September 30, 1998
ANNUAL REPORT
CALVERT WORLD VALUES
INTERNATIONAL EQUITY
FUND
<PAGE>
Calvert World Values International Equity Fund
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Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Web Site
http://www.calvertgroup.com
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
This report is intended to provide fund information to shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
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<PAGE>
TABLE OF CONTENTS
President's Letter 1
Portfolio Manager Remarks 2
Report of Independent Accountants 6
Statement of Net Assets 7
Statements of Operations 12
Statements of Changes in Net Assets 13
Notes to Financial Statements 15
Financial Highlights 18
[picture of Barbara Krumsiek, no caption]
Dear Shareholders:
I'd like to take a minute to share with you our views on the current
investment environment and offer some information you can use to put recent
financial market events in perspective.
Today's investment climate reflects an unprecedented confluence of factors:
1. Global economic turmoil. The financial crisis touched off in Asia has
spread, by way of Russia, to emerging markets in Latin America, Africa and
elsewhere. Weakened economies abroad affect the profit outlook for U.S.
companies.
2. Low interest rates in the U.S. The shakeup of world economies and markets
caused investors to seek shelter in the safest securities, especially U.S.
Treasuries. Increased demand for fixed-income securities has pushed Treasury
yields to historic lows.
3. A high level of volatility. The Standard & Poor's 500 Stock Index posted 17
consecutive quarters of positive returns before surprising investors with
negative returns for the third quarter of 1998. Since the end of that quarter,
the S&P 500 has rallied back and, as of this writing, is in positive territory
again for the year.
No one can assure you there won't be further jolts. However, we believe the
underpinnings of the market are solid. Our forecast calls for slower growth in
the U.S., but not a recession, and continued low interest rates. We are also
encouraged by recent progress to implement solutions that should help to take
the pressure off world markets.
You should know that Calvert Group fund managers are working to capitalize on
opportunities, within appropriate levels of risk for each portfolio. This
challenging environment underscores the value of professional money
management, and we certainly appreciate your trust.
Sincerely,
/s/
Barbara J. Krumsiek
President and CEO
October 20, 1998
<PAGE>
International Equity Fund Portfolio Statistics
September 30, 1998
Investment Performance
6 Months 12 Months
ended ended
9/30/98 9/30/98
Class A (14.93%) (9.29%)
Class B (15.35%) N/A
Class C (15.33%) (10.22%)
MSCI EAFE
Index GD (13.18%) (8.08%)
Lipper International
Funds Average (15.54%) (10.65%)
Ten Largest Stock Holdings
% of Assets
VNU 3.1%
Telecom Italia Mobile 2.4%
Telefonica de Espana 2.4%
Allianz 2.3%
Volkswagen 2.3%
ING Group 2.2%
Cap Gemini 2.2%
Telecom Corp. of New Zealand 2.2%
Christiana Bank 2.2%
Pinault Printemps 2.1%
Total 23.4%
Asset Allocation
Stocks 90%
Bonds 2%
Cash & Cash Equivalents 8%
100%
Investment performance does not reflect the deduction of any front-end or
deferred sales charge.
GD represents gross dividends.
Source: Lipper Analytical Services, Inc.
[picture of Andrew Preston, no caption]
Andrew Preston
of Murray Johnstone International
How would you characterize the investment climate during the period?
The year was marked by roller-coaster returns from different global regions.
Asia saw a relentless collapse, beginning in Thailand and spreading ultimately
to all economies and markets. The contagion then spread via Russia to all the
emerging markets. Europe and the U.S. enjoyed steady growth of corporate
profits and investment returns until late in the year when companies announced
a greater than expected impact on results due to falling sales to the Far East
and increasing price competition from imports.
Your Fund was biased towards Europe but had some exposure to markets which
were under pressure and this impacted returns. By the end of the period, the
Fund's share price had declined (9.29%), compared to a (8.08%) return for the
Morgan Stanley Capital International Europe Australia and Far East (EAFE)
Index.
How is it that financial turmoil in one region spread so quickly and
pervasively?
In Asia, the collapse escalated as investors attempted to minimize their
exposure to the region. This put pressure on the stronger economies and stock
markets even though the authorities were pursuing more prudent fiscal and
monetary policies. Hong Kong, Singapore, Australia and New Zealand all
suffered in this wave of selling. A key issue for the area was the inability
of Japan to prevent its economy from spiraling into recession and deflation.
As the leading direct investor and consumer in the region, this was a major
concern for recovery in Asia, and indeed, for the health of the global economy.
<PAGE>
The Japanese government introduced several packages to stimulate growth and
pursued a policy of very low interest rates but in a climate where investors
had little incentive to borrow and consumers had no incentive to spend, this
strategy had little effect. Adding to the troubles in Japan was the mountain
of bad debts burdening the banking system and the snail's pace at which the
authorities were tackling this problem.
The Russian collapse added a new dimension to the crisis which until then had
been confined to Asia. Although the size of the Russian stock market was not
significant in terms of world markets, the health of the economy was important
in view of trade and investment links into Europe as well as outstanding debt.
With the threat of default, investors began to fear that shelter might not be
found in any emerging market. The Latin American markets became the next
victims and, in spite of their sound fundamentals, were sold for the relative
safety of U.S. stocks and bonds. We believe that the economies of Latin
America are stronger than most other regions (5% growth and improving earnings
are unusual attributes in these times) but pressure on markets and currencies
had the inevitable result that short-term interest rates were hiked to
crippling levels.
The area of strength during the year was Europe. Buoyed by domestic growth,
the European markets were largely immune to events in Asia and Russia until
late in the period. The consumer was enjoying the weak pricing environment and
manufacturing had yet to adjust to the lower level of demand. Other factors
were also positive in Europe: progress towards monetary union led to lower
interest rates while rationalization in manufacturing enhanced corporate
profits. Europe generated steady returns until late in the year when, as in
the U.S., earnings were belatedly downgraded for 1998 and 1999. Stock prices
corrected but following their spectacular rise earlier in the year, the
European components of the Morgan Stanley Capital International EAFE Index
still returned 8.4% for the 12 months ended September 30, 1998. European
investments in the Fund's portfolio outperformed with a return of 13.4%.
Portfolio Statistics
September 30, 1998
Average Annual Total Returns
Class A Shares
as of 9/30/98
One year (13.60%)
Five year 6.05%
Since inception 6.38%
(7/02/92)
Class B Shares
as of 9/30/98
Since inception (19.58%)
(3/31/98)
Class C Shares
as of 9/30/98
One year (11.11%)
Since inception 3.39%
(3/01/94)
Performance Comparison
Comparison of change in value of $10,000 investment. (Source:Lipper Analytical
Services, Inc.)
Line graph here from 8/1/1992 to 9/30/1998:
Calvert World Values Int'l Equity Fund - $14,939
MSCI EAFE Index GD - $17,389
Lipper International Fund Index - $17,671
Total returns assume reinvestment of dividends and reflect the deduction of
the Fund's maximum front-end or deferred sales charge. 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
another class of shares would be different. Past performance is no guarantee
of future results.
