SEC Registration Nos.
811-3591 and 2-80154
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 34 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
Amendment No. 34 XX
Calvert Variable Series, Inc.
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
__ Immediately upon filing XX on April 30, 1998
pursuant to paragraph (b) pursuant to paragraph (b)
__ 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
<PAGE>
Calvert Variable Series, Inc.
Form N-1A Cross Reference Sheet
Item number Prospectus Caption
1. Cover Page
2. *
3. Financial Highlights
4. The Fund
Investment Objectives and Policies
of the Series
5. The Fund and Its Management
Transfer and Dividend Disbursing Agent
6. The Fund and Its Management
Dividends and Distributions
Total Return and Yield Information
Taxes
7. Purchase and Redemption of Shares
8. Purchase and Redemption of Shares
9. *
Statement of Additional Information Caption
10. Cover Page
11. Table of Contents
12. General Information
13. Investment Objectives and Policies
Investment Restrictions
Investment Selection Process
Portfolio Turnover
14. Management of the Fund
15. General Information
16. Investment Advisor
Independent Accountants and Custodians
17. Investment Advisor
Securities Transactions and Brokerage
18. General Information
19. Determination of Net Asset Value
Purchase and Redemption of Shares
20. Taxes
21. *
22. Calculation of Yield and Total Return
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
PROSPECTUS - APRIL 30, 1998
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL MONEY MARKET PORTFOLIO
4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND 20814 (800)368-2748
The Calvert Social Money Market Portfolio (formerly,
Calvert Responsibly Invested Money Market Portfolio)
(the "Portfolio") is a series of Calvert Variable
Series, Inc. (formerly, Acacia Capital Corporation) (the
"Fund"), an open-end management investment company whose
investment advisor is Calvert Asset Management Company,
Inc. (the "Investment Advisor").
The Portfolio invests in money market instruments,
including repurchase agreements with banks and brokers
secured by money market instruments, and seeks to
maintain a constant net asset value of $1.00 per share.
An investment in the Portfolio is neither insured nor
guaranteed by the U.S. Government, and there can be no
assurance that the Portfolio will be able to maintain a
stable net asset value of $1.00 per share. See
"Investment Objective and Policies."
This Prospectus sets forth the information that a
prospective policyholder should know before directing
investment in the Portfolio and it should be read and
kept for future reference. A Statement of Additional
Information dated April 30, 1998, which contains further
information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated
by reference into this Prospectus. A copy of the
Statement of Additional Information may be obtained
without charge by calling the Fund at the number above,
or by writing the Fund at 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. The Commission
maintains a web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference, and other
information regarding registrants that file
electronically with the Commission.
Shares of the Fund are offered only to insurance
companies for allocation to certain of their variable
separate accounts.
..........................................................
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------
The following table provides information about the
Portfolio's financial history. It expresses the
information in terms of a single share outstanding
throughout each period. The table has been audited by
those independent accountants whose report is included
in the Portfolio's Annual Report to Shareholders, for
each of the respective periods presented. The table
should be read in conjunction with the financial
statements and their related notes. The Annual Report to
Shareholders is incorporated by reference into the
Statement of Additional Information.
- ----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY.
Years Ended
December 31, December 31, December 31,
SOCIAL MONEY MARKET PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------
Net asset value, beginning $1.000 $1.000 $1.000
- ----------------------------------------------------------
Income from investment operations
Net investment income .051 .048 .055
Net realized gain (loss) - - -
- ----------------------------------------------------------
Total from investment operations .051 .048 .055
- ----------------------------------------------------------
Distributions from
Net investment income (.051) (.048) (.055)
- ----------------------------------------------------------
Total increase (decrease) in net
asset value - - -
Net asset value, ending $1.000 $1.000 $1.000
- ----------------------------------------------------------
Total return* 5.20% 4.95% 5.37%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 5.10% 4.82% 5.23%
- ----------------------------------------------------------
Total expenses+ .69% .75% .66%
Net expenses . .59% .62% .59%
Expenses reimbursed - - -
Net assets, ending (in thousands) $6,242 $4,378 $5,129
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 6,246 4,382 5,133
- ----------------------------------------------------------
Periods Ended
- ----------------------------------------------------------
December 31, December 31, December 31,
SOCIAL MONEY MARKET PORTFOLIO 1994 1993 1992^
- ----------------------------------------------------------
Net asset value, beginning $1.000 $1.000 $1.000
- ----------------------------------------------------------
Income from investment operations
Net investment income .039 .031 .009
Net realized gain (loss) - - -
- ----------------------------------------------------------
Total from investment operations .039 .031 .009
- ----------------------------------------------------------
Distributions from
Net investment income (.039) (.031) (.009)
- ----------------------------------------------------------
Total increase (decrease) in
net asset value - - -
Net asset value, ending $1.000 $1.000 $1.000
- ----------------------------------------------------------
Total return* 3.96% 3.09% 2.11%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 3.91% 3.07% 3.02%(a)
- ----------------------------------------------------------
Total expenses+ NA NA NA
Net expenses .45% - -
Expenses reimbursed .36% .11% .85%(a)
Net assets, ending (in thousands) $6,479 $4,032 $1,795
- ----------------------------------------------------------
Number of shares outstanding, ending
(in thousands) 6,484 4,032 1,795
- ----------------------------------------------------------
(a) Annualized
+ Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such
reductions are included in the ratio of net epenses.
* Total return is for the Portfolio only and does not
reflect sales charges and expenses deducted by the Insurance
Companies. Total return is not annualized for periods of
less than one year.
^ From March 1, 1995 inception.
NA Disclosure not applicable to prior periods.
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective described below is fundamental
and may not be changed without the approval of the
holders of a majority of the outstanding shares of the
Portfolio. As a Policyholder, you may be given an
opportunity to indicate how you believe the Insurance
Company should vote the shares which underlie your
Policy.
The investment objective of the Portfolio is to provide
current income by investing in enterprises that make a
significant contribution to society through their
products and services and through the way they do
business. The Portfolio aims for short-term cash
management and stability of principal. The Portfolio
seeks to provide the highest level of current income,
consistent with liquidity, safety and security of
capital, by investing in money market instruments,
including repurchase agreements with recognized
securities dealers and banks secured by such
instruments, selected in accordance with its investment
and social criteria. The Portfolio attempts to maintain
a constant net asset value of $1.00 per share.
The Portfolio invests only in high grade, short-term
money market instruments which may include: obligations
issued or guaranteed as to principal by the United
States Government, its agencies and instrumentalities;
U.S. dollar-denominated certificates of deposit, time
deposits and bankers' acceptances of U.S. banks,
generally banks with assets in excess of $1 billion; and
commercial paper (including participation interests in
loans extended by banks to issuers of commercial paper)
that at the date of investment is rated A-1 by Standard
& Poor's Corporation or Prime-1 by Moody's Investors
Service, Inc., or, if not rated, is of comparable
quality.
..........................................................
