Update on Calvert Tax-Free Bond Fund
10/13/2009
Situation
Re: Capital Trust Agency security held in Calvert Tax-Free Bond Fund
On Tuesday, October 13, Standard & Poors, the pricing evaluator, decreased the price on the Capital Trust Agency security held in Calvert Tax-Free Bond Fund. The price was marked down from just under $50 to $40, due to recent disclosure that the issuer expects that operations will not be stabilized for another year. It is reasonable to expect that, based on the disclosure, the next coupon will not be paid on time.
Calvert Funds Affected
Prior to the markdown, the Capital Trust Agency security represented 2.91% of Calvert Tax-Free Bond Fund.
In the absence of other market changes, the effect of the markdown on the Fund’s net asset value is $0.092 per share.
Perspective
This markdown in the value of the Capital Trust Agency security is a continuation of a credit quality issue with bonds held in the Fund and was exacerbated by the market downturn late last year.
Please keep in mind, investment in mutual funds involves risk, including possible loss of principal invested. Mutual funds that invest in bonds are subject to certain risks, including interest-rate risk and credit risk. As interest rates rise, bond prices generally decrease. In addition, the credit quality of the securities may deteriorate, which could lead to default or bankruptcy of the issuer where the issuer becomes unable to pay its obligations when due.
#9441 (10/09)
