N-CSR 1 intleq93003.htm CWVF INTERNATIONAL EQUITY FUND ANNUAL REPORT 09/30/03 Calvert World Values International Equity Fund Annual Report 09/30/03

Calvert

Investments that make a difference (registered trademark)

E-Delivery Sign-up -- details inside

September 30, 2003

Annual Report

Calvert World Values

International Equity Fund


Table of Contents

President's Letter

1

Social Update

3

Portfolio Management Discussion

4

Independent Auditors' Report

8

Schedule of Investments

9

Statement of Assets and Liabilities

18

Statement of Operations

19

Statements of Changes in Net Assets

20

Notes to Financial Statements

22

Financial Highlights

28

Explanation of Financial Tables

32

Director and Officer Information Table

34


Dear Shareholders:

The markets have improved dramatically over the past year, with stocks showing substantial gains and bonds continuing to profit from an historically low interest-rate environment.  

We believe that this year's broad-based market turnaround illustrates once again the value of diversification, asset allocation and long-term investing.  Many investors who pursued an appropriate asset allocation, with investments in stocks, bonds and cash, were able to benefit from the rally in securities prices.  Those who paid too much attention to short-term past performance and substantially reduced their stock holdings early in the year may well have missed the sharp rallies in the second quarter.  At Calvert, we encourage all our shareholders to review their portfolios with their financial advisors to ensure that their investments remain in line with their specific risk tolerance, return expectations and financial goals. 

A cloud on the otherwise bright performance of the markets and economy was the distressing news concerning recent market timing and illegal after-hours trading on the part of certain mutual funds. We want to assure Calvert shareholders that we have a long-standing policy of not accepting trades from market timers, which is strictly enforced. And, of course, we do not accept or execute trades after the market closes, which would be in violation of securities industry regulations.  

Markets like the ones that we have seen over the past several years demonstrate that understanding risk -- at the security, fund, and asset-class level -- is an integral part of successful investing.  This year, we have taken a number of steps to improve our ability to monitor and manage risk, and to prepare for further growth in our investor base.  We have reorganized Calvert's investment activities into two departments, Equities and Fixed Income, each headed by Chief Investment Officers who will work closely with our Social Research Department.  We believe that these changes will enhance our ability to deliver top-tier investment performance to our shareholders, while keeping investment risk at appropriate levels. 

Thank you for your continued business, and we look forward to serving you in the year ahead.

Sincerely,

/s/Barbara J. Krumsiek

President and CEO

Calvert Asset Management Company, Inc.

November 2003


Social Update

from the Calvert Social Research Department

Shareholder Activism

Calvert shareholder activism seeks to move companies already performing in a more socially responsible manner than their industry peers to a higher level of corporate responsibility. We've secured the agreement of two major pharmaceutical companies to amend and post their ethical policies for clinical research in developing countries, where people are often not provided adequate information about the risks of clinical research or are promised but not given health care in exchange for their participation in trials for new drugs.

In addition, our shareholder resolution effectiveness for our various Calvert Funds has increased as we've become more effective in positioning our point of view in the context of shareholders' financial interests. For example, we received 12% support on a resolution seeking inclusive diversity policies at Alltel Corporation and a remarkable 63% on a resolution for staggered board tenures at Gillette.

Corporate "dialogues" continue, including a current effort with Weyerhaeuser to establish a policy prohibiting the harvest of and trade in products from primary and old-growth forests.

Board Diversity Initiative Successes

Two companies held in Calvert Funds have agreed to adopt key language from Calvert's model board diversity charter, which reflects our belief that boards of directors should look like America, not just a small slice of it.

Social Policy Leadership Announced

Calvert has named Joe Keefe Senior Advisor for Strategic Social Policy. Mr. Keefe, who has worked for and consulted with several socially responsible mutual fund groups, will provide focused, proactive direction for our social vision.


Portfolio Management Discussion

Thomas Hancock

of Grantham, Mayo, Van Otterloo

Performance

The Calvert World Values International Equity Fund's Class A Shares returned 21.93% over the 12-month period ended September 30, 2003. This performance was  4.61% behind the MSCI EAFE benchmark, which returned 26.54%.

Investment Climate

The last 12 months started out quite positively. After hitting a trough in early October 2002, equities enjoyed two strong months led by some of the most beaten-down stocks of the post-bubble period, notably in the Technology, Media, and Telecom (TMT) and Insurance sectors.  This initial rally proved fleeting, however, as rising oil prices, the buildup to hostilities in Iraq, and the SARS outbreak combined to push stock prices back down over the next three months.  But in mid-March, with signs of a successful outcome to the war, stocks picked up. And the second half of the period was an especially strong six months for global equities.

The rally was fueled by an apparent increased appetite for risk on the part of investors. And unlike the late 1990s, when large-cap growth stocks led the bull market, it was primarily smaller, more cyclical, lower-valuation and lower-quality stocks that led the upturn. While all sectors gained in value, Technology stocks led the way, while defensive sectors (Consumer Staples, Health Care, and Utilities) lagged. Telecommunications stocks showed an interesting switch, as they moved from being viewed as riskier growth stocks back toward their traditional role as more conservative defensive stocks. We believe that the switch was prompted by reduction in debt levels built up in the bubble period and by a fall in price to levels more commensurate with current cash flow.

Foreign stocks outperformed the U.S. market as measured by the S&P 500, which returned 24.4%. In terms of their native currencies, foreign markets performed poorly relative to U.S. stocks. The weakness of the U.S. dollar versus major foreign currencies accounted for almost half of the U.S. dollar return of EAFE. The euro, yen, and other foreign currencies strengthened significantly against the U.S. dollar. It appears that this strengthening was driven largely by foreign investors slowing down their purchases of U.S. financial assets. These purchases are necessary to support the large current-account deficit. The euro touched lifetime highs against the dollar earlier in the period, while the yen set three-year highs in September. In September, the G7 group of countries issued a call for "flexible exchange rates," interpreted to mean rising Asian currencies.

Portfolio Statistics

September 30, 2003

Investment Performance

(total return at NAV)

6 Months

12 Months

ended

ended

9/30/03

9/30/03

Class A

24.36%

21.93%

Class B

23.59%

20.34%

Class C

23.76%

20.72%

Class I

24.96%

23.12%

MSCI EAFE Index GD

29.35%

26.54%

Lipper International Funds Avg

26.92%

22.94%

Ten Largest Stock Holdings

% of Net Assets

Vodafone Airtouch plc

4.1%

Toyota Motor Corp.

1.6%

National Australia Bank Ltd

1.5%

Boots Group plc

1.5%

Volkswagen AG Ordinary

1.4%

DaiiChi Pharm Co.

1.4%

Canon, Inc.

1.4%

ING Groep NV

1.4%

Scottish Power plc

1.4%

Next Group plc

1.4%

Total

17.1%

Asset Allocation

        

Stocks

90%

Bonds & Notes

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.


Portfolio Statistics

September 30, 2003

Average Annual Total Returns

(with max. load)

Class A Shares

One year

16.12%

Five year

(1.94%)

Ten year

2.47%

Class B Shares

One year

15.34%

Five year

(2.45%)

Since inception

(5.14%)

(4/1/98)

Class C Shares

One year

19.72%

Five year

(2.00%)

Since inception

0.54%

(3/1/94)

Class I Shares

One year

23.12%

Since inception

(3.36%)

(3/1/99)

Performance Comparison

Comparison of change in value of $10,000 investment. (Source: Lipper Analytical Services, Inc.)

[See Attached .JPG file for Line Graph]

Average annual total returns in the Portfolio Statistics above and the Performance Comparison line graph are with maximum load deducted -- they assume reinvestment of dividends and reflect the deduction of the Fund's Class A maximum  front-end 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 another class of shares would be different. New subadvisor assumed management of the Fund effective March 2002. The graph and table do not reflect the deduction of taxes that a shareholder would pay on the Fund's distributions or the redemption of Fund shares. Past performance is no guarantee of future results.


