For over 20 years, Calvert has been committed to corporate responsibility-in the way we invest, and in the way we conduct our own business. At the core of this commitment is our belief that corporations and mutual funds should be governed and managed for the benefit of their shareholders. Calvert's trading policies reflect this commitment and belief.
Market Timing
Calvert's long-standing policy against the market timing of its mutual funds is clearly stated in our Fund prospectuses and strictly enforced. (Market timing of mutual funds is the rapid trading in and out of funds for quick profit, which can affect a fund's overall performance.) Each day we review the trading activity across all our Calvert Funds, analyzing the purchases and sales so as to assure that all transactions are within Calvert's trading guidelines, including prohibitions against market timing. If we determine that an investor is trying to violate these guidelines, we refuse the trade and take action to restrict future trading activity.
Several years ago, we imposed the maximum permissible 2% redemption in Calvert World Values International Equity Fund as a deterrent to market timing. To further safeguard shareholder value, as of February 2004 Calvert extended this 2% redemption fee policy across all Fund redemptions (except money market funds), including exchanges, made within 30 days of purchase (five days for Calvert Tax-Free Reserves Limited-Term Portfolio and Calvert California Limited-Term Municipal Fund).
With regard to plan sponsor and institutional accounts, please note that Calvert does not directly impose the redemption fee on retirement platforms or omnibus accounts; however, these groups are not excluded from the redemption fee. We have worked with these various platforms to generally ensure a redemption fee is applied either directly on their system or, if that is not feasible, the fee is applied manually to the underlying account.
In all cases, the redemption fee that is charged on these trades is paid to the applicable Fund.
Late Trading and Selective Arrangements
Similarly, Calvert has no selective arrangements with clients for market timing or late-trading purposes. Late trading, which is illegal, involves the placement of orders at that day's net asset value after the official close of the market. Specifically, according to SEC rules, orders received prior to 4:00 pm Eastern time are required to be executed at that day's closing price. Orders received after 4:00 pm Eastern time must be executed at the following day's closing price. This rule also applies to shareholders who place orders through intermediaries such as brokers and retirement plan platforms. These intermediaries are authorized to transmit their customer orders for Calvert Funds at that day's closing price after 4:00 pm Eastern time only if the intermediary received the orders prior to that time. At Calvert, we expect these intermediaries to enforce these rules strictly.
Calvert has contacted the broker/dealers and 401(k) platforms with whom we do business seeking their assurance that they do not accept orders for Calvert Funds at that day's closing price after 4:00 pm and to request that they review Calvert's clear policies prohibiting market timing. We have also required each of our employees to sign a pledge stating that they will not engage in market timing of Calvert Funds.
These policies reflect our ongoing commitment to transparency and accountability in our operations and to protecting shareholder value in our Funds. We also continue to support good governance practices and regulatory reforms that promote corporate responsibility and integrity within our own industry.
If you have any questions about Calvert's trading policies and practices, please call us at 800.368.2746.
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