<PAGE>
Portfolio Statistics
Country Allocation
% of Equity Securities
9/30/98 9/30/97
Argentina 1.4% 4.1%
Australia -- 6.6%
Belgium 3.6% 2.2%
Brazil 1.1% --
Chile 1.5% 2.1%
Costa Rica .1% .1%
Finland -- 2.9%
France 11.7% 7.2%
Germany 10.3% 5.2%
Hong Kong 2.2% 5.5%
Ireland 1.9% 2.8%
Italy 4.7% 8.7%
Japan 15.0% 16.8%
Mexico 1.1% 3.6%
Netherlands 9.0% 2.9%
New Zealand 2.4% 2.5%
Norway 2.4% --
Singapore 2.5% 2.3%
South Africa .9% 2.2%
Spain 3.9% 4.1%
Switzerland 3.4% 2.7%
U.K. 19.7% 15.2%
U.S. 1.2% .3%
100% 100%
Top Five Economic Sectors
% of Equity Holdings
Banks 15.09%
Financial Services 13.81%
Business Services 13.06%
Retail 8.88%
Capital Goods 7.29%
What impact have these events had on the Fund's strategy and performance?
There was a limited direct impact on performance from the crisis in Asia since
our strategy from early in the year was to reduce exposure to the region. In
September 1997 exposure to Asia (excluding Japan) was 16.6% of assets, but
after successive withdrawals our position had been reduced to 1.0% by August
1998. We reduced the overweight exposure to the Hong Kong market then
eliminated our Hong Kong and Australian positions in May 1998, when the
pressure shifted from equity markets to currencies. Both markets and
currencies in Asia came under pressure and stocks were sold at prices some 30%
above their levels at the end of September.
The assets were shifted to Europe which outperformed Asia over the year. The
portfolio was not directly exposed to the Russian market but began to feel the
effects of the collapse in July and August, when companies outside Russia
started to admit they had exposure to the region. The impact was greatest in
financial stocks which were perceived to be at risk through loans outstanding.
We began to sell Credit Suisse on these grounds and also took profits in
Zurich Allied, the Swiss insurance company.
Financial stocks took another hit late in the year when Long Term Capital
Management (LTCM), a U.S.-based hedge fund, failed. Many of its investors were
later revealed to be banks. European financials, in particular had been strong
performers over the previous months due to declining interest rates and
consolidation in the industry. Events in Russia and the collapse of LTCM led
to a swift turn around in the stock prices which was not confined to financial
stocks. Weakening corporate profits, across the board, stimulated broad
profit-taking in equities. Not only did this lead to the removal of the
"froth" in the market, but it provided a necessary correction following the
bull run which had moved well into its third year.
<PAGE>
Could you give us an update on some of the Fund's social and environmental
activities?
We continue to encourage corporate responsibility through our investments in a
number of companies with positive social and environmental policies and
practices. These include the Argentina-based bank, Banco Frances del Rio de La
Plata S.A. This bank broadened its focus from providing service to large
corporations to servicing the "middle" market and consumers. The bank has a
special consumer loan division that offers products to middle- and low-income
persons. We also invest in one of Norway's largest banks, Christiania Bank.
Christiania places strong emphasis on employee training and has also
established a Code of Ethics which applies to all employees.
In the UK, we like the retailer Arcadia Group, which is one of the few in the
UK apparel industry that has a stated human rights policy guiding its business
with its suppliers around the world. A major concern with manufacturers and
retailers of apparel is the working conditions under which their products are
made around the world. Arcadia's Sourcing Policy states that it will only buy
products from suppliers and manufacturers that ensure acceptable working
conditions.
The Fund also continues to engage in shareholder activism. Your Board of
Directors has adopted a policy on investing in companies with exposure to
Burma. The policy calls for the Fund's social researchers to engage in a
dialogue with companies doing business there and urge them to adopt more
appropriate and positive practices. On a select basis, we may request that
companies cease operations in Burma. In addition, Calvert Group and Murray
Johnstone visited a number of companies in May 1998 to meet with senior
management and tour factories. During our visits, we stressed the importance
of reporting on environmental compliance, developing an EEO policy, hiring and
promoting women and ethnic minorities and being responsible to local
communities.
What's your outlook and how are you positioning the Fund to benefit?
Looking beyond the LTCM issue, the sell-off during the third quarter of 1998
was precipitated by the belated downgrading of profit expectations and the
fear of deflation, stemming in particular from areas like Japan. Markets have
reacted to this, corrected from their high valuations and now appear to be
close to reasonable valuations. But, just as they have the tendency to
overshoot on the upside, so they will overshoot on the downside as long as
areas of uncertainty persist. Market pundits are falling into one of two
camps: either the world will enter a period of deflation and asset prices will
continue to slide or the cumulative intelligence and experience of world
leaders will begin to turn this around. If the later proves to be the case,
there are some excellent bargains available now.
We take the optimistic view. We believe the combination of recent events and
the broad slowdown in economic activity will lead to lower interest rates by
the end of the year and possibly sooner. Furthermore, we believe the Japanese
authorities are finally making progress. Japan is the key to recovery in Asia
and, ultimately, the rest of the world. When these policies begin to take hold
the early beneficiaries in terms of markets will be those which led the
downturn: Japan itself and some markets in the Far East, including Hong Kong,
Singapore, Australia, and New Zealand. With this scenario in mind, we have
begun to increase the Fund's exposure to these regions.
