SCHEDULE 14A
INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant
[X]
Filed by a Party other than the Registrant
[ ]
Check the Appropriate Box:
[X] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)) [ ]
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CALVERT MUNICIPAL FUND, INC.
(Name of Registrant as Specified in Its Charter)
CALVERT MUNICIPAL FUND, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary material
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(3) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND
portfolios of Calvert Municipal Fund, Inc.
4550 Montgomery Avenue
Bethesda, Maryland 20814
Dear Investor:
I cordially invite you to attend a joint special meeting of
shareholders of Calvert National Municipal Intermediate Fund (the
"National Fund") and Calvert California Municipal Intermediate Fund (the
"California Fund") (each a "Fund" and together, the "Funds") on April 18,
1996 (the "Meeting"). Each Fund is a portfolio of Calvert Municipal
Fund, Inc. (the "Company"). At the Meeting, shareholders of each Fund
will be asked to vote on several important matters affecting the Funds.
Shareholders of both Funds are being asked to vote upon four of the
matters specified below and shareholders of the National Fund are being
asked to vote upon one additional matter. The Directors of the Company
recommend that you vote in favor of each of the Proposals. Each of
these items is explained in greater detail in the enclosed Proxy
Statement.
Proposals 1 - 3. To amend certain of each Fund's fundamental
investment restrictions to permit the use of futures and options. These
proposals are to be voted upon by shareholders of both the National Fund
and the California Fund and concern:
1) commodities and futures contracts,
2) options, and
3) short sales and purchases on
margin
Proposals 4 - 5 To amend certain other fundamental investment
restrictions to eliminate any limitations that are not required to be
fundamental by the Investment Company Act of 1940, as amended (the "1940
Act"). The Directors of the Company believe the Funds' investment
advisor's ability to manage each Fund in a changing investment
environment will be enhanced and that investment management
opportunities will be increased by these proposed changes. These
Proposals concern:
4) non-investment grade debt
securities
5) securities of any single issuer.
[For National Fund
shareholders only]
Please exercise your right to vote. We urge you to complete,
sign and return the enclosed proxy ballot so that your shares will be
represented and voted. If you have any questions, please call your
financial representative or Calvert at 1-800-368-2745. Thank you for
your prompt response to this important matter.
Sincerely,
Clifton S. Sorrell, Jr. President
INSTRUCTIONS FOR EXECUTING PROXY BALLOT
The proxy ballot must be executed properly. When ballots are
not signed as required by law, you and your Fund must undertake the time
and expense to take steps to validate your vote. The following general
guide may help you choose the proper format for signing your ballot.
1. Individual Accounts: Your name should be signed exactly as it
appears in the registration on the proxy ballot.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the
registration.
3. All other accounts should show the capacity of the individual
signing. This can be shown either in the form of the account
registration itself or by the individual executing the proxy
ballot. For example:
REGISTRATION VALID SIGNATURE
A. 1) Save the Earth Corp. Jane Q. Nature,
Treasurer
2) Save the Earth Corp. Jane Q. Nature,
c/o Jane Q. Nature, Treasurer Treasurer
B. 1) Save the Earth Corp. Profit Sharing Jon B. Goodhealth,
Plan Trustee
2) Save the Earth Trust Jon B. Goodhealth,
Trustee
3) Jon B. Goodhealth, Trustee Jon B. Goodhealth,
u/t/d 5/1/78 Trustee
C. 1) Elisa Pachamama, Cust. Elisa Pachamama
f/b/o Elena Pachamama
UGMA
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND
portfolios of Calvert Municipal Fund, Inc.
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
April 18, 1996
NOTICE IS HEREBY GIVEN that a joint Special Meeting of
Shareholders of Calvert National Municipal Intermediate Fund (the
"National Fund") and Calvert California Municipal Intermediate Fund (the
"California Fund") (each a "Fund" and together, the "Funds"), portfolios
of Calvert Municipal Fund, Inc. (the "Company"), will be held at the
offices of Calvert Group, Ltd., 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland, 20814 on Thursday, April 18, 1996, at 10:00 a.m.