Fund Strategy

The Fund has had a more defensive tilt than the Index throughout the period, helping returns through the March turning point, but holding back performance subsequently. The strongest contribution to performance came from country allocation, and in particular the allocation to emerging markets, which are not represented in the benchmark, but where the Fund has held close to 10% of its assets. Allocations to Indonesia, Thailand, and Taiwan boosted returns as Asian markets have heated up with increasingly strong economic performance after fears of SARS subsided. Positions in Brazilian stocks Tele Norte Leste and Unibanco also helped as that country recovered from its crisis the previous year.

Industry sector allocation was less successful, with overweight positions in Utilities and underweights in Technology and Industrial Cyclicals hurting relative returns. We place a heavy emphasis on valuation, but also on trying to identify more profitable, less debt-ridden value stocks. In the recovery period it was the lower-profitable, highly-leveraged value stocks that performed best.

The troubled Japanese banking sector showed signs of benefiting from renewed government vigor for reform, and the Fund's strongest single stock impact came from Mitsui Trust. Other holdings that helped returns were French bank Societe Generale, Italian toll road operator Autostrade, Taiwan Semiconductor, Austrian carton-board manufacturer Mayr-Melnhof Karton, and Japanese cable manufacturer Furukawa Electric. These were generally cyclical stocks that benefited from renewed optimism about the global economy.

Portfolio Statistics

Country Allocation

% of Equity Securities

9/30/03

9/30/02

Argentina

0.5%

--

 

Australia

3.7%

  3.1%

Austria

1.3%

  1.9%

Belgium

1.7%

  0.6%

Brazil

1.4%

  0.8%

Canada

2.1%

  2.0%

Chile

0.1%

  --

Czech Republic

0.2%

  1.0 %

Denmark

--

  0.6%

Finland

1.4%

  2.4%

France

7.0%

  7.2%

Germany

5.0%

  4.3%

Greece

0.9%

  0.3%

Hong Kong

0.6%

  0.4%

Hungary

0.3%

  -- 

India

1.1%

  -- 

Indonesia

0.6%

  1.3%

Ireland

2.0%

  2.3%

Israel

0.5%

  -- 

Italy

3.8%

  2.1%

Japan

21.8%

  18.6%

Korea

1.1%

  2.2 %

Mexico

0.8%

  0.3%

Netherlands

3.8%

  5.4%

Norway

1.5%

  0.7%

Philippines

0.2%

  --

Poland

0.2%

  -- 

Russia

0.3%

  -- 

Singapore

1.3%

  0.8%

South Africa

1.3%

  1.1%

Spain

3.1%

  3.2%

Sweden

0.9%

  1.9%

Switzerland

2.9%

  2.7%

Taiwan

0.9%

  1.2%

Thailand

0.8%

  2.0%

Turkey

0.2%

  -- 

United Kingdom

22.9%

  26.9%

United States

1.8%

  2.7%

100%

100%

        


Less successful holdings included the current largest position, Vodafone, which did well earlier in the period, but has underperformed after we added to the position. Utility holdings Scottish and Southern Energy and United Utilities have lagged. Consumer Staples leader Unilever had disappointing results in the spring, showing that even "defensive" stocks can struggle in a tough market. Auto stock holdings like Mazda Motor have suffered primarily from rising exchange rates and low industry profitability.

Outlook

Our positive outlook is that international stocks trade at reasonable valuations, particularly compared with the U.S. market. So the long-term prognosis is at least average. The shorter-term picture is murkier, as the remainder of the year will be driven by whether there is a truly global economic recovery. Much of the recent strong performance has been driven by relatively flimsy news, particularly in Europe, and the bounce-back from earlier overselling. For Europe and Japan to continue their strong performance, investors will require stronger evidence that fundamentals are truly improving.

November 2003


Independent Auditors' Report

To the Board of Directors of Calvert World Values Fund, Inc.

and Shareholders of Calvert World Values International Equity Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Calvert World Values International Equity Fund (the "Fund"), a series of Calvert World Values Fund, Inc., as of September 30, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. 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.  The financial highlights for the years ended September 30, 2001 and 2000, were audited by other auditors who have ceased operations.  Those auditors expressed an unqualified opinion on those financial statements in their report dated November 16, 2001.  The financial highlights for the periods presented prior to September 30, 2000, were audited by other auditors, whose report dated November 10, 1999, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  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 securities owned as of September 30, 2003, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received.  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 Calvert World Values International Equity Fund as of September 30, 2003, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/KPMG LLP

Philadelphia, Pennsylvania

November 18, 2003


Schedule of Investments

September 30, 2003

Equity Securities - 89.2%

Shares

Value

Argentina - 0.4%

Grupo Financiero Galicia SA * (ADR) Class B

  102,700

  $505,284

Telecom Argentina SA * (ADR) Class B

  52,300

  336,289

 

841,573

Australia - 3.3%

Australia and New Zealand Banking Group Ltd

 

139,582

  1,704,364

National Australia Bank Ltd

  143,044

  2,997,014

Qantas Airways Ltd

  285,192

  636,326

Westpac Banking Corp.

  107,477

  1,184,402

 

6,522,106

Austria - 1.2%

Mayr-Melnhof Karton AG

  25,313

  2,358,101

Belgium - 1.5%

Agfa-Gevaert NV

  40,526

  977,472

Fortis SA/NV

  120,016

  2,043,101

 

3,020,573

Brazil - 1.3%

Banco Itau Holding Financiera SA (ADR)

  14,900

  539,380

Gerdau SA (ADR)

  41,020

  591,098

Tele Centro Oeste Celular Participacoes SA (ADR)

  59,500

  433,160

Tele Norte Leste Participacoes SA (ADR)

  32,900

  458,626

Unibanco Uniao de Bancos Brasileiros SA (GDR)

  22,800

  451,440

 

2,473,704

Canada - 1.8%

Nortel Networks Corp.

  520,900

  2,140,685

Royal Bank of Canada

  33,300

  1,465,890

 

3,606,575

Chile - 0.1%

Cia de Telecomunicaciones de Chile SA (ADR)

  17,200

  219,300

Czech Republic - 0.2%

Ceske Radiokomunikace AS (GDR)

  24,700

  253,016

Cesky Telecom AS (GDR)

  10,200

  100,470

 

353,486

Finland - 1.2%

Nokia Oyj

 

76,900

  1,184,563

Sampo Oyj

 

150,200

  1,216,340

 

2,400,903

France - 6.2%

BNP Paribas

  48,924

  $2,399,962

Carrefour SA

  15,016

  755,855

France Telecom SA

  59,112

  1,360,326

Groupe Danone SA

  12,013

  1,833,678

JC Decaux SA *

  53,016

  745,615

L'OREAL SA

  21,682

  1,481,725

Sanofi - Synthelabo Groupe

  22,632

  1,376,556

Societe Generale Routiere

  33,700

  2,246,086

 

12,199,803

Germany - 4.5%

Altana AG

 

18,397

  1,174,488

Deutsche Telekom AG

  161,461

  2,340,391

SAP AG

 

15,715

  1,920,470

Volkswagen AG:

Non Voting Preferred

  17,168

  532,910

Ordinary

  62,506

  2,810,586

  8,778,845

Greece - 0.8%

National Bank of Greece SA

  81,126

  1,658,021

Hong Kong - 0.6%

Bank of East Asia Ltd

  441,600

  1,134,735

Hungary - 0.2%

OTP Bank Ltd (GDR)

  19,500

  464,100

India - 1.0%

Bajaj Auto Ltd (GDR)

  21,275

  362,101

ICICI Bank Ltd (ADR)

  40,000

  422,400

Ranbaxy Laboratories Ltd (GDR)

  19,200

  415,680

Satyam Computer Services Ltd (ADR)

  19,300

  248,970

State Bank of India Ltd (GDR)

  20,200

  508,636

  1,957,787

Indonesia - 0.6%

PT Indonesian Satellite Corp. Tbk

  326,000

  365,027

Unilever Indonesia

  1,869,000

  745,819

  1,110,846

Ireland - 1.7%

Allied Irish Banks plc

  130,759

  1,927,358

Bank of Ireland

  125,266

  1,497,549

  3,424,907

Israel - 0.5%

Check Point Software Technologies Ltd *

 

21,700

  364,560

Taro Pharmaceutical Industries Ltd

  2,400

  135,264

Teva Pharmaceutical Industries Ltd (ADR)

  7,300

  417,195

 

917,019

Italy - 3.4%

Enel SpA

  252,646

  $1,572,006

Parmalat Finanziaria SpA

  661,855

  2,078,366

Seat Pagine Gialle SpA

  744,131

  684,978

Telecom Italia Mobile SpA

  293,504

  1,364,543

Telecom Italia SpA

  385,573

  950,205

  6,650,098

Japan - 19.4%

Acom Co. Ltd

  46,272

  2,080,714

Canon, Inc.

