[Federal Register Volume 84, Number 194 (Monday, October 7, 2019)]
[Notices]
[Pages 53507-53509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21810]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33653; 812-14993]


Calvert Fund, et al.

October 2, 2019.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 6(c) and 17(b) of 
the Investment Company Act of 1940 (``Act'') for exemptions from 
section 17(a) of the Act, and under section 17(d) of the Act and rule 
17d-1 thereunder to permit certain joint transactions.

Summary of Application: Applicants request an order (``Requested 
Order'') to permit certain registered investment companies to invest a 
portion of their assets in certain fixed rate notes issued in 
connection with a community investment program sponsored by an 
affiliated non-profit corporation.

Applicants: Calvert Fund, Calvert Impact Fund, Inc., Calvert Management 
Series, Calvert Responsible Index Series, Inc., Calvert Social 
Investment Fund, Calvert Variable Series, Inc., Calvert World Values 
Fund, Inc. (collectively, the ``Calvert Funds''), and Calvert Research 
and Management (``CRM'' and, collectively with the Calvert Funds, the 
``Applicants'').

Filing Dates: The application was filed on December 27, 2018 and 
amended on May 29, 2019.

Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on October 28, 2019, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090. Applicants: the Calvert Funds, 
1825 Connecticut Ave. NW, Suite 400, Washington, DC 20009 and Katy D. 
Burke, Calvert Research and Management, Two International Place, 
Boston, MA 02110.

FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 
551-6819, or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. Each Calvert Fund is registered under the Act as an open-end 
management investment company that offers one or more series of shares. 
Calvert Fund, Calvert Management Series, and Calvert Social Investment 
Fund are each organized as a business trust under the laws of the 
Commonwealth of Massachusetts. Calvert World Values Fund, Inc., Calvert 
Responsible Index Series, Inc., Calvert Variable Series, Inc., and 
Calvert Impact Fund, Inc. are each organized as corporations under the 
laws of the state of Maryland. All of the Calvert Funds are advised by 
CRM, an investment adviser registered under the Investment Advisers Act 
of 1940 (the ``Advisers Act'').\1\ CRM is a business trust established 
under the laws of the Commonwealth of Massachusetts.
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    \1\ Applicants request that the order apply not only to the 
Applicants, but that it also extend to any other existing or future 
series of the Calvert Funds and to any existing or future registered 
investment management companies or series thereof (collectively with 
the Calvert Funds, the ``Funds'' and each a ``Fund'') that are, or 
may in the future be, advised by CRM or any entity controlling, 
controlled by, or under common control (within the meaning of 
section 2(a)(9) of the Act) with CRM, or any successor in interest 
to any such entity (each and collectively, the ``Adviser''). For 
purposes of the Requested Order, ``successor'' is limited to any 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization. The Adviser of 
each Fund will be an investment adviser registered under the 
Advisers Act. All entities that currently intend to rely on the 
Requested Order have been named as Applicants, and any other entity 
that relies on the Requested Order in the future will comply with 
the terms and conditions of the application.
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    2. Although each of the Calvert Funds has distinct investment 
objectives and policies, a guiding philosophy of each Calvert Fund is 
an interest in fostering environmental, social, and governance 
(``ESG'') initiatives by investing a small percentage of its net assets 
pursuant to special non-principal investment strategies, including high 
social impact (``HSI'') investment opportunities such as the CIN 
Program (as defined below). HSI investments may be made by the Calvert 
Funds in a variety of ways, including through the purchase of debt 
securities. The registration statement of any Fund relying on the 
Requested Order will include disclosure designed to inform investors 
about the risks that may be associated with HSI investing, including 
the fact that such investments may offer a rate of return below the 
market rate prevailing at the time of the investment.
    3. Calvert Impact Capital, Inc. (``CIC'') \2\ is a non-profit 
corporation that was organized for the purpose of, among other things, 
making loans to (and other investments in) organizations aligned with 
CIC's mission and increasing public awareness and knowledge of the 
concept of socially responsible investing. CIC focuses its work on 
offering investors the ability to support organizations that strengthen 
communities and sustain the planet. Applicants state that CIC is exempt 
from registration as an investment company under section 3(c)(10)(A) of 
the Act.
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    \2\ Effective October 31, 2017, Calvert Social Investment 
Foundation, Inc. changed its legal name to Calvert Impact Capital, 
Inc.
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    4. The Community Investment Notes Program (the ``CIN Program'') 
sponsored by CIC is designed to provide financing solutions to 
organizations seeking to address an array of social and environmental 
problems. In connection with the CIN Program, CIC issues notes \3\