ADDITIONAL FUNDAMENTAL INVESTMENT POLICIES
The Portfolio may engage in repurchase agreements and
reverse repurchase agreements. In a repurchase
agreement, the Portfolio buys a security subject to the
right and obligation to sell it back at a higher price.
In order to minimize any risk involved, the Portfolio
engages in such transactions only with recognized
securities dealers and banks determined by the Advisor
to present a minimal credit risk. Repurchase agreements
are fully collateralized and always have a maturity of
less than one year. No more than 10 percent of Portfolio
assets may be invested in repurchase agreements not
terminable within seven days. In a reverse repurchase
agreement, the Portfolio sells a security subject to the
right and obligation to buy it back at a higher price.
The Portfolio then invests the proceeds from the
transaction in another obligation in which it is
authorized to invest. For reverse repurchase agreements,
the Portfolio maintains a segregated account with liquid
assets equal in value to the repurchase price.
The Portfolio may borrow money from banks (and pledge
its assets to secure such borrowing) for temporary or
emergency purposes, but not for leverage. This type of
borrowing may not exceed 10% of the value of the
Portfolio's total assets. The Portfolio may also make
loans of the securities it holds. The advantage of
loaning securities is that the Portfolio continues to
receive the equivalent of the interest earned or
dividends paid by the issuers while at the same time
earning interest on the cash or equivalent collateral
that may be invested in accordance with the Portfolio's
investment objective, policies, and restrictions. The
purpose of the loans is usually to facilitate the
delivery of securities. As with any extension of credit,
there may be risks of delay in recovery and possible
loss of rights in the loaned security if the borrower
fails financially. The Investment Advisor attempts to
reduce the risk by lending only to borrowers that it
deems creditworthy and only on terms that it believes
compensates for any risk inherent in the transaction.
The Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with
assets of one billion dollars or more. All loans must be
secured continuously in the form of cash or cash
equivalents such as U.S. Treasury bills. In addition,
the amount of collateral must, on a current basis, equal
or exceed the market value of the loaned securities, and
the Portfolio may only make the loan if the value of the
securities loaned does not exceed 10% of its assets. The
Portfolio must be able to terminate loans at any time
with appropriate notice. The Portfolio will exercise its
right to terminate a securities loan in order to
preserve its right to vote on matters of importance
affecting holders of the securities. All securities must
be returned to the Portfolio when a loan terminates, and
the Portfolio absorbs any gain or loss in the market
value of the securities during the loan period.
The Portfolio may invest up to 25% of its assets in the
securities of foreign issuers, provided it purchases
only high quality, U.S. dollar-denominated instruments.
..........................................................
ADDITIONAL NONFUNDAMENTAL INVESTMENT POLICIES
The Portfolio has adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed
by the Board of Directors without shareholder approval:
The Portfolio may not purchase illiquid securities if
more than 10% of the value of its net assets would be
invested in such securities. Further, the Portfolio may
not acquire private placement investments until the
value of the Portfolio's assets exceeds $20 million.
For further information on the Portfolio's investment
policies and restrictions, as well as a description of
the types of securities that may be purchased, see the
Statement of Additional Information.
..........................................................
INVESTMENT SCREENS
- ----------------------------------------------------------
Each investment is selected with a concern for its
social impact. The Portfolio invests in accordance with
its philosophy that long-term rewards to investors will
come from those organizations whose products, services,
and methods enhance the human condition and the
traditional American values of individual initiative,
equality of opportunity and cooperative effort.
The Portfolio has developed the following criteria for
the selection of organizations in which they invest. The
Portfolio recognizes, however, that these criteria
represent standards of behavior which few, if any,
organizations totally satisfy and that, as a matter of
practice, evaluation of a particular organization in the
context of these criteria will involve subjective
judgment by the Portfolio's Investment Advisor.
Given these considerations, the Portfolio seeks to
invest in producers or service providers that:
1. Deliver safe products and services in ways that
sustain our natural environment.
2. Are managed with participation throughout the
organization in defining and achieving objectives.
3. Negotiate fairly with their workers, provide an
environment supportive of their wellness, do not
discriminate on the basis of race, gender,
religion, age, disability, ethnic origin, or sexual
orientation, do not consistently violate
regulations of the Equal Employment Opportunity
Commission, and provide opportunities for women,
disadvantaged minorities, and others for whom equal
opportunities have often been denied.
4. Foster awareness of a commitment to human goals,
such as creativity, productivity, self-respect and
responsibility, within the organization and the
world, and continually recreate a context within
which these goals can be realized.
The Portfolio will not invest in an issuer primarily
engaged in:
1. The production of nuclear energy or the manufacture
of equipment to produce nuclear energy.
2. Business activities in support of repressive
regimes.
3. The manufacture of weapons systems.
In addition, the Portfolio will not, as a matter of
operating policy which may be changed without the
approval of a majority of the outstanding shares, invest
in an issuer primarily engaged in the manufacture of
alcoholic beverages or tobacco products, or the
operation of gambling casinos.
The Portfolio believes that social and technological
change will continue to transform America and the world
into the next century. Those enterprises that exhibit a
social awareness measured in terms of the above
attributes and considerations should be better prepared
to meet future societal needs for goods and services. By
responding to social concerns, these enterprises should
maintain flexibility and further social goals. In so
doing they may not only avoid the liability that may be
incurred when a product or service is determined to have
a negative social impact or has outlived its usefulness,
but should also be better positioned to develop
opportunities to make a profitable contribution to
society. The Portfolio believes that these enterprises
will be ready to respond to external demands and ensure
that over the longer term they will be able to provide a
positive return to both investors and society as a whole.
In selecting investments under the four positive and
three negative factors outlined above, the Advisor will
consider the investments' ability to contribute to the
dual objective of the Portfolio. Potential investments
are first screened for financial soundness and then
evaluated according to social criteria. To the greatest
extent possible investments are made in companies
exhibiting unusual, positive accomplishments with
respect to one or more of the criteria. Companies must
meet the Portfolio's minimum standards for all the
criteria. It should be noted that the Portfolio's social
criteria tend to limit the availability of investment
opportunities more than is customary with other
investment portfolios.
The selection of an organization for investment by the
Portfolio does not constitute endorsement or validation,
nor does the exclusion of an organization necessarily
reflect failure to satisfy the Portfolio's social
criteria. Investors in the Portfolio are invited to send
brief descriptions of companies they believe might be
suitable investments.
..........................................................
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------
Calvert Variable Series, Inc. (the "Fund"), a Maryland
corporation, is an open-end investment company, which
was incorporated under the laws of the State of Maryland
on September 27, 1982. The Board of Directors supervises
the business affairs and investments of the Fund, which
are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios,
each issuing one class of stock. The shares of the Fund
currently are sold only to insurance companies
(collectively, the "Insurance Companies") for allocation
to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable
annuity and variable life insurance policies
(collectively, the "Policies") issued by such companies.
Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity
or life insurance policy and is described in the
attached prospectus for one of the Policies, which
should be reviewed carefully by a person considering the
purchase of a Policy. The rights of the Insurance
Companies as shareholders should be distinguished from
the rights of a policy owner which are described in the
Policies. Policy owners should consider that the
investment return experience of the Portfolio will
affect the value of the policy and the amount of annuity
payments or life insurance benefits received under a
policy. See the attached prospectus(es) for the Policies
for a description of the relationship between increases
or decreases in the net asset value of Portfolio shares
(and any distributions on such shares) and the benefits
provided under a policy.
..........................................................
Investment Advisor
Calvert Asset Management Company, Inc. (the "Advisor"),
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to the Portfolio.
Calvert Asset Management is a wholly-owned subsidiary of
Calvert Group, Ltd., which is in turn an indirect
wholly-owned subsidiary of Acacia Mutual Life Insurance
Company. As of December 31, 1997, Calvert Group, Ltd.
had assets under management and administration in excess
of $5.0 billion. Pursuant to its investment advisory
agreement with the Fund, the Investment Advisor manages
the investment and reinvestment of the assets of each
Portfolio and is responsible for the overall management
of the business affairs of each Portfolio, subject to
the direction and authority of the Fund's Board of
Directors.
..........................................................
Advisory Fee
For its services, the Advisor during 1997, received an
annual fee of 0.50% of net assets based on a percentage
of the average daily net assets of the Portfolio.
..........................................................
Expenses
The Portfolio's expenses, which are accrued daily,
include: the fee of the Investment Advisor; costs of
executing portfolio transactions; pricing costs;
interest; taxes; custodian and transfer agent fees;
legal and auditing fees; bookkeeping and dividend
disbursing expenses; and certain other expenses relating
to the Portfolio's operations. Certain expenses are paid
by the particular Portfolio that incurs them, while
other expenses are allocated among each Portfolio on the
basis of their relative size (based on net assets), or
as designated by the Board of Directors, as appropriate.
Expenses constituted 0.69% of the average net assets of
the Portfolio for 1997, including fees paid indirectly,
and 0.59% net of fees paid indirectly.
..........................................................
Capital Stock
The Fund issues separate stock for each of its
Portfolios. Shares of each of the Portfolios have equal
rights with regard to voting, redemptions, dividends,
distributions, and liquidations. No Portfolio has
preference over another Portfolio. When issued, shares
are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting
rights. The Insurance Companies and the Fund's
shareholders will vote Fund shares allocated to
registered separate accounts in accordance with
instructions received from policyholders. Under certain
circumstances, which are described in the accompanying
prospectus of the variable life or annuity policy, the
voting instructions received from variable life or
annuity policyholders may be disregarded.
..........................................................
PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------
The Fund offers its shares, without sales charge, only
for purchase by various Insurance Companies for
allocation to their Variable Accounts. Shares are
purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the
Insurance Company receives the premium payment. The Fund
continuously offers its shares in the Portfolio at a
price equal to the net asset value per share. Initial
and subsequent payments allocated to a Portfolio are
subject to the limits applicable in the Policies issued
by the Insurance Companies.
It is conceivable that in the future it may be
disadvantageous for both annuity Variable Accounts and
life insurance Variable Accounts, or for Variable
Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither
the Insurance Companies nor the Fund foresee any such
disadvantages to either variable annuity or variable
life insurance policyholders of any Insurance Company.
The Fund's Board of Directors intends to monitor events
in order to identify any material conflict between such
policyholders and to determine what action, if any,
should be taken in response to the problem.
The Insurance Companies redeem shares of the Fund to
make benefit and surrender payments under the terms of
their Policies. Redemptions are processed on any day on
which the Fund is open for business (each day the New
York Stock Exchange is open), and are made at the
Portfolio's net asset value next determined after the
appropriate Insurance Company receives a surrender
request in acceptable form.
Payment for redeemed shares will be made promptly, and
in no event later than seven days. However, the right of
redemption may be suspended or the date of payment
postponed in accordance with the Rules under the
Investment Company Act of 1940. The Fund redeems all
full and fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the
New York Stock Exchange, on days when the Exchange is
open for
business, or for any other day when there is a
sufficient degree of trading in the investments of the
Portfolio to affect materially its net asset value per
share (except on days when no orders to purchase or
redeem shares of the Portfolio have been received). The
net asset value is determined by adding the values of
all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by
the number of outstanding shares of the Portfolio. All
instruments held by Calvert Social Money Market are
valued on an amortized cost basis.
..........................................................
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------------------------------------
It is the Portfolio's intention to distribute
substantially all of its net investment income, if any.
For dividend purposes, net investment income consists of
the interest income earned on investments, plus or minus
amortized purchase discount or premium, plus or minus
realized and unrealized gains and loss, less estimated
expenses. All net realized capital gains, if any, are
declared and distributed periodically, at least
annually. All dividends and distributions are reinvested
in additional shares of the Portfolio at net asset value.
..........................................................
YIELD INFORMATION
- ----------------------------------------------------------
From time to time Calvert Social Money Market advertises
its "yield" and "effective yield." The "yield" of the
Portfolio refers to the actual income generated by an
investment in the Portfolio over a particular base
period of time, which will be stated in the
advertisement. If the base period is less than one year,
the yield is then "annualized." That is, the amount of
income generated by the investment during the base
period is assumed to be generated over a one-year period
and is shown as a percentage of the investment. The
"effective yield" is calculated similarly but, when
annualized, the income earned by an investment in the
Portfolio is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield'' because
of the compounding effect of this assumed reinvestment.
TAXES
- ----------------------------------------------------------
As a "regulated investment company" under the Internal
Revenue Code of 1986, as amended, the Fund is not
subject to federal income or excise tax to the extent
that it distributes its net investment income and net
capital gains. Each Portfolio is treated as a separate
entity for federal income tax purposes. Since the sole
shareholders of the Fund are Insurance Companies, no
discussion is included here as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of
the annuity or life insurance policies, see the
prospectuses for the Policies.
..........................................................
TRANSFER AND DIVIDEND DISBURSING AGENT
- ----------------------------------------------------------
Calvert Shareholder Services, Inc., 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the
shareholder servicing agent. National Financial Data
Services, Inc.("NFDS"), has been retained by the Fund
to act as transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - APRIL 30, 1998
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL SMALL CAP PORTFOLIO
4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND 20814 (800) 368-2748
The Calvert Social Small Cap Portfolio (formerly,
Calvert Social Strategic Growth Portfolio) (the
"Portfolio" or"Small Cap") is a series of Calvert
Variable Series, Inc. (formerly, Acacia Capital
Corporation) (the "Fund"), an open-end management
investment company whose investment advisor is Calvert
Asset Management Company, Inc. (the "Investment
Advisor").
The Portfolio seeks to achieve long-term capital
appreciation by investing primarily in the equity
securities of small companies** publicly traded in the
United States. In seeking capital appreciation, the
Portfolio invests primarily in the equity securities of
small capitalized growth companies (including American
Depositary Receipts ("ADRs") that have historically
exhibited exceptional growth characteristics and that,
in the Advisor's opinion, have strong earnings potential
relative to the U.S. market as a whole. The Portfolio
will take reasonable risks in seeking to achieve its
investment objective. There is, of course, no assurance
that the Portfolio will be successful in meeting its
objective since there is risk involved in the ownership
of all equity securities. See "Investment Objective and
Policies."
