CALVERT WORLD VALUES
INTERNATIONAL EQUITY FUND
Dear Shareholder:
This report of the Calvert World Values International Equity Fund covers
the one-year period ending September 30, 1996.
For shareholders, one of the most significant events during this period was
a change in the Fund's investment strategy. We advised shareholders of this
earlier in the year, but it warrants repeating here. In May of this year, the
Fund's board of directors adopted an operating policy to limit the percentage of
portfolio assets that the Fund could commit to U.S. equity securities to 5%.
This change has the effect of removing the U. S. market as a major area of
investment and allowing us to focus on opportunities in international markets
and stocks. Accordingly, the Fund's name was changed from the World Values
Global Equity Fund to the World Values International Equity Fund, and our
benchmark index is now the Morgan Stanley Capital International Europe,
Australia and Far East Index, not the Morgan Stanley Capital International World
Index. We hope this change will be welcomed by shareholders, who now have a more
purely international vehicle for investing responsibly.
Economic and Market Review
Throughout the Fund's fiscal year, international equity markets keyed off
developments in the United States. In late 1995, the pace of economic growth
appeared sluggish. But in 1996, there were signs of stronger growth, which
triggered inflation fears and raised the possibility that the Federal Reserve
would adopt a tighter monetary policy. The uncertain outlook led to increased
market volatility. When it became apparent that economic growth had been
achieved without giving rise to inflationary pressures, interest rates eased and
equity markets stabilized. During 1996, several of the international stock
markets began to respond to a pickup in their local economies. The exception to
this trend was Japan. There, the economy saw a mild recovery, helped by the
weaker yen, but apart from a brief spurt in April, the market failed to respond.
By the end of the period, dollar investors had all but lost the rise in the
market to the weakening currency.
The European economies made little headway through 1995, as demand for
exports slumped and domestic consumers failed to take up the slack. At the same
time, many governments were attempting to rein in expenditures and improve their
fiscal position in preparation for European monetary union. Fortuitously, the
result of the lower rate of growth and tighter fiscal policies was falling
inflation, and this has allowed governments to bring interest rates down. Growth
began to pick up in 1996.
The South East Asian markets had a year of mixed fortunes. The area was
largely ignored during 1995, when U.S. mutual fund managers tended to focus on
the domestic market. The Hong Kong stock market had a brief surge in January
1996, but tension surrounding the elections in Taiwan and rocky negotiations
with China over Hong Kong's reversion to Chinese rule in 1997 chased investors
away. During that period of uncertainty, cash flowed into the Singapore market,
but once the nervousness subsided, cash flows reversed. The Hong Kong market
ended the Fund's fiscal year with a rise of 23.1%. The Singapore market ended
the year unchanged. The Australian and New Zealand markets advanced. Most
emerging markets experienced a steady recovery over the last 12 months, after
dismal performance in 1994. The Fund's largest exposure was to the Mexican
market, where we held on to investments following the collapse of the currency.
During the subsequent period, the currency stabilized and corporate profits made
a sound recovery. The Mexican market returned 13.7% for the year.
Fund Strategy and Performance
The change in the Fund's investment strategy necessitated the sale of stock
of U.S. companies and reinvestment of the proceeds in the EAFE markets. At the
close of the reporting period, this process was still underway. Our cash
position is currently higher than normal, but will decline over the coming
months as the reinvestment nears completion. The Fund's commitment to U.S.
equity securities declined from 20% of assets on March 31, 1996, to less than 1%
of assets on September 30, 1996.
To correspond to the change in the Fund's investment strategy, our
benchmark for this period reflects the performance of the MSCI World Index
through June 30, 1996 and the MSCI EAFE Index from July 1, 1996 until the close
of the period.
In the first part of this fiscal year, the portfolio was underweighted in
the U.S. market, underweighted in Japan, overweighted in South East Asia and
neutral in Europe, relative to the MSCI World Index. Our limited exposure to the
U.S. market was based on our value analysis. Corporate profits had peaked and
valuations were becoming increasingly stretched. Still, cash continued to flow
into the market, driving stock prices higher, and our underweighting had a
negative effect on the Fund's performance.