  57,000

  2,793,340

DaiiChi Pharm Co.

  172,000

  2,794,238

Daiwa House Industries Co. Ltd

  141,000

  1,289,584

Denso Corp.

  87,000

  1,725,710

Fuji Photo Film Co. Ltd

  54,000

  1,589,732

Furukawa Electric Co. Ltd *

  573,000

  2,036,602

Kawasaki Kisen Kaisha Ltd

  566,000

  1,935,520

Kobe Steel Ltd *

  1,057,000

  1,204,856

Mazda Motor Corp.

  629,067

  1,592,217

Mitsui Trust Holdings, Inc.

  314,000

  1,727,613

Mizuho Financial Group, Inc.

  703

  1,577,436

Nippon Express Co. Ltd

  328,000

  1,374,824

Nippon Sheet Glass Co. Ltd

  386,000

  1,171,009

NTT DoCoMo, Inc.

  348

  852,704

Olympus Optical Co. Ltd

  62,000

  1,480,232

Sumitomo Electric Industries Ltd

  129,000

  1,076,785

Takefuji Corp.

  32,610

  2,092,730

TDK Corp.

  16,600

  987,820

Terumo Corp.

  86,700

  1,676,960

Toyota Motor Corp.

  108,200

  3,185,352

Yamanouchi Pharmaceutical Co. Ltd

  72,000

  1,990,396

  38,236,374

Korea - 1.0%

Kookmin Bank (ADR)

  18,400

  605,360

KT Corp. (ADR)

  33,600

  669,648

SK Telecom Co. Ltd (ADR)

  36,600

  652,944

  1,927,952

Mexico - 0.7%

America Movil, SA de CV (ADR)

  21,100

  487,621

Empresas ESM, SA de CV (a)(b)(i)

  2,989

  350,000

Telefonos de Mexico, SA de CV (ADR)

  17,900

  546,845

  1,384,466

Netherlands - 3.4%

Aegon NV

 

112,985

  1,315,184

Buhrmann NV

  134,934

  1,001,524

ING Groep NV

  151,073

  2,768,955

Koninklijke KPN NV *

  213,550

  1,599,967

  6,685,630

Norway - 1.3%

DNB Holding ASA *

  232,800

  $1,115,328

Gjensidige NOR Sparebank ASA

  44,050

  1,529,731

  2,645,059

Philippines - 0.1%

Globe Telecom, Inc.

  21,001

  265,981

Poland - 0.2%

Telekomunikacja Polska SA* (GDR)

  107,700

  385,566

Russia - 0.3%

Vimpel-Communications * (ADR)

  8,000

  486,880

Singapore - 1.1%

Haw Par Corp. Ltd

  96,006

  237,621

ST Assembly Test Services Ltd *

  563,000

  807,425

Venture Corp. Ltd

  102,000

  1,179,702

  2,224,748

South Africa - 1.2%

Alexander Forbes Ltd

  154,800

  229,291

BIDVest Group Ltd

  50,700

  302,940

Community Growth Fund

  894,098

  344,059

Investec Group Ltd

  17,387

  245,035

Nedcor Ltd

 

23,323

  232,096

Old Mutual plc

  211,000

  321,637

Pick 'n Pay Holdings Ltd

  61,200

  57,206

Pick 'n Pay Stores Ltd

  69,600

  146,130

Venfin Ltd *

  167,600

  410,938

  2,289,332

Spain - 2.8%

Gas Natural SDG SA

  115,854

  2,226,035

Santander Central Hispano SA

  111,370

  944,713

Telefonica SA

  198,037

  2,339,832

  5,510,580

Sweden - 0.8%

Hennes & Mauritz AB *

  66,050

  1,496,060

Switzerland - 2.6%

Givaudan AG

  2,230

  944,515

Swisscom AG

  6,688

  1,950,962

Zurich Financial Services Group AG

  17,802

  2,225,587

  5,121,064

Taiwan - 0.8%

Taiwan Semiconductor Manufacturing Co. Ltd (ADR)*

  82,284

  891,136

United Microelectronics Corp. (ADR)*

  159,666

  720,093

  1,611,229

Thailand - 0.7%

Bangkok Bank PCL

  157,900

  $299,785

Charoen Pokphand Foods PCL

  1,672,000

  205,502

Electricity Generating PCL:

Alien Market

  161,700

  234,290

Local Market

  22,000

  31,876

Land & Houses PCL

  1,146,900

  346,677

National Finance PCL

  665,500

  290,938

  1,409,068

Turkey - 0.2%

Turkcell Iletisim Hizmetleri AS (ADR) *

 

17,100

  295,830

United Kingdom - 20.4%

Abbey National Benefit Consultants Ltd

  225,028

  1,847,821

Aviva plc

  259,446

  2,014,004

AWG plc

  171,081

  1,372,136

Barclays plc

 

300,543

  2,306,800

Barratt Developments plc

  150,604

  1,271,735

Boots Group plc

  266,305

  2,857,407

BT Group plc

  675,213

  2,020,272

GlaxoSmithKline plc

  113,092

  2,347,961

HSBC Holdings plc

  71,996

  949,624

InterContinental Hotels Group plc

  90,003

  718,116

Invensys plc

  2,911,973

  1,379,522

KESA Electricals plc *

  62,731

  232,272

Kingfisher plc

  274,448

  1,190,686

Land Securities Group plc

  1

  12

Next Group plc

  143,699

  2,684,829

Royal & Sun Alliance Insurance Group plc:

Ordinary

  770,674

  1,034,451

Rights

  770,674

  156,929

Scottish & Southern Energy plc

  248,535

  2,511,815

Scottish Power plc

  473,038

  2,761,906

United Utilities plc

  251,469

  1,918,641

Vodafone Airtouch plc

  4,000,459

  7,979,718

Wolseley plc

  44,397

  518,253

 

40,074,910

United States - 1.7%

Evergreen Solar, Inc. *

  2,732

  5,655

H2Gen Innovations, Inc.:

Series A (Preferred) (b)(i)*

  251,496

  251,496

Warrants Exp. 1/1/12 (b)(i)*

  20,833

--  

Mayer Laboratories, Inc., Warrants Exp. 12/31/07 (b)(i)*

 

11,538

  --  

Northern Power Systems, Inc.:

Series A (Preferred) (a)(b)(i)*

  1,747

  8,735

Series C (Preferred) (a)(b)(i)*

  182,178

  910,890

Series D (Preferred) (a)(b)(i)*

  35,000

  175,000

Powerspan Corp.:

Series A (Preferred) (b)(i)*

  45,455

  148,437

Series B (Preferred) (b)(i)*

  20,000

  37,873

ProFund Internacional SA:

(Common) (b)(i)*

  2,500

  --  

(Preferred) (b)(i)