(the "Meeting"). The purpose of the Meeting is to consider and act upon
the following Proposals, and to transact such other business as may
properly come before the meeting or any adjournments.
Proposals for Shareholders of Each Fund
1. To amend each Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide
greater flexibility in futures trading.
2. To eliminate each Fund's fundamental investment restriction on
options.
3. To eliminate each Fund's fundamental investment restriction on
short sales and purchases on margin and replace such
restriction with two separate non-fundamental policies that
will allow for transactions in futures and options.
4. To eliminate each Fund's fundamental investment restriction
regarding the purchase by the Funds of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit each Fund to invest up to 35% of each
Fund's net assets in non-investment grade debt securities.
Proposal for Shareholders of the National Fund Only
5. To eliminate the National Fund's fundamental investment
restriction concerning diversification and change the National
Fund's classification under the Investment Company Act of 1940,
as amended (the "1940 Act") from "diversified" to
"non-diversified" to permit the National Fund to commit a
higher percentage of its assets to investments in the
securities of any single
issuer.
The Directors of the Company have fixed the close of business
on February 9, 1996 as the record date for the determination of
shareholders of each Fund entitled to notice of, and to vote at, the
Meeting and any adjournments thereof.
By order of the Board of Directors
William M. Tartikoff, Esq.
Vice President and Secretary
Please vote on the enclosed proxy ballot, date, sign, and return it in
the envelope provided, which needs no postage if mailed in the United
States. We ask your cooperation in promptly mailing your proxy ballot,
no matter how large or small your holdings may be.
Preliminary Proxy Statement Dated February 5, 1996; Subject to Completion
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
CALVERT CALIFORNIA MUNICIPAL INTERMEDIATE FUND
portfolios of Calvert Municipal Fund, Inc.
4550 Montgomery Avenue
Bethesda, Maryland 20814
February 15, 1996
This proxy statement is being furnished on behalf of the Board
of Directors (the "Board" or the "Directors") of Calvert Municipal
Fund, Inc. (the "Company") in connection with a solicitation of proxies
from shareholders of Calvert National Municipal Intermediate Fund (the
"National Fund") and Calvert California Municipal Intermediate Fund (the
"California Fund") (each a "Fund" and together, the "Funds") in
connection with the Joint Special Meeting of Shareholders of the Funds
(the "Meeting"), which will be held at the offices of Calvert Group,
Ltd., 4550 Montgomery Avenue, Bethesda, Maryland 20814 on April 18, 1996
at 10:00 a.m. for the purposes set forth in the Notice of Meeting. Each
Fund is a series portfolio of Calvert Municipal Fund, Inc. (the
"Company").
Shareholders of record of each Fund as of the close of business
on February 9, 1996 are entitled to notice of and to vote at the
Meeting. On ____, 1996 there were issued and outstanding _____ and
_____ shares of beneficial interest of Class A and ___ and ____ shares
of beneficial interest of Class C in the National Fund and the
California Fund, respectively. Each share of each Fund is entitled to
one vote, regardless of Class. The approximate date on which this proxy
statement and form of proxy are first being mailed to shareholders is
February 20, 1996.
Each Fund will furnish, without charge, a copy of the annual
report to shareholders for the Fund's most recently completed fiscal
year, and the most recent semi-annual report to shareholders upon
request. Please telephone Calvert Group at 1-800-368-2745 to request
such reports.
Timely, properly executed proxies will be voted as you
instruct. If a returned proxy does not contain a vote on any given
Proposal, the proxy will be voted in favor of the Proposal for which no
vote was specified. A proxy may be revoked at any time prior to its
exercise by written notice to the Board, by execution of a subsequent
proxy, or by voting in person at the Meeting.
The principal solicitation of proxies will be by mail. But
proxies may also be solicited by telephone, computer communications,
facsimile, personal contact, by officers or employees of Calvert Group
and its affiliates, or by proxy solicitation firms retained for this
purpose. The cost of the solicitation and meeting will be paid by the
respective Fund.