** Currently those with a total capitalization of less
than $1 billion at the time of the Fund's initial investment.
This Prospectus sets forth the information that a
prospective policyholder should know before directing
investment in the Portfolio and it should be read and
kept for future reference. A Statement of Additional
Information dated April 30, 1998, which contains further
information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated
by reference into this Prospectus. A copy of the
Statement of Additional Information may be obtained
without charge by calling the Fund at the number above,
or by writing the Fund at 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. The Commission
maintains a web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference, and other
information regarding registrants that file
electronically with the Commission.
Shares of the Fund are offered only to insurance
companies for allocation to certain of their variable
separate accounts.
- ----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. WHEN INVESTORS
SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER OR
LOWER THAN THE AMOUNT ORIGINALLY PAID.
FINANCIAL HIGHLIGHTS
The following table provides information about the
Portfolio's financial history. It expresses the
information in terms of a single share outstanding
throughout each period. The table has been audited by
those independent accountants whose reports are included
in the Fund's Annual Report to Shareholders. The table
should be read in conjunction with the financial
statements and their related notes. The current Annual
Report to Shareholders is incorporated by reference into
the Statement of Additional Information.
Periods Ended
- ----------------------------------------------------------
December 31, December 31, December 31,
1997 1996 1995^
- ----------------------------------------------------------
Net asset value, beginning $14.65 $10.94 $10.00
- ----------------------------------------------------------
Income from investment operations
Net investment income (.12) (.15) .25
Net realized and unrealized
gain (loss) (1.32) 3.90 .93
- ----------------------------------------------------------
Total from investment operations (1.44) 3.75 1.18
- ----------------------------------------------------------
Distributions from
Net investment income - - (.24)
Net realized gains (1.19) (.04) -
- ----------------------------------------------------------
Total distributions (1.19) (.04) (.24)
Total increase (decrease) in net
asset value (2.63) 3.71 .94
Net asset value, ending $12.02 $14.65 $10.94
- ----------------------------------------------------------
Total return* (9.86%) 34.33% 9.65%
Ratios to average net assets:
Net investment income (1.19%) (1.60%) .43%(a)
- ----------------------------------------------------------
Total expenses+ 1.92% 2.27% 2.17%(a)
Net expenses 1.61% 1.81% 1.64%(a)
Expenses reimbursed .18% .20% .20%(a)
Portfolio turnover 292% 120% 223%
Average commission rate paid $.0502 $.0499 NA
Net assets, ending (in thousands) $4,146 $3,031 $1,209
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 345 207 111
- ----------------------------------------------------------
(a) Annualized
+ Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such
reductions are included in the ratio of net epenses.
* Total return is for the Portfolio only and does not
reflect sales charges and expenses deducted by the Insurance
Companies. Total return is not annualized for periods of
less than one year.
^ From March 1, 1995 inception.
NA Disclosure not applicable to prior periods.
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective described below is not
fundamental and may be changed upon 60 days written
notice to shareholders without a shareholder vote. There
is, of course, no assurance that the Portfolio will be
successful in meeting its objective.
The investment objective of the Portfolio is to provide
long-term capital appreciation by investing primarily in
equity securities of companies that have small market
capitalizations. In seeking capital appreciation, the
Portfolio invests primarily in equity securities of
small capitalized growth companies that have
historically exhibited exceptional growth
characteristics and that, in the Advisor's opinion, have
strong earnings potential relative to the U.S. market as
a whole. The Portfolio's investment objective is not
fundamental and may be changed without shareholder
approval.
The Portfolio pursues the objective of capital
appreciation by investing primarily in equity securities
of primarily small companies with promising growth
potential. These companies typically are developing
innovative products or services to seize emerging
opportunities.
Under normal circumstances, the Portfolio will invest at
least 65% of its total assets in equity securities of
companies publicly traded in the United States
(currently those with a total market capitalization of
under $1 billion at the time of the Portfolio's initial
investment).
The Portfolio considers issuers of all industries with
operations in all geographic markets, and does not seek
interest income or dividends. Equity securities may
include common stocks, preferred stocks, convertible
securities and warrants. The Portfolio may hold cash or
cash equivalents for temporary defensive purposes or to
enable it to take advantage of buying opportunities.
There is, of course, no assurance that the Portfolio
will be successful in meeting its objective.
Companies whose capitalization increases or decreases
after initial purchase by the Portfolio continue to be
considered small-capitalized for purposes of the 65%
policy. Accordingly, less than 65% of the Portfolio's
total assets may be invested in securities of issuers of
companies publicly traded in the United States
(currently those with a total market capitalization of
less than $1 billion).
The Portfolio will normally be as fully invested as
practicable in common stocks (including ADRs), but also
may invest in warrants and rights to purchase common
stocks and in debt securities and preferred stocks
convertible into common stocks (collectively, "equity
securities").
While any investment in securities carries a certain
degree of risk, the approach of the Portfolio is
designed to maximize growth in relation to the risks
assumed. The securities of small cap issuers may be less
actively traded than the securities of larger issuers,
may trade in a more limited volume, and may change in
value more abruptly than securities of larger companies.
Information concerning these securities may not be
readily available so that the companies may be less
actively followed by stock analysts. Small-cap issuers
do not usually participate in market rallies to the same
extent as more widely-known securities, and they tend to
have a relatively higher percentage of insider ownership.
Investing in smaller, new issuers generally involves
greater risk than investing in larger, established
issuers. Companies in which the Portfolio is likely to
invest may have limited product lines, markets or
financial resources and may lack management depth. The
securities in such companies may also have limited
marketability and may be subject to more abrupt or
erratic market movements than securities of larger, more
established companies or the market averages in general.
Accordingly an investment in the Portfolio may not be
appropriate for all investors.
Although the Portfolio invests primarily in equity
securities, it may invest up to 35% of its assets in
debt securities, excluding money market instruments.
These debt securities may consist of investment-grade
and noninvestment-grade obligations. Investment-grade
obligations are those which, at the date of investment,
are rated within the four highest grades established by
Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa) or
by Standard and Poor's Corporation (AAA, AA, A, or BBB).
Noninvestment-grade securities are those rated below Baa
or BBB, or unrated obligations that the investment
subadvisor has determined are not investment-grade; such
securities have speculative characteristics. The
Portfolio will not buy debt securities rated lower than
C. See "Additional Risk Factors - Noninvestment-grade
Securities."
Under normal market conditions the Portfolio strives to
be fully invested in securities. However, for temporary
defensive purposes - which may include a lack of
adequate purchase candidates or an unfavorable market
environment - the Portfolio may invest up to 35% of its
total assets in cash or cash equivalents. Cash
equivalents include instruments such as, but not limited
to, U.S. government and agency obligations, certificates
of deposit, bankers' acceptances, time deposits,
commercial paper, short-term corporate debt securities
and repurchase agreements.