  212,448

  $135,967

Proton Energy Systems, Inc. *

  418,331

  1,087,661

RF Technology, Inc.:

Series A (Preferred) (b)(i)*

  53,844

  1

Warrants Exp. 7/16/04 (b)(i)*

  15,384

  --  

SMARTTHINKING, Inc.:

Series A (Preferred) (b)(i)*

  44,699

  68,314

Series B (Preferred) (b)(i)*

  163,588

  31,050

Warrants Exp. 10/20/05 (b)(i)*

  32,726

  --  

Soluz, Inc.:

(Common) (b)(i)*

 

10,250

  1

Warrants Exp. 6/1/04 (b)(i)*

  3,125

  --  

Wellspring International, Inc.:

Series A (Preferred) (b)(i)*

  129,032

  116,223

Series B (Preferred) (b)(i)*

  108,267

  112,170

Series C (Preferred) (b)(i)*

  277,778

  150,000

Warrants Exp. 8/15/12 (b)(i)*

  23,148

  --  

  3,239,473

Total Equity Securities (Cost $162,548,220) 

 

175,382,684

 

Adjusted

Limited Partnership Interest - 0.5%

  Basis

SEAF Central & Eastern European Growth Fund LLC (a)(b)(i)*

 

$884,290

  736,856

Solar Development Capital LP (b)(i)*

  32,500

  --  

Sustainable Asset Management AG (b)(i)*

  526,659

  320,767

Terra Capital Investments, Inc. (b)(i)*

 

280,800

  1

Total Limited Partnership Interest (Cost $1,676,973)

  1,057,624

  Principal

Taxable Variable Rate Demand Notes - 1.4%

  Amount

New York City Housing Development Corp. MFH Revenue,

1.06%, 8/15/32

  675,000

675,000

New York State Housing Finance Agency Revenue, 1.11%, 11/1/33

  2,000,000

  2,000,000

Total Taxable Variable Rate Demand Notes (Cost $2,675,000)

  2,675,000

Corporate Notes - 0.1%

Mayer Laboratories, Inc., 6.00%, 12/31/03 (b)(e)(i)

  125,000

  31,250

Powerspan Corp., 10.00%, 12/20/04 (b)(i)

  179,322

  179,322

Soluz Dominicana, Inc., 9.00%, 12/31/03 (b)(d)(i)

  150,000

  25,560

Total Corporate Notes (Cost $454,322)

  236,132

Principal

High Social Impact Investments - 1.8%

Amount

Value

Calvert Social Investment Foundation Notes,

1.74%, 7/1/05(b)(i)

  $3,738,819

  $3,648,863

Total High Social Impact Investments (Cost $3,738,819)

  3,648,863

Certificates of Deposit - 0.1%

Self Help Credit Union, 1.36%, 2/23/04 (b)(k)

 

100,000

  99,880

Shore Bank, 2.20%, 3/15/04 (b)(k)

  100,000

  99,820

Total Certificates of Deposit (Cost $200,000)

  199,700

U.S. Government Agencies and Instrumentalities - 0.6%

U.S. Treasury Bills:

1.05%, 10/23/03 (l)

  200,000

  199,871

1.09%, 10/23/03 (l)

  50,000

  49,967

1.16%, 10/23/03 (l)

  700,000

  699,504

1.185%, 10/23/03 (l)

  200,000

  199,867

Total U.S. Government Agencies

and Instrumentalities (Cost $1,149,209)

  1,149,209

TOTAL INVESTMENTS (Cost $172,442,543) - 93.7%

  184,349,212

Other assets and liabilities, net - 6.3%

  12,314,829

Net Assets - 100%

  $196,664,041

Abbreviations:

ADR: American Depository Receipt

LP: Limited Partnership

GDR: Global Depository Receipt

MFH: Multi-Family Housing

LLC: Limited Liability Corporation

PCL: Public Company Limited

*        Non-income producing security.

(a)      Affiliated company.

(b)      This security was valued by the Board of Directors. See Note A.

(d)      Security is a defaulted security and $28,989 in accrued interest has been written of as of September 30, 2003.

(e)      Security is a defaulted security.

(i)       Restricted securities represent 3.8% of net assets of the Fund.

(k)      These certificates of deposit are fully insured by agencies of the federal government.

(l)       Collateral for futures contracts.

See notes to financial statements.


Forward Foreign Currency Contracts, Open at September 30, 2003

Unrealized

Appreciation/

Contracts to Receive/ Deliver

In Exchange For

Settlement

Contract Value

Depreciation

Date

(US$)

(US$)

__________________________________________________________________________________

Purchases_________________________________________________________________________

Australian Dollar

2,805,885 US Dollars

  $1,717,202

31-Oct-03

1,902,441

  $185,239

Australian Dollar

2,434,570 US Dollars

1,592,085

31-Oct-03

1,650,682

  58,597

Swiss Franc

2,145,613 US Dollars

1,589,579

26-Mar-04

1,632,702

  43,123

Swiss Franc

2,145,613 US Dollars

1,591,925

26-Mar-04

1,632,702

  40,777

Swiss Franc

2,145,613 US Dollars

1,591,937

26-Mar-04

1,632,702

  40,765

Swiss Franc

2,145,613 US Dollars

1,593,278

26-Mar-04

1,632,702

  39,424

Swiss Franc

2,145,613 US Dollars

1,592,292

26-Mar-04

1,632,702

  40,410

Euro

464,901 US Dollars

531,172

26-Mar-04

539,198

  8,026

Euro

464,901 US Dollars

531,521

26-Mar-04

539,198

  7,677

Euro

929,802 US Dollars

1,061,092

26-Mar-04

1,078,396

  17,304

Japanese Yen

356,505,000 US Dollars

2,995,840

31-Oct-03

3,203,093

  207,253

__________________________________________________________________________________

_________________________________________________________Total Purchases          $688,595

__________________________________________________________________________________

Sales_____________________________________________________________________________

Australian Dollar

1,796,009 US Dollars

  $1,097,793

31-Oct-03

1,217,727

  ($119,934)

Australian Dollar

1,198,015 US Dollars

731,987

31-Oct-03

812,275

  (80,288)

British Pound

548,844 US Dollars

895,692

26-Mar-04

900,922

  (5,230)

British Pound

548,844 US Dollars

897,635

26-Mar-04

900,922

  (3,287)

British Pound

548,845 US Dollars

897,635

26-Mar-04

900,922

  (3,287)

Japanese Yen

51,151,400 US Dollars

431,221

31-Oct-03

459,580

  (28,359)

Japanese Yen

133,442,000 US Dollars

1,123,277

31-Oct-03

1,198,937

  (75,660)

Japanese Yen

186,439,000 US Dollars

1,569,352

31-Oct-03

1,675,100

  (105,748)

Japanese Yen

59,505,000 US Dollars

500,000

31-Oct-03

534,635

  (34,635)

Swedish Krona

962,470 US Dollars

121,719

26-Mar-04

123,220

  (1,501)

Swedish Krona

962,470 US Dollars

122,492

26-Mar-04

123,220

  (728)

__________________________________________________________________________________

_____________________________________________________________Total Sales       ($458,657)

__________________________________________________________________________________

____________________________________________Total Net Unrealized Appreciation           $229,938

See notes to financial statements.


Underlying

Unrealized

# of

Expiration

Face Amount

Appreciation

Futures*

Contracts

  Date

at Value

(Depreciation)

Purchased:

FTSE 100 Index

  47

12/03

  $3,106,203

  ($97,094)

CAC 40 Index

  28

10/03

  1,023,220

  (32,395)

DAX Index

  63

12/03

  5,994,972

  (559,766)

MIB 30 Index

  7

12/03

  1,012,094

  (27,462)

TSE Topix Index

  19

12/03

  1,727,116

  (48,471)

Total Purchased

 

 

  ($765,188)

Sold:

S&P CAN 60 Index

  17

12/03

  $1,050,902

  $26,355

Total Sold

  $26,355

* Futures collateralized by 1,150,000 units of U.S. Treasury Bills.