Proposals 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 a Fund at the Meeting if the holders of more than 50% of
the outstanding shares of the Fund are present in person or by proxy, or
(2) the vote of more than 50% of the outstanding shares of a Fund.
Abstentions and "broker non-votes", as defined below, are
counted for purposes of determining whether a quorum is present for
purposes of convening the meeting. Broker non-votes are shares held by
a broker or nominee for which an executed proxy is received by a Fund,
but are not voted as to one or more Proposals because instructions have
not been received from the beneficial owners or persons entitled to vote
and the broker or nominee does not have discretionary voting power. If
a Proposal must be approved by a percentage of votes cast on the
Proposal, abstentions and broker non-votes will not be counted as "votes
cast" on the Proposal and will have no effect on the result of the vote.
If the Proposal must be approved by a percentage of voting securities
present at the meeting, abstentions will be considered to be voting
securities that are present and will have the effect of being counted as
votes against the Proposal. Broker non-votes will not be counted for
any purpose in connection with calculating the vote on such a Proposal.
All officers and directors of a Fund, as a group,
beneficially owned less than one percent of the outstanding shares of
either Fund as of January 31, 1996. For this purpose, "beneficial
ownership" is defined under Section 13(d) of the Securities Exchange Act
of 1934, as amended. No person or group owned more than 5% of the
outstanding shares of either Fund. The information as to beneficial
ownership is based on statements furnished to the Funds by the Directors
or the Funds' transfer agent.
SUMMARY OF PROPOSALS
THE NATIONAL FUND
1. To amend each Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide greater
flexibility in futures trading.
2. To eliminate each Fund's fundamental investment restriction on
options.
3. To eliminate each Fund's fundamental investment restriction on
short sales and purchases on margin and replace such
restriction with two separate non-fundamental policies that
will allow for transactions in futures and options.
4. To eliminate each Fund's fundamental investment restriction
regarding the purchase by the Funds of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit each Fund to invest up to 35% of each
Fund's net assets in non-investment grade debt securities.
5. To eliminate the National Fund's fundamental investment
restriction concerning diversification and change the National
Fund's classification under the Investment Company Act of 1940,
as amended (the "1940 Act") from "diversified" to
"non-diversified" to permit the National Fund to invest a
higher percentage of its assets to investments in the
securities of any single issuer.
THE CALIFORNIA FUND
1. To amend each Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide greater
flexibility in futures trading.
2. To eliminate each Fund's fundamental investment restriction on
options.
3. To eliminate each Fund's fundamental investment restriction on
short sales and purchases on margin and replace such
restriction with two separate non-fundamental policies that
will allow for transactions in futures and options.
4. To eliminate each Fund's fundamental investment restriction
regarding the purchase by the Funds of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit each Fund to invest up to 35% of each
Fund's net assets in non-investment grade debt securities.
BACKGROUND
Each Fund is a portfolio of the Company, an open-end management
investment company organized as a Maryland corporation on May 21, 1992.
The National Fund and the California Fund are authorized to
issue, respectively, ___ and ___ shares, which may be issued in series
and are freely transferable. Issued shares are fully paid and non
assessable and have no preemptive or conversion rights. Shareholder
voting rights are not cumulative.
Investment Advisor and Principal Underwriter
Calvert Asset Management Company, Inc. ("CAMCO" or the
"Advisor") serves as investment advisor to each Fund and to several other
registered investment companies in the Calvert Group Family of Funds.
Calvert Distributors, Inc. ("CDI") serves as the principal underwriter
to each Fund. Both CAMCO and CDI are located at 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814, and are indirect, wholly-owned
subsidiaries of Acacia Mutual Life Insurance Company, 51 Louisiana
Avenue, NW, Washington, D.C. 20001.