October 14, 1998
<PAGE>
Report of Independent Accountants
To the Board of Directors of Calvert World Values Fund, Inc. and Shareholders
of International Equity Fund:
In our opinion, the accompanying statement of net assets and the related
statement of operations, statement of changes in net assets and financial
highlights present fairly, in all material respects, the financial position of
International Equity Fund (one of the portfolios comprising Calvert World
Values Fund, Inc., hereafter referred to as the "Fund"), at September 30,
1998, and the results of its operations for the year then ended, the changes
in its net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles. Theses financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at September 30, 1998 by
correspondence with custodians provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 6, 1998
<PAGE>
STATEMENT OF NET ASSETS
September 30, 1998
Equity Securities - 91.5% Shares Value
Argentina - 1.2%
Banco Frances del Rio la Plat (ADR) 130,000 $2,518,750
2,518,750
Belgium - 3.3%
Fortis 16,597 4,093,863
UCB 530 2,708,445
6,802,308
Brazil - 1.0%
Unibanco (GDR) 150,000 2,025,000
2,025,000
Chile - 1.4%
Compania de Telecomunicaciones
de Chile (ADR) 150,000 2,868,750
2,868,750
Costa Rica - 0.1%
Pro Fund International + 1,910 1,910
Pro Fund International (Preferred) + 189,038 189,038
190,948
France - 10.7%
AXA UAP 23,042 2,110,887
Banque National de Paris 47,572 2,548,591
Cap Gemini 28,814 4,414,874
Equant* 25,316 1,164,536
Legrand 8,888 2,261,759
Pinault-Printemps 30,000 4,339,441
Sita 13,537 2,975,829
Suez Lyonnaise des Eaux 5,312 904,969
Vivendi 6,048 1,205,323
21,926,209
Germany - 9.5%
Allianz 15,266 4,735,344
Douglas Holdings 71,250 4,104,464
Douglas Holdings AG* 7,125 413,860
Linde 5,450 3,181,982
SAP . . . . . . 5,300 2,247,013
Volkswagen 64,270 4,637,585
19,320,248
Hong Kong - 2.0%
Johnson Electronic Holdings* 1,000,000 1,897,068
Hutchison Whampoa 430,000 2,264,093
4,161,161
<PAGE>
Equity Securities (Cont'd) Shares Value
Ireland - 1.8%
Allied Irish Banks 177,307 $2,633,526
Bank of Ireland 56,070 1,001,861
3,635,387
Italy - 4.3%
Credito Italiano 928,086 3,868,313
Telecom Italia Mobile 846,491 4,933,356
8,801,669
Japan - 13.7%
Canon Sales 1,000 12,950
Ezaki Glico Co. 252,000 1,265,488
Fuji Machine Manufacturing 86,000 2,253,797
Fuji Photo Film 88,000 3,027,707
Fujitsu 296,000 2,556,861
Gunze Limited* 1,180,000 2,530,947
Matsushita Comm 75,000 2,690,238
Nippon Telegraph & Telephone Corp. 380 2,767,834
Snow Brand Milk* 450,000 1,360,492
Sony Corp. 36,500 2,535,668
Sumitomo Bank 304,000 2,114,125
Tokyo Steel Manufacturing 634,000 2,223,096
Yamanouchi Phamaceuticals 124,000 2,668,716
28,007,919
Mexico - 1.0%
Banpais (ADR)* 100,000 0
Cifra (ADR)* 83,767 1,019,336
Grupo Industrial Durango (ADS)* 177,000 962,438
1,981,774
Netherlands - 8.2%
Buhrmann* 66,515 1,239,644
Elsevier 111,419 1,656,480
ING Groep 98,122 4,423,266
Kon KPN 57,613 1,780,379
TNT Post Group 57,613 1,468,354
VNU 152,050 6,281,089
16,849,212
New Zealand - 2.2%
Telecom Corporation of New Zealand* 1,150,000 4,402,707
4,402,707
Norway - 2.2%
Christiana Bank 1,396,806 4,401,620
4,401,620
Singapore - 2.3%
City Developments 1,080,000 2,367,299
Raffles Medical Group 1,000,000 254,739
Singapore Press 240,000 1,990,521
4,612,559
<PAGE>
Equity Securities (Cont'd) Shares Value
South Africa - 0.8%
Community Growth Fund 768,077 $232,300
Liberty Life Association 66,000 1,004,976
Standard Bank Investment 200,000 411,722
1,648,998
Spain - 3.6%
Banco Santander* 93,164 1,411,228
Banco Santander (Rights) 93,164 656
Banco Santander (New Shares) 1,863 28,220
Superdiplo* 42,789 1,113,928
Telefonica de Espana 131,822 4,810,920
7,364,952
Switzerland - 3.1%
Sulzer 3,883 1,926,873
Zurich Allied* 8,709 4,334,311
6,261,184
United Kingdom - 18.0%
Abbey National* 138,500 2,387,602
Anglian Group 398,700 1,226,872
Anglian Water 146,720 2,364,677
Arcadia Group 198,237 808,854
BPB 218,700 877,476
Bank of Scotland 200,000 1,909,211
Barclays 106,400 1,738,358
Beazer Group 343,000 863,038
Bellway 177,000 767,340
Cadbury Schweppes 174,600 2,261,900
FirstGroup PLC 342,100 2,483,449
Johnson Matthey 211,000 1,091,552
Kingfisher 368,800 3,423,401
London International Group 343,900 923,769
Mayflower Corp. 309,200 730,682
Misys 250,985 2,214,570
Norwich Union 299,600 2,325,181
SIG 223,400 402,590
Safeway 270,900 1,269,986
Smith Kline Beecham 246,700 2,713,612
Somerfield 258,300 1,833,391
Quadrant Healthcare 200,000 244,814
Unigate 161,700 1,231,579
Vodafone Group* 55,100 639,803
36,733,707
United States - 1.1%
Calypte Biomedical Series E (Preferred) + 50,000 87,500
Global Telesystems Group, Inc.* 46,250 1,560,938
Proton Energy Systems + 227,273 250,000
Soluz, Inc. + 4,000 40,000
Zero Emissions Tech, Inc. (Preferred) + 90,909 250,000
2,188,438
Total Equity Securities (Cost $181,520,544) 186,703,500
<PAGE>
Principal
Corporate Notes - 1.8% Amount Value
Bolivia - 0.0%
Banco Solidario $50,000 $48,956
48,956
United States - 1.8%
Accion International 100,000 95,635
Cascadia Revolving Loan Fund 200,000 194,834
Catholic Relief Services 200,000 190,184
Community Equity Investments 50,000 45,000
Ecumenical Development Corporation USA 150,000 147,275
Enterprise Loan Fund 100,000 98,434
Ethiopian Community Development Council 125,000 120,004
Federation of Appalachian Housing
Enterprises Corp. 200,000 197,120
Foundation For International Community
Assistance 150,000 145,436
Freedom From Hunger 100,000 96,344
Greater New Haven Community Loan Fund 75,000 71,650
Impact Seven 300,000 286,599
Mayer Laboratories, Inc. 150,000 150,000
Mcauley Institute 85,000 83,776
Mennonite Economic Development
Association 200,000 190,184
Minnesota Non-Profit Assistance Fund 100,000 97,187
New Mexico Community Loan Fund 200,000 192,782
Program for Appropriate Technology and
Health 300,000 291,561
Proton Energy Systems. 88,000 88,000
Rural Community Assistance Co. 200,000 191,424
Self Help Credit Union 100,000 98,861
Shared Interest 100,000 98,305
Societe D'Investissement et de
Developpement International 250,000 240,140
Soluz Dominicana, Inc. 150,000 110,000
South Shore Bank 200,000 197,386
3,718,121
Total Corporate Notes (Cost $3,883,000) + 3,767,077
Time Deposits - 4.5%
Capital Markets, London, 5.50%, 10/1/98 9,076,916 9,076,916
Total Time Deposits (Cost $9,076,916) 9,076,916
TOTAL INVESTMENTS (Cost $194,480,460) - 97.8% 199,547,493
Other assets in excess of liabilities - 2.2% 4,566,483
Net Assets - 100% $204,113,976
<PAGE>
Net Assets Consist of: Value
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, B and C combined:
Class A : 10,509,698 shares outstanding $175,052,071
Class B : 47,588 shares outstanding 1,028,949
Class C : 451,123 shares outstanding 8,072,550
Undistributed net investment income 722,103
Accumulated net realized gain (loss) on investments
and foreign currencies 14,228,954
Net unrealized appreciation (depreciation) on investments
and assets and liabilities in foreign currencies 5,009,349
Net Assets $204,113,976
Net Asset Value Per Share
Class A (based on net assets of $195,191,918) $18.57
Class B (based on net assets of $879,499) $18.48
Class C (based on net assets of $8,042,559) $17.83
+ Restricted securities representing 2.2% of net assets.
* Non-income producing.
See notes to financial statements.