The other negative in terms of country allocation was our overweighting in
the Singapore market, which exhibited lackluster performance. Our valuation
measures pointed to a favorable outlook, but we did not foresee the steps the
government would take to cool down the property sector. Singapore also fell from
the favor of international investors, who perceived the market to be too reliant
on the weakening semiconductor cycle. The Singapore market ended the year
unchanged, with the Fund's investments there falling 4.7%.
On the positive side, our overweighting in the Hong Kong market enhanced
performance. For the 12 months, the Hong Kong market index gained 23.1%, and
portfolio investments rose 35.9%. Our underweighting in the Japanese market was
positive for returns. We also benefited from an increased commitment to European
markets. France, Ireland, Italy, Norway and Spain all made solid contributions
to the bottom line. The French companies Primagaz and SITA came through strongly
in this period. In the Netherlands, VNU and Elsevier continued to report strong
sales and profits. In Germany, the retailer, Douglas, responded to improved
consumer sentiment, and in the U.K., retailers Kingfisher and Marks & Spencer
turned in good gains.
The Fund also benefited from positions in Mexican stocks, which were up
17.3%, compared to a rise of 13.7% for the index. The supermarket chain, Cifra,
was a top performer.
Highlights of Responsible Investments
The Fund added the U.K. company Bellway to the portfolio during the second
half of this fiscal year. Bellway constructs reasonably priced energy-efficient
houses and has a policy of minimizing the use of non-renewable hardwoods and
CFC-producing equipment.
Calvert Group's Social Research Department closely monitors companies with
operations in countries that have poor records for protecting human rights.
During this reporting period, we initiated a dialog with Elsevier, a publishing
company based in the Netherlands with operations in Nigeria. As a leading
publisher of educational materials, including textbooks for Nigerian schools,
and publisher of the African Writers series, Elsevier is playing a positive role
in the country's development.
Outlook
Concern for possibly rising interest rates in the U.S., which weakened the
performance of equity markets through mid-1996, has dissipated since early
August, as analysts have countered arguments of a strengthening economy with the
near absence of visible inflationary pressures. The forthcoming U.S. election
may also serve to steady stock prices, since the Administration will presumably
want to maintain a neutral stance on rates in the months leading up to the
election. Further out, interest rates could well trend higher, but possibly not
until 1997. Accordingly, the focus for investment in the year ahead will
continue to be on the high-growth economies of the Far East and on core markets
in Europe, which have lagged their smaller neighbors. As the Latin American
economies recover, we will also look to diversify the portfolio's investments in
this region. We appreciate your investment in the Fund.
Sincerely,
Andrew Preston Clifton S. Sorrell
Portfolio Manager President
October 17, 1996
Portfolio Statistics
Ten Largest Stock Holdings
as of September 30, 1996
% of Net Assets
- ------------------------------------------------------------------------------
Sun Hung Kai Properties 2.6%
Hysan Development 2.6%
National Australia Bank 2.4%
City Developments 2.1%
Brambles Industries, Ltd. 2.0%
Malayan Bank Berhad 2.0%
Cheung Kong Holdings 1.9%
Allied Irish Banks, Plc. 1.9%
Transportadora de Gas (ADR) 1.8%
AMMB Holdings Berhad 1.8%
- --------------------------------------------------------------------------------
Total 21.1%
============================================================================
Average Annual Total Returns
for periods ended September 30, 1996
Class A Shares
One Year 4.02%
Since Inception (6/92) 7.07%
Class C Shares
One Year 8.07%
Since Inception (3/94) 2.96%
Performance Comparison
Comparison of change in value of $10,000 investment.
Total returns assume reinvestment of dividends and, for Class A shares,
reflect the deduction of the Fund's maximum sales charge of 4.75%. No sales
charge has been applied to the index used for comparison. The value of an
investment in Class A shares is plotted in the line graph. The value of an
investment in Class C shares would be different. Past performance is no
guarantee of future results.
