-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G0guEhx6zer8/s9NztWF+lVX/4WngSRXkvpG5O4tYzXQyJQ2e9us7MYfjF14/uLp plHxfwDc583iWr2YO0mdMw== 0000319676-99-000001.txt : 19990112 0000319676-99-000001.hdr.sgml : 19990112 ACCESSION NUMBER: 0000319676-99-000001 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990111 FILED AS OF DATE: 19990111 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALVERT TAX FREE RESERVES CENTRAL INDEX KEY: 0000319676 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 526211999 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 811-03101 FILM NUMBER: 99503770 BUSINESS ADDRESS: STREET 1: 4550 MONTGOMERY AVE STE 1000N CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019514881 MAIL ADDRESS: STREET 1: 4550 MONTGOMERY AVENUE CITY: BETHESDA STATE: MD ZIP: 20814 DEF 14A 1 25 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12 Calvert Municipal Fund, Inc. (Name of Registrant as Specified in Its Charter) William M. Tartikoff, Esq. Secretary (Name of Person Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: (5) Total Fee Paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a) (2) and identify the filing for which the offsetting fee was paid previously. Identify previous filing by statement number, or the Form or Schedule and the date its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: December 28, 1998 Dear Shareholder: I am writing to inform you of the upcoming special meeting for shareholders of Calvert Tax-Free Reserves. A summary of the proposals and the formal Notice of Meeting appears on the next few pages, followed by the detailed proxy statement. Please take a few minutes to read the enclosed material and vote on these important issues. The Board of Trustees/Directors, including myself, believe these changes are in your best interest and that of your Portfolio. Regardless of the number of shares you own, it is important that you take the time to read the enclosed proxy materials, and vote on the issues as soon as you can. You may vote by mail, by telephone, through the internet, by facsimile machine, or in person. If you do not cast your vote, you may be contacted by our proxy solicitation service, Shareholder Communications Corporation, or by a Calvert Group employee. All shareholders benefit from the speedy return of proxy votes. I appreciate the time you will take to review these important matters. If we may be of any assistance or if you have any questions about the proxy issues, please call us at (800) 368-2748. Our hearing-impaired shareholders may call (800) 541-1524 for a TDD connection. Sincerely, Barbara J. Krumsiek President and Chief Executive Officer Calvert Group, Ltd. Quick Overview of Proposals ................................................................................ Proposal 1 ................................................................................ To elect the Board of Trustees. Affected portfolios: All Reason for Proposal It has been several years since the Board members have been voted on by shareholders. Recently, some new members have been added; thus, it is appropriate for the shareholders to vote on the complete slate. ................................................................................ Proposal 2 ................................................................................ To approve amended fundamental investment restrictions to (a) delete restrictions that are no longer required to be fundamental due to changes in state laws or which otherwise need not be fundamental; and (b) to revise the language of those restrictions that are still required to be fundamental. Affected portfolios: All Reason for Proposal Current investment restrictions and policies are more restrictive than Federal law. A shareholder vote is required to change the restrictions and policies because they are considered fundamental. CAMCO has recommended to the Board that the investment restrictions of the Portfolios be changed to conform to, but not be more restrictive than, federal law, and changing the policies so that they can be altered by the Board without a shareholder vote (nonfundamental policies or restrictions). This would give each of the Portfolios more flexibility and may help each Portfolio to more easily adapt to different investment environments. ................................................................................ Proposal 3 ................................................................................ To approve a new investment advisory agreement with the investment advisor, Calvert Asset Management Company, Inc. ("CAMCO"). Affected Portfolios: All Reason for Proposal CAMCO is a subsidiary of Calvert Group, Ltd. which is owned by Acacia Mutual Life Insurance Company ("Acacia"). Acacia plans to merge with another insurance company, Ameritas Insurance Holding Company. Because of the merger of the ultimate parent company, the investment advisory contract should be approved by shareholders. ................................................................................ Proposal 4 ................................................................................ To change the fundamental policy concerning credit quality to a nonfundamental policy allowing Calvert Tax-Free Reserves ("CTFR") Limited-Term, Long-Term, and Vermont Municipal Portfolios to invest in non-investment grade securities. Affected Portfolios: Limited-Term, Long-Term, and Vermont Municipal Reason for Proposal Limited-Term, Long-Term, and Vermont Municipal (the "Funds") all have the same fundamental credit quality policies, to invest primarily in investment-grade municipal obligations. CAMCO proposes to change the credit quality guidelines to permit the Funds to invest in non-investment grade obligations: up to 15% for Limited-Term, and up to 35% for Long-Term and Vermont Municipal. CAMCO believes this will give more flexibility in purchasing securities where there are no published ratings and where there may be a question of investment grade rating. In addition, it will bring the credit quality policy of each Fund more in line with its peers, allowing more accurate comparisons. ................................................................................ Proposal 5 ................................................................................ To change Long-Term from a diversified to a nondiversified fund. Affected Portfolios: Long-Term Reason for Proposal CAMCO believes that Long-Term will have greater investment flexibility if it becomes nondiversified (allowed to invest more than 5% in any one issuer). This will permit it to acquire larger positions in the securities of individual issuers, such as hospitals, housing bonds, or utilities, and may provide opportunities to enhance the investment performance with minimal additional risk. ................................................................................ Proposal 6 ................................................................................ To ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P. Affected Portfolios: All Reason for Proposal Periodically, shareholders will be asked to approve independent auditors for Calvert Funds. The auditors review reports, documents filed with federal and state governments, and help to ensure that the Funds are complying with generally accepted accounting principles. Calvert Tax-Free Reserves Money Market Portfolio Limited-Term Portfolio Long-Term Portfolio California Money Market Portfolio Vermont Municipal Portfolio NOTICE OF SPECIAL MEETING OF SHAREHOLDERS To be held on February 24, 1999 NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders of the Calvert Tax-Free Reserves ("CTFR") will be held in the Tenth Floor Conference Room of Calvert Group, Ltd., Air Rights North Tower, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland at 1:30 p.m. on Wednesday, February 24, 1999 for the following purposes: I. For each Portfolio: To elect the board of Trustees. II. For each Portfolio: to approve amended fundamental investment restrictions to: (a) delete restrictions that are no longer required to be fundamental due to changes in state laws or which otherwise need not be fundamental; and (b) to revise the language of those restrictions that are still required to be fundamental. III. For each Portfolio: to approve a new investment advisory agreement with the investment advisor, Calvert Asset Management Company, Inc. ("CAMCO"), identical to the current investment advisory agreements in all material respects. IV. Limited-Term, Long-Term, and Vermont Municipal: To change the fundamental policy concerning credit quality to a nonfundamental policy allowing each to invest in non-investment grade securities. V. Long-Term only: To change Long-Term from a diversified to a nondiversified fund. VI. For each Portfolio: to ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P. VII. To transact any other business that may properly come before the Special Meeting or any adjournment or adjournments thereof. By Order of the Trustees, William M. Tartikoff, Esq. Vice President Calvert Tax-Free Reserves Money Market Portfolio Limited-Term Portfolio Long-Term Portfolio California Money Market Portfolio Vermont Municipal Portfolio 4550 Montgomery Avenue, Suite 1000N Bethesda, Maryland 20814 PROXY STATEMENT December 31, 1998 We are sending this proxy statement to you to ask you to approve several important changes. You may vote by mail, by telephone, by facsimile, through a secure internet website, or in person. Your vote is important. Please call 800-368-2748 if you have questions about this proxy. This statement is furnished in connection with the solicitation of proxies by the Board of Trustees of Calvert Tax-Free Reserves (the "Board") to be used at the Special Meeting of Shareholders. The Special Meeting will be held in the Tenth Floor Conference Room of Calvert Group, Ltd., Air Rights North Tower, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland at 1:30 p.m. on Wednesday, February 24, 1999, or at such later time or date made necessary by adjournment for the purpose set forth in the Notice of Meeting. The approximate date on which this proxy statement and form of proxy are first being mailed to shareholders is December 31, 1998. Calvert Tax-Free Reserves ("CTFR") is an open-end management investment company that was organized as a Massachusetts business trust on October 20, 1980. CTFR has five Portfolios: Money Market, Limited-Term, Long-Term, California Money Market, and Vermont Municipal. Summary of Proposals 1. For each Portfolio: to elect the Board of Trustees. 2. For each Portfolio: to approve amended fundamental investment restrictions to: (a) delete restrictions that are no longer required to be fundamental due to changes in state laws or which otherwise need not be fundamental; and (b) to revise the language of those restrictions that are still required to be fundamental. 3. For each Portfolio: to approve a new investment advisory agreement with the investment advisor, Calvert Asset Management Company, Inc. ("CAMCO"). 4. Limited-Term, Long-Term and Vermont Municipal : To change the fundamental policy concerning credit quality to a nonfundamental policy allowing each to invest in non-investment grade securities. 5. Long-Term only: To change Long-Term from a diversified to a nondiversified fund. 6. For each Portfolio: to ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P. PROPOSALS - -------------------------------------------------------------------------------- Proposal 1 To elect the Board of Trustees. - -------------------------------------------------------------------------------- Discussion The purpose of this proposal is to elect the currently serving members of the CTFR Board of Trustees. All of the nominees listed below have served as Trustees continuously since originally elected or appointed. Each of the nominees elected will serve as a Trustee until the next meeting called for the purpose of electing a Board of Trustees and until a successor is elected and qualified, or until death, retirement, resignation or removal. {This will be formatted in tabular format by the typesetter} Name Date of Birth, Principal Occupation & Year Elected During Last Five Years or Appointed and Other Directorships Richard L. Baird, Jr. DOB: 05/09/48 1976 Mr. Baird is Executive Vice President for the Family Health Council, Inc. in Pittsburgh, Pennsylvania, a non-profit corporation which provides family planning services, nutrition, maternal/child health care, and various health screening services. Mr. Baird is a trustee/director of each of the investment companies in the Calvert Group of Funds, except for Calvert Variable Series, Inc., Calvert New World Fund, Inc. and Calvert World Values Fund, Inc. Frank H. Blatz, Jr., Esq. DOB: 10/29/35 1982 Mr. Blatz is a partner in the law firm of Snevily, Ely, Williams & Blatz. He was formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A. He is also a director of Calvert Variable Series, Inc. Frederick T. Borts, M.D. DOB: 7/23/49 1976 Dr. Borts is a radiologist with Kaiser Permanente. Prior to that, he was a radiologist at Bethlehem Medical Imaging in Allentown, Pennsylvania. Charles E. Diehl DOB: 10/13/22 1983 Mr. Diehl is a self-employed consultant and is Vice President and Treasurer Emeritus of the George Washington University. He has retired from University Support Services, Inc. of Herndon, Virginia. Formerly, he was a Director of Acacia Mutual Life Insurance Company, and is currently a Director of Servus Financial Corporation. Douglas E. Feldman, M.D. DOB: 5/23/48 1982 Dr. Feldman is managing partner of Feldman Otolaryngology, Head and Neck Surgery in Washington, D.C. A graduate of Harvard Medical School, he is Associate Professor of Otolaryngology, Head and Neck Surgery at Georgetown University and George Washington University Medical School, and past Chairman of the Department of Otolaryngology, Head and Neck Surgery at the Washington Hospital Center. He is included in The Best Doctors in America. Peter W. Gavian, CFA DOB: 12/8/32 1980 Mr. Gavian is President of Corporate Finance of Washington, Inc. Formerly, he was a principal of Gavian De Vaux Associates, an investment banking firm. He is also a Chartered Financial Analyst and an accredited senior business appraiser. {This will be formatted in tabular format by the typesetter} Name Date of Birth, Principal Occupation & Year Elected During Last Five Years or Appointed and Other Directorships John G. Guffey, Jr. DOB: 5/15/48 1976 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 Ariel Funds, and the Treasurer and Director of Silby, Guffey, and Co., Inc., a venture capital firm. Mr. Guffey is a trustee/director of each of the other investment companies in the Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert New World Fund, Inc. Mr. Guffey has been advised that the Securities and Exchange Commission ("SEC") expects to enter an order against him relating to his former service as a director of Community Bankers Mutual Fund, Inc. This fund is not connected with any Calvert Fund or the Calvert Group and ceased operations in September, 1994. Mr. Guffey consented to the entry of the order without admitting or denying the findings in the order. The order is expected to contain findings (1) that the Community Bankers Mutual Fund's prospectus and statement of additional information were materially false and misleading because they misstated or failed to state material facts concerning the pricing of fund shares and the percentage of illiquid securities in the fund's portfolio and that Mr. Guffey, as a member of the fund's board, should have known of these misstatements and therefore violated the Securities Act of 1933; (2) that the