18
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
First Variable Rate Fund for Government Income
(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:
<PAGE>
December 31, 1998
Dear Shareholder:
I am writing to inform you of the upcoming special meeting for shareholders of
the Calvert First Government Money Market Fund, a series of the First Variable
Rate Fund for Government Income.
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, believes these changes are in
your best interest and that of your Fund.
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 employee. All shareholders benefit from the
speedy return of proxy votes.
I appreciate the time you will take to review this important matter. 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.
<PAGE>
Calvert First Government Money Market Fund
Quick Overview
................................................................................
Proposal 1
................................................................................
To elect the Board of Trustees.
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.
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. Calvert Asset Management Company,
Inc. ("CAMCO") has recommended to the Board that the investment restrictions
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
CAMCO more flexibility and may help to more easily adapt to different
investment environments.
................................................................................
Proposal 3
................................................................................
To approve a new investment advisory agreement with the investment advisor,
CAMCO.
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 is being
submitted for approval by shareholders. CAMCO is also proposing
................................................................................
1. the deletion of references to administrative services (because they are
performed by a different subsidiary); and
................................................................................
................................................................................
2. the elimination of contractual expense limitations (replaced by
voluntary limitations).
................................................................................
................................................................................
Proposal 4
................................................................................
To ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P.
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.
<PAGE>
Calvert First Government Money Market Fund, a series of First Variable Rate
Fund for Government Income
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
First Government Money Market Fund (the "Fund"), a series of the First
Variable Rate Fund for Government Income ("FVRF") 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 1:00 p.m. on Wednesday,
February 24, 1999 for the following purposes:
I. To elect the Board of Trustees.
II. 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 those which otherwise need not be
fundamental; and (b) to revise the language of those restrictions
that are still required to be fundamental.
III. 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, except that it reflects a reduced advisory fee and does not
provide for administrative services or an expense cap.
IV. To ratify the Board's selection of auditors, PricewaterhouseCoopers,
L.L.P.
V. To transact any other business that may properly come before the
Special Meeting or any adjournment or adjournments thereof.
By Order of the Trustees/Directors,
William M. Tartikoff, Esq.
Vice President
<PAGE>
Calvert First Government Money Market Fund
a series of
First Variable Rate Fund for Government Income
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 the First Variable Rate Fund for Government Income
(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 1:00 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 First Government Money Market Fund (the "Fund") is the only series of
the First Variable Rate Fund for Government Income ("FVRF"), an open-end
management investment company that was first incorporated in Maryland in 1976
and then reorganized as a Massachusetts business trust in April, 1984.
PROPOSALS
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Proposal 1
To elect the Board of Trustees.
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Discussion
The purpose of this proposal is to elect the currently serving members of the
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.
<PAGE>
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Name
Date of Birth, Principal Occupation
& Year Elected During Last Five Years
or Appointed and Other Directorships
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.
<PAGE>
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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 an 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.
<PAGE>
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Name
Date of Birth, Principal Occupation
& Year Elected During Last Five Years
or Appointed and Other Directorships
*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 and the Board met four (4) times in the past year. All Trustees
attended at least 75% of the 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 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.
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. $2,418 $0 $34,450
Frank H. Blatz, Jr. $3,076 $3,076 $46,000
Frederick T. Borts $2,323 $0 $32,500
Charles E. Diehl $2,968 $2,968 $44,500
Douglas E. Feldman $2,318 $0 $32,500
Peter W. Gavian $1,488 $1,259 $38,500
John G. Guffey, Jr. $3,019 $0 $61,615
M. Charito Kruvant $2,588 $0 $36,250
Arthur J. Pugh $3,129 $104 $48,250
D. Wayne Silby $2,480 $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.
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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.
- --------------------------------------------------------------------------------
Discussion
FVRF came into existence over 20 years ago. The federal and state laws
governing mutual funds have been changed several times since then. The Fund's
Prospectus and Statement of Additional Information ("SAI") contain investment
policies and restrictions that are more restrictive than the current law. For
example, federal 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 policies for
the Fund are currently even more stringent than the Rule. This severely
restricts Fund investments and could potentially reduce its yield. The
fundamental policies concern the Government-guaranteed loan market,
investments maturing in more than one year, and repurchase agreements by the
Fund to sell a money market security and buy it back (repurchase) at a
particular time and price. The Fund 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. The Fund, 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 be changed
to conform to, but not be more restrictive than, the federal law. That way, if
the federal law changes, the restrictions can change accordingly. This gives
the Fund more flexibility and may help it to more easily adapt to different
investment environments. This is expected to increase investment management
opportunities. Further, it is not anticipated that these proposed changes will
substantially affect the way the Fund is currently managed.