Report of Independent Accountants
To the Board of Directors of Calvert World Values Fund, Inc. and the
Shareholders of International Equity Fund:
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of International Equity Fund (one of the
portfolios comprising Calvert World Values Fund, Inc.), as of September 30,
1996, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the four years in the period then
ended and for the period from July 2, 1992 (commencement of operations) through
September 30, 1992. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
September 30, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
International Equity Fund as of September 30, 1996, and the results of its
operations, the changes in its net assets and financial highlights for each of
the respective periods referred to above, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 8, 1996
Equity Securities - 83.8% Shares Value
- --------------------------------------------------------------------------------
Australia - 4.4%
Brambles Industries, Ltd. 250,000 $4,057,156
National Australia Bank 450,000 4,737,967
- -----------------------------------------------------------------------------
8,795,123
Argentina - 2.9%
Banco Frances del Rio de La Plata (ADR) 85,000 2,220,625
Transportadora de Gas (ADR) 300,000 3,675,000
- ----------------------------------------------------------------------------
5,895,625
Costa Rica - 0.1%
Pro Fund International SA * 1,518 1,518
Pro Fund International SA (Preferred) * 150,240 150,240
- --------------------------------------------------------------------------------
151,758
France - 4.9%
Canal Plus 7,800 1,917,723
Lyonnaise des Eaux SA 5,200 465,086
Lyonnaise des Eaux (non-negotiable) * 112 10,017
Pinault-Printemps Redoute SA 7,400 2,721,905
Primagaz Cie 8,316 874,182
Primagaz Cie (Warrants) * 756 14,050
SITA 6,830 1,405,535
SGS Thomson Micro. * 50,400 2,409,014
- -----------------------------------------------------------------------------
9,817,512
- -------------------------------------------------------------------------------
Germany - 4.3%
Continental AG 110,000 2,010,675
Douglas Holdings AG 44,850 1,953,320
Linde AG 3,990 2,547,809
Volkswagen AG 5,570 2,075,663
- -------------------------------------------------------------------------------
8,587,467
Hong Kong - 8.3%
Cheung Kong Holdings 500,000 3,847,149
Hong Kong Land Holdings 1,000,000 2,330,000
Hysan Development 1,650,000 5,163,585
Hysan Development (Warrants) * 90,000 41,898
Sun Hung Kai Properties 500,000 5,318,117
- --------------------------------------------------------------------------------
16,700,749
Ireland - 2.2%
Allied Irish Banks, Plc 636,100 3,770,901
Smurfit (Jefferson) 219,000 593,004
- -----------------------------------------------------------------------------
4,363,905
Equity Securities (Cont'd) Shares Value
- --------------------------------------------------------------------------------
Italy - 2.1%
Telecom Italia Mobile 1,121,100 $2,487,653
Telecom Italia Mobile (Di Risp) 1,396,500 1,732,733
- --------------------------------------------------------------------------------
4,220,386
Japan - 14.8%
Banyu Pharmaceutical 205,000 2,773,746
Futaba Corp. 67,000 3,001,792
Itochu Corp. 443,000 2,806,461
Keyence Corp. 24,000 2,967,742
Nikko Securities 127,000 1,354,212
Nippon Sanso Corp. 490,000 2,195,341
ShinMaywa Industries 274,000 2,553,405
Shiseido Co. 179,000 2,149,283
Sumitomo Bank 86,000 1,587,455
Sumitomo Electric Industries 207,000 2,837,903
Takasago Thermal Engineering 179,000 2,694,624
Tokyo Style Co. 177,000 2,886,559
- -------------------------------------------------------------------------------
29,808,523
Malaysia - 4.3%
AMMB Holdings Berhad 500,000 3,633,677
Malayan Bank Berhad 405,000 4,023,500
Selangor Properties 900,000 1,037,743
- --------------------------------------------------------------------------------
8,694,920
Mexico - 2.6%
Banpais SA (ADR) * 100,000 0
Grupo Durango SA (ADR) * 177,000 2,101,875
Telefonos de Mexico SA (ADR) 100,000 3,212,500
- --------------------------------------------------------------------------------
5,314,375
- ----------------------------------------------------------------------------
Netherlands - 4.9%
Ahold NV 34,800 1,968,891
Elsevier NV 141,100 2,331,482
ING Groep NV 71,250 2,221,492
VNU 169,050 3,306,577
- --------------------------------------------------------------------------------
9,828,442
New Zealand - 2.3%
Independent Newspapers 600,000 2,365,606
Wilson & Horton 300,000 2,216,708
- -----------------------------------------------------------------------------
4,582,314
Singapore - 3.7%
City Developments 500,000 4,260,758
Straits Steamship Land 650,000 2,123,278
United Overseas Land (Warrants) * 2,100,000 1,148,274
- -------------------------------------------------------------------------------
7,532,310
Equity Securities (Cont'd) Shares Value
- --------------------------------------------------------------------------------
South Africa - 0.1%
Community Growth Fund 690,369 $269,502