By this proxy statement, the Funds seek shareholder approval to
eliminate or amend certain fundamental investment restrictions, and
change the classification of the National Fund under the 1940 Act from
"diversified" to "non-diversified". Fundamental policies may be changed
only by shareholder vote, while non-fundamental, or operating, policies,
may be changed by vote of the Directors of the Company without
shareholder approval.
1. To amend each Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide greater
flexibility in futures trading.
The Directors of the Company have proposed amendments to the
fundamental investment restrictions of the Funds to provide each Fund
with greater flexibility in buying and selling futures contracts. The
provisions of each Fund's current fundamental investment restrictions in
this area prohibit the Funds from purchasing any futures contracts, and
are more restrictive than are required by applicable law. The Directors
believe CAMCO should have greater flexibility to enter into futures
contracts consistent with each Fund's investment objective and program
and as market and regulatory developments require and permit, without
the necessity of seeking further shareholder approval.
CAMCO believes that using interest rate futures and options for
hedging and substitution purposes to adjust the duration and other
characteristics of the portfolio is an important tool of portfolio
management. These techniques are already used by CAMCO in several other
fixed-income funds managed by CAMCO in the Calvert Family of Funds, and
CAMCO believes that it would be to each Fund's advantage to have access
to these portfolio management techniques.
If approved, the primary effects of the amendments would be to allow
each Fund to invest in exchange traded options and futures for purposes
of hedging and substitution in the portfolio.
These techniques would permit each Fund to more precisely
increase or decrease its exposure to changing security prices, interest
rates, or other factors that affect security values. Each Fund would
use these practices either as substitution or as protection against an
adverse move in the Fund's portfolio to adjust the risk and return
characteristics of the Fund's portfolio. The Funds will not engage in
transactions for the purpose of speculation or leverage. If CAMCO
judges market conditions incorrectly or employs a strategy that does not
correlate well with a Fund's investments, or if the counterparty to the
transaction does not perform as promised, these techniques could result
in a loss. These techniques may increase the volatility of a Fund and
may involve a small investment of cash relative to the magnitude of the
risk assumed. They may involve a greater degree of risk than those
inherent in more conservative investment approaches.
Each Fund's current fundamental investment restriction
concerning investment in commodities and futures is as follows:
"[As a matter of fundamental policy, the Fund may
not] purchase or sell real estate, real estate
investment trust securities commodities or commodities
contracts or oil and gas interests, but this shall not
prevent [either Fund] from investing in municipal
obligations secured by real estate or interests
therein;"
As amended, each Fund's fundamental investment restriction on
investing in commodities and futures would be combined, and set apart
from the restriction on investing in real estate and mortgages. Such
revised fundamental investment restrictions would read as follows:
"[As a matter of fundamental policy, the Fund
may not:] purchase or sell physical commodities
except that it may enter into futures contracts
and options thereon."
"[As a matter of fundamental policy, the Fund
may not] invest in real estate, although it may
invest in securities which are secured by real
estate or real estate mortgages and may invest in
the securities of issuers which invest or deal in
real estate or real estate mortgages."
In addition, it is the present intention of the Board of
Directors of the Company to adopt for each Fund the following
non-fundamental operating policy, which may be changed by the Board of
Directors of the Company without further shareholder approval,
"[As a matter of operating policy, the Fund may not]:
Purchase a futures contract or an option thereon if with
respect to positions in futures or options on futures which
do not represent bona fide hedging, the aggregate initial
margin and premiums on such options would exceed 5% of the
Fund's net asset value."
By making substantive limits on futures non-fundamental, each
Fund will have the flexibility to adapt to changes in Securities and
Exchange Commission ("SEC"), Commodity Futures Trading Commission
("CFTC") and state laws and regulations without seeking further
shareholder approval. All trading in futures by the Fund would be
subject to applicable SEC and CFTC rules and applicable state law.
The Directors of the Company have voted to approve the
proposed changes and recommend such changes to shareholders.
Accordingly, the Directors of the Company have recommended that
shareholders vote FOR Proposal 1.
2. To eliminate each Fund's fundamental investment restriction on
options.