The current investment restrictions for the Fund, excerpted from its SAI, 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 Fund may not purchase common stocks, preferred stocks, warrants,
other equity securities, corporate bonds or debentures, state bonds, municipal
bonds, or industrial revenue bonds.
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 Fund may not 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.
Recommended Change
Management recommends that the 25% 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 Board has adopted 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 Fund may not issue senior securities or borrow money, except from banks
for temporary or emergency purposes and then only in an amount up to 33 1/3%
of the value of its total assets or as permitted by law and except by engaging
in reverse repurchase agreements, where allowed. In order to secure any
permitted borrowings and reverse repurchase agreements under this section, the
Fund may pledge, mortgage or hypothecate its assets.
...............................................................................
Current Fundamental Restriction
3. The Fund may not 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.
Recommended Change
Management recommends that this investment restriction be deleted, as the
essence is now included in the proposed fundamental investment restriction
number 2, above.
...............................................................................
Current Fundamental Restriction
4. The Fund may not sell securities short.
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
5. The Fund may not write or purchase put or call options.
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
6. The Fund may not purchase a security which is subject to legal or
contractual restrictions on resale, i.e., restricted 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 Fund may not purchase or sell real estate investment trust
securities, commodities or oil and gas interests.
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 Fund 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
8. The Fund may not 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).
Recommended Change
Management recommends that this investment restriction be changed to the
standard policy for other Calvert Group Funds.
Proposed Fundamental Investment Restriction
The Fund may not make loans, other than through the purchase of money market
instruments and repurchase agreements or by the purchase of bonds, debentures
or other debt securities, or as permitted by law. The purchase of all or a
portion of an issue of publicly or privately distributed debt obligations in
accordance with the Fund's investment objective, policies and restrictions,
shall not constitute the making of a loan.
...............................................................................
Current Fundamental Restriction
9. The Fund may not 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 plans.
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.
...............................................................................
Proposed NEW Fundamental Restriction
10. The Fund 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 domestic bank
money market instruments.
...............................................................................
Proposed NEW Fundamental Restriction
11. The Fund may not make any investment inconsistent with its
classification as a diversified investment company under the 1940 Act.
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
Fund.
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Proposal 3
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- --------------------------------------------------------------------------------
To approve a new investment advisory agreement with the investment advisor,
CAMCO.
- --------------------------------------------------------------------------------
Discussion
The following circumstances affect the terms of the current investment
advisory agreement (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, a standard investment advisory agreement between FVRF and CAMCO
(the "New Advisory Agreement").
Management has determined that the administrative services, and the
provision of compensation for such services, are best provided for in a
separate administrative services agreement. Accordingly, it is proposed
to remove the provision of these services from the advisory agreement.
Management proposes to eliminate the expense limitation with respect to
fund expenses. However, Management agrees to maintain the expense
limitation until such time in the future that Management and the Board
agree otherwise.
Despite the importance of the proposed changes, CAMCO anticipates there will
be no effect on the actual investment management operations with respect to
the Fund.
The Current Advisory Agreement
Under the Current Advisory Agreement, CAMCO provides a continuous investment
program for the Fund, subject to the control of the Board. The Current
Advisory Agreement was last submitted to shareholders in 1983 due to the sale
of Calvert Group, Ltd., CAMCO's parent company, to Acacia. The shareholders of
the Fund approved 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 January 1984 contract between CAMCO and the Fund include:
1. The services to be provided to the Fund (manage Fund assets, place
orders for securities trades and perform other administrative services);
2. General obligations of CAMCO (manage the Fund in accordance with
Fund guidelines and restrictions, under the direction of the Board);
3. Expenses of the Fund (advisory, legal, audit, registration, taxes,
printing and postage, mailing prospectuses);
4. Expense limitation (CAMCO agreed to reimburse the Fund for any total
expenses over 1% of average daily net assets);
5. Liability issues (CAMCO is not liable for actions unless it is
grossly negligent, acts in bad faith, or in reckless disregard of its
duties); and
6. The fees to be paid to CAMCO (0.50% for the first $500,000,000 of
the Fund's average daily net assets, 0.45% for the next $400,000,000,
0.40% for the next $400,000,000, 0.35% for the next $400,000,000, and
0.30% of all assets in excess of $2,000,000,000.)