..........................................................
ADDITIONAL FUNDAMENTAL INVESTMENT POLICIES
In extraordinary circumstances, the Portfolio may use
options and futures contracts to increase or decrease
its exposure to changing security prices, interest
rates, or other factors that affect security values.
These techniques may involve derivative transactions
such as buying and selling options and futures contracts
and leveraged notes, entering into swap agreements, and
purchasing indexed securities. The Portfolio can use
these practices only as protection against an adverse
move of the holdings in the Portfolio to adjust the risk
and return characteristics of the Portfolio. The
decision to invest in these instruments will be based on
market conditions, regulatory limits and tax
considerations. If market conditions are judged
incorrectly, a strategy does not correlate well with the
Portfolio's investments, or if the counterparty to the
transaction does not perform as promised, these
techniques could result in a loss. These techniques may
increase the volatility of the Portfolio and may involve
a small investment of cash relative to the magnitude of
the risk assumed. Any instruments determined to be
illiquid are subject to the Portfolio's limitation on
illiquid securities. See below and the Statement of
Additional Information for more details about these
strategies.
There can be no assurance that engaging in options,
futures, or any other investment strategy will be
successful. While defensive strategies are designed to
protect the Portfolio from potential declines, if market
values or other economic factors are misgauged, the
Portfolio may be worse off than had it not employed the
defensive strategy. While an attempt is made to assess
market and equity risk and thereby prevent declines in
the value of the Portfolio's portfolio holdings, there
is a risk of imperfect or no correlation between price
movements of portfolio investments and instruments used
as part of an investment strategy, so that a loss may be
incurred. While such strategies can reduce the risk of
loss, they can also reduce the opportunity for gain
since they can or may offset favorable price movements.
The use of these strategies may result in a disadvantage
to the Portfolio if the Portfolio is not able to
purchase or sell a portfolio holding at an optimal time
due to the need to cover its transaction in its
segregated account, or due to the inability of the
Portfolio to liquidate its position because of its
relative illiquidity.
The Portfolio may engage in repurchase agreements and
reverse repurchase agreements. In a repurchase
agreement, the Portfolio buys a security subject to the
right and obligation to sell it back at a higher price.
In order to minimize any risk involved, the Portfolio
engages in such transactions only with recognized
securities dealers and banks determined by the Advisor
to present a minimal credit risk. Repurchase agreements
are fully collateralized and always have a maturity of
less than one year. Repurchase agreements not terminable
within seven days are considered illiquid. In a reverse
repurchase agreement, the Portfolio sells a security
subject to the right and obligation to buy it back at a
higher price. The Portfolio then invests the proceeds
from the transaction in another obligation in which it
is authorized to invest. For reverse repurchase
agreements, the Portfolio maintains a segregated account
with liquid assets equal in value to the repurchase
price.
The Portfolio may borrow money from banks (and pledge
its assets to secure such borrowing) for temporary or
emergency purposes, but not for leverage. This type of
borrowing may not exceed one-third of the value of the
Portfolio's total assets. The Portfolio may also make
loans of the securities it holds. The advantage of
loaning securities is that the Portfolio continues to
receive the equivalent of the interest earned or
dividends paid by the issuers while at the same time
earning interest on the cash or equivalent collateral
that may be invested in accordance with the Portfolio's
investment objective, policies, and restrictions. The
purpose of the loans is usually to facilitate the
delivery of securities. As with any extension of credit,
there may be risks of delay in recovery and possible
loss of rights in the loaned security if the borrower
fails financially. The Investment Advisor attempts to
reduce the risk by lending only to borrowers that it
deems creditworthy and only on terms that it believes
compensates for any risk inherent in the transaction.
The Portfolio may lend its portfolio securities to
member firms of the New York Stock Exchange and
commercial banks with assets of one billion dollars or
more, although it does not currently intend to lend more
than 5% of its portfolio securities. The advantage of
such loans is that the Portfolio continues to receive
the equivalent of the interest earned or dividends paid
by the issuers on the loaned securities while at the
same time earning interest on the cash or equivalent
collateral which may be invested in accordance with the
Portfolio's investment objective, policies and
restrictions. As with any extension of credit, there may
be risks of delay in recovery and possibly loss of
rights in the loaned securities should the borrower of
the loaned securities fail financially.
..........................................................
ADRS
The Portfolio may invest up to 15% of its total assets
in ADRs which are traded in the U.S. on exchanges or
over the counter and are generally sponsored and issued
by domestic banks. ADRs represent the right to receive
securities of foreign issuers deposited in a domestic
bank or a correspondent bank. ADRs do not eliminate all
the risk inherent in investing in the securities of
foreign issuers. However, by investing in ADRs rather
than directly in foreign issuers' stock, the Portfolio
may avoid currency risks during the settlement period
for either purchases or sales. In general, there is a
large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the
accounting, auditing and financial reporting standards
of the domestic market or exchange on which they are
traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be
subject.
..........................................................
ADDITIONAL NONFUNDAMENTAL INVESTMENT POLICIES
Small Cap has adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed
by the Board of Directors without shareholder approval:
The Portfolio may not purchase illiquid securities if
more than 15% of the value of its net assets would be
invested in such securities. Further, the Portfolio may
not acquire private placement investments until the
value of its assets exceeds $20 million.
For further information on the Portfolio's investment
policies and restrictions, as well as a description of
the types of securities that may be purchased, see the
Statement of Additional Information.
..........................................................
ADDITIONAL RISK FACTORS
Interest Rate Risk
All fixed income instruments are subject to
interest-rate risk: that is, if market interest rates
rise, the current principal value of a bond will
decline. In general, the longer the maturity of the
bond, the greater the decline in value will be.
..........................................................
Noninvestment-grade Securities
Noninvestment-grade securities tend to be less sensitive
to interest rate changes than higher-rated investments,
but are more sensitive to adverse economic changes and
individual corporate developments. This may affect the
issuer's ability to make principal and interest payments
on the debt obligation. There is also a greater risk of
price declines due to changes in the issuer's
creditworthiness. Because the market for lower-rated
securities may be less active ("thinner") than for
higher-rated securities, it may be difficult for the
Portfolio to sell the securities. Because of a lack of
objective data, a thinly-traded market may make it
difficult to value the securities, so that the Board of
Directors may have to exercise its judgment in assigning
a value. See the Appendix in the Statement of Additional
Information for more information on bond ratings.
..........................................................
Real Estate Investment Trusts
The Portfolio also may invest in real estate investment
trusts ("REITs"), including equity REITs, which own real
estate properties, and mortgage REITs, which make
construction, development and long-term mortgage loans.
The risks associated with REITs include default by
borrowers, self-liquidation, failure to qualify as a
pass-through entity under the Federal tax law, failure
to qualify as an exempt entity under the 1940 Act, and
the fact that REITs are not diversified.