See notes to financial statements.


Statement of Assets and Liabilities

September 30, 2003

Assets

Value

Investments in securities, at value (Cost $172,442,543) -

see accompanying schedule

$184,349,212

Cash

11,843,090

Unrealized appreciation on forward foreign currency contracts

688,595

Receivable for securities sold

8,166

Receivable for shares sold

389,980

Interest and dividends receivable

393,979

Other assets

117,165

Total assets

197,790,187

Liabilities

Payable for shares redeemed

38,456

Payable for futures variation margin

164,222

Payable to Calvert Asset Management Co., Inc.

226,966

Payable to Calvert Administrative Services Co.

53,416

Payable to Calvert Shareholder Services, Inc.

11,339

Payable to Calvert Distributors, Inc.

46,889

Unrealized depreciation on forward foreign currency contracts

458,657

Accrued expenses and other liabilities

126,201

Total liabilities

1,126,146

Net Assets

$196,664,041

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, Class C and Class I combined:

Class A: 11,184,928 shares outstanding

$186,156,028

Class B: 455,234 shares outstanding

8,729,435

Class C: 740,983 shares outstanding

12,996,511

Class I: 1,188,595 shares outstanding

28,306,666

Undistributed net investment income

2,197,017

Accumulated net realized gain (loss) on investments

(53,196,188)

Net unrealized appreciation (depreciation) on investments

11,474,572

Net Assets

$196,664,041

Net Asset Value Per Share

Class A (based on net assets of $162,699,200)

$14.55

Class B (based on net assets of $6,175,618)

$13.57

Class C (based on net assets of $9,763,662)

$13.18

Class I (based on net assets of $18,025,561)

$15.17

 

See notes to financial statements.

Statement of Operations

Year Ended September 30, 2003

Net Investment Income

Investment Income:

Dividend income (net of foreign taxes withheld of $490,426)

$4,427,759

Interest income

92,365

Total investment income

4,520,124

Expenses:

Investment advisory fee

1,223,345

Transfer agency fees and expenses

585,666

Distribution Plan expenses:

Class A

355,723

Class B

50,770

Class C

82,102

Directors' fees and expenses

48,409

Administrative fees

555,822

Custodian fees

306,460

Registration fees

51,303

Reports to shareholders

119,905

Professional fees

31,960

Miscellaneous

73,243

Total expenses

3,484,708

Reimbursement from Advisor:

Class A

(27,462)

Class B

(980)

Class C

(1,584)

Class I

(22,450)

Fees paid indirectly

(11,239)

Net expenses

3,420,993

Net Investment Income

1,099,131

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investments

(10,655,118)

Foreign currency transactions

1,176,958

Futures

120,134

(9,358,026)

Change in unrealized appreciation or (depreciation) on:

Investments and foreign currencies

41,329,270

Assets and liabilities denominated in foreign currencies

206,766

Futures

(763,458)

40,772,578

Net Realized and Unrealized Gain

(Loss)

31,414,552

Increase (Decrease) in Net Assets

Resulting From Operations

$32,513,683

See notes to financial statements.


Statements of Changes in Net Assets

Year Ended

Year Ended

September 30,

September 30,

Increase (Decrease) in Net Assets

2003

2002

Operations:

Net investment income

$1,099,131

$187,631

Net realized gain (loss)

(9,358,026)

(35,243,739)

Change in unrealized appreciation or (depreciation)

40,772,578

14,771,208

Increase (Decrease) in Net Assets

Resulting From Operations

32,513,683

(20,284,900)

Distributions to shareholders from

Net investment income:

Class A Shares

(648,785)

--

Class B Shares

(22,167)

--

Class C Shares

(36,190)

--

Class I Shares

(30,094)

--

Net realized gain:

Class A Shares

--

(855,302)

Class B Shares

--

(27,385)

Class C Shares

--

(45,320)

Class I Shares

--

(126,199)

Total distributions

(737,236)

(1,054,206)

Capital share transactions:

Shares sold:

Class A Shares

73,404,754

77,599,181

Class B Shares

1,817,241

1,525,730

Class C Shares

2,392,549

3,655,045

Class I Shares

10,982,600

2,148,284

Shares issued from merger (See Note A):

Class A

--

1,830,011

Reinvestment of distributions:

Class A Shares

594,397

792,023

Class B Shares

19,341

24,505

Class C Shares

33,081

41,796

Class I Shares

29,276

119,566

Redemption fees:

Class A Shares

63,089

255,963

Shares redeemed:

Class A Shares

(69,095,200)

(85,362,691)

Class B Shares

(1,017,597)

(941,648)

Class C Shares

(1,216,412)

(2,994,487)

Class I Shares

(394,192)

(16,418,101)

Total capital share transactions

17,612,927

(17,724,823)

Total Increase (Decrease) in Net Assets

49,389,374

(39,063,929)

Net Assets

Beginning of year

147,274,667

186,338,596

End of year (including undistributed net investment income

of $2,197,017 and $694,436, respectively.)

$196,664,041

$147,274,667

See notes to financial statements.


Statements of Changes in Net Assets

Year Ended

Year Ended

September 30,

September 30,

Capital Share Activity

2003

2002

Shares sold:

Class A Shares

5,754,470

5,481,345

Class B Shares

146,384

112,282

Class C Shares

202,140

280,228

Class I Shares

735,993

160,346

Shares issued from merger (See Note A):

Class A

--

144,323

Reinvestment of distributions:

Class A Shares

47,177

52,912

Class B Shares

1,630

1,710

Class C Shares

2,870

3,022

Class I Shares

2,243

7,789

Shares redeemed:

Class A Shares

(5,451,679)

(6,002,043)

Class B Shares

(83,180)

(70,431)

Class C Shares

(103,824)

(231,619)

Class I Shares

(29,620)

(1,269,402)

Total capital share activity

1,224,604

(1,329,538)

See notes to financial statements.


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 operation of each series is accounted for separately. The Fund offers four classes of shares of capital stock. Class A shares are sold with a maximum front-end sales charge of 4.75%. 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 investors have owned the 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 of purchase. Class B and Class C shares have higher levels of expenses than Class A shares. Class I shares require a minimum account balance of $1,000,000. The $1 million minimum initial investment may be waived for certain institutional accounts, where it is believed to be in the best interest of the Fund and its shareholders. Class I shares have no front-end or deferred sales charge. 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.

On September 13, 2002, the net assets of the Calvert South Africa Fund merged into the Calvert World Values International Equity Fund. The merger was accomplished by a tax-free exchange of 144,323 Class A shares of the International Equity Fund (valued at $1,830,011) for 168,200 Class A shares of the South Africa Fund outstanding at September 13, 2002.  The South Africa Fund's net assets at that date, including $274,438 of unrealized depreciation and $5,638,571 of net realized loss were combined with those of the International Equity Fund.

Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time), and at such other times as may be necessary or appropriate. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Fund, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. 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. Short-term notes are stated at amortized cost, which approximates fair value. 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. 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 for the investments existed, and the differences could be material.

At September 30, 2003, $7,638,476, or 3.9% of net assets, were valued by 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 Fund may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date.  Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract.  While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Fund.  When a futures contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract.  The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Fund's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms.

Restricted Securities:   The Fund may invest in securities that are subject to legal or contractual restrictions on resale. Generally, these securities may only be sold publicly upon registration under the Securities Act of 1933 or in transactions exempt from such registration.

Security Transactions and Net 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, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Investment income and realized and unrealized gains and losses are allocated to separate classes of shares based upon the relative net assets of each class. Expenses arising in connection with a class are charged directly to that class. Expenses common to the classes are allocated to each class in proportion to their relative net assets.

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 converted 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 and foreign currencies is included in the net realized and unrealized gain or loss on securities and foreign currencies.