price of the fund's shares sold to the public was not based on the current net asset value of the shares, in violation of the Investment Company Act of 1940 (the "Investment Company Act"); and (3) that the board of the fund, including Mr. Guffey, violated the Investment Company Act by directing the filing of a materially false registration statement. It is expected that the order will direct Mr. Guffey to cease and desist from committing or causing future violations and to pay a civil penalty of $5,000. The SEC placed no restrictions on Mr. Guffey's continuing to serve as a Trustee or Director of mutual funds. *Barbara J. Krumsiek DOB: 8/9/52 1997 Ms. Krumsiek serves as President, Chief Executive Officer and Vice Chairman of Calvert Group, Ltd. and as an officer and director of each of its affiliated companies. She is a director of Calvert-Sloan Advisers, L.L.C., and a trustee/director of each of the investment companies in the Calvert Group of Funds. Ms. Krumsiek is the President of each of the investment companies, except for Calvert Social Investment Fund, of which she is the Senior Vice President. Prior to joining Calvert Group, Ms. Krumsiek served as a Managing Director of Alliance Fund Distributors, Inc. M. Charito Kruvant DOB: 12/8/45 1996 Ms. Kruvant is President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. She is also a director of Acacia Federal Savings Bank. Arthur J. Pugh DOB: 9/24/37 1983 Mr. Pugh is a Director of Calvert Variable Series, Inc., and serves as a director of Acacia Federal Savings Bank. *David R. Rochat DOB: 10/7/37 1982 Mr. Rochat is Executive Vice President of Calvert Asset Management Company, Inc., Director and Secretary of Grady, Berwald and Co., Inc., and Director and President of Chelsea Securities, Inc. He is the Senior Vice President of First Variable Rate Fund, Calvert Tax-Free Reserves, Calvert Municipal Fund, Inc., Calvert Cash Reserves, and The Calvert Fund. *D. Wayne Silby, Esq. DOB: 7/20/48 1976 Mr. Silby is a trustee/director of each of the investment companies in the Calvert Group of Funds, except for Calvert Variable Series, Inc. and Calvert New World Fund. Mr. Silby is Executive Chairman of Group Serve, Inc., an internet company focused on community building collaborative tools, and an officer, director and shareholder of Silby, Guffey & Company, Inc., which serves as general partner of Calvert Social Venture Partners ("CSVP"). CSVP is a venture capital firm investing in socially responsible small companies. He is also a Director of Acacia Mutual Life Insurance Company. Executive officers of the Fund not mentioned above include William Tartikoff, Esq., age 51, Vice President and Secretary, Ronald Wolfsheimer, age 51, Treasurer, Reno J. Martini, age 48, Senior Vice President, and Daniel Hayes, age 48, Vice President. Each has been an executive officer for more than five years. Trustees marked with an *, above, are "interested persons" of the Funds, under the Investment Company Act of 1940, because of their affiliation with the Funds, the investment advisor, or the parent company. As a group, the Trustees and officers own less than 1% of each Fund's outstanding shares. The Audit Committee of the Board 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 and Ms. Krumsiek. Each committee met three (3) times during the past year, while the Board met four (4) times this past year. All Trustees attended at least 75% of the committee or Board meetings held. 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 $1,500 for each regular Board or Committee meeting attended. Trustees of the Fund who are 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 ACTFRued 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. Trustee Compensation Table Fiscal Year 1997 Aggregate Pension or Total Compensation Compensation Retirement from Benefits (unaudited numbers) from Registrant Accrued as Registrant and Fund for Service part of Complex paid to as Trustee of Registrant Trustee** Expenses* Name of Trustee Richard L. Baird, Jr. $24,466 $0 $34,450 Frank H. Blatz, Jr. $31,031 $31,031 $46,000 Frederick T. Borts $23,515 $0 $32,500 Charles E. Diehl $29,959 $29,959 $44,500 Douglas E. Feldman $23,462 $0 $32,500 Peter W. Gavian $27,736 $12,668 $38,500 John G. Guffey, Jr. $30,451 $0 $61,615 M. Charito Kruvant $26,145 $0 $36,250 Arthur J. Pugh $32,589 $1,038 $48,250 D. Wayne Silby $25,072 $0 $62,830 *Messrs. Blatz, Diehl, Gavian and Pugh have chosen to defer a portion of their compensation. As of December 31, 1997, total deferred compensation, including dividends and capital appreciation, was $555,901.79, $545,259.10, $137,436.70 and $187,735.55, for each trustee, respectively. **As of December 31, 1997. The Fund Complex consists of nine (9) registered investment companies. Recommendation The Board recommends that you vote FOR each of the Trustees listed above. - -------------------------------------------------------------------------------- Proposal 2 For each Portfolio: To approve amended fundamental investment restrictions to (a) delete restrictions that are no longer required to be fundamental due to changes in state laws or which otherwise need not be fundamental; and (b) to revise the language of those restrictions that are still required to be fundamental. - -------------------------------------------------------------------------------- Discussion The federal and state laws governing mutual funds have been changed numerous times in the last several years. The Prospectuses and Statements of Additional Information ("SAIs") for each Portfolio contain investment restrictions that are more restrictive than the current law. For example, Rule 2a-7 under the 1940 Act (the "Rule") states what types of money market securities can be purchased for a money market fund. All money market funds must comply with the Rule. However, the investment restrictions for CTFR Money Market are currently even more stringent than the Rule. This restricts CTFR Money Market's investments and could potentially reduce its yield. CTFR Money Market does not intend to change its investment style but plans to operate under Rule 2a-7, as may be periodically amended. Also in the past few years, many state securities laws have changed or have been superseded by federal securities laws. Each Portfolio, however, must still comply with the old fundamental restrictions, unless you vote to change these restrictions to be in line with the changed regulatory landscape. As explained above, federal law in many cases controls what a mutual fund can purchase. Federal law also specifies certain investment restrictions that must be fundamental and cannot be changed without a shareholder vote. The policies/restrictions that are required by law to be fundamental are those concerning diversification, borrowing money, the issuance of senior securities, underwriting of securities issued by other persons, the purchase and sale of real estate and commodities, the policy about making loans to other persons, and the concentration of investments in a particular industry or group of industries. CAMCO has recommended to the Board that the investment restrictions of the Portfolios be changed to conform to, but not be more restrictive than, the federal law. That way, if the federal law changes, the Portfolio restrictions can change accordingly. This gives each of the Portfolios more flexibility and may help each Portfolio to more easily adapt to different investment environments. This is expected to enhance the Advisor's ability to manage a non-money market Portfolio in a changing investment environment and will increase investment management opportunities. Further, it is not anticipated that these proposed changes will substantially affect the way any of the Portfolios are currently managed. The current investment restrictions for the CTFR Portfolios, excerpted from the SAIs, are shown