The Directors of the Company have proposed that each Fund's
fundamental investment restriction on investing in options be eliminated
and replaced with an operating policy that would permit each Fund to buy
and sell put and call options in implementing its investment program,
and would permit other changes in the policy as the Directors of the
Company may determine from time to time.
Under the proposed new operating policy, each Fund would be
permitted to purchase and sell options of any type for any purpose
consistent with the Fund's investment program. Options can be used in a
variety of strategies aimed at different goals and having different
characteristics of risk and reward. For example, buying puts or writing
calls may hedge against rising interest rates or other factors, such as
currency rates, that could depress the value of portfolio securities.
Buying calls or writing puts may help fix a definite price for
securities a Fund intends to purchase, reducing the risk of acquiring
the securities at a higher cost at a later date. The purpose of the
Proposal is to allow the Funds greater flexibility in responding to
market and regulatory developments by allowing the Directors of the
Company the authority to make changes in a Fund's policy on options
without seeking further shareholder approval.
Each Fund's current fundamental policy in the area of investing
in options is as follows:
[As a matter of fundamental policy, the Fund may not:] sell
securities short, purchase securities on margin, or write put or
call options. [Each Fund] reserves the right to purchase
securities with puts attached. See "Obligations with Puts
Attached";
If the Proposal is approved by shareholders, the Directors of
the Company intend to adopt the following operating policy on investing
in options for each Fund:
"Non-fundamental policy. [As a matter of operating policy, the
Fund may not:] invest in puts, calls, straddles, spreads, or
any combination thereof, except to the extent permitted by the
Prospectus or Statement of Additional Information, as each may
from time to time be amended."
Any such strategies must, of course, be in accordance with
applicable federal and state regulation. In addition to review by the
Directors of the Company, a Fund would not engage in such strategies
unless the strategies were consistent with the Fund's investment
objective, and until they had been described sufficiently in such Fund's
Prospectus and Statement of Additional Information.
The Directors of the Company have voted to approve the proposed
changes and recommend such changes to shareholders. Accordingly, the
Directors of the Company have recommended that shareholders vote FOR
Proposal 2.
3. To eliminate each Fund's fundamental investment restriction on
short sales and purchases on margin and replace such restriction with
two separate non-fundamental policies that will allow for transactions
in futures and options.
Each Fund's current fundamental investment restrictions
concerning selling securities short and purchasing securities on margin
is as follows:
[As a matter of fundamental policy, the Fund may not:] sell
securities short, purchase securities on margin, or write put or
call options. [Each Fund] reserves the right to purchase
securities with puts attached. See "Obligations with Puts
Attached."
The Directors of the Company recommend that shareholders vote
to eliminate the above fundamental restriction regarding short sales and
purchases on margin. If the proposal is approved, the Directors intend
to adopt separate non-fundamental restrictions for short sales and
purchases on margin that could be changed without a vote of the
shareholders of a Fund. The proposed non-fundamental limitations are
set forth below, with a brief analysis of the substantive differences
between the proposed and current investment limitations.
Short Sales. In a short sale, an investor sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. Each Fund's fundamental investment limitation on
short sales provides that the Fund may not engage in short sales of any
kind. Certain state regulations currently prohibit mutual funds such as
the Funds from entering into short sales, other than short sales
"against the box." A short sale "against the box" is a sale where the
mutual fund owns, or by reason of its ownership of other securities, has
the right to obtain, securities equivalent in kind and amount to the
securities sold short. If the Proposal is approved by shareholders,
each Fund will adopt the following non-fundamental investment limitation
on short selling, which would also permit a Fund to engage in short
sales against the box, and would clarify that futures and option
transactions are not considered short sales.
If the proposal is approved, the Directors of the Company
would be able to change the proposed non-fundamental limitation in the
future, without the vote of a Fund's shareholders, if state regulations
were to change to permit other types of short sales, or if waivers from
existing requirements were available, subject to appropriate disclosure
to investors. Any such short sales would be subject to extensive
regulation under the 1940 Act designed to ensure that the Funds could
not use short sales for leveraging purposes.