Forward Currency Contracts:   The Fund enters into forward currency contracts to protect the value of securities and related receivables and payables against changes in future foreign exchange rates and to hedge against its currency exposure relative to that of the MSCI EAFE Index. The Fund's risks in using these contracts include movement in the values of the foreign currencies relative to the U.S. dollar, and the ability of the counterparties to fulfill their obligations under the contracts.

Forward currency contracts are valued at their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Net Assets as an asset (liability) and in the Statement of Operations as unrealized appreciation (depreciation) until the contracts are closed, when they are recorded as realized forward currency contract gains (losses).

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 accounting principles generally accepted in the United States 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 reported period. Actual results could differ from those estimates.

Redemption Fees: In an effort to minimize the effect of any market timers, the Fund charges a redemption fee to shareholders upon the redemption of certain large-ticket purchases redeemed within 30 days of purchase. The fee, which is payable to the Fund, is equal to 2% of redemption proceeds, on purchases in excess of $100,000 that are redeemed or exchanged out of the Fund in less than 30 days.

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 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 continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable 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 Ameritas Acacia Mutual Holding 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: .75% on the first $250 million, .725% on the next $250 million and .675% on the excess of $500 million.

The Advisor contractually reimbursed the Fund for expenses of $52,476 for the year ended September 30, 2003. Effective February 1, 2003, the contractual expense cap became 1.10% for Class I shares. For the purposes of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, extraordinary expenses and capital items.

Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and principal underwriter for the Fund. Distribution Plans, adopted by Class A, Class B and Class C 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 shares, respectively. Class I shares do not have Distribution Plan expenses.

The Distributor received $62,362 as its portion of commissions charged on sales of the Fund's Class A shares for the year ended September 30, 2003.

Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, is the shareholder servicing agent for the Fund. For its services, CSSI received a fee of $135,102 for the year ended September 30, 2003. Boston 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 .35% for Class A, Class B and Class C shares and .15% for Class I shares, based on their average daily net assets.

The Fund invests in Community Investment Notes issued by the Calvert Social Investment Foundation (the "CSI Foundation"). The CSI Foundation is a 501(c)(3) non-profit organization that receives in-kind support from the Calvert Group, Ltd. and its subsidiaries. The Fund has received from the Securities and Exchange Commission an exemptive order permitting the Fund to make investments in these notes under certain conditions.

Each Director of the Fund who is not an employee of the Advisor or its affiliates receives an annual retainer of $9,500 plus $500 for each Board and Committee meeting attended. An additional fee of $5,000 annually is paid to the Lead Independent Director. 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 $119,549,476 and $109,136,069, respectively.

The cost of investments owned at September 30, 2003 for federal income tax purposes was $172,558,866. Net unrealized appreciation aggregated $11,790,346, of which $21,154,953 related to appreciated securities and $9,364,607 related to depreciated securities.

Net capital loss carryforwards of $633,283 (from Calvert South Africa Fund), $8,132,920 and $35,108,441 expire on September 30, 2009, September 30, 2010 and September 30, 2011, respectively.

The Fund's use of net capital loss carryforwards from Calvert South Africa Fund may be limited under certain tax provisions.

The Fund intends to elect to defer approximately $9,217,061 of post-October losses to fiscal year ending September 30, 2004.  Such losses if unutilized will expire in 2012.

The tax character of dividends and distributions paid during the years ended September 30, 2003, and September 30, 2002 were as follows:       

                                   

Distributions paid from:

2003

2002

Ordinary income

$737,236

--

Long-term capital gain

--

$1,504,206

Total

$737,236

$1,504,206

                 

                                   

As of September 30, 2003, the components of distributable earnings/(accumulated losses) on a tax basis were as follows:                                       

Undistributed ordinary income

$2,438,794

Capital loss carryforward

(43,874,644)

Unrealized appreciation (depreciation)

11,790,346

($29,645,504)

Reclassifications have been made to the funds components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations.  The primary permanent differences causing such reclassifications are due to currency gains and losses and treatment of partnerships for federal tax purposes.

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to wash sales, post October losses, treatment of partnerships for federal tax purposes and currency contracts.

The Fund paid foreign taxes of $472,604 and recognized foreign source income of $4,483,716.  Pursuant to IRC section 853, the Fund designates $.03 per share of foreign taxes and $.36 per share of foreign source income as having been paid for taxable year ended September 30, 2003.


The Fund may sell or purchase securities to and from other funds managed by the Advisor, typically short-term variable rate demand notes. Interportfolio transactions are primarily used for cash management purposes. Interportfolio transactions are made pursuant to Rule 17a-7 of the Investment Company Act of 1940. For the year ended September 30, 2003, purchase and sales transactions were $7,365,000 and $4,665,000, respectively.

Note D -- Line of Credit

A financing agreement is in place with all Calvert Group Funds (except for the Calvert Social Investment Fund's Balanced and Enhanced Equity Portfolios, the CVS Calvert Social Balanced Portfolio and the CVS Ameritas Index 500 Portfolio) 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. The Fund had no loans outstanding pursuant to this line of credit at September 30, 2003.

For the year ended September 30, 2003, borrowings by the Fund under the Agreement were as follows:

Weighted

Month of

Average

Average

Maximum

Maximum

Daily

Interest

Amount

Amount

Balance

Rate

Borrowed

Borrowed

$92,068

1.84%

$3,394,823

March 2003

Note E -- Affiliated Companies           

An affiliated company is a company in which the Fund has a direct or indirect ownership of, control of, or voting power over 5 percent or more of the outstanding voting shares.  Affiliated companies of the Fund are as follows:

Affiliates

Cost

Value

Empresas ESM, SA de CV

$350,000

$350,000

Northern Power Systems, Inc.

434,812

1,094,625

SEAF Central & Eastern European Growth Fund LLC

879,382

736,856

TOTALS

$1,664,194

$2,181,481

Financial Highlights

Years Ended

September 30,

September 30,

Class A Shares

2003

2002

Net asset value, beginning

$11.99

$13.65

Income from investment operations

Net investment income (loss)

.09

.01

Net realized and unrealized gain (loss)

2.53

(1.59)

Total from investment operations

2.62

(1.58)

Distributions from

Net investment income

(.06)

--

Net realized gains

--

(.08)

Total distributions

(.06)

(.08)

Total increase (decrease) in net asset value

2.56

(1.66)

Net asset value, ending

$14.55

$11.99

Total return*

21.93%

(11.69%)

Ratios to average net assets:

Net investment income (loss)

.72%

.06%

Total expenses

2.07%

2.02%

Expenses before offsets

2.05%

2.00%

Net expenses

2.05%

1.99%

Portfolio turnover

71%

106%

Net assets, ending (in thousands)

$162,699

$129,887

Years Ended

September 30,

September 30,

September 30,

Class A Shares

2001

2000

1999

Net asset value, beginning

$21.77

$21.89

$18.57

Income from investment operations

Net investment income

.01

(.03)

.01

Net realized and unrealized gain (loss)

(6.75)

.87

4.94

Total from investment operations

.