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 Directors"), and (ii) the holders of a majority
of the outstanding shares of the Fund. 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 the Fund, 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, deletion of the provision of administrative services as
discussed under B., below, elimination of the expense limitation as discussed
under C.
If approved by shareholders, the New Advisory Agreements will continue until
January 1, 2000 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 investment advisory services to FVRF.
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/Directors and/or officers of
FVRF.
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.
B. Administrative Services
Management has taken the opportunity to re-examine the specific provisions for
services under the Current Advisory Agreement. In doing so, management has
determined that it is better to delete the provision of administrative duties
and leave intact the investment advisory services to be provided by CAMCO.
Administrative services are not currently provided by CAMCO, but are provided
by FVRF's Administrator, Calvert Administrative Services Company, Inc.
("CASC"). Thus, this change will more accurately reflect the services which
CAMCO provides. As a result of administrative services being provided to FVRF
under a separate agreement, the investment advisory fees will be reduced so
that the proposed advisory fee plus the new administrative fee will equal the
current advisory fees. The Board has approved a new Administrative Services
contract with CASC. No shareholder approval is required for that contract, and
the fees may be changed by the Board without shareholder approval.
During the 1997 fiscal year ended December 31, 1997, the Fund paid advisory
fees of $1,206,618 to CAMCO. For that same time period, under the New Advisory
Agreement, CAMCO would have received $603,309 in advisory fees, while CASC
would have received $603,309 in administrative services fees.
The fees to be paid to CAMCO will be reduced to:
0.25% for the first $500,000,000 of the Fund's average daily net assets
0.225% for the next $400,000,000
0.20% for the next $400,000,000
0.175% for the next $400,000,000; and
0.15% of all assets in excess of $2,000,000,000.
Under the new contract, total management fees (advisory fee plus
administrative services fee) are expected to remain 0.50% of the Fund's
average daily net assets, the same as in previous fiscal years.
Accounting Fees
CAMCO recently proposed to the Board that each Calvert Fund be responsible for
its accounting fees with the Custodian, State Street Bank & Trust Company
("State Street"). Under the Current Advisory Agreement, the accounting fees
have been paid by CAMCO to State Street. In the past, the Fund has not paid
these fees directly, though that is the normal procedure in the mutual fund
industry. If the Fund continues to pay CAMCO the same fees, and then the Fund
pays State Street separately for the accounting fees, it is, in essence, an
increase, though minimal, in the Fund's expenses. The accounting fees are not
included as part of the administrative services provided by CASC, above. The
Board reviewed the materials presented concerning the fees, the general
industry practices, and the minimal effect upon the Fund expenses. The Board,
emphasizing the net effect upon the expenses of the Fund, approved the change;
finding it to be in the best interests of the shareholders.
C. Expense Limitation
Upon initially entering into the Current Advisory Agreement, CAMCO agreed to
limit the fund expenses to 1.00% of average daily net assets. At that time,
certain states also imposed limits on fund expenses so that if expenses
exceeded a certain amount, the investment advisor would have to reimburse a
fund for the excess. The recent passage of reformed federal securities laws
now preempts the states from imposing substantive requirements on investment
companies. Therefore, the state-imposed expense limitation is no longer
applicable to the Fund.
Accordingly, Management recommends that this provision not be included in the
New Advisory Agreement. The removal of the contractual expense limitation will
not affect the management of FVRF or its accrual of expenses. Management has
agreed to maintain the expense limitation until such time in the future that
Management and the Board agree otherwise.
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 the Fund. The Board based this determination
primarily upon the following, giving equal weight to each factor:
(a) After a review of all materials related to the Merger, the Board
determined that they were satisfied that CAMCO's services to FVRF would
not be adversely affected by the Merger and that such Merger would not
impose an unfair burden on FVRF;
(b) In evaluating the materials presented concerning administrative
services, the Board carefully considered the corporate structure and
advisory expenses, and reviewed the proposed form of New Investment
Advisory Agreement and form of Administrative Services Agreement;
(c) In evaluating the deletion of the expense limitation, the
Trustees/Directors considered the applicable securities laws and the
current fund expenses, and Management's agreement to continue the
limitation.