Purchases on Margin. Margin purchases involve the purchase of
securities with money borrowed from a broker. "Margin" is the cash or
eligible securities that the borrower places with his or her broker as
collateral against this loan. Each Fund's current fundamental
restriction prohibits the Fund from purchasing securities on margin
under any circumstances. To permit the Fund to implement its proposed
investment policy of using futures and options, the existing fundamental
restriction would be replaced with a non-fundamental restriction that
would allow initial and variation margin payments made in connection
with the purchase and sale of futures contracts and options on futures,
and other permissible investments. It would also allow the Funds to
obtain short-term credits as may be necessary for the clearance of
transactions. With these exceptions, mutual funds are prohibited from
entering into most types of margin purchases by applicable SEC
policies. By eliminating the fundamental restriction, the Funds would
be permitted to purchase warrants, subject to its investment objectives
and restrictions.
If the proposal is approved by shareholders, the Directors of the
Company intend to adopt the following two separate non-fundamental
restrictions for each Fund:
[As a matter of operating policy, the Fund may not:] effect
short sales of securities, except if it owns or has the right
to obtain securities equivalent in kind and amount to the
securities sold short. For purposes of this restriction,
transactions in futures contracts and options are not deemed to
constitute selling securities short.
[As a matter of operating policy, the Fund may not:] purchase
securities on margin, except 1) for use of short-term credit
necessary for clearance of purchases of portfolio securities
and 2) it may make margin deposits in connection with futures
contracts or options on futures or other permissible
investments.
The Directors of the Company have voted to approve the proposed
changes and recommend such changes to shareholders. Accordingly, the
Directors of the Company have recommended that shareholders vote FOR
Proposal 3.
4. To eliminate each Fund's fundamental investment restriction
regarding the purchase by the Funds of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit each Fund to invest up to 35% of each
Fund's net assets in non-investment grade debt securities.
Each Fund is currently able to invest only in
investment debt securities. Investment grade securities are those
securities rated within the four highest rating categories by Standard &
Poor's Incorporated ("S&P") or Moody's Investor Services, Inc.
("Mood's"), or securities determined by the Advisor 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, "high-yield", or sometimes, "junk bonds".
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, or
"thinner", than for higher-rated securities, it may be difficult for a
Fund to sell the securities. Because of a lack of objective data, a
thinly-traded market may make it difficult for the Advisor to value the
securities, so that the Board of Directors of the Company may have to
exercise its judgment in assigning a value. When purchasing
non-investment grade debt securities, rated or unrated, the Advisor
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. See the
Appendix to this Proxy Statement for additional information on bond
ratings.
If the proposal is approved by shareholders of the Funds, the
Directors of the Company intend to adopt a non-fundamental restriction
to permit each Fund to invest up to 35% of its net assets in
non-investment grade debt securities. The Directors of the Company
believe that this will provide CAMCO with more flexibility to take
advantage of investment opportunities and respond more quickly to market
changes.
The Directors of the Company have voted to approve the proposed
changes and recommend such changes to shareholders. Accordingly, the
Directors of the Company recommend that shareholders vote FOR Proposal 4.
[PROPOSAL FOR SHAREHOLDERS
OF THE NATIONAL FUND ONLY]
5. To eliminate the National Fund's fundamental investment
restriction concerning diversification and change the National
Fund's classification under the 1940 Act from "diversified" to
"non-diversified" to permit the National Fund to invest a
higher percentage of its assets to investments in the
securities of any single issuer.
The National Fund's current fundamental investment restriction
on issuer diversification is as follows:
("As a matter of fundamental policy, the Fund may
not:] With respect to 75% of Fund assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of the Fund's total assets would
be invested in securities of that issuer, or as allowed
by law . . . ."