<PAGE>
Statement of Operations
Year Ended September 30, 1998
Net Investment Income
Investment Income
Dividend income (net of foreign taxes of $583,324) $4,202,197
Interest income 626,643
Total investment income 4,828,840
Expenses
Investment advisory fee 2,338,864
Transfer agency fees and expenses 551,534
Distribution Plan expenses:
Class A 562,144
Class B 2,365
Class C 87,923
Directors' fees and expenses 54,541
Administrative fees 233,886
Custodian fees 397,979
Registration fees 47,743
Reports to shareholders 92,145
Professional fees 25,417
Miscellaneous 61,261
Reimbursement from Advisor (6,842)
Total expenses 4,448,960
Fees paid indirectly (146,914)
Net expenses 4,302,046
Net Investment Income 526,794
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Securities 20,108,738
Foreign currencies 220,401
20,329,139
Change in unrealized appreciation or (depreciation) on:
Investments and Foreign Securities (41,220,669)
Assets and liabilities in foreign currencies (60,245)
(41,280,914)
Net Realized and Unrealized Gain
(Loss) on Investments (20,951,775)
Increase (Decrease) in Net Assets
Resulting From Operations $(20,424,981)
See notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
Year Ended Year Ended
September 30, September 30,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income $526,794 $1,023,532
Net realized gain (loss) 20,329,139 8,202,967
Change in unrealized appreciation
or (depreciation) (41,280,914) 32,535,176
Increase (Decrease) in Net Assets
Resulting From Operations (20,424,981) 41,761,675
Distributions to shareholders from
Net investment income:
Class A Shares (561,623) (524,960)
Class B Shares - -
Class C Shares (98) (5)
Net realized gain:
Class A Shares (13,935,050) (4,308,311)
Class B Shares - -
Class C Shares (566,765) (158,527)
Total distributions (15,063,536) (4,991,803)
Capital share transactions:
Shares sold:
Class A Shares 74,805,451 32,021,552
Class B Shares 1,055,551 -
Class C Shares 2,186,794 1,999,316
Reinvestment of distributions:
Class A Shares 13,185,790 4,436,444
Class B Shares - -
Class C Shares 536,723 150,494
Shares redeemed:
Class A Shares (84,138,384) (40,829,241)
Class B Shares (26,602) -
Class C Shares (1,970,101) (1,391,705)
Total capital share transactions 5,635,222 (3,613,140)
Total Increase (Decrease) in
Net Assets (29,853,295) 33,156,732
Net Assets
Beginning of year 233,967,271 200,810,539
End of year (including undistributed net
investment income of $722,103 and
$536,630, respectively) $204,113,976 $233,967,271
See notes to financial statements.
<PAGE>
Year Ended Year Ended
September 30, September 30,
Capital Share Activity 1998 1997
Shares sold:
Class A Shares 3,550,511 1,591,043
Class B Shares 48,885 -
Class C Shares 108,077 102,735
Reinvestment of distributions:
Class A Shares 712,725 236,367
Class B Shares - -
Class C Shares 29,985 8,215
Shares redeemed:
Class A Shares (3,960,103) (2,042,418)
Class B Shares (1,297) -
Class C Shares (98,379) (72,077)
Total capital share activity 390,404 (176,135)
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A - Significant Accounting Policies
General: The Calvert World Values 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
three classes of shares of capital stock. Class A shares are sold with a
maximum front-end sales charge of 4.75%. Effective April 1, 1998, the Fund
began to offer Class B shares of capital stock. Class B shares are sold
without a front-end sales charge. With certain exceptions, the Fund will
impose a deferred sales charge at the time of redemption, depending on how long
you have owned the shares. Effective June 1, 1998, the Fund converted its
existing Class C shares to new Class C shares. Class C shares are sold without
a front-end sales charge. With certain exceptions, the Fund will impose a
deferred sales charge on shares sold within one year. Class B shares and Class
C shares have a higher level of expenses than Class A shares, including higher
Distribution Plan expenses. 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. Investments for which market quotations are not
available or deemed inappropriate are valued in good faith under the direction
of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and
quantitative information available. These factors are subject to change over
time and are reviewed periodically. The values assigned to fair value
investments are based on available information and do not necessarily
represent amounts that might ultimately be realized, since such amounts depend
on future developments inherent in long-term investments. Further, because of
the inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market of
the investments existed, and the differences could be material.
At September 30, 1998, $4,585,525 or 2.2% of net assets, were valued by 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. Investment income,
expenses and realized and unrealized gains and losses are allocated to
separate classes of shares based upon the relative net assets of each class.
<PAGE>
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 translated 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.
Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reported
period. Actual results could differ from those estimates.
Expense Offset Arrangement: The Fund has an arrangement with its custodian
bank whereby the custodian's and transfer agent's fees may be 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. Under the terms of the agreement, $252,145 was payable at year end.
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%, 1.0% and 1.0% annually of average daily net assets of each Class
A, Class B and Class C, respectively. Under the terms of the agreement,
$49,007 was payable at year end.
The Distributor received $126,829 as its portion of commissions charged on
sales of the Fund's shares.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, is the
shareholder servicing agent for the Fund. Under the terms of the agreement,
$11,981 was payable at year end.
<PAGE>
National Financial Data Services, Inc., is the transfer and dividend
disbursing agent.
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. Under
the terms of the agreement, $17,361 was payable at year end.
Each Director who is not affiliated with the Advisor receives an annual fee of
$4,000 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 $185,222,612 and $207,168,805, respectively.
The cost of investments owned at September 30, 1998 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $5,067,033, of which $35,822,310 related to
appreciated securities and $30,755,277 related to depreciated securities.
Note D - Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount of $50
million ($25 million committed and $25 million uncommitted), to be accessed by
the Funds for temporary or emergency purposes only. Borrowings under this
facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. a commitment fee of .10% per annum will be incurred on the unused
portion of the committed facility which will be allocated to all participating
funds. This fee is paid quarterly in arrears. The Fund had no loans
outstanding pursuant to this line of credit at September 30, 1998.
- --------------------------------------------------------------------------------
Tax Information (Unaudited)
- --------------------------------------------------------------------------------
The Fund paid foreign taxes of $583,324 and recognized foreign source income
of $4,785,521. Pursuant to IRC section 853, the Fund hereby designates $.53
per share of foreign taxes and $.435 per share of foreign source income as
having been paid for taxable year ended September 30, 1998.
The Fund also designates $5,833,696 as capital gain dividends paid during
fiscal year ended September 30, 1998. Of the amount designated, 26.53% is
taxable at 28% and 73.47% is taxable at 20%.