Investment screens
- ----------------------------------------------------------
Once equity and debt securities are determined to fall
within the investment objective of the Portfolio and are
deemed financially viable investments, they are screened
according to the social criteria described below. These
social screens are applied to potential investment
candidates by the Advisor in consultation with the
Subadvisor. However, the Portfolio may purchase
instruments used for defensive purposes, such as short
positions, options and futures contracts, without regard
to the social criteria. The following criteria may be
changed by the Fund's Board of Directors without
shareholder approval:
1. The Portfolio avoids investing in companies that,
in the Advisor's opinion, have significant or
historical patterns of violating environmental
regulations, or otherwise have an egregious
environmental record. Additionally, the Portfolio
will avoid investing in nuclear power plant
operators and owners, or manufacturers of key
components in the nuclear power process.
2. The Portfolio will not invest in companies that are
listed among the top 100 weapons systems
contractors, or major nuclear weapons systems
contractors.
3. The Portfolio will not invest in companies that, in
the Advisor's opinion, have significant or
historical patterns of discrimination against
employees on the basis of race, gender, religion,
age, disability or sexual orientation, or in
companies that have major labor-management disputes.
4. The Portfolio will not invest in companies that are
significantly involved in the manufacture of
tobacco or alcohol products. The Portfolio will not
invest in companies that make products or offer
services that, under proper use, in the Advisor's
opinion, are considered harmful.
While the Portfolio may invest in companies that exhibit
positive social characteristics, it makes no explicit
claims to seek out companies with such practices.
..........................................................
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------
Calvert Variable Series, Inc. (the "Fund"), a Maryland
corporation, is an open-end investment company, which
was incorporated under the laws of the State of Maryland
on September 27, 1982. The Board of Directors supervises
the business affairs and investments of the Fund, which
are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios,
each issuing one class of stock. The shares of the Fund
currently are sold only to insurance companies
(collectively, the "Insurance Companies") for allocation
to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable
annuity and variable life insurance policies
(collectively, the "Policies") issued by such companies.
Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity
or life insurance policy and is described in the
attached prospectus for one of the Policies, which
should be reviewed carefully by a person considering the
purchase of a Policy. The rights of the Insurance
Companies as shareholders should be distinguished from
the rights of a policy owner which are described in the
Policies. Policy owners should consider that the
investment return experience of the Portfolio will
affect the value of the policy and the amount of annuity
payments or life insurance benefits received under a
policy. See the attached prospectus(es) for the Policies
for a description of the relationship between increases
or decreases in the net asset value of Portfolio shares
(and any distributions on such shares) and the benefits
provided under a policy.
..........................................................
Investment Advisor and Subadvisor
Calvert Asset Management Company, Inc. (the "Advisor"),
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to all of the Fund's
Portfolios. It is a wholly-owned subsidiary of Calvert
Group, Ltd., which is in turn an indirect wholly-owned
subsidiary of Acacia Mutual Life Insurance Company. As
of December 31, 1997, Calvert Group, Ltd. had assets
under management and administration in excess of $5.0
billion. Pursuant to its investment advisory agreement
with the Fund, the Investment Advisor manages the
investment and reinvestment of the assets of each
Portfolio and is responsible for the overall management
of the business affairs of each Portfolio, subject to
the direction and authority of the Fund's Board of
Directors. The Advisor has retained an investment
subadvisor ("Subadvisor") for Small Cap. The Advisor
will continuously monitor and evaluate the performance
and investment style of the Subadvisor.
The Subadvisor to the Portfolio is Awad & Associates
("AWAD"). AWAD is located at 477 Madison Avenue, New
York, New York 10022. AWAD had $960 million in assets
under management as of December 31, 1997. The Subadvisor
manages the investment and reinvestment of the assets of
the Portfolio, although the Advisor may screen potential
investments for compatibility with the Portfolio's
social criteria.
The Portfolio will be managed by a team of investment
professionals. The Senior Investment Officer is James D.
Awad. Mr. Awad has been in the investment business since
1965, focusing on research and portfolio management.
Prior to forming AWAD, he was founder and President of
BMI Capital, a successful money management firm. In
addition, he has managed assets at Neuberger & Berman,
Channing Management and First Investment Corp. Mr. Awad
earned an MBA from Harvard Business School and a BS Cum
Laude from Washington & Lee University.
Dennison T. Veru is President of AWAD. Mr. Veru joined
AWAD in 1992 coming from Smith Barney Harris Upham where
he was Senior Vice President of the firm's Whiffletree
Capital Management division specializing in small and
medium capitalization stocks. From 1988 through 1990, he
was a Vice President of Broad Street Investment
Management. Prior to that, he was an Assistant Vice
President at Drexel Burnham Lambert. Mr. Veru is a
graduate of Franklin and Marshall College.
AWAD also manages the Calvert New Vision Small Cap Fund,
a series of The Calvert Fund, an open-end investment
company sponsored by Calvert Group, Ltd.
The Portfolio has obtained an exemptive order from the
Securities and Exchange Commission to permit the
Portfolio, pursuant to approval by the Board of
Trustees, to enter into and materially amend contracts
with the Portfolio's Subadvisor without shareholder
approval. See "Investment Advisory Agreement" in the SAI
for further details.
Advisory Fee
Effective December 1, 1997, the Investment Advisor
received from the Portfolio a monthly base fee, computed
on a daily basis at an annual rate of 0.90% of the
average daily net assets of the Portfolio.
Prior to December 1, 1997, the Investment Advisor
received from the Portfolio a monthly base fee, computed
on a daily basis at an annual rate of 1.50% of the
average daily net assets of the Portfolio, plus a
performance fee. The performance fee was terminated
December 1997.
Effective October 1, 1997, the Advisor paid the
Subadvisor a base fee of 0.40% of the Portfolio's
average daily net assets.
Prior to October 1, 1997, the Advisor paid the previous
Subadvisor a base fee of 0.95% of the Portfolio's
average net assets.
..........................................................
Administrative Services
Calvert Administrative Services Company ("CASC"), an
affiliate of the Advisor, has been retained by Small Cap
to provide certain administrative services necessary to
the conduct of its affairs, including the preparation of
regulatory filings and shareholder reports, the daily
determination of net asset value per share and
dividends, and the maintenance of portfolio and general
accounting records. For providing such services, CASC is
entitled to receive a fee from the Portfolio of 0.10% of
net assets per year. For the period January through
November 1997, the fee was based on 0.20% of the
Portfolio's annual average net assets. Effective
December 1997, the annual fee was changed to 0.10%.
..........................................................
Expenses
The Portfolio's expenses, which are accrued daily,
include: the fee of the Investment Advisor; costs of
executing portfolio transactions; pricing costs;
interest; taxes; custodian and transfer agent fees;
legal and auditing fees; bookkeeping and dividend
disbursing expenses; and certain other expenses relating
to the Fund's operations. Certain expenses are paid by
the particular Portfolio that incurs them, while other
expenses are allocated among each Portfolio on the basis
of their relative size (based on net assets), or as
designated by the Board of Directors, as appropriate.