- --------------------------------------------------------------------------------
269,502
Spain - 5.1%
General de Aguas de Barcelona SA 82,785 3,128,278
Prosegur Compania 70,000 2,805,884
Telefonica de Esp 50,800 943,011
Vallehermoso SA 170,440 3,296,571
- --------------------------------------------------------------------------------
10,173,744
Sweden - 0.7%
Scania AB - Series A 24,086 652,427
Scania AB - Series B 24,086 654,244
- ----------------------------------------------------------------------------
1,306,671
Thailand - 0.1%
Bangkok Bank 15,000 195,824
- -----------------------------------------------------------------------------
195,824
United Kingdom - 15.7%
Anglian Water 195,300 1,643,039
Anglian Group 132,000 432,838
Bellway 158,300 846,133
Cable & Wireless, Plc. 177,000 1,242,518
Carlton Communications 277,300 2,096,352
Commercial Union, Plc. 182,000 1,710,612
Firstbus 294,200 794,326
Glynwed International, Plc. 325,100 1,875,088
Hays, Plc. 110,000 809,203
Johnson Matthey 184,700 1,763,453
Kingfisher, Plc. 174,900 1,734,217
Lloyds TSB Group, Plc. 375,200 2,219,840
Low and Bonar, Plc. 125,000 1,093,677
Marks & Spencer, Plc. 231,900 1,802,134
National Westminster, Plc. 198,900 2,113,838
Powerscreen International, Plc. 92,500 795,567
Safeway, Plc. 327,900 1,685,947
SIG 210,000 834,873
Smith & Nephew 665,800 2,144,128
Somerfield * 321,000 793,833
Vitec Group 71,700 779,958
Wolseley 300,200 2,283,569
- --------------------------------------------------------------------------------
31,495,143
United States - 0.3%
Calypte Biomedical (Warrants) * 50,000 393,750
Quadrant Healthcare, Plc. * 200,000 234,265
- --------------------------------------------------------------------------------
628,015
Total Equity Securities (Cost $154,554,368) 168,362,308
- -------------------------------------------------------------------------------
Principal
Corporate Notes - 0.9% Amount Value
- --------------------------------------------------------------------------------
Bolivia - 0.2%
Banco Solidario SA $301,617 $301,617
- ------------------------------------------------------------------------------
301,617
- -------------------------------------------------------------------------------
United States - 0.7%
Accion International 100,000 95,210
Cascadia Revolving Loan Fund 125,000 120,755
Catholic Relief Services 150,000 149,970
Community Equity Investments 200,000 196,132
Delaware Valley Community Reinvestment Fund 75,000 71,408
Ecumenical Development Corporation USA 150,000 146,709
Enterprise Loan Fund 50,000 49,033
Foundation For International Community Assistance 50,000 48,185
Foundation For International Development 100,000 94,463
Freedom From Hunger 100,000 95,210
Program for Appropriate Technology & Health 150,000 142,904
Minnesota Non-Profit Assistance Fund 100,000 96,370
New Mexico Community Loan Fund 100,000 95,210
Societe D'Investissement et de Developement
International 100,000 95,210
- --------------------------------------------------------------------------------
1,496,769
Total Corporate Notes (Cost $1,851,617) 1,798,386
- ------------------------------------------------------------------------------
Time Deposits - 9.8%
- --------------------------------------------------------------------------------
Capital Markets, London, 5.625%, 10/1/96 8,926,742 8,926,742
Capital Markets, London, 5.78125%, 10/1/96 10,731,204 10,731,204
- --------------------------------------------------------------------------------
Total Time Deposits (Cost $19,657,946) 19,657,946
TOTAL INVESTMENTS (Cost $176,063,931) - 94.5% 189,818,640
Other assets and liabilities, net - 5.5% 10,991,899
- --------------------------------------------------------------------------------
Net Assets - 100% $200,810,539
================================================================================
Assets Value
- --------------------------------------------------------------------------------
Investments in securities, at value-see accompanying portfolio $189,818,640
Cash 681,174
Receivable for securities sold 13,773,307
Receivable for shares sold 189,683
Dividends and interest receivable 456,822
Deferred organization expenses 7,927
Dividend reclaim receivable 109,409
Other assets 29,932
- --------------------------------------------------------------------------------
Total assets 205,066,894
Liabilities
- -------------------------------------------------------------------------------
Payable for securities purchased 3,714,582
Payable for shares redeemed 196,726
Payable to Calvert Asset Management, Inc. 195,519
Payable to Calvert Administrative Service Corp., Inc. 16,174
Payable to Calvert Shareholders Services, Inc. 34,264
Payable to Calvert Distributors, Inc. 44,536
Accrued expenses and other liabilities 54,554
- --------------------------------------------------------------------------------
Total liabilities 4,256,355
Net assets $200,810,539
============================================================================
Net Assets Consist of:
- ---------------------------------------------------------------------
Paid-in capital applicable to the following shares of common stock with
250,000,000 shares of $0.01 par value share authorized for Class A
and Class C combined:
Class A: 10,421,573 shares outstanding $175,570,459
Class C: 372,567 shares outstanding 6,561,029
Undistributed net investment income 523,742
Accumulated net realized gain (loss) on investments
and foreign currencies 4,400,222
Net unrealized appreciation (depreciation) on investments
and assets and liabilities in foreign currencies 13,755,087
- ------------------------------------------------------------------------------
Net assets $200,810,539
================================================================================
Net Asset Value per Share
- --------------------------------------------------------------------------------
Class A (based on net assets of $194,031,546) $18.62
============================================================================
Class C (based on net assets of $6,778,993) $18.20
Net Investment Income
- -------------------------------------------------------------------------
Investment Income
Dividend income (net of foreign taxes of $363,343) $3,302,971
Interest income 713,271
- ----------------------------------------------------------------------------
Total investment income 4,016,242
Expenses
Investment advisory fee 1,971,329
Transfer agency fees and expenses 535,888
Distribution Plan expenses:
Class A 476,884
Class C 63,792
Directors' fees and expenses 54,432
Administrative fees 197,133
Custodian fees 273,542
Registration fees 31,671
Reports to shareholders 154,417
Professional fees 32,280
Miscellaneous 124,809
- --------------------------------------------------------------------------------
Total expenses 3,916,177
Fees paid indirectly (273,542)
- --------------------------------------------------------------------------------
Net expenses 3,642,635
- --------------------------------------------------------------------------------
Net Investment Income 373,607
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
on Investments
- --------------------------------------------------------------------------
Net realized gain (loss) on:
Securities 5,836,828
Foreign currencies (197,552)
- --------------------------------------------------------------------------------
5,639,276
Change in unrealized appreciation or depreciation on:
Securities 11,329,151
Assets and liabilities in foreign currencies (3,777)
- --------------------------------------------------------------------------------
11,325,374
- ----------------------------------------------------------------------------
Net Realized and Unrealized Gain
(Loss) on Investments 16,964,650
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting From Operations $17,338,257
================================================================================
Increase (Decrease) in Net Assets
- --------------------------------------------------------------------
Operations
Net investment income (loss) $373,607 $1,203,211
Net realized gain (loss) 5,639,276 4,007,986
Change in unrealized appreciation or
depreciation 11,325,374 1,101,087
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
Resulting From Operations 17,338,257 6,312,284
- --------------------------------------------------------------------------------
Distributions to shareholders from
Net investment income:
Class A Shares (1,473,251) (2,494)
Class C Shares (93) --
Net realized gain:
Class A Shares (4,675,910) (8,976,058)
Class C Shares (152,211) (251,801)
- --------------------------------------------------------------------------------
Total distributions (6,301,465) (9,230,353)
Capital share transactions:
Shares sold:
Class A Shares 29,276,964 46,195,309
Class C Shares 1,834,205 3,608,598
Reinvestment of distributions:
Class A Shares 5,618,030 8,979,242
Class C Shares 146,275 252,415
Shares redeemed:
Class A Shares (43,143,186) (36,309,658)
Class C Shares (1,605,586) (1,324,206)
- -------------------------------------------------------------------------------
Total capital share transactions (7,873,298) 21,401,700
- --------------------------------------------------------------------------------
Total Increase (Decrease)
in Net Assets 3,163,494 18,483,631
Net Assets
Beginning of year 197,647,045 179,163,414
- ---------------------------------------------------------------------------
End of year (including undistributed net investment
income of $523,742 and $1,474,321,
respectively) $200,810,539 $197,647,045
================================================================================
Capital Share Activity
- --------------------------------------------------------------------------------
Shares sold:
Class A Shares 1,639,291 2,695,201
Class C Shares 104,679 213,899
Reinvestment of distributions:
Class A Shares 326,453 545,587
Class C Shares 8,717 15,334
Shares redeemed:
Class A Shares (2,419,896) (2,120,350)
Class C Shares (91,537) (81,268)
- -----------------------------------------------------------------------------