<PAGE>
Financial Highlights
Years Ended September 30,
Class A Shares 1998 1997 1996
Net asset value, beginning $22.06 $18.62 $17.62
Income from investment operations
Net investment income (.06) .10 .04
Net realized and unrealized gain (loss) (2.11) 3.81 1.53
Total from investment operations (2.05) 3.91 1.57
Distributions from
Net investment income (.06) (.05) (.13)
Excess of net investment income - - -
Net realized gain (loss) (1.38) (.42) (.44)
Total distributions (1.44) (.47) (.57)
Total increase (decrease) in net asset value (3.49) 3.44 1.00
Net asset value, ending $18.57 $22.06 $18.62
Total return* (9.29%) 21.44% 9.22%
Ratios to average net assets:
Net investment income (loss) .27% .51% .23%
Total expenses+ 1.86% 1.91% 1.95%
Net expenses 1.80% 1.76% 1.81%
Expenses reimbursed - - -
Portfolio turnover 84% 58% 96%
Net assets, ending (in thousands) $195,192 $225,169 $194,032
Number of shares outstanding,
ending (in thousands) 10,510 10,207 10,422
Years Ended September 30,
Class A Shares 1995 1994
Net asset value, beginning $17.99 $16.35
Income from investment operations
Net investment income .11 -
Net realized and unrealized gain (loss) .38 2.14
Total from investment operations .49 2.14
Distributions from
Net investment income - (.03)
Excess of net investment income - (.04)
Net realized gains (.86) (.43)
Total distributions (.86) (.50)
Total increase (decrease) in net asset value (.37) 1.64
Net asset value, ending $17.62 $17.99
Total return* 3.19% 13.44%
Ratios to average net assets:
Net investment income (loss) .68% (.04%)
Total expenses+ 1.93% N/A
Net expenses 1.79% 1.96%
Expenses reimbursed - .04%
Portfolio turnover 73% 78%
Net assets, ending (in thousands) $191,586 $175,543
Number of shares outstanding,
ending (in thousands) 10,876 9,755
<PAGE>
Financial Highlights
Period Ended
September 30,
Class B Shares 1998^^
Net asset value, beginning $21.83
Income from investment operations
Net investment income (.05)
Net realized and unrealized gain (loss) (3.30)
Total from investment operations (3.35)
Total increase (decrease) in net asset value (3.35)
Net asset value, ending $18.48
Total return* (15.35%)
Ratios to average net assets:
Net investment income (loss) (.99%)(a)
Total expenses+ 3.22%(a)
Net expenses 3.16%(a)
Expenses reimbursed 2.89%(a)
Portfolio turnover 84%
Net assets, ending (in thousands). $879
Number of shares outstanding,
ending (in thousands) 48
<PAGE>
Financial Highlights
Years Ended September 30,
Class C Shares 1998 1997 1996
Net asset value, beginning $21.39 $18.20 $17.28
Income from investment operations
Net investment income (.13) (.07) (.15)
Net realized and unrealized gain (loss) (2.05) 3.68 1.51
Total from investment operations (2.18) 3.61 1.36
Distributions from
Net realized gain (loss) (1.38) (.42) (.44)
Total distributions (1.38) (.47) (.57)
Total increase (decrease) in net asset value (3.56) 3.19 .92
Net asset value, ending $17.83 $21.39 $18.20
Total return* (10.22%) 20.22% 8.07%
Ratios to average net assets:
Net investment income (loss) (.79%) (.47%) (.88%)
Total expenses+ 2.91% 2.91% 3.08%
Net expenses 2.85% 2.76% 2.93%
Expenses reimbursed - - -
Portfolio turnover 84% 58% 96%
Net assets, ending (in thousands) $8,043 $8,799 $6,779
Number of shares outstanding,
ending (in thousands) 451 411 373
Years Ended September 30,
Class C Shares 1995 1994^
Net asset value, beginning $17.86 $18.24
Income from investment operations
Net investment income (.05) (.06 )
Net realized and unrealized gain (loss) .32 (.32)
Total from investment operations .27 (.38)
Distributions from
Net realized gains (.85) -
Total distributions (.85) -
Total increase (decrease) in net asset value (.58) (.38)
Net asset value, ending $17.28 $17.86
Total return* 1.95% (1.27%)
Ratios to average net assets:
Net investment income (loss) (.47%) (1.16%)(a)
Total expenses+ 3.12% N/A
Net expenses 2.99% 3.32%(a)
Expenses reimbursed .13% .50%(a)
Portfolio turnover 73% 78%
Net assets, ending (in thousands) $6,061 $3,620
Number of shares outstanding,
ending (in thousands) 351 203
(a) Annualized
* Total return is not annualized for periods less than one year and does not
reflect deduction of any front-end or deferred sales charge.
+ Effective September 30,1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the ratio
of net expenses.
^ From March 1, 1994 inception.
^^ From April 1, 1998 inception.
N/A Disclosure not applicable to prior periods.
<PAGE>
This page is reserved for any comments and questions.
<PAGE>
September 30, 1998
ANNUAL REPORT
CALVERT CAPITAL
ACCUMULATION FUND
<PAGE>
Calvert Capital Accumulation Fund
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Bethesda, Maryland 20814
Calvert Group Information
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
TDD for Hearing Impaired
800-541-1524
Branch Office
4550 Montgomery Avenue
Suite 1000 North
Bethesda, Maryland 20814
Registered, Certified
or Overnight Mail
Calvert Group
c/o NFDS, 6th Floor
1004 Baltimore
Kansas City, MO 64105-1807
Web Site
http://www.calvertgroup.com
Please check the inside back cover for
Calvert Group's Family of Funds.
This report is intended to provide fund information to shareholders. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a prospectus.
TABLE OF CONTENTS
President's Letter 1
Portfolio Manager Remarks 2
Report of Independent Accountants 4
Statement of Net Assets 5
Statements of Operations 8
Statements of Changes in net Assets 9
Notes to Financial Statements 10
Financial Highlights 13
[picture of Barbara Krumsiek, no caption]
Dear Shareholders:
I'd like to take a minute to share with you our views on the current
investment environment and offer some information you can use to put recent
financial market events in perspective.
Today's investment climate reflects an unprecedented confluence of factors:
1. Global economic turmoil. The financial crisis touched off in Asia has
spread, by way of Russia, to emerging markets in Latin America, Africa and
elsewhere. Weakened economies abroad affect the profit outlook for U.S.
companies.
2. Low interest rates in the U.S. The shakeup of world economies and markets
caused investors to seek shelter in the safest securities, especially U.S.
Treasuries. Increased demand for fixed-income securities has pushed Treasury
yields to historic lows.
3. A high level of volatility. The Standard & Poor's 500 Stock Index posted 17
consecutive quarters of positive returns before surprising investors with
negative returns for the third quarter of 1998. Since the end of that quarter,
the S&P 500 has rallied back and, as of this writing, is in positive territory
again for the year.
No one can assure you there won't be further jolts. However, we believe the
underpinnings of the market are solid. Our forecast calls for slower growth in
the U.S., but not a recession, and continued low interest rates. We are also
encouraged by recent progress to implement solutions that should help to take
the pressure off world markets.
You should know that Calvert Group fund managers are working to capitalize on
opportunities, within appropriate levels of risk for each portfolio. This
challenging environment underscores the value of professional money
management, and we certainly appreciate your trust.
Sincerely,
/s/
Barbara J. Krumsiek
President and CEO
October 20, 1998
<PAGE>
Capital Accumulation Fund Portfolio Statistics
September 30, 1998
Investment Performance
6 Months 12 Months
ended ended
9/30/98 9/30/98
Class A (10.39%) 3.37%
Class B (10.95%) N/A
Class C (10.66%) 2.52%
S&P Midcap 400
Index TR (6.93%) 9.08%
Lipper Mid-Cap
Funds Average (19.02%) (11.95%)
Ten Largest Stock Holdings
% of Net Assets
BMC Software, Inc. 3.93%
Paychex, Inc. 3.73%
Sterling Software, Inc. 3.73%
Solectron Corp. 3.54%
Sterling Commerce, Inc. 3.34%
ALZA Corp. 3.25%
Network Associates, Inc. 3.12%
Altera Corp. 3.02%
G&K Services, Inc., Class A 2.90%
Axciom Corp. 2.88%
Total 33.44%
Asset Allocation
Stocks 97%
Cash or Cash Equivalents 3%
Total 100%
Investment performance does not reflect the deduction of any front-end or
deferred sales charge.
