Holding Company                     
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                     Calvert Administrative                           Director
Services Co.                    
Service Company                     
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                     Calvert Asset Management Co., Inc.               Director
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                     Calvert Shareholder Services, Inc.               Director
Transfer Agent                      
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                    Calvert Social Investment Fund                   Trustee
Investment Company                  
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
-----------------                   
                     The Advisors Group, Inc.                         Director
Broker-Dealer and                   
Investment Advisor                  
51 Louisiana Avenue, NW             
Washington, D.C. 20001              
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Robert John.          Acacia National Life Insurance                   Officer  
H. Sands            Insurance Company                                and    
                     51 Louisiana Avenue, NW                          Director
Washington, D.C.  20001             
----------------                    
                    Acacia Mutual Life Insurance                     Officer
Insurance Company                   
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
----------------                    
                    Acacia Financial Corporation                     Officer
                Holding Company                                  and
                     51 Louisiana Avenue, NW                          Director
Washington, D.C.  20001             
----------------                    
                    Acacia Federal Savings Bank                      Officer
Savings Bank                        
7600-B Leesburg Pike                
Falls Church, Virginia 22043        
---------------                     
                     Enterprise Resources, Inc.                       Director
Business Support Services           
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
---------------                     
                    Acacia Realty Corporation                        Officer
Real Estate Investments             
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
---------------                     
Acacia Insurance Management         
                      Services Corporation                           Officer
                Service Corporation                              and
                     51 Louisiana Avenue, N.W                         Director
Washington, D.C.  20001             
---------------                     
                    Gardner Montgomery Company                       Officer
                Tax Return Preparation Services                  and
                     51 Louisiana Avenue, NW                          Director
Washington, D.C. 20001              
----------------                    
                     The Advisors Group, Inc.                         Director
Broker-Dealer and                   
Investment Advisor                  
51 Louisiana Avenue, NW             
Washington, D.C. 20001              
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Robert-John H.        Calvert Group, Ltd.                              Director 
Sands                 Holding Company                                           
(continued)         4550 Montgomery Avenue                                  
Bethesda, MD  20814                 
---------------                     
                     Calvert Administrative                           Director
Services, Co.                   
Service Company                     
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                     Calvert Asset Management Co., Inc.               Director
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, MD  20814                 
---------------                     
                     Calvert Shareholder Services, Inc.               Director
Transfer Agent                      
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     

William M. Tartikoff  Acacia National Life Insurance                   Officer  
Insurance Company                   
51 Louisiana Avenue, NW             
Washington, D.C.  20001             
----------------                    
          First Variable Rate Fund for Government Income
                    Calvert Tax-Free Reserves                        Officer
Money Management Plus               
Calvert Social Investment Fund      
The Calvert Fund                    
Acacia Capital Corporation          
Calvert Municipal Fund, Inc.        
Calvert World Values Fund, Inc.     
Calvert New World Fund, Inc.        

Investment Companies                
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Group, Ltd.                              Officer
Holding Company                     
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

William M.            Calvert Administrative                           Officer  
Tartikoff               Services Company                                        
(continued)         Service Company                                         
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Asset Management                         Officer
Company, Inc.                   
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
                    Calvert Shareholder                              Officer
Services, Inc.                  
Transfer Agent                      
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
                     Calvert Distributors, Inc.                       Director
                Broker-Dealer                                    and
                    4550 Montgomery Avenue                           Officer
Bethesda, Maryland  20814           
----------------                    
                    Calvert-Sloan Advisers, L.L.C.                   Officer
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland 20814            
----------------                    

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Susan Walker          Calvert Group, Ltd.                              Officer  
Bender              Holding Company                                         
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Administrative                           Officer
Services Company                
Service Company                     
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Asset Management                         Officer
Company, Inc.                   
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
                    Calvert Shareholder                              Officer
Services, Inc.                  
Transfer Agent                      
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
                    Calvert Distributors, Inc.                       Officer
Broker-Dealer                       
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
                    Calvert-Sloan Advisers, L.L.C.                   Officer
Investment Advisor                  
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
----------------                    
          First Variable Rate Fund for Government Income
                    Calvert Tax-Free Reserves                        Officer
Money Management Plus               
Calvert Social Investment Fund      
The Calvert Fund                    
Acacia Capital Corporation          
Calvert Municipal Fund, Inc.        
Calvert World Values Fund, Inc.     
Calvert New World Fund, Inc.        

Investment Companies                
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     

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Item 28.  Business and Other Connections of Investment Adviser                  

Name of Company, Principal          
Name                  Business and Address                             Capacity 

Katherine             Calvert Group, Ltd.                              Officer  
Stoner              Holding Company                                         
4550 Montgomery Avenue              
Bethesda, Maryland  20814           
---------------                     
                    Calvert Administ