Total capital share activity (432,293) 1,268,403
===============================================================================
Note A-Significant Accounting Policies
General: The Calvert International Equity Fund (the "Fund"), a series of
Calvert World Values Fund, Inc., is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The operations
of each series are accounted for separately. The Fund offers Class A and Class C
shares of capital stock. Class A shares are sold with a maximum front-end sales
charge of 4.75%. Class C shares, which have no transaction-based sales charge,
have a higher annual expense rate than Class A. Each class has different: (a)
dividend rates due to differences in Distribution Plan expenses and other class
specific expenses, (b) exchange privileges and (c) class specific voting rights.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Unlisted securities and
listed securities for which the last sale price is not available are valued at
the most recent bid price or based on a yield equivalent obtained from the
securities' market maker. Foreign security prices, furnished by quotation
services in the security's local currency, are translated using the current U.S.
dollar exchange rate. The Fund may invest in securities whose resale is subject
to restrictions. Restricted securities and other securities and assets for which
market quotations are not available or deemed inappropriate are valued in good
faith under the direction of the Board of Directors.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date or,
in the case of dividends on certain foreign securities, as soon as the Fund is
informed of the ex-dividend date. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Foreign Currency Transactions: The Fund's accounting records are maintained
in U. S. dollars. For valuation of assets and liabilities on each date of net
asset value determination, foreign denominations are translated into U.S.
dollars using the current exchange rate. Security transactions, income and
expenses are converted at the prevailing rate of exchange on the date of the
event. The effect of changes in foreign exchange rates on securities is included
in the net realized and unrealized gain or loss on securities.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Fund on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles; accordingly,
periodic reclassifications are made within the Fund's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
The Fund paid foreign taxes of $363,343 and recognized foreign source
income of $3,040,298 during the taxable year ended September 30, 1996. Pursuant
to IRCSection 853, the Fund hereby designates $.034 per share of foreign taxes
and $.282 per share of foreign source income as having been paid in the taxable
year ended September 30, 1996. The Fund also designates $2,580,764 as capital
gain dividends for its taxable year ended September 30, 1996.
Expense Offset Arrangement: The Fund has an arrangement with its custodian
bank whereby the custodian's fees are paid indirectly by credits earned on the
Fund's cash on deposit with the bank. Such deposit arrangement is an alternative
to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Fund intends to continue to qualify as a regulated investment
company under the Internal Revenue Code and to distribute substantially all of
its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Directors of the Fund.
For its services, the Advisor receives a monthly fee based on the following
annual rates of average daily net assets: 1.0 % on the first $250 million, .975%
on the next $250 million and .925% on the excess of $500 million.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor
and principal underwriter for the Fund. Distribution Plans, adopted by each
class of shares, allow the Fund to pay the distributor for expenses and services
associated with distribution of shares. The expenses paid may not exceed .35%
and 1.0% annually of average daily net assets of each Class A and Class C,
respectively.
The Distributor received $157,897 as its portion of commissions charged on
sales of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Fund.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Fund for an annual fee, payable monthly,
of the greater of $40,000 or .10% of the average daily net assets of the Fund.
Each Director who is not affiliated with the Advisor receives an annual fee
of $3,000 plus $1,000 for each Board and Committee meeting attended. Additional
fees of up to $10,000 annually may be paid to the Chairperson of special
committees of the Board. Director's fees are allocated to each of the funds
served.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $175,553,459 and $213,929,158, respectively.
The cost of investments owned at September 30, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $13,754,709, of which $18,456,171 related to appreciated
securities and $4,701,462 related to depreciated securities.