below. After careful consideration, and with the advice of outside counsel, the Board has approved several changes, subject to shareholder approval. ............................................................................... Current Fundamental Restriction 1. The Funds may not purchase common stocks, preferred stocks, warrants, or other equity securities. Recommended Change Management recommends that this restriction be deleted since it is not required to be fundamental. If shareholders approve deleting this restriction, the Board intends to adopt a new nonfundamental policy imposing substantially the same limitations as the deleted restriction. A nonfundamental policy can be changed by the Board at any time without a shareholder vote. ............................................................................... Current Fundamental Restriction 2. The Funds may not 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 total assets at the time of the borrowing. Investment securities will not be purchased while any borrowings are outstanding. Recommended Change Management recommends that the 10% limitation be changed to 33 1/3% for maximum flexibility. The Board also recommends the use of the standard borrowing policy recited in other Calvert SAIs. As part of the standardization, the last sentence above will be replaced by a new nonfundamental operating policy: The Fund does not intend to make any purchases of securities if borrowing exceeds 5% of total assets. A nonfundamental policy can be changed by the Board at any time without a shareholder vote. Proposed Fundamental Investment Restriction (with the above changes) The Funds may not issue senior securities or borrow money, except from banks for temporary or emergency purposes and then only in an amount up to 33 1/3% of the value of a Fund's total assets or as permitted by law and except by engaging in reverse repurchase agreements, where allowed. In order to secure any permitted borrowings and reverse repurchase agreements under this section, a Fund may pledge, mortgage or hypothecate its assets. ............................................................................... Current Fundamental Restriction 3. The Funds may not sell securities short, purchase securities on margin, or write put or call options, except as permitted for Long-Term and Vermont in connection with transactions in futures contracts and options thereon. The Funds reserve the right to purchase securities with puts attached or with demand features. Recommended Change Management recommends that this restriction be deleted since it is not required to be fundamental. If shareholders approve deleting this restriction, the Board intends to adopt a new nonfundamental policy imposing substantially the same limitations as the deleted restriction. A nonfundamental policy can be changed by the Board at any time without a shareholder vote. ............................................................................... Current Fundamental Restriction 4. The Funds may not purchase securities which are subject to legal or contractual restrictions on resale, i.e., restricted securities, or other securities which are not readily marketable assets, including repurchase agreements not terminable within seven days, with respect to no more than 10% of assets. Recommended Change Management recommends that this investment restriction be deleted. It was originally required by one or more states, but no longer applies due to changes in federal laws which supersede such state-imposed restrictions. ............................................................................... Current Fundamental Restriction 5. The Funds may not purchase or sell real estate, real estate investment trust securities, commodities, or commodity contracts, or oil and gas interests, but this shall not prevent the Funds from investing in municipal obligations secured by real estate or interests therein. Recommended Change Management recommends that this be changed to the standard policy for other Calvert Group Funds. The portion of the restriction referring to oil and gas interests should be deleted, as it was originally required by one or more states, but no longer applies due to changes in federal laws which supersede such state-imposed restrictions. Proposed Fundamental Investment Restriction The Funds may not invest directly in commodities or real estate, although it may invest in securities which are secured by real estate or real estate mortgages and securities of issuers which invest or deal in commodities, commodity futures, real estate or real estate mortgages. ............................................................................... Current Fundamental Restriction 6. The Funds may not purchase or retain securities of an issuer if those trustees of the Funds, 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. Recommended Change Management recommends that this investment restriction be deleted. It was originally required by one or more states, but no longer applies due to changes in federal laws which supersede such state-imposed restrictions. ............................................................................... Current Fundamental Restriction 7. The Funds may not make loans to others, except in accordance with a Fund's investment objective and policies or pursuant to contracts providing for the compensation of service providers by compensating balances. Recommended Change Management recommends that this investment restriction be changed to the standard policy for other Calvert Group Funds concerning the Fund's loan policy. Proposed Fundamental Investment Restriction The Funds may not make loans, other than through the purchase of money market instruments and repurchase agreements or by the purchase of bonds, debentures or other debt securities, or as permitted by law. The purchase by a Fund of all or a portion of an issue of publicly or privately distributed debt obligations in accordance with its investment objective, policies and restrictions, shall not constitute the making of a loan. ............................................................................... Current Fundamental Restriction 8. The Funds may not invest in companies for the purpose of exercising control; or invest in securities of other investment companies, except as they may be acquired as part of a merger, consolidation or acquisition of assets, or in connection with a trustee's/director's deferred compensation plan, as long as there is no duplication of advisory fees. Recommended Change Management recommends that this investment restriction be deleted. It was originally required by one or more states, but no longer applies due to changes in federal laws which supersede such state-imposed restrictions. ............................................................................... Current Fundamental Restriction 9. The Funds may not purchase more than 25% of its assets in the securities of any one issuer or of issuers located within the same state, except that each Portfolio may invest more than 25% of its assets in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 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. Recommended Change Management recommends that this investment restriction be changed to the standard policy for other Calvert Group Funds concerning diversification policy. Money Market, Limited-Term, and California Money Market are classified as diversified Funds, meaning that they may not invest significant amounts in one particular security. The CTFR Long-Term nondiversification proposal is discussed below in Proposal 5. Vermont Municipal is classified as a nondiversified Fund. The investment restriction would be revised as shown immediately below. Proposed Fundamental Investment Restriction Money Market, Limited-Term, and California Money Market: The Funds