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with fixed rates of interest to domestic individuals and institutional 
investors (``Noteholders''). CIC currently offers the notes to 
investors with various set terms and interest rates. A potential 
investor can select the particular note in which it would like to 
invest from the current offerings based on the term of the note and 
corresponding fixed interest rate (currently ranging from zero to four 
percent). The operating expenses associated with the administration of 
CIC's CIN Program are treated by CIC as part of its general operating 
expenses, and there is no fee assessed upon Noteholders for their 
investment in the notes.
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    \3\ Applicants state that such notes are exempt from 
registration under section 3(a)(4) of the Securities Act of 1933.
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    5. From 1998 to 2016, the Calvert Funds' HSI investments included 
the acquisition of notes (the ``Existing Notes'') issued through the 
CIN Program in accordance with an exemptive order issued by the 
Commission in 1998 (the ``1998 Order'').\4\ The 1998 Order permitted 
certain Calvert Funds to invest a portion of their assets in the 
Existing Notes.\5\ The Calvert Funds' former investment adviser, 
Calvert Investment Management, Inc. (``CIM'') was the adviser to the 
registrants relying on the 1998 Order. The Calvert Funds stopped 
relying on the 1998 Order to make additional investments in notes 
issued through the CIN Program following the purchase, on December 30, 
2016, by CRM of substantially all of the business assets of CIM. 
Following this transaction, CRM became the Calvert Funds' investment 
adviser on December 31, 2016.
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    \4\ Investment Company Act Release Nos. 23306 (July 8, 1998) 
(notice) and 23376 (Aug. 4, 1998) (order).
    \5\ As of December 31, 2018, the Existing Notes held by the 
Calvert Funds represented $54.12 million of the approximately 
$410.10 million in notes issued pursuant to the CIN Program. This 
amount represents approximately 13% of the notes issued pursuant to 
the CIN Program and approximately 37% of the $145.81 million of 
notes maturing in 2019.
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    6. From 1998 to 2016, the Boards of Directors/Trustees 
(collectively, the ``Funds' Board'') of the Calvert Funds that invested 
in the Existing Notes and other HSI investments gained experience with 
respect to the oversight of HSI investing. CRM and the Funds' Board 
have determined that the ability to continue to invest through the CIN 
Program would be appropriate for the Calvert Funds, including making 
additional investments in notes issued by CIC through the CIN Program 
(such notes together with the Existing Notes, the ``Notes'').
    7. The Funds' Board has authorized each Calvert Fund to invest up 
to 3% of its net assets in HSI investments. The decision to participate 
in the CIN Program would be made by the Adviser in a manner consistent 
with the investment objectives and policies adopted by the Funds' 
Board, disclosure provided to the Funds' shareholders, the fiduciary 
duties of the Adviser, and subject to the oversight of the Funds' 
Board. The Adviser would not receive any compensation for the Funds' 
investments in the Notes (aside from the potential impact on a Fund's 
asset-based advisory fee). Information about the Calvert Funds' 
investments in the CIN Program is presented to the Funds' Board on a 
quarterly basis, thereby mitigating potential conflicts that CRM may 
have with the CIN Program.
    8. Responsibility for the business, property, and affairs of CIC is 
vested in its Board of Directors (the ``CIC Board''). The CIC Board and 
the Funds' Board share certain common trustees/directors, as described 
in the application. Currently, there is one common trustee/director 
between the CIC Board (comprised of thirteen directors) and the Funds' 
Board (comprised of eight directors/trustees). Further, CRM supports 
CIC in a number of ways. CRM has licensed use of the Calvert name to 
CIC and has committed to make an annual $250,000 donation to CIC in 
each of five consecutive years beginning in 2018. Additionally, in 
response to requests from intermediaries for information about impact 
investing or CIC, representatives of a limited purpose broker-dealer 
affiliated with CRM may direct such intermediaries to CIC.\6\
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    \6\ Neither CRM nor the affiliated broker-dealer would receive 
any compensation in connection with the foregoing activity, and 
neither CRM nor the affiliated broker-dealer anticipates involvement 
in suitability determinations or in selling the Notes directly to 
individuals or organizations on an agency basis.
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Applicants' Legal Analysis