At the request of CAMCO, the Directors of the Company recommend
that shareholders of the National Fund vote to change the
classification of the Fund from a "diversified" fund to a
"non-diversified" fund (as defined by the 1940 Act). If the proposal is
approved, the National Fund would limit its investments so that at the
close of each quarter of its taxable year: (a) with regard to at least
50% of its total assets, no more than 5% of its total assets are
invested in the securities of a single issuer, and (b) no more than 25%
of its total assets are invested in the securities of a single issuer.
Limitations (a) and (b) do not apply to "Government securities" as
defined for federal tax purposes.
The proposal would permit the National Fund to invest up to 25%
of its total assets in a single issuer and another 25% of its total
assets in another issuer. The remaining 50% of total assets would be
required to be invested in no more than 5% in any one issuer. Currently,
with respect to 75% of its total assets, the Fund can invest no more
than 5% of its assets in any one issuer.
There are risks associated with relaxing the diversification
requirements applicable to the National Fund. Specifically, since,
under the proposal, a relatively high percentage of the assets of the
National Fund could be invested in the obligations of a limited number
of issuers, the value of shares of National Fund may be more susceptible
to any single economic, political or regulatory event than the shares of
a diversified fund would be.
The primary purpose of the proposal is to give the National
Fund greater investment flexibility by permitting it to acquire larger
positions in the securities of individual issuers. CAMCO believes that
this increased flexibility may provide opportunities to enhance the
investment performance of the National Fund. At the same time,
investing a larger percentage of the Fund's assets in a single issuer's
securities increases the National Fund's exposure to credit and other
risks associated with such issuer's financial condition and business
operations. CAMCO expects to use this increased flexibility to acquire
larger positions in the securities of a single issuer when it believes
the potential return on the securities justifies the National Fund's
accepting the risks involved with respect to the concentration of the
National Fund's assets in the securities of a single issuer.
The Directors of the Company have voted to approve the proposed
changes and recommend such changes to shareholders. Accordingly, the
Directors of the Company recommend that shareholders vote FOR Proposal 5.
OTHER MATTERS
The Directors of the Company do not know of any other matters
to be brought before the meeting. If any matters not referred to in the
notice of meeting should be presented for consideration and/or action,
the persons named in the proxy intend to take such action in regard to
such matters as in their judgment seems advisable.
SHAREHOLDER PROPOSALS
Neither the National Fund nor the California Fund is 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.
==============================================================================
APPENDIX
==============================================================================
Municipal Bond and Note Ratings
Description of Moody's Investors Service, Inc.'s ratings of state and
municipal notes:
Moody's ratings for state and municipal notes and other short-term
obligations are designated Moody's Investment Grade ("MIG"). This distinction is
in recognition of the differences between short-term credit risk and long-term
risk.
MIG 1: Notes bearing this designation are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
MIG2: Notes bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.
MIG3: Notes bearing this designation are of favorable quality, with all
security elements accounted for but lacking the undeniable strength of the
preceding grades. Market access for refinancing, in particular, is likely to be
less well established.
MIG4: Notes bearing this designation are of adequate quality, carrying
specific risk but having protection commonly regarded as required of an
investment security and not distinctly or predominantly speculative. Description
of Moody's Investors Service Inc.'s/Standard & Poor's municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. This rating indicates an extremely strong capacity to pay principal and
interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude, or
there may be other elements present which make long-term risks appear somewhat
larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to principal
and interest are considered adequate, but elements may be present which make the
bond somewhat more susceptible to the adverse effects of circumstances and
economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal and
interest. Whereas they normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this category than
for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is regarded as
predominantly speculative with respect to capacity to pay interest and repay
principal. There may be some large uncertainties and major risk exposure to
adverse conditions. The higher the degree of speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in arrears.
CALVERT NATIONAL MUNICIPAL INTERMEDIATE FUND
a portfolio of Calvert Municipal Fund, Inc.
PROXY
To be voted at the April 18, 1996 Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
I hereby appoint(s) William M. Tartikoff, Esq. and Clifton S.