may not make any investment inconsistent with their classifications as diversified investment companies under the 1940 Act. CTFR Long-Term (if Proposal 5 is approved), and CTFR Vermont Municipal: The Funds may not make any investment inconsistent with their classifications as nondiversified investment companies under the 1940 Act. ............................................................................... Current Fundamental Restriction 10. The Funds may not invest 25% or more of its total assets in any particular industry or industries, except that a Portfolio may invest more than 25% of its assets in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 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". Recommended Change Management recommends that this be changed to a more accurate standard policy concerning concentration as shown immediately below. Proposed Fundamental Investment Restriction The Funds may not concentrate its investments in the securities of issuers primarily engaged in any particular industry (other than securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities and repurchase agreements secured thereby), or, for Money Market and California Money Market, domestic bank money market instruments. ............................................................................... Current Fundamental Restriction 11. The Funds may not 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. Recommended Change Management recommends that this investment restriction be deleted. It was originally required by one or more states, but no longer applies due to changes in federal laws which supersede such state-imposed restrictions. Recommendation The Board has voted to change or delete each of these fundamental investment restrictions as shown above and recommends that you vote FOR the changes or deletions of each of these revised fundamental investment restrictions for the Portfolios. - -------------------------------------------------------------------------------- Proposal 3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- For each Portfolio: To approve a new investment advisory agreement with the investment advisor, CAMCO. - -------------------------------------------------------------------------------- Discussion The following circumstances affect the terms of the current investment advisory agreements (the "Current Advisory Agreement"); therefore, Management proposes that a new advisory agreement be executed: CAMCO is an indirectly wholly-owned subsidiary of Acacia Mutual Life Insurance Company ("Acacia"), which subject to certain conditions, plans to merge with Ameritas Insurance Holding Company ("Ameritas") (such planned transaction is hereafter referred to as the "Merger"). The surviving company will be named Ameritas Acacia Mutual Holding Company. Although the Merger could be considered a change in control of CAMCO, terminating the Current Advisory Agreement, the Board has received assurances that it does not cause such a change. Nonetheless, in order to remove any possible doubt as to the status of the Current Advisory Agreement, the Board has approved, and recommends that shareholders approve, one standard investment advisory agreement between CTFR and CAMCO for each of the CTFR Portfolios (the "New Advisory Agreement"). Despite the importance of the proposed changes, CAMCO anticipates there will be no effect on the actual investment management operations with respect to CTFR. The Current Advisory Agreement Under the Current Advisory Agreement, CAMCO provides a continuous investment program for CTFR, subject to the control of the Board. The shareholders of CTFR approved the current investment advisory agreement (the "Current Advisory Agreement") at a meeting on December 20, 1983, and it was signed January 3, 1984. Since then, the Current Advisory Agreement has been approved by the Board on an annual basis, in accordance with the requirements of the Investment Company Act of 1940. The terms of the Current Advisory Agreement between CAMCO and CTFR include: 1. The services to be provided (manage assets, place orders for securities trades and perform other administrative services); 2. General obligations of CAMCO (manage CTFR in accordance with CTFR guidelines and restrictions, under the direction of the Board); 3. Expenses of CTFR (advisory, legal, audit, registration, transfer agent, and custodial fees, taxes, printing and postage, mailing prospectuses); 4. Liability issues (CAMCO was not liable for actions unless it was grossly negligent, acted in bad faith, or in reckless disregard of its duties); and 5. The fees to be paid to CAMCO (0.60% for the first $500,000,000 of each Portfolio's average daily net assets, 0.50% for the next $500,000,000, 0.40% for all assets in excess of $1,000,000,000.) The Current Advisory Agreement provides for automatic termination unless its continuance is approved at least annually by (i) a majority of the Board, including those who are not parties to the Agreement or interested persons, within the meaning of the Investment Company Act of 1940 (the "1940 Act"), of any such party ("Independent Trustees"), and (ii) the holders of a majority of the outstanding shares of CTFR. The Current Advisory Agreement terminates automatically upon its assignment and is terminable at any time, without penalty, by the Board, CAMCO, or the holders of a majority of the outstanding shares of CTFR, upon 60 days' prior written notice. The New Advisory Agreement The terms and conditions of the New Advisory Agreement are identical to the terms and conditions of the Current Advisory Agreement, except as to effective and termination dates. If approved by shareholders, the New Advisory Agreement will continue until January 1, 2001 unless terminated earlier by either party, and provided that at least annually thereafter its continuance is approved in the same manner as prescribed in the Current Advisory Agreement. Calvert Asset Management Company, Inc. CAMCO has investment advisory contracts with eight investment companies: First Variable Rate Fund for Government Income, Calvert Tax-Free Reserves, Calvert Cash Reserves, Calvert Social Investment Fund, The Calvert Fund, Calvert Municipal Fund, Inc., Calvert World Values Fund, Inc., and Calvert Variable Series, Inc. Each has a substantially similar investment advisory contract with CAMCO, though the actual fees and breakpoints may vary. Reno J. Martini, Senior Vice President and Chief Investment Officer for CAMCO, has primary responsibility for rendering advisory services to CTFR. Mr. Martini oversees the investment management of all Calvert Funds. It is anticipated that each of the directors and officers of CAMCO will hold the same position with CAMCO after the Merger. The address of the directors and officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland, 20814, unless otherwise noted. The directors and executive officers of CAMCO are listed below: Charles T. Nason, Director. Chairman, President and Chief Executive Officer of The Acacia Group, 7315 Wisconsin Avenue, Bethesda, Maryland 20814. *Barbara J. Krumsiek, Director. President of CAMCO and President, Chief Executive Officer and Vice Chairman of Calvert Group, Ltd. *David R. Rochat, Director and Senior Vice President. Robert-John H. Sands, Director. Senior Vice President and General Counsel, The Acacia Group, 7315 Wisconsin Avenue, Bethesda, Maryland 20814. *Reno J. Martini, Senior Vice President and Chief Investment Officer. *Ronald M. Wolfsheimer, Senior Vice President and Chief Financial Officer. *William M. Tartikoff, Senior Vice President, Secretary, and General Counsel. Matthew D. Gelfand, Senior Vice President. *Daniel K. Hayes, Vice President. John Nichols, Vice President. Persons marked with a *, above, are also Trustees and/or officers of CTFR. A. The Merger of CAMCO's parent company CAMCO is an