Thus, the Board, including a majority of the Independent Trustees/Directors,
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 recommends that shareholders vote FOR the
proposed New Advisory Agreement.
- --------------------------------------------------------------------------------
Proposal 4
- --------------------------------------------------------------------------------
To ratify the Board's selection of accountants, PricewaterhouseCoopers, L.L.P.
Discussion
Shareholders are requested to ratify the action of the Board in selecting the
firm of PricewaterhouseCoopers, L.L.P. as the independent accountants for FVRF
during the current fiscal year. The Board believe that the firm is well
qualified, and has accordingly selected PricewaterhouseCoopers to act as
independent accountants, subject to ratification by shareholders.
Coopers & Lybrand, L.L.P. has experience in accounting and auditing and has
served as independent accountants for FVRF since 1994. On July 1, 1998,
Coopers & Lybrand merged with Price Waterhouse, L.L.P. to form
PricewaterhouseCoopers, L.L.P.
Neither PricewaterhouseCoopers nor any of its partners has any direct or
indirect connection (other than as independent accountants) with FVRF or any
of their affiliates. No representative of PricewaterhouseCoopers 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 accountants for FVRF.
- --------------------------------------------------------------------------------
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 Report to Shareholders of FVRF is incorporated by reference
into this proxy statement. Copies of the most recent Annual Report may be
obtained without charge if you:
write to:
FVRF
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
call (800) 368-2745
visit Calvert's website at www.calvertgroup.com
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
FVRF 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 ADP/Shareholder communications, Inc., a proxy soliciting firm retained
for this purpose. FVRF may bear solicitation costs. By voting as soon as
possible, you can save the 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 the
Fund at the Special Meeting if the holders of more than 50% of the outstanding
shares of the Fund o are present in person or by proxy, or (2) the vote of
more than 50% of the outstanding shares of the Fund. All classes of the Fund
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 the Fund 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
the Fund, there were issued and outstanding 285,179,001.570 shares.
As of the record date, the officers and Trustees/Directors of FVRF as a group
beneficially owned less than 1% of the outstanding shares of the Fund. The
following shareholders, as of record date, owned more than 5% of the Portfolio
shown, as of December 7, 1998:
Name and Address % of Ownership
Saul Maluth 36.92%, Class B
Hicksville, NY 11801
Laurie Davidson 27.89%, Class B
Renton, WA 98059
Craig Miller 17.70%, Class B
Bend, OR 97708
Hillel Gray 14.48%, Class B
Jerusalem, Israel
Alison Crawford-Jakel 7.15%, Class B
Christopher Crawford-Jakel
Portland, OR 97213
Lionel Weisman 13.85%, Class C
Lake Oswego, OR 97034
Painewebber FBO 9.91%, Class C
D. Solnit
San Rafael, CA 94901
Daniel Parman 9.70%, Class C
C/FBO E. Parman
East Troy, WI 53120
CIBC Oppenheimer 5.26%, Class C
FBO 324-19316-11
New York, NY 10008
Montgomery County Government 32.42%, Class I
Rockville, MD 20850
Maryland State Treasurer 29.06%, Class I
Annapolis, MD 21401
Working Assets Funding 17.80%, Class I
San Francisco, CA 94111
Mayor & City Council 12.57%, Class I
of Baltimore
Baltimore, MD 21202
- --------------------------------------------------------------------------------
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
<PAGE>
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 1:00 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 RECOMMENDS A VOTE FOR THE FOLLOWING:
1. To approve the Board of Trustees for FVRF:
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. 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 equities
2) Borrowing policy
3) Pledge securities
4) Short sales
5) Puts and calls
6) Restricted securities
7) Real estate & commodities
8) Loan policy
9) Exercise control
10) Concentration policy
11) Diversification policy
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. To approve a new investment advisory agreement with the investment
advisor, Calvert Asset Management Company, Inc. ("CAMCO").
For [ ] Against [ ] Abstain [ ]
4. To ratify the Board's selection of auditors, PricewaterhouseCoopers,
L.L.P.
For [ ] Against [ ] Abstain [ ]