    In light of the overlapping Board members, the Calvert Funds' 
ownership in the Notes, and the other potential means of affiliation 
described in the application, CIC may be deemed to be an affiliated 
person of each of the Calvert Funds for purposes of section 17(a) and 
17(d) of the Act. Additionally, because the Calvert Funds are 
affiliated persons of one another through their common investment 
adviser, each of the Funds might be deemed to be participating in a 
joint transaction with each other Fund through investments in the Notes 
within the scope of section 17(d). Applicants submit that the Requested 
Order would be consistent with the standards of sections 6(c), 17(b), 
and 17(d) of the Act and rule 17d-1 under the Act.

Applicants' Conditions

    Applicants agree that the Requested Order will be subject to the 
following conditions:
    1. The Funds' Board will be responsible for reviewing the CIN 
Program not less frequently than annually. The Funds may continue to 
participate in the CIN Program through investment in the Notes only if, 
at the time of such review, the Funds' Board concludes that (i) 
continued participation in the CIN Program by the Funds remains 
consistent with the investment objectives and policies of each of the 
Funds; and (ii) such participation is not on a basis that is less 
advantageous than that of other Noteholders of the same class.
    2. The Funds will invest in the Notes only in accordance with the 
investment objectives, policies and restrictions of the applicable Fund 
as disclosed in its registration statement, and the Funds will not be 
permitted to acquire the Notes to an extent greater than that which is 
permitted under the terms of their prospectus at the time of such 
investment and any limits approved by those members of the Funds' Board 
who are not ``interested persons'' of the Funds as defined by section 
2(a)(19) of the Act.
    3. The Adviser will not invest in CIC by directly purchasing Notes 
for its own account. Neither the Adviser nor any entity controlling, 
controlled by, or under common control with (within the meaning of 
section 2(a)(9) of the Act) the Adviser will receive any compensation 
for the Funds' investment in the Notes or for services provided to CIC 
in connection with the Funds' investment in the Notes, provided that: 
(i) The market value of the Notes in which the Funds may, from time to 
time, invest will be included in the calculation of any investment 
advisory fee payable by a Fund to its Adviser pursuant to the terms of 
an investment advisory contract that satisfies the requirements of 
section 15(a) of the Act and subject to section 36 of the Act, where 
such fee is calculated based on a percentage of the average daily net 
assets of any such Fund; and (ii) in response to requests from 
intermediaries for information about impact investing or CIC, 
representatives of an entity affiliated with the Adviser may direct 
such intermediaries to CIC, provided that such activities would not 
affect the value of, or interest paid under the terms of, any Note 
purchased by a Fund in reliance on the Requested Order.
    4. All Noteholders will participate in the income (losses) 
generated by the assets underlying the Notes in

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proportion to their respective investments.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21810 Filed 10-4-19; 8:45 am]
BILLING CODE 8011-01-P