indirect, wholly-owned subsidiary of Acacia. On September 14, 1998, seeking a strategic affiliation to create a stronger, more diversified insurance and financial services enterprise, Acacia and Ameritas entered into an agreement of merger which provides for the merger of their respective mutual holding companies. Acacia and its related subsidiaries offer traditional life insurance and annuity products, as well as variable products, special banking products and services, and a variety of mutual funds, and operate a full service financial planning broker dealer, while Ameritas and its subsidiaries specialize in variable life, fixed and variable annuities, group dental, low-load insurance products and 401(k) and other investment products. This strategic affiliation is expected to create a stronger, more diversified insurance and financial services enterprise, with almost $11 billion in assets under management, insurance assets of $6 billion, $21 billion life insurance in-force, over $750 million in revenues and approximately $750 million in equity/capital. The Merger is subject to the approval of the members of both Acacia and Ameritas and is further conditioned upon approval by the appropriate federal and state regulatory authorities. CAMCO will not be directly affected by the Merger and will remain a wholly-owned subsidiary of Calvert Group, Ltd. As a result of the Merger, however, CAMCO will become an indirect, wholly-owned subsidiary of Ameritas Acacia Mutual Holding Company. Acacia's current address is 7315 Wisconsin Avenue, Bethesda, Maryland 20814. After consummation of the Merger, Ameritas Acacia Mutual Holding Company's principal place of business will be 5900 "O" Street, Lincoln, Nebraska 68501-1889. Recommendation Based on evaluation of the materials presented, the Board has determined that the changes reflected in the proposed New Advisory Agreement are in the best interests of the shareholders of CTFR. The Board, giving equal weight to all the factors, based this determination primarily upon a review of all materials related to the Merger. The Board determined to their satisfaction that CAMCO's services to CTFR would not be adversely affected by the Merger and that such Merger would not impose an unfair burden on CTFR. Thus, the Board, including a majority of the Independent Trustees, approved the New Advisory Agreement (subject to approval by shareholders) and authorized submission of the New Advisory Agreement to shareholders for approval. Accordingly, the Board recommend that shareholders vote FOR the appropriate proposed New Advisory Agreement. - -------------------------------------------------------------------------------- Proposal 4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Limited-Term, Long-Term and Vermont Municipal: To change the fundamental policy concerning credit quality to a nonfundamental policy allowing each to invest in non-investment grade securities. - -------------------------------------------------------------------------------- Discussion Over the years, federal laws, bond investment strategies, and public perception of bonds have changed considerably. Limited-Term, Long-Term, and Vermont Municipal all have the same fundamental credit quality policy, to invest primarily in investment-grade municipal obligations, the interest of which is exempt from federal income tax. Investment grade securities or obligations are those securities rated within the four highest rating categories by Standard & Poor's Incorporated ("S&P") or Moody's Investor Services, Inc. ("Moody's"), or securities determined by CAMCO to be of equivalent credit quality. Municipal obligations rated below the four highest rating categories (i.e., below BBB or Baa) are referred to as non-investment grade. Non-investment debt securities tend to be more sensitive to adverse economic changes and developments relating to the issuer's credit quality. This may affect the issuer's ability to make principal and interest payments on the debt obligation. There is also a greater risk of price declines due to changes in the issuer's creditworthiness. Because the market for lower-rated securities may be less active than for higher-rated securities, it may be difficult for a Fund to sell the securities. Also, because of a lack of objective data, a less actively traded market may make it difficult for CAMCO to value the securities, so that the Board of Trustees/Directors may have to exercise its judgment in assigning a value. When purchasing non-investment grade debt securities, rated or unrated, CAMCO prepares its own 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. CAMCO proposes to change the credit quality guidelines to permit Limited-Term to invest up to 15% in non-investment grade obligations. CAMCO believes this will give more flexibility in purchasing securities where there are no published ratings and where there may be a question of investment grade rating. As an operating policy, however, subject to change by the Board at any time (and not subject to a shareholder vote), CAMCO will limit Limited-Term's investments in non-investment grade securities to 5% of assets. CAMCO proposes to change the credit quality guidelines for Long-Term and Vermont Municipal to permit investments of up to 35% in non-investment grade obligations. CAMCO believes these changes will put these portfolios more in line with the Funds' peers and make the Funds' more competitive without changing the risk profiles significantly. The long-term tax-free category has a wide range of parameters, but CAMCO's research found the vast majority in that category have the same percentage guidelines recommended now by CAMCO. This also will limit liability to CAMCO and the Board as mentioned above. As an operating policy, however, subject to change by the Board at any time (and not subject to a shareholder vote), CAMCO will limit Long-Term and Vermont investments in non-investment grade securities to 15% of assets. If this proposal is approved, Limited-Term will adopt a nonfundamental policy to permit it to invest up to 15% of its net assets in non-investment grade debt securities. The policy for Long-Term and Vermont Municipal will be to allow up to 35% to be invested in non-investment grade securities. CAMCO does not believe that this will have a negative impact on the Portfolios or, particularly for Limited-Term, the stability of the share price. CAMCO does not intend at this time to purchase any securities rated below B. CAMCO believes that this will provide more flexibility to take advantage of investment opportunities, including for unrated obligations, and will allow it to respond more quickly to market changes. CAMCO does not plan to significantly alter the credit quality of these Funds. The new policies will be nonfundamental, and may be changed by the Board without a shareholder vote: Limited-Term only: The Limited-Term Portfolio invests primarily in a diversified portfolio of municipal obligations with interest exempt from federal income tax. Municipal obligations in which the Portfolio will invest at least 85% in fixed and variable rate investment-grade (medium and higher) obligations. Limited-Term, Long-Term, and Vermont: 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 Portfolios as part of the 85% (Limited-Term) or 65% (Long-Term and Vermont) total if CAMCO 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 15% (Limited-Term) or 35% (Long-Term and Vermont) of the Portfolio may consist of noninvestment-grade municipal obligations (rated below Baa or BBB), or unrated obligations that CAMCO 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. Recommendation The Board recommends that shareholders vote FOR the proposed changes to the investment credit quality policy. - -------------------------------------------------------------------------------- Proposal 5 - -------------------------------------------------------------------------------- Long-Term only: To change CTFR Long-Term from a diversified to a nondiversified fund. Discussion The 1940 Act reflects many of the requirements with which a registered investment company must comply. Each fund is required to state whether it will have a diversified portfolio or a nondiversified portfolio. Long-Term is a diversified mutual fund. Being diversified means that a fund must invest in several different companies and adhere to the federal diversification rule. The diversification rule is that "at least 75% of the value of total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities for this calculation limited in respect of any one issuer to an amount not greater in value than 5% of the value of total assets of such management company and to not more than 10% of the outstanding voting securities of such issuer." Long-Term's investment advisor, CAMCO, believes that Long-Term will have greater investment flexibility if it becomes nondiversified. This will permit Long-Term to acquire larger positions in the securities of individual issuers, such as hospitals, housing bonds, or utilities. Theoretically, investing a larger percentage of a fund's assets in a single issuer's securities increases its exposure to credit and other risks associated with the single issuer's financial condition and business operations. The value of shares of a fund may be more susceptible to any single economic, political or regulatory event than the shares of a diversified fund. Because Long-Term is a bond fund, however, CAMCO does not expect that being nondiversified will bring more risk to Long-Term. CAMCO expects to use this increased flexibility to acquire larger positions in the securities of a single issuer only when it believes that the potential return on the securities justifies the additional risk. CAMCO believes that these risks are somewhat limited by the diversification requirements of Subchapter M, below, which must be satisfied on a quarterly basis. In order to qualify as a regulated investment company ("RIC"), Long-Term must continue to comply with the diversification requirements of Subchapter M of the Internal Revenue Code. This requires that Long-Term have, at the close of each quarter of the taxable year, at least 50% of the value of its total assets is represented by cash and cash items (including receivables), Government securities and securities of other RICs, and not more than 5% of its total assets will be invested in the securities of any one issuer and not more than 10% of the outstanding voting securities of such issuer. Also, not more than 25% of the total assets will be invested in the securities (other than Government securities or the securities of other RICs) of any one issuer, or of two or more issuers which Long-Term controls and which are determined to be engaged in the same or similar trades or businesses or related trades or businesses. Thus, at least quarterly, Long-Term will be limited in its investments, and therefore, the diversification risks will be reduced for a portion of the portfolio. Recommendation After reviewing the current diversification policy, and considering the investment objective of Long-Term, the Board concluded that a change to the diversification policy could be beneficial to the shareholders of Long-Term. The Board voted to approve the change from diversified to nondiversified, subject to the oversight of the Board, and subject to shareholder approval. The Board recommends that Long-Term shareholders vote FOR the proposed changes to Long-Term 's diversification policies. - -------------------------------------------------------------------------------- Proposal 6 - -------------------------------------------------------------------------------- For each Portfolio: To ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P. Discussion Shareholders are requested to ratify the action of the Board in selecting the firm of PricewaterhouseCoopers, L.L.P. ("PricewaterhouseCoopers") as the independent auditors for the current fiscal year. The Board believe that the firm is well qualified, and has accordingly selected PricewaterhouseCoopers, L.L.P. to act as independent auditors, subject to ratification by shareholders. Coopers & Lybrand, L.L.P. has experience in accounting and auditing and has served as independent auditors for CTFR since 1994. On July 1, 1998, Coopers & Lybrand merged with Price Waterhouse, L.L.P. to form PricewaterhouseCoopers, L.L.P. Neither PricewaterhouseCoopers, L.L.P., nor any of its partners has any direct or indirect connection (other than as independent accountants) with CTFR or any of its affiliates. No representative of PricewaterhouseCoopers, L.L.P. will be present at the Special Meeting, but a representative will be available via telephone to respond to appropriate questions from shareholders. Recommendation The Board recommends a vote FOR ratification of the selection of PricewaterhouseCoopers, L.L.P. as independent auditors for CTFR. - -------------------------------------------------------------------------------- OTHER BUSINESS - -------------------------------------------------------------------------------- The Board does not intend to present any other business at the meeting. If, however, any other matters are properly brought before the meeting, William M. Tartikoff, Esq., and Barbara J. Krumsiek will vote on the matters in accordance with their judgment. - -------------------------------------------------------------------------------- ANNUAL REPORTS - -------------------------------------------------------------------------------- The audited Annual Reports to Shareholders of CTFR are incorporated by reference into this proxy statement. Copies of the most recent Annual Reports may be obtained without charge if you: write to CTFR 4550 Montgomery Avenue Suite 1000N Bethesda, Maryland 20814 call (800) 368-2745 visit Calvert's website at www.calvertgroup.com - -------------------------------------------------------------------------------- SHAREHOLDER PROPOSALS - -------------------------------------------------------------------------------- CTFR is not required to hold annual shareholder meetings. Shareholders who would like to submit proposals for consideration at future shareholder meetings should send written proposals to the Calvert Group Legal Department, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland, 20814. - -------------------------------------------------------------------------------- VOTING INFORMATION - -------------------------------------------------------------------------------- Proxies are solicited initially by mail. Additional solicitations may be made by telephone, computer communications, facsimile or other such means, or by personal contact by officers or employees of Calvert Group and its affiliates or by Shareholder Communications Corporation, a proxy soliciting firm retained for this purpose. CTFR will bear solicitation costs. By voting as soon as possible, you can save your Fund the expense of follow-up mailings and calls. A proxy may be revoked at any time before the meeting or during the meeting by oral or written notice to William M. Tartikoff, Esq., 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Unless revoked, all valid proxies will be voted in accordance with the specification thereon or, in the absence of specification, for approval of the proposals. Each proposal must be approved by a majority of the outstanding shares, which is defined as the lesser of: (1) the vote of 67% or more of the shares of each Portfolio at the Special Meeting if the holders of more than 50% of the outstanding shares of each Portfolio are present in person or by proxy, or (2) the vote of more than 50% of the outstanding shares of each Portfolio. All classes of each Portfolio vote together. Any