TR represents total return.
Source: Lipper Analytical Services, Inc.
[picture of Ed Brown, no caption]
Ed Brown of Brown Capital Management Company
How would you characterize the investment climate during the past year?
For the 12 months, the climate for investing in U.S. stocks was generally
hospitable, evidenced by modest inflation, relatively stable interest rates
and sustained corporate profits growth. Despite this favorable environment,
investor psychology and confidence were dampened by domestic political
uncertainty and economic problems in Asia and Russia. As a result, the past 12
months were marked by increasing volatility and, in our opinion,
indiscriminate selling of companies with solid fundamentals.
For the year, the Standard & Poor's 400 Midcap Index returned (6.07%),
compared to a 9.08% return for the large-company proxy, the Standard & Poor's
500 Stock Index. The Midcap Index's returns were driven by computer software
companies and health care-related distributors, on the positive side, and by
electronic components and equipment, health services and leisure services on
the negative side.
What steps did managers take to enhance returns and reduce risks?
We held to our strategy, which is designed to generate superior long-term
results regardless of the investment climate. We utilize a bottom-up,
fundamental approach to finding the most promising opportunities and use a
proprietary valuation methodology to identify stocks selling at reasonable
prices. As another way of seeking to maximize return and minimize risk, we
construct the portfolio around our "best ideas," selecting those companies
that stand to benefit from the underlying themes and trends we see at work in
the stock market.
<PAGE>
During this past year of increased market volatility, we have re-evaluated all
Fund holding to make sure we have the same high level of confidence we had
when we purchased the stock. And, as stock prices for medium-sized companies
fell to even more attractive levels relative to large-companies, we sought to
selectively increase our exposure to this sector. We believe that confidence
and conviction are the key to making sound investment decisions, particularly
when the markets are highly volatile, and these qualities form the foundation
of our strategy.
How has the Fund performed relative to its peer group?
We're pleased to have generated a positive return for the 12-month period and
outperformed both the S&P 400 Midcap Index and the Lipper Average of similar
funds. The majority of the relative outperformance can be attributed to stock
selection, an overweighted position in the technology industry and our
exposure to large companies. Large-company stocks led small-company stocks
especially in the first half of the Fund's fiscal year. This sector also
proved to be most susceptible to market volatility.
What's your outlook for the U.S. market?
We view the market as reasonably valued, based on expectations for continued
low interest rates and a benign level of inflation. While we do not expect
economic conditions in the U.S. to deteriorate, problems overseas could
adversely affect the fundamental growth prospects for U.S.-based companies.
More specifically, the Fund has little direct exposure to international
securities, but share prices for our holdings will likely remain volatile as
the financial crises in Asia, Russia and now Latin America play out. Our
long-term view of the market's fundamentals is constructive.
October 14, 1998
Portfolio Statistics
September 30, 1998
Average Annual Total Returns
Class A Shares
One year (1.51%)
Since inception 16.81%
(10/31/94)
Class B Shares
Since inception (15.44%)
(3/31/98)
Class C Shares
One year 1.52%
Since inception 17.35%
(10/31/94)
Performance Comparison
Comparison of change in value of $10,000 investment. (Source: Lipper
Analytical Services, Inc.)
Line graph here 11/1/94 - 9/98:
Calvert Capital Accumulation Fund (A) - $18,391
Calvert Capital Accumulation Fund (B) - 18,723
Lipper Mid-Cap Fund Index - $16,321
S&P Mid-Cap 400 Index - $18,532
Top Five Economic Sectors
% of Equity Holdings
Technology 31.19%
Business Equipment and Services 19.55%
Health Care 12.91%
Financial Services 12.24%
Retail 6.98%
Total returns assume reinvestment of dividends and reflect the deduction of
the Fund's maximum front-end or deferred sales charge. No sales charge has
been applied to the index used for comparison. Past performance is no
guarantee of future results.
<PAGE>
Report of Independent Accountants
To the Board of Directors of Calvert World Values Fund, Inc. and Shareholders
of Calvert Capital Accumulation Fund:
In our opinion, the accompanying statement of net assets and the related
statement of operations, statement of changes in net assets and financial
highlights present fairly, in all material respects, the financial position of
Calvert Capital Accumulation Fund, (hereafter referred to as the "Fund"), at
September 30, 1998, and the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended and the financial highlights for each of the periods indicated therein,
in conformity with generally accepted accounting principles. Theses financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1998 by correspondence with
custodians provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
November 6, 1998
<PAGE>
Statement of Net Assets
September 30, 1998
Equity Securities - 97.1% Shares Value
Communications Equipment - 3.0%
ADC Telecommunications, Inc. * 71,900 $1,518,888
Northern Telecom, Ltd. 33,360 1,067,520
2,586,408
Computer - Peripherals - 2.7%
EMC Corp. * 39,378 2,251,929
Computer - Software and Services - 21.3%
BMC Software, Inc. * 55,500 3,333,469
Compuware Corp. * 22,100 1,301,138
Microsoft Corp. * 12,100 1,331,756
Network Associates, Inc. * 74,703 2,651,956
Oracle Corp. * 29,480 858,605
Parametric Technology Corp. * 159,900 1,608,994
Platinum Technology, Inc. * 57,700 1,038,600
Sterling Commerce, Inc. * 81,931 2,836,861
Sterling Software, Inc. * 114,900 3,166,931
18,128,310
Distributors - Food and Health - 2.8%
Cardinal Health, Inc. 23,150 2,390,238
Electrical Equipment - 4.6%
Belden, Inc. 66,600 894,938
Solectron Corp. * 62,700 3,009,600
3,904,538
Electronics - Semiconductors - 3.0%
Altera Corp. * 72,900 2,560,612
Financial - Diversified - 2.5%
SLM Holding Corp. 64,600 2,095,462
Health Care - Hospital Management - 2.7%
Health Management Associates, Inc.,
Class A* 126,400 2,306,800
Health Care - Products and Supplies - 1.6%
Boston Scientific Corp. * 26,500 1,361,438
Health Care - Special Services - 5.4%
ALZA Corp. * 63,600 2,758,650
Quintiles Transnational Corp. * 41,900 1,833,125
4,591,775
Home Building - 1.2%
Rouse Co. 39,100 1,053,256
Housewares - 2.0%
Newell Co. 36,700 1,690,494
<PAGE>
Equity Securities - (Cont'd) Shares Value
Insurance - Life and Health - 2.0%
AFLAC, Inc. 61,000 $1,742,312
Investment Banking / Brokerage - 0.9%
Legg Mason, Inc. 29,600 778,850
Investment Management - 4.7%
Franklin Resources, Inc. 56,165 1,684,950
T. Rowe Price Associates, Inc. 77,700 2,282,438
3,967,388
Leisure - 2.5%
Harley Davidson, Inc. 72,100 2,117,937
Oil and Gas - Equipment - 2.4%