(6.74)

.84

4.95

Distributions from

Net investment income

--

--

(.07)

Net realized gains

(1.38)

(.96)

(1.56)

Total distributions

(1.38)

(.96)

(1.63)

Total increase (decrease) in net asset value

(8.12)

(.12)

3.32

Net asset value, ending

$13.65

$21.77

$21.89

Total return*

(32.93%)

3.36%

27.53%

Ratios to average net assets:

Net investment income (loss)

.07%

(.15%)

.04%

Total expenses

1.85%

1.81%

1.87%

Expenses before offsets

1.85%

1.81%

1.87%

Net expenses

1.83%

1.73%

1.83%

Portfolio turnover

93%

76%

82%

Net assets, ending (in thousands)

$152,278

$238,646

$231,516

        

 


Years Ended

September 30,

September 30,

Class B Shares

2003

2002

Net asset value, beginning

$11.33

$13.09

Income from investment operations

Net investment income (loss)

(.08)

(.16)

Net realized and unrealized gain (loss)

2.38

(1.52)

Total from investment operations

2.30

(1.68)

Distributions from:

Net investment income

(.06)

--

Net realized gains

--

(.08)

Total distributions

(.06)

(.08)

Total increase (decrease) in net asset value

2.24

(1.76)

Net asset value, ending

$13.57

$11.33

Total return*

20.34%

(12.96%)

Ratios to average net assets

Net investment income (loss)

(.64%)

(1.22%)

Total expenses

3.44%

3.33%

Expenses before offsets

3.42%

3.31%

Net expenses

3.41%

3.31%

Portfolio turnover

71%

106%

Net assets, ending (in thousands)

$6,176

$4,424

        

Years Ended

September 30,

September 30,

September 30,

Class B Shares

2001

2000

1999

Net asset value, beginning

$21.20

$21.56

$18.48

Income from investment operations

Net investment income (loss)

(.18)

(.23)

(.15)

Net realized and unrealized gain (loss)

(6.55)

.83

4.79

Total from investment operations

(6.73)

.60

4.64

Distributions from:

Net realized gains

(1.38)

(.96)

(1.56)

Total distributions

(1.38)

(.96)

(1.56)

Total increase (decrease) in net asset value

(8.11)

(.36)

3.08

Net asset value, ending

$13.09

$21.20

$21.56

Total return*

(33.82%)

2.28%

25.84%

Ratios to average net assets:

Net investment income (loss)

(1.13%)

(1.29%)

(1.20%)

Total expenses

3.08%

3.04%

3.62%

Expenses before offsets

3.08%

3.04%

3.20%

Net expenses

3.06%

2.96%

3.16%

Portfolio turnover

93%

76%

82%

Net assets, ending (in thousands)

$4,542

$5,577

$3,133

        


Years Ended

September 30,

September 30,

Class C Shares

2003

2002

Net asset value, beginning

$10.97

$12.64

Income from investment operations

Net investment income (loss)

(.03)

(.12)

Net realized and unrealized gain (loss)

2.30

(1.47)

Total from investment operations

2.27

(1.59)

Distributions from:

Net investment income

(.06)

--

Net realized gains

--

(.08)

Total distributions

(.06)

(.08)

Total increase (decrease) in net asset value

2.21

(1.67)

Net asset value, ending

$13.18

$10.97

Total return*

20.72%

(12.71%)

Ratios to average net assets:

Net investment income (loss)

(.27%)

(.95%)

Total expenses

3.09%

3.05%

Expenses before offsets

3.07%

3.04%

Net expenses

3.07%

3.03%

Portfolio turnover

71%

106%

Net assets, ending (in thousands)

$9,764

$7,021

Years Ended

September 30,

September 30,

September 30,

Class C Shares

2001

2000

1999

Net asset value, beginning

$20.46

$20.81

$17.83

Income from investment operations

Net investment income (loss)

(.14)

(.22)

(.17)

Net realized and unrealized gain (loss)

(6.30)

.83

4.71

Total from investment operations

.

(6.44)

.61

4.54

Distributions from

Net realized gains

(1.38)

(.96)

(1.56)

Total distributions

(1.38)

(.96)

(1.56)

Total increase (decrease) in net asset value

(7.82)

(.35)

2.98

Net asset value, ending

$12.64

$20.46

$20.81

Total return*

(33.62%)

2.41%

26.25%

Ratios to average net assets:

Net investment income (loss)

(.89%)

(1.06%)

(.92%)

Total expenses

2.81%

2.75%

2.83%

Expenses before offsets

2.81%

2.75%

2.83%

Net expenses

2.79%

2.67%

2.80%

Portfolio turnover

93%

76%

82%

Net assets, ending (in thousands)

$7,434

$11,278

$9,777

        

Years Ended

September 30,

September 30,

September 30,

Class I Shares

2003

2002

2001

Net asset value, beginning

$12.38

$13.97

$22.03

Income from investment operations

Net investment income

.22

.16

.18

Net realized and unrealized gain (loss)

2.63

(1.67)

(6.86)

Total from investment operations

2.85

(1.51)

(6.68)

Distributions from:

Net investment income

(.06)

--

--

Net realized gains

--

(.08)

(1.38)

Total distributions

(.06)

(.08)

(1.38)

Total increase (decrease) in net asset value

2.79

(1.59)

(8.06)

Net asset value, ending

$15.17

$12.38

$13.97

Total return*

23.12%

(10.93%)

(32.25%)

Ratios to average net assets:

Net investment income (loss)

1.65%

1.05%

1.09%

Total expenses

1.39%

1.27%

1.19%

Expenses before offsets

1.09%

1.06%

1.07%

Net expenses

1.09%

1.05%

1.05%

Portfolio turnover

71%

106%

93%

Net assets, ending (in thousands)

$18,026

$5,943

$22,085

Periods Ended

September 30,

September 30,

Class I Shares

2000

1999#

Net asset value, beginning

$21.99

$19.91

Income from investment operations

Net investment income

.16

.15

Net realized and unrealized gain (loss)

.84

1.93

Total from investment operations

1.00

2.08

Distributions from:

Net realized gains

(.96)

--

Total distributions

(.96)

--

Total increase (decrease) in net asset value

.04

2.08

Net asset value, ending

$22.03

$21.99

Total return*

4.10%

10.45%

Ratios to average net assets:

Net investment income (loss)

.90%

1.19% (a)

Total expenses

1.28%

1.53% (a)

Expenses before offsets

1.12%

1.09% (a)

Net expenses

1.05%

1.05% (a)

Portfolio turnover

76%

82%

Net assets, ending (in thousands)

$10,114

$3,006

        

(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.

#        From April 1, 1999 inception.

See notes to financial statements.


Explanation of Financial Tables

Schedule of Investments

The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period.  Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.

Statement of Assets and Liabilities

The Statement of Assets and Liabilities is often referred to as the fund's balance sheet.  It lists the value of what the fund owns, is due and owes on the last day of the reporting period.  The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received.  The fund's liabilities include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid.  The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period.  The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding.  This statement is accompanied by a Schedule of Investments.  Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.

Statement of Net Assets

The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period.  The Statement of Net Assets includes a Schedule of Investments.  Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets.  Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.

At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets.  Paid in Capital is the money invested by shareholders and represents the bulk of net assets.  Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date.  Accumulated Realized Losses will appear as negative balances.  Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.

Statement of Operations

The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund.  Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund.  Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports.  Expense offsets (fees paid indirectly) are also shown.  Credits earned from offset arrangements are used to reduce the fund's expenses.  This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.

Statement of Changes in Net Assets

The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods.  Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.

The Operations section of the report summarizes information detailed in the Statement of Operations.  The Distribution section shows the dividend and capital gain distributions made to shareholders.  The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes.  The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed.  The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.

Financial Highlights

The Financial Highlights table provides a per-share breakdown per class of the components that affect the fund's net asset value for current and past reporting periods.  The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period.  Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value.  Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment.  Total distributions include distributions from net investment income and net realized gains.  Long-term gains are earned on securities held in the fund more than one year.  Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes.  The expense ratio is a fund's cost of doing business, expressed as a percentage of net assets.  These expenses directly reduce returns to shareholders.  Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund.  Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.


Director and Officer Information Table

# of Calvert

Position

Position

Portfolios

Other

Name &

with

Start

Principal Occupation

Overseen

Directorships

Date of Birth

Fund

Date

During Last 5 Years

(Not   Applicable   to  Officers)

JOHN GUFFEY, JR.

DOB: 05/15/48

Director 

1992

Treasurer and Director of Silby, Guffey and Co., Inc. a venture capital firm.

20

Ariel Funds

Calvert Foundation

Calvert Ventures, LLC

TERRENCE J. MOLLNER, Ed.D.