Expenses constituted 1.92%, annualized, of the average
net assets of the Portfolio for 1997, including fees
paid indirectly, and 1.61%, annualized, net of fees paid
indirectly.
..........................................................
Capital Stock
The Fund issues separate stock for each of its
Portfolios. Shares of each of the Portfolios have equal
rights with regard to voting, redemptions, dividends,
distributions, and liquidations. No Portfolio has
preference over another Portfolio. When issued, shares
are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting
rights. The Insurance Companies and the Fund's
shareholders will vote Fund shares allocated to
registered separate accounts in accordance with
instructions received from policyholders. Aegon
Financial Services Group, Inc. (formerly, Providian Life
and Health Insurance Company) owns more than 25% of the
outstanding stock of the Portfolio. Under certain
circumstances, which are described in the accompanying
prospectus of the variable life or annuity policy, the
voting instructions received from variable life or
annuity policyholders may be disregarded.
..........................................................
PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------
The Fund offers its shares, without sales charge, only
for purchase by various Insurance Companies for
allocation to their Variable Accounts. Shares are
purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the
Insurance Company receives the premium payment. The Fund
continuously offers its shares in the Portfolio at a
price equal to the net asset value per share. Initial
and subsequent payments allocated to the Portfolio are
subject to the limits applicable in the Policies issued
by the Insurance Companies.
It is conceivable that in the future it may be
disadvantageous for both annuity Variable Accounts and
life insurance Variable Accounts, or for Variable
Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither
the Insurance Companies nor the Fund foresee any such
disadvantages to either variable annuity or variable
life insurance policyholders of any Insurance Company.
The Fund's Board of Directors intends to monitor events
in order to identify any material conflict between such
policyholders and to determine what action, if any,
should be taken in response to the problem.
The Insurance Companies redeem shares of the Fund to
make benefit and surrender payments under the terms of
their Policies. Redemptions are processed on any day on
which the Fund is open for business (each day the New
York Stock Exchange is open), and are made at the
Portfolio's net asset value next determined after the
appropriate Insurance Company receives a surrender
request in acceptable form.
Payment for redeemed shares will be made promptly, and
in no event later than seven days. However, the right of
redemption may be suspended or the date of payment
postponed in accordance with the Rules under the
Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or
less than the amount paid for the shares, depending on
the fluctuations in the market value of the assets owned
by the Portfolio. The Fund redeems all full and
fractional shares of each Portfolio for cash.
The net asset value of the shares of each Portfolio of
the Fund is determined once daily as of the close of
business of the New York Stock Exchange, on days when
the Exchange is open for business, or for any other day
when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its
net asset value per share (except on days when no orders
to purchase or redeem shares of the Portfolio have been
received). The net asset value is determined by adding
the values of all securities and other assets of the
Portfolio, subtracting liabilities and expenses, and
dividing by the number of outstanding shares of the
Portfolio.
Except for money market instruments maturing in 60 days
or less, securities held by the Portfolio are valued at
their market value if market quotations are readily
available. Otherwise, securities are valued at fair
value as determined in good faith by the Board of
Directors, although the actual calculations may be made
by persons acting pursuant to the direction of the
Board. Money market instruments with a remaining
maturity of 60 days or less held by the Portfolio are
valued on an amortized cost basis.
..........................................................
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------------------------------------
It is the Portfolio's intention to distribute
substantially all of its net investment income, if any.
For dividend purposes, net investment income consists of
all payments of dividends or interest received by the
Portfolio less estimated expenses, including the
investment advisory fee. All net realized capital gains,
if any, are declared and distributed periodically, at
least annually. All dividends and distributions are
reinvested in additional shares of the Portfolio at net
asset value. No dividends will accrue on amounts
represented by uncashed distribution or redemption
checks.
..........................................................
TOTAL RETURN INFORMATION
- ----------------------------------------------------------
Total Return and Other Quotations
Small Cap may advertise "total return." Total return
refers to the total change in value of an investment in
the Portfolio over a specified period. It differs from
yield in that yield figures measure only the income
component of the Portfolio's investments, while total
return includes not only the effect of income dividends
but also any change in net asset value, or principal
amount, during the stated period. Total return shows its
overall change in value, including changes in share
price and assuming all of the Portfolio's dividends and
capital gain distributions are reinvested. A cumulative
total return reflects the Portfolio's performance over a
stated period of time. An average annual total return
reflects the hypothetical annual compounded return that
would have produced the same cumulative total return if
the Portfolio's performance had been constant over the
entire period. Because average annual returns tend to
smooth out variations in the Portfolio's returns, you
should recognize that they are not the same as actual
year-by-year results. The total return of the Portfolio
generally does not include the effect of paying the
charges or expenses on the particular insurance policy
or annuity contract for which the Portfolio serves as
the investment vehicle.
..........................................................
TAXES
- ----------------------------------------------------------
As a "regulated investment company" under the Internal
Revenue Code of 1986, as amended, the Fund is not
subject to federal income or excise tax to the extent
that it distributes its net investment income and net
capital gains. Each Portfolio is treated as a separate
entity for federal income tax purposes. Since the sole
shareholders of the Fund are Insurance Companies, no
discussion is included here as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of
the annuity or life insurance policies, see the
prospectuses for the Policies.
..........................................................
TRANSFER AND DIVIDEND DISBURSING AGENT
- ----------------------------------------------------------
Calvert Shareholder Services, Inc., 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the
shareholder servicing agent. National Financial Data
Services, Inc. ("NFDS"), has been retained by the Fund
to act as transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - APRIL 30, 1998
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO
4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND
20814 (800) 368-2748
Calvert Social Mid Cap Growth Portfolio, (formerly,
Calvert Responsibly Invested Capital Accumulation
Portfolio) (the "Portfolio"), seeks long-term capital
appreciation by investing primarily in a nondiversified
portfolio of the equity securities of medium-sized
companies. It is a portfolio of Calvert Variable Series,
Inc. (formerly, Acacia Capital Corporation) (the
"Fund"), an open-ended management investment company. Of
course, there can be no assurance that the Portfolio
will be successful in meeting its investment objective.
This Prospectus sets forth basic information about the
Portfolio that a prospective investor should know before
investing and should be read and retained for future
reference. A Statement of Additional Information, dated
April 30, 1998, and incorporated by reference into this
Prospectus, has been filed with the Securities and
Exchange Commission and may be obtained free of charge
by writing or calling the Fund at the address or
telephone number listed above. The Commission maintains
a web site (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other
information regarding registrants that file
electronically with the Commission.
Shares of the Portfolio are offered only to insurance
companies for allocation to certain of their variable
separate accounts.
..........................................................
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------
The following table provides information about the
Portfolio's financial history. It expresses the
information in terms of a single share outstanding
throughout each period. The table has been audited by
those independent accountants whose report is included
in the Portfolio's Annual Report to Shareholders, for
each of the respective periods presented. The table
should be read in conjunction with the financial
statements and their related notes. The Annual Report to
Shareholders is incorporated by reference into the
Statement of Additional Information.