Class A Shares
- --------------------------------------------------------------------------------
Net asset value, beginning $17.62 $17.99 $16.35
=============================================================================
Income from investment operations
Net investment income .04 .11 --
Net realized and unrealized gain (loss) 1.53 .38 2.14
- -----------------------------------------------------------------------------
Total from investment operations 1.57 .49 2.14
Distributions from
Net investment income (.13) -- (.03)
Excess of net investment income - -- (.04)
Net realized gains (.44) (.86) (.43)
- -------------------------------------------------------------------------------
Total distributions (.57) (.86) (.50)
Total increase (decrease) in net
asset value 1.00 (.37) 1.64
Net asset value, ending $18.62 $17.62 $17.99
================================================================================
Total return* 9.22% 3.19% 13.44%
================================================================================
Ratios to average net assets:
Net investment income (loss) .23% .68% (.04%)
================================================================================
Total expenses 1.95% 1.93% --
Net expenses 1.81% 1.79% 1.96%
Expenses reimbursed - -- .04%
Portfolio turnover 96% 73% 78%
Average commission rate paid $.03 - -
Net assets, ending (in thousands) $194,032 $191,586 $175,543
Number of shares outstanding,
ending (in thousands) 10,422 10,876 9,755
Class A Shares
- --------------------------------------------------------------------------------
Net asset value, beginning $14.31 $15.00
================================================================================
Income from investment operations
Net investment income .08 .02
Net realized and unrealized gain (loss) 2.04 (.71)
- -------------------------------------------------------------------------------
Total from investment operations . 2.12 (.69)
- -------------------------------------------------------------------------------
Distributions from
Net investment income (.05) --
Net realized gains (.03) --
- --------------------------------------------------------------------------------
Total distributions (.08) --
- --------------------------------------------------------------------------------
Total increase (decrease) in net asset value 2.04 (.69)
- --------------------------------------------------------------------------------
Net asset value, ending $16.35 $14.31
================================================================================
Total return* 14.95% (4.60%)
================================================================================
Ratios to average net assets:
Net investment income (loss) .80% 1.23%(a)
================================================================================
Total expenses -- --
===========================================================================
Net expenses 1.50% 1.01%(a)
================================================================================
Expenses reimbursed .20% .60%(a)
=============================================================================
Portfolio turnover 35% --
Average commission rate paid - -
===========================================================================
Net assets, ending (in thousands) $54,280 $8,440
=============================================================================
Number of shares outstanding, ending (in thousands) 3,319 590
================================================================================
- -------------------------------------------------------------------------------
Class C Shares
- -------------------------------------------------------------------------------
Net asset value, beginning $17.28 $17.86 $18.24
==========================================================================
Income from investment operations
Net investment income (.15) (.05) (.06)
Net realized and unrealized gain
(loss) 1.51 .32 (.32)
- --------------------------------------------------------------------------------
Total from investment operations 1.36 .27 (.38)
- --------------------------------------------------------------------------------
Distributions from
Net realized gains (.44) (.85) -
- ---------------------------------------------------------------------------
Total distributions (.44) (.85) -
- --------------------------------------------------------------------------------
Total increase (decrease) in net
asset value .92 (.58) (.38)
- --------------------------------------------------------------------------------
Net asset value, ending $18.20 $17.28 $17.86
================================================================================
Total return* 8.07% 1.95% (1.27%)
===========================================================================
Net investment income (loss) (.88%) (.47%) (1.16%)(a)
=============================================================================
Total expenses 3.08% 3.12% -
==============================================================================
Net expenses 2.93% 2.99% 3.32%(a)
Expenses reimbursed - .13% .50%(a)
Portfolio turnover 96% 73% 78%
Average commission rate paid $.03 - -
==============================================================================
Net assets, ending (in thousands). $6,779 $6,061$3,620
=============================================================================
Number of shares outstanding,
ending (in thousands) 373 351 203
===============================================================================
To Open an Account:
................................................................................
800-368-2748
Yields and Prices:
...............................................................................
Calvert Information Network
24 hours, 7 days a week
800-368-2745
Service for
Existing Account:
..........................................................................
Shareholders: 800-368-2745
Brokers: 800-368-2746
TDDfor Hearing
Impaired:
..............................................................................
800-541-1524
Branch Office:
................................................................................
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail:
..............................................................................
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Web Site
.............................................................................
Address: http://www.calvertgroup.com
Principal
Underwriter:
................................................................................
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