Sorrell, Jr. as attorneys-in-fact, with full power of substitution, to
vote all shares of Calvert National Municipal Intermediate Fund (the
"Fund") that I am entitled to vote at the Special Meeting of
Shareholders to be held at the offices of Calvert Group, Ltd., 10th
Floor Conference Room, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814, on Thursday, April 18, 1996 at 10:00 a.m. and at any
adjournments of the meeting. They are instructed to vote as indicated
on the matter referred to in the Proxy Statement for the meeting,
receipt of which is hereby acknowledged, with discretionary power to
vote on such other business as may properly come before the meeting or
any adjournment thereof. If a returned proxy does not contain a vote
on any given Proposal, the proxy will be voted in favor of the Proposal
for which no vote was specified.
The Board of Directors recommends that you vote FOR the Proposals.
Please vote and sign on the reverse side.
1. To amend the Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide
greater flexibility in futures trading.
___ FOR ___ AGAINST ___ ABSTAIN
2. To eliminate the Fund's fundamental investment restriction on
options.
___ FOR ___ AGAINST ___ ABSTAIN
3. To eliminate the Fund's fundamental investment restriction on
short sales and purchases on margin and replace such
restriction with two separate non-fundamental policies that
will allow for transactions in futures and options.
___ FOR ___ AGAINST ___ ABSTAIN
4. To eliminate the Fund's fundamental investment restriction
regarding the purchase by the Fund of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit the Fund to invest up to 35% of the
Fund's net assets in non-investment grade debt securities.
___ FOR ___ AGAINST ___ ABSTAIN
5. To eliminate the Fund's fundamental investment restriction
concerning diversification and change the Fund's classification
under the 1940 Act from "diversified" to "non-diversified" to
the Fund to commit a higher percentage of its assets to
investments in the securities of any single issuer.
___ FOR ___ AGAINST ___ ABSTAIN
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as an executor, administrator,
trustee, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
, 1996
Date Signature & Title (if applicable)
, 1996
Date Signature & Title (if applicable)
To be voted at the April 18, 1996 Special Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
I hereby appoint(s) William M. Tartikoff, Esq.
and Clifton S. Sorrell, Jr. as attorneys-in-fact, with full power of
substitution, to vote all shares of Calvert National Municipal
Intermediate Fund (the "Fund") that I am entitled to vote at the Special
Meeting of Shareholders to be held at the offices of Calvert Group,
Ltd., 10th Floor Conference Room, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814, on Thursday, April 18, 1996 at 10:00 a.m. and
at any adjournments of the meeting. They are instructed to vote as
indicated on the matter referred to in the Proxy Statement for the
meeting, receipt of which is hereby acknowledged, with discretionary
power to vote on such other business as may properly come before the
meeting or any adjournment thereof. If a returned proxy does not
contain a vote on any given Proposal, the proxy will be voted in favor
of the Proposal for which no vote was specified.
The Board of Directors recommends that you vote FOR the Proposals.
Please vote and sign on the reverse side.
1. To amend the Fund's fundamental investment restriction on
investing in commodities and futures contracts to provide
greater flexibility in futures trading.
___ FOR ___ AGAINST ___ ABSTAIN
2. To eliminate the Fund's fundamental investment restriction on
options.
___ FOR ___ AGAINST ___ ABSTAIN
3. To eliminate the Fund's fundamental investment restriction on
short sales and purchases on margin and replace such
restriction with two separate non-fundamental policies that
will allow for transactions in futures and options.
___ FOR ___ AGAINST ___ ABSTAIN
4. To eliminate the Fund's fundamental investment restriction
regarding the purchase by the Fund of only investment grade
debt securities and replace it with a different non-fundamental
restriction to permit the Fund to invest up to 35% of the
Fund's net assets in non-investment grade debt securities
___ FOR ___ AGAINST ___ ABSTAIN
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. When
signing in a fiduciary capacity, such as an executor, administrator,
trustee, guardian, etc., please so indicate. Corporate and partnership
proxies should be signed by an authorized person indicating the person's
title.
, 1996 _________
Date Signature & Title (if applicable)
, 1996 ___________
Date Signature & Title (if applicable)