- ----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS ANY FEDERAL
OR STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY.
Years Ended
December 31, December 31, December 31,
SOCIAL MID CAP GROWTH PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------
Net asset value, beginning $24.05 $22.42 $16.97
- ----------------------------------------------------------
Income from investment operations
Net investment income (.04) (.12) (.15)
Net realized and unrealized
gain (loss) 5.70 1.79 6.85
- ----------------------------------------------------------
Total from investment operations 5.66 1.67 6.70
Distributions from
- ----------------------------------------------------------
Net investment income - - (.01)
Net realized gains (3.08) (.04) (1.24)
- ----------------------------------------------------------
Total distributions (3.08) (.04) (1.25)
Total increase (decrease) in net
asset value 2.58 1.63 5.45
Net asset value, ending $26.63 $24.05 $22.42
- ----------------------------------------------------------
Total return* 23.53% 7.44% 39.46%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income (.17%) (.60%) (.84%)
- ----------------------------------------------------------
Total expenses+ 1.04% 1.33% 1.56%
Net expenses .96% 1.00% 1.25%
Expenses reimbursed -- .10%
Portfolio turnover 96% 124% 135%
Average commission rate paid $.0516 $.0563 NA
Net assets, ending (in thousands) $26,117 $19,904 $8,935
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 981 828 398
- ----------------------------------------------------------
Years Ended
- ----------------------------------------------------------
December 31, December 31,
SOCIAL MID CAP GROWTH PORTFOLIO 1994 1993
- ----------------------------------------------------------
Net asset value, beginning $18.95 $17.87
- ----------------------------------------------------------
Income from investment operations
Net investment income .10 .08
Net realized and unrealized
gain (loss) (1.98) 1.27
- ----------------------------------------------------------
Total from investment operations (1.88) 1.35
- ----------------------------------------------------------
Distributions from
Net investment income (.10) (.08)
Net realized gains - (.19)
- ----------------------------------------------------------
Total distributions (.10) (.27)
Total increase (decrease) in net
asset value (1.98) 1.08
Net asset value, ending $16.97 $18.95
- ----------------------------------------------------------
Total return* (9.92%) 7.56%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income .68% .66%
- ----------------------------------------------------------
Total expenses+ NA NA
- ----------------------------------------------------------
Net expenses .79% .80%
- ----------------------------------------------------------
Expenses reimbursed - -
Portfolio turnover 79% 26%
Average commission rate paid NA NA
Net assets, ending (in thousands) $5,689 $4,986
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 335 263
- ----------------------------------------------------------
Periods Ended
December 31, December 31,
SOCIAL MID CAP GROWTH PORTFOLIO 1992 1991^
- ----------------------------------------------------------
Net asset value, beginning $15.82 $15.00
- ----------------------------------------------------------
Income from investment operations
Net investment income .09 .26
Net realized and unrealized gain (loss) 2.09 .82
- ----------------------------------------------------------
Total from investment operations 2.18 1.08
- ----------------------------------------------------------
Distributions from
Net investment income (.09) (.26)
Net realized gains (.04) -
- ----------------------------------------------------------
Total distributions (.13) (.26)
Total increase (decrease) in net asset value 2.05 .82
Net asset value, ending $17.87 $15.82
- ----------------------------------------------------------
Total return* 13.73% 7.25%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 1.19% .84%(a)
- ----------------------------------------------------------
Total expenses+ NA NA
Net expenses .39% -
Expenses reimbursed .87% 4.23%(a)
Portfolio turnover 2% 5%
Average commission rate paid NA NA
Net assets, ending (in thousands) $870 $268
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 49 17
- ----------------------------------------------------------
(a) Annualized
+ Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such
reductions are included in the ratio of net epenses.
* Total return is for the Portfolio only and does not
reflect sales charges and expenses deducted by the Insurance
Companies. Total return is not annualized for periods of
less than one year.
^ From July 16, 1991 inception.
NA Disclosure not applicable to prior periods.
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
Calvert Social Mid Cap Growth seeks to provide long-term
capital appreciation by investing primarily in a
nondiversified portfolio of the equity securities of
mid-sized companies that are undervalued but demonstrate
a potential for growth. The Portfolio will rely on its
proprietary research to identify stocks that may have
been overlooked by analysts, investors, and the media,
and which generally have a market capitalization within
the range of the S&P 500 Mid-Cap Index, but which may be
larger or smaller as deemed appropriate. Investments may
also include, but are not limited to, preferred stocks,
foreign securities, convertible securities, bonds, notes
and other debt securities. The Portfolio may use certain
futures and options, invest in repurchase agreements,
and lend its portfolio securities. The Portfolio will
take reasonable risks in seeking to achieve its
investment objective. There is, of course, no assurance
that the Portfolio will be successful in meeting its
objective since there is risk involved in the ownership
of all equity securities. The Portfolio's investment
objective is not fundamental and may be changed without
shareholder approval. The Portfolio will notify
shareholders at least thirty days in advance of a change
in the investment objective of the Portfolio so that
shareholders may determine whether the Portfolio's goals
continue to meet their own.
Under normal market conditions the Portfolio strives to
be fully invested in securities. However, for temporary
defensive purposes - which may include a lack of
adequate purchase candidates or an unfavorable market
environment - the Portfolio may invest up to 100% of its
assets in cash or cash equivalents. Cash equivalents
include instruments such as, but not limited to, U.S.
government and agency obligations, certificates of
deposit, bankers' acceptances, time deposits, commercial
paper, short-term corporate debt securities and
repurchase agreements.
Although the Portfolio invests primarily in equity
securities, it may invest in debt securities. These debt
securities may consist of investment-grade and
noninvestment-grade obligations. Investment-grade
obligations are those which, at the date of investment,
are rated within the four highest grades established by
Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa) or
by Standard and Poor's Corporation (AAA, AA, A, or BBB).
Noninvestment-grade securities are those rated below Baa
or BBB, or unrated obligations that the investment
subadvisor has determined are not investment-grade; such
securities are speculative, and the Portfolio currently
intends to limit such investments to 5% of its assets.
The Portfolio will not buy debt securities rated lower
than C. See "Additional Risk Factors -
Noninvestment-grade Securities."
Calvert Social Mid Cap Growth may, in pursuit of its
investment objectives, purchase put and call options and
engage in the writing of covered call options and
secured put options on securities of issuers that meet
the Portfolio's social criteria, and employ a variety of
other investment techniques, including the purchase and
sale of market index futures contracts, financial
futures contracts and options on such futures. Investing
in options may involve a greater degree of risk than
those inherent in more conservative investment
approaches. The Portfolio will engage in futures
contracts and related options only to protect against
market declines. The Portfolio will not engage in such
transactions for speculation or leverage. It is an
operating policy of the Fund that no Portfolio may
invest in exchange-traded put and call options if as a
result more than 5% of its assets would be so invested.
The Portfolio may invest up to 25% of its assets in
foreign securities. There are substantial and different