DOB: 12/13/44

Director

 

 

1992

Founder, Chairperson, and President of Trusteeship Institute, Inc., a diverse foundation known principally for its consultation to corporations converting to cooperative employee-ownership and the development of socially and spiritually responsible investment vehicles.

8

Hampshire County United Way

Cyberlore Studies, Inc.

Calvert Foundation

Ben & Jerry's Homemade, Inc.

RUSTUM ROY

DOB: 07/03/24

Director 

1992

Evan Pugh Professor of the Solid State and of Geo-chemistry Emeritus, at Pennsylvania State University, and Corporation Chair, National Association of Science, Technology, and Society.

2

Chairperson,  Friends of Health

TESSA TENNANT

DOB: 05/29/59

Director

1992

Chair of AsriA Ltd., a not-for-profit membership organization for Socially Responsible Investing (SRI), serving the Asia Pacific region.  Previously, Ms. Tennant served as Head of SRI Policy for Henderson Investors, U.K. and Head of green and ethical investing for National Provident Investment Managers Ltd.  Initially, Ms. Tennant headed the Environmental Research Unit of Jupiter Tyndall Merlin Ltd., and served as Director of Jupiter Tyndall Merlin investment managers.

2

Solar Century Company, Ltd.

BARBARA J. KRUMSIEK

DOB: 08/09/52

(interested Director)

Director &

President 

1997

President, Chief Executive Officer and Vice Chairman of Calvert Group, Ltd.  Prior to joining Calvert in 1997, Ms. Krumsiek had served as a Managing Director of Alliance Fund Distributors, Inc.

37

Calvert Foundation

D. Wayne Silby, Esq.

DOB: 07/20/48

(interested Director)

Director

1992

Mr. Silby is Chairman of GroupServe Foundation, a software company focused on collaborative tools for non-profit groups. He is an officer and director of Silby, Guffey and Co., Inc., a private investment company.

21

Ameritas Acacia Mutual Life Insurance Company

Calvert Foundation

Grameen Foundation USA

SUSAN walker Bender, Esq.

DOB: 01/29/59

Officer 

   

1992

Assistant Vice President and Associate General Counsel of Calvert Group, Ltd.

IVY WAFFORD DUKE, Esq.

DOB: 09/07/68

Officer 

   

1996

Assistant Vice President and Associate General Counsel of Calvert Group, Ltd.

Daniel K. Hayes

DOB: 09/09/50

Officer 

   

1996

Senior Vice President of Calvert Asset Management Company, Inc.

HUI PING HO, CPA

DOB: 01/06/65

Officer 

   

2000

Tax Compliance Manager of Calvert Group, Ltd. and Assistant Fund Treasurer.

Gregory J. Keifer

DOB: 08/22/64

Officer

2003

Compliance Officer and Assistant Secretary of the Funds. Prior to working at Calvert Group, Mr. Keifer was Assistant Director of Compliance with Legg Mason Wood Walker, Incorporated and a senior compliance analyst with BISYS Fund Services.

LANCELOT A. KING, Esq.

DOB: 07/19/70

Officer

2002

Assistant Secretary and Assistant General Counsel of Calvert Group, Ltd. Prior to working at Calvert Group, Mr. King was an associate with Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, and also with Kirkpatrick & Lockhart.

William M. Tartikoff, Esq.

DOB: 08/12/47

Officer 

   

1992

Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd.

Ronald M. Wolfsheimer, CPA

DOB: 07/24/52

Officer 

   

1992

Senior Vice President and Chief Financial Officer of Calvert Group, Ltd.  and Fund Treasurer.

MICHAEL V. YUHAS JR., CPA

DOB: 08/04/61

Officer 

   

1999

Director of Fund Administration of Calvert Group, Ltd. and Fund Controller.

The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, except Mr. Silby's address is 1715 18th Street, N.W., Washington, DC  20009. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's advisor and its affiliates.  Mr. Silby is an interested person of the Fund since he is a director of the parent company of the Fund's advisor.

Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.


SUPPLEMENT TO

CLASS I (INSTITUTIONAL) SHARES PROSPECTUS

Calvert Social Investment Fund Portfolios

Calvert Social Index Fund

Calvert Large Cap Growth Fund

Calvert Capital Accumulation Fund

Calvert World Values International Equity Fund

Calvert New Vision Small Cap Fund

Calvert Income Fund

Calvert Short Duration Income Fund

Prospectus dated: January 31, 2003

Date of Supplement: June 9, 2003

The $1 million minimum initial investment may be waived for certain  institutional accounts, where it is believed to be in the best interest of the Fund and its shareholders. 

Please note this change in the prospectus.

SUPPLEMENT TO

PROSPECTUS

Calvert Social Investment Fund (CSIF) Balanced Portfolio

CSIF Equity Portfolio

CSIF Enhanced Equity Portfolio

CSIF Bond Portfolio

CSIF Money Market Portfolio

Calvert Social Index Fund

Calvert Large Cap Growth Fund

Calvert Capital Accumulation Fund

Calvert World Values International Equity Fund

Calvert New Vision Small Cap Fund

Date of Prospectus: January 31, 2003 as revised June 30, 2003

Class I (Institutional) Shares

(All Portfolios)

Date of Prospectus: January 31, 2003

Calvert Income Fund

Calvert Short Duration Income Fund

Date of Prospectus: January 31, 2003 as revised September 15, 2003

CALVERT VARIABLE SERIES, INC.

PROSPECTUS

Calvert Social Balanced Portfolio

Calvert Income Portfolio

Date of Prospectus: April 30, 2003

Date of This Supplement: October 30, 2003

Please replace the second paragraph under "About Calvert" with the following: (for Calvert Variable Series Social Balanced and Income Portfolios replace the third paragraph under "The Fund and Its Management" with the following:)

Steven Falci serves as Calvert's Chief Investment Officer, Equities and oversees the investment strategy and management of all Calvert equity and balanced portfolios.  Calvert uses a team approach to its management of the fixed-income portfolios.  Gregory Habeeb heads this team for Calvert's taxable fixed-income portfolios. Mr. Habeeb has over 20 years of experience as an analyst, trader, and portfolio manager.  Matt Nottingham is also a member of the fixed-income management team. Mr. Nottingham has 7 1/2 years of experience as an analyst, trader, and portfolio manager.

Calvert World Values International Equity Fund

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 BFDS

330 West 9th Street

Kansas City, MO 64105

Web Site

http://www.calvert.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.

Calvert's Family of Funds

Tax-Exempt Money Market Funds

CTFR Money Market Portfolio

CTFR California Money Market Portfolio

Taxable Money Market Funds

First Government Money Market Fund

CSIF Money Market Portfolio

Balanced Fund

CSIF Balanced Portfolio

Municipal Funds

CTFR Limited-Term Portfolio

CTFR Long-Term Portfolio

CTFR Vermont Municipal Portfolio

National Muni. Intermediate Portfolio

California Muni. Intermediate Portfolio

Taxable Bond Funds

CSIF Bond Portfolio

Income Fund

Short Duration Income Fund

Equity Funds

CSIF Enhanced Equity Portfolio

CSIF Equity Portfolio

Calvert Large Cap Growth Fund

Capital Accumulation Fund

CWV International Equity Fund

New Vision Small Cap Fund

Calvert Social Index Fund

printed on recycled paper using soy-based inks

<page>

SIGNATURE PAGE FOR FORM N-CSR

         Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CALVert world values fund

By:     /s/Barbara Krumsiek

         Barbara Krumsiek

         President -- Principal Executive Officer

Date: November 25, 2003

         Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

         /s/Barbara Krumsiek

         Barbara Krumsiek

         President -- Principal Executive Officer

Date: November 25, 2003

         /s/Ronald Wolfsheimer    

          Ronald Wolfsheimer

         Treasurer -- Principal Financial Officer

Date: November 30, 2003