abstentions and broker non-votes will be counted as shares present for purposes of determining whether a quorum is present but will not be voted for or against any adjournment or proposal. A broker non-vote is when a broker holds the shares and the actual owner does not vote and the broker holding the shares does not have the authority to vote the shares. This means that abstentions and broker non-votes effectively will be a vote against adjournment or against any proposal where the required vote is a percentage of the shares present. Shareholders of each Portfolio of record at the close of business on December 7, 1998 ("record date") are entitled to notice of and to vote at the Special Meeting or any adjournment thereof. Shareholders are entitled to one vote for each share held on that date. As of December 7, 1998, as shown on the books of each respective Portfolio, there were issued and outstanding: 1,614,811,450.775 shares of Money Market 51,711,735.774 shares of Limited-Term 3,387,687.663 shares of Long-Term 438,298,843.726 shares of California Money Market 3,131,870.312 shares of Vermont Municipal As of the record date, the officers and Trustees of CTFR as a group beneficially owned less than 1% of the outstanding shares of any CTFR Portfolio. The following shareholders, as of record date, owned more than 5% of any class of the Portfolio shown: CTFR Money Market Portfolio Name and Address % of Ownership Hillenbrand Industries 14.78%, Class I Batesville, IN 47006 F. Korbel & Bros. Inc. 12.95%, Class I Guerneville, CA 95446 Mollanvick Inc. 11.96%, Class I Wilmington, DE 19810 Florida Power & Light 9.86%, Class I Miami, FL 33102 FPL Group Inc. 9.86%, Class I Miami, FL 33102 The Grocers Supply Co. Inc. 8.40%, Class I Houston, TX 77221 Wilmington Trust Co. 6.80%, Class I Diebold Inv Co Ac Wilmington, DE 19890 Desko Family Ltd Partnership 5.02%, Class I Latrobe, PA 15650 George or Janet Desko 5.01%, Class I Latrobe, PA 15650 CTFR Long-Term Name and Address % of Ownership John Swanson 7.57% McMurray, PA 15317 CTFR California Money Market Name and Address % of Ownership Bruce & Betty Walkup Tr 17.38% San Francisco, CA 94108 CTFR Vermont Municipal Name and Address % of Ownership - -------------------------------------------------------------------------------- ADJOURNMENT - -------------------------------------------------------------------------------- In the event that sufficient votes in favor of the proposals set forth in the Notice of Meeting and Proxy Statement are not received by the time scheduled for the meeting, William M. Tartikoff, Esq., or Barbara J. Krumsiek may move one or more adjournments of the meeting to permit further solicitation of proxies with respect to any such proposals. Any such adjournment will require the affirmative vote of a majority of the shares present at the meeting. Mr. Tartikoff and Ms. Krumsiek will vote in favor of such adjournment those shares that they are entitled to vote which have voted in favor of such proposals. They will vote against any such adjournment on behalf of those proxies that have voted against any such proposals. - -------------------------------------------------------------------------------- Investment Advisor Calvert Asset Management Company, Inc. 4550 Montgomery Avenue Suite 1000N Bethesda, Maryland 20814 Principal Underwriter Calvert Distributors, Inc. 4550 Montgomery Avenue Suite 1000N Bethesda, Maryland 20814 Administrator Calvert Administrative Services Company, Inc. 4550 Montgomery Avenue Suite 1000N Bethesda, Maryland 20814 CALVERT TAX-FREE RESERVES PROXY CARD The undersigned, revoking previous proxies, hereby appoint(s) William M. Tartikoff, Esq. and Barbara J. Krumsiek, attorneys, with full power of substitution, to vote all shares that the undersigned is entitled to vote at the Special Meeting of Shareholders to be held in the Tenth Floor Conference Room of Calvert Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 on Wednesday, February 24, 1999 at 1:30 p.m. and at any adjournment thereof. All powers may be exercised by a majority of the proxy holders or substitutes voting or acting or, if only one votes and acts, then by that one. This Proxy shall be voted on the proposals described in the Proxy Statement. Receipt of the Notice of the Meeting and the accompanying Proxy Statement is hereby acknowledged. You may cast your vote using one of the following methods: 1. By internet (through a secure internet site): www.calvertgroup.com 2. By telephone (through a secure telephone system): call 1-800-368-2745 3. By facsimile: fax to ______________ 4. By mail: postage-paid envelope enclosed 5. In person: Wednesday, February 24, 1999 NOTE: If you plan to vote by mail or by facsimile, please sign the proxy card exactly as your name appears on the card. If you have a joint account, either person may sign the proxy card. When signing in a fiduciary capacity, such as executor, administrator, trustee, guardian, etc., please sign your name and indicate your title. Corporate and partnership proxies should be signed by an authorized person indicating the person's title. Date: ________________________, 1999 __________________________________ __________________________________ Signature(s) (and Title(s), if applicable) IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS. As to any other matter, the attorneys shall vote in accordance with their best judgment. THE BOARD OF TRUSTEES/DIRECTORS RECOMMEND A VOTE FOR THE FOLLOWING: 1. For each Portfolio: To approve the Board of Trustees for CTFR: 1. Richard L. Baird, Jr. 2. Frank H. Blatz, Jr., Esq. 3. Frederick T. Borts, M.D. 4. Charles E. Diehl 5. Douglas E. Feldman, M.D. 6. Peter W. Gavian, CFA 7. John G. Guffey, Jr. 8. Barbara J. Krumsiek 9. M. Charito Kruvant 10. Arthur J. Pugh 11. David R. Rochat 12. D. Wayne Silby, Esq. For all [ ] Against all [ ] Abstain on all [ ] To abstain from voting on or to vote against one or more of the proposed Trustees listed above, but to approve the others, place an "x" in the box at left and indicate the number(s) of the person on the appropriate line: I vote against _____________. I abstain on _____________. 2. For each Portfolio: To approve amended fundamental investment restrictions to (a) delete restrictions that are no longer required to be fundamental due to changes in state laws or which otherwise need not be fundamental; and; (b) to revise the language of those restrictions that are still required to be fundamental. 1) Purchase of equities 2) Borrowing policy 3) Short sales 4) Restricted securities 5) Real estate 6) Securities and Fund officers or Trustees 7) Loan policy 8) Exercise control 9) Diversification policy 10) Concentration policy 11) New companies For all [ ] Against all [ ] Abstain on all [ ] To abstain from voting on or to vote against the proposed changes to one or more of the specific fundamental investment restrictions, but to approve the others, place an "x" in the box at left and indicate the number(s) (as set forth in the proxy statement) of the affected investment restriction(s) on the appropriate line: I vote against _____________. I abstain on _____________. 3. For each Portfolio: to approve a new investment advisory agreement with the investment advisor, Calvert Asset Management Company, Inc. ("CAMCO"). For [ ] Against [ ] Abstain [ ] 4. Limited-Term, Long-Term and Vermont: To change the fundamental policy concerning credit quality to a nonfundamental policy allowing Calvert Tax-Free Reserves ("CTFR") Limited-Term, Long-Term, and Vermont Municipal to invest in non-investment grade securities. For [ ] Against [ ] Abstain [ ] 5. Long-Term only: To change Long-Term from a diversified to a nondiversified fund. For [ ] Against [ ] Abstain [ ] 6. For each Portfolio: to ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P. For [ ] Against [ ] Abstain [ ] -----END PRIVACY-ENHANCED MESSAGE-----