Smith International, Inc. * 74,600 2,046,837
Restaurants - 1.8%
Cheesecake Factory, Inc. * 96,800 1,500,400
Retail - Building Supplies - 2.9%
Fastenal Co. 65,800 1,645,000
Home Depot, Inc. 19,700 778,150
2,423,150
Retail - Department Stores - 1.7%
Kohls Corp. * 36,100 1,407,900
Retail - Discounters - 1.3%
Dollar General Corp. 43,001 1,144,908
Retail - Specialty - 3.7%
Autozone, Inc. * 89,600 2,206,400
Casey's General Stores, Inc. 62,400 936,000
3,142,400
Services - Advertising and Marketing - 5.5%
Acxiom Corp. * 98,500 2,444,031
Catalina Marketing Corp. * 46,700 2,194,900
4,638,931
Services - Commercial and Consumer - 2.9%
G & K Services, Inc., Class A 52,600 2,465,625
Services - Data Processing - 8.7%
Equifax, Inc. 64,900 2,316,119
Fiserv, Inc. * 41,000 1,888,562
Paychex, Inc. 61,500 3,171,094
7,375,775
<PAGE>
Equity Securities - (Cont'd) Shares Value
Services - Employment - 3.3%
Interim Services, Inc. * 62,400 $1,283,100
Robert Half International, Inc. * 35,300 1,524,519
2,807,619
Total Equity Securities (Cost $84,250,220) 82,481,292
Principal
Repurchase Agreements - 2.6% Amount
State Street Bank: 5.35%, dated 9/30/98,
due 10/1/98 (Collateral: $2,310,118,
U.S. Treasury, 3.64%, 11/30/00) $2,200,000 2,200,000
Total Repurchase Agreements (Cost $2,200,000) 2,200,000
Total Investments (Cost $86,450,220) - 99.7% 84,681,292
Other assets in excess of liabilities - 0.3% 245,593
Net Assets - 100% $84,926,885
Net Assets Consist of:
Paid-in capital applicable to the following shares of common stock,
250,000,000 shares of $0.01 par value authorized for Class A,
Class B and Class C combined:
Class A: 2,951,716 shares outstanding $64,961,517
Class B: 130,978 shares outstanding 3,700,813
Class C: 265,853 shares outstanding 6,100,653
Accumulated net realized gain (loss) on investments 11,932,830
Net unrealized appreciation (depreciation) on investments (1,768,928)
Net Assets $84,926,885
Net Asset Value Per Share
Class A (based on net assets of $75,068,456) $25.43
Class B (based on net assets of $3,310,741) $25.28
Class C (based on net assets of $6,547,688) $24.63
* Non-income producing.
See notes to financial statements.
<PAGE>
Statement of Operations
Year Ended September 30, 1998
Net Investment Income
Investment Income
Interest income $54,652
Dividend income (net of foreign taxes of $375) 338,804
Total investment income 393,456
Expenses
Investment advisory fee 593,353
Transfer agency fees and expenses 241,446
Distribution Plan expenses:
Class A 239,422
Class B 7,885
Class C 54,591
Directors' fees and expenses 21,844
Administrative fees 74,654
Custodian fees 27,698
Registration fees 51,626
Reports to shareholders 33,326
Professional fees 8,734
Miscellaneous 16,660
Reimbursement from Advisor (2,017)
Total expenses 1,369,222
Fees paid indirectly (105,559)
Net expenses 1,263,663
Net Investment Income (Loss) (870,207)
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Securities 13,287,725
Futures 91,580
13,379,305
Change in unrealized appreciation
or (depreciation) (12,767,191)
Net Realized and Unrealized Gain
(Loss) on Investments 612,114
Increase (Decrease) in Net Assets
Resulting From Operations $(258,093)
See notes to financial statements.
<PAGE>
Statements of Changes in Net Assets
Year Ended Year Ended
September 30, September 30,
Increase (Decrease) in Net Assets 1998 1997
Operations
Net investment income (loss) $(870,207) $(567,674)
Net realized gain (loss) 13,379,305 6,355,994
Change in unrealized appreciation
or (depreciation) (12,767,191) 4,031,882
Increase (Decrease) in Net Assets
Resulting From Operations (258,093) 9,820,202
Distributions to shareholders from
Net realized gain:
Class A Shares (5,175,390) -
Class C Shares (417,340) -
Total distributions (5,592,730) -
Capital share transactions:
Shares sold:
Class A Shares 48,471,955 25,046,771
Class B Shares 3,722,714 -
Class C Shares 3,607,052 1,469,185
Reinvestment of distributions:
Class A Shares 4,897,289 -
Class C Shares 391,618 -
Shares redeemed:
Class A Shares (28,145,595) (19,310,865)
Class B Shares (21,901) -
Class C Shares (1,080,594) (1,088,191)
Total capital share transactions 31,842,538 6,116,900
Total Increase (Decrease) in Net Assets 25,991,715 15,937,102
Net Assets
Beginning of year 58,935,170 42,998,068
End of year $84,926,885 $58,935,170
Capital Share Activity
Shares sold:
Class A Shares 1,716,355 1,067,042
Class B Shares 131,783 -
Class C Shares 132,018 64,057
Reinvestment of distributions:
Class A Shares 209,017 -
Class C Shares 17,154 -
Shares redeemed:
Class A Shares (985,970) (821,581)
Class B Shares (805) -
Class C Shares (40,384) (48,629)
Total capital share activity 1,179,168 260,889
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A - Significant Accounting Policies
General: The Calvert Capital Accumulation Fund (the "Fund"), a series of
Calvert World Values Fund, Inc., is registered under the Investment Company
Act of 1940 as a non-diversified, open-end management investment company. The
operations of each series are accounted for separately. The Fund, which
commenced operations on October 31, 1994, offers three classes of shares of
capital stock. Class A shares are sold with a maximum front-end sales charge
of 4.75%. Effective April 1, 1998, the Fund began to offer Class B shares of
capital stock. Class B shares are sold without a front-end sales charge.
With certain exceptions, the Fund will impose a deferred sales charge at the
time of redemption, depending on how long you have owned the shares. Effective
June 1, 1998, the Fund converted its existing Class C shares to new Class C
shares. Class C shares are sold without a front-end sales charge. With certain
exceptions, the Fund will impose a deferred sales charge on shares sold within
one year. Class B and Class C shares have a higher level of expense than Class
A shares, including higher Distribution Plan expenses. 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 unavailable are valued at
the most recent bid price or based on a yield equivalent obtained from the
securities' market maker. 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.
Repurchase Agreements: The Fund may enter into repurchase agreements with
recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest. Although risk is mitigated by
the collateral, the Fund could experience a delay in recovering its value and
a possible loss of income or value if the counterparty fails to perform in
accordance with the terms of the agreement.
Futures Contracts: The Portfolio may enter into futures contracts agreeing to
buy or sell a financial instrument for a set price at a future date. The
Portfolio maintains securities with a value equal to its obligation under each
contract. Initial margin deposits of either cash or securities are made upon
entering into futures contracts; thereafter, variation margin payments are
made or received daily reflecting the change in market value. Unrealized or
realized gains and losses are recognized based on the change in market value.
Risks of futures contracts arise from the possible illiquidity of the futures
markets and the movement in the value of the investment or in interest rates.
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.
Interest income, accretion of discount and amortization of premium are
recorded on an accrual basis. Investment income, expenses and realized and
unrealized gains and losses are allocated to separate classes of shares based
upon the relative net assets of each class.
<PAGE>
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.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Fund has an arrangement with its custodian
bank whereby the custodian's fees may be paid indirectly by credits earned on
the Fund's cash on deposit with the bank. Such a 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 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 an
annual rate of .80% of the Fund's average daily net assets. Under the terms of
the agreement, $83,889 was payable at period end. The Fund pays a monthly
performance fee of plus or minus up to .05%, on an annual basis, of average
daily net assets of the performance period depending on the Fund's performance
compared to the S&P Mid-Cap 400 Index. For the year ended September 30, 1998,
the performance fee adjustment decreased management fees by $3,877.
Calvert Administrative Services Company, an affiliate of the Advisor, provides
administrative services to the Fund for an annual fee, payable monthly, of
.10% of the average daily net assets of the Fund. Under the terms of the
agreement, $6,834 was payable at year end.
The Advisor voluntarily waived and reimbursed the fund for advisory fees,
administrative fees, and other operating expenses of $2,017.
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%, 1.00% and 1.00% annually of average daily net assets of each
Class A, Class B and Class C, respectively. Under the terms of the agreement,
$28,944 was payable at year end.
<PAGE>
The Distributor received $138,740 as its portion of the 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.
Under the terms of the agreement, $8,569 was payable at year end.
Each Director who is not affiliated with the Advisor receives an annual fee of
$4,000 plus $1,000 for each Board and Committee meeting attended. 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 $80,480,755 and $54,420,791, respectively.
The cost of investments owned at September 30, 1998 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $1,768,928, of which $9,009,383 related to appreciated
securities and $10,778,311 related to depreciated securities.
Note D - Line of Credit
A financing agreement is in place with all Calvert Group Funds and State
Street Bank and Trust Company ("the Bank"). Under the agreement, the Bank is
providing an unsecured line of credit facility, in the aggregate amount of $50
million ($25 million committed and $25 million uncommitted), to be accessed by
the Funds for temporary or emergency purposes only. Borrowings under this
facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused
portion of the committed facility which will be allocated to all participating
funds. This fee is paid quarterly in arrears. The Fund had no loans
outstanding pursuant to this line of credit at September 30, 1998.
- --------------------------------------------------------------------------------
Tax Information (Unaudited)
- --------------------------------------------------------------------------------
The Fund designates $4,046,973 as capital gain dividends paid during fiscal
year ended September 30, 1998. Of the amount designated, 54.58% is taxable at
28% and 45.42% is taxable at 20%.
<PAGE>
Financial Highlights
Years Ended September 30,
Class A Shares 1998 1997
Net asset value, beginning $27.21 $22.55
Income from investment operations
Net investment income (loss) (.25) (.25)
Net realized and unrealized gain (loss) .96 4.91
Total from investment operations .71 4.66
Distributions from
Net investment income - -
Net realized gain (2.49) -
Total distributions (2.49) -
Total increase (decrease) in net asset value (1.78) 4.66
Net asset value, ending $25.43 $27.21
Total return * 3.37% 20.67%
Ratios to average net assets:
Net investment income (loss) (1.08%) (1.09%)
Total expenses + 1.74% 1.91%
Net expenses 1.61% 1.85%
Expenses reimbursed - -
Portfolio turnover 77% 126%
Net assets, ending (in thousands) $75,068 $54,751
Number of shares outstanding ending
(in thousands) 2,952 2,012
Periods ended September 30,
Class A Shares 1996 1995^
Net asset value, beginning $21.48 $15.00
Income from investment operations
Net investment income (loss) (.24) (.11)
Net realized and unrealized gain (loss) 1.88 6.61
Total from investment operations 1.64 6.50
Distributions from
Net investment income - (.02)
Net realized gain (.57) -
Total distributions (.57) (.02)
Total increase (decrease) in net asset value 1.07 6.48
Net asset value, ending $22.55 $21.48
Total return* 7.92% 43.40%
Ratios to average net assets:
Net investment income (loss) (1.56%) (1.55%)(a)
Total expenses+ 2.16% 2.35%(a)
Net expenses 1.98% 2.06%(a)
Expenses reimbursed - .05%(a)
Portfolio turnover 114% 95%
Net assets, ending (in thousands) $39,834 $16,111
Number of shares outstanding, ending
(in thousands) 1,767 750
<PAGE>
Financial Highlights
Period Ended
September 30,
Class B Shares 1998 #
Net asset value, beginning $28.39
Income from investment operations
Net investment income (loss) (.16)
Net realized and unrealized gain (loss) (2.95)
Total from investment operations (3.11)
Distributions from
Net investment income -
Net realized gain -
Total distributions -
Total increase (decrease) in net asset value (3.11)
Net asset value, ending $25.28
Total return* (10.95)%
Ratios to average net assets:
Net investment income (loss) (2.62%)
Total expenses+ 3.31%
Net expenses 3.01%
Expenses reimbursed .26%
Portfolio turnover 77%
Net assets, ending (in thousands) $3,311
Number of shares outstanding, ending (in thousands) 131
<PAGE>
Years Ended September 30,
Class C Shares 1998 1997
Net asset value, beginning $26.64 $22.34
Income from investment operations
Net investment income (loss (.40) (.47)
Net realized and unrealized gain (loss) .88 4.77
Total from investment operations .48 4.30
Distributions from
Net investment income - -
Net realized gain (2.49) -
Total distributions (2.49) -
Total increase (decrease) in net asset value (2.01) 4.30
Net asset value, ending $24.63 $26.64
Total return* 2.52% 19.25%
Ratios to average net assets:
Net investment income (loss) (1.98%) (2.30%)
Total expenses+ 2.75% 3.11%
Net expenses 2.50% 3.05%
Expenses reimbursed - -
Portfolio turnover 77% 126%
Net assets, ending (in thousands) $6,548 $4,184
Number of shares outstanding, ending (in thousands) 266 157
Periods Ended September 30,
Class C Shares 1996 1995^
Net asset value, beginning $21.55 $15.00
Income from investment operations
Net investment income (loss) (.55) (.15)
Net realized and unrealized gain (loss) 1.91 6.70
Total from investment operations 1.36 6.55
Distributions from
Net investment income - -
Net realized gain (.57) -
Total distributions (.57) -
Total increase (decrease) in net asset value .79 6.55
Net asset value, ending $22.34 $21.55
Total return* 6.56% 43.67%
Ratios to average net assets:
Net investment income (loss) (2.82%) (3.13%)(a)
Total expenses+ 3.42% 3.79%(a)
Net expenses 3.24% 3.50%(a)
Expenses reimbursed - 2.79%(a)
Portfolio turnover 114% 95%
Net assets, ending (in thousands) $3,164 $1,992
Number of shares outstanding, ending
(in thousands) 142 92
(a) Annualized
+ Ratio reflects total expenses before reduction for fees paid indirectly;
such reductions are included in the ratio of net expenses.
* Total return does not reflect deduction of any front-end or deferred sales
charge.
^ From October 31, 1994 inception
# From April 1, 1994 inception
<PAGE>
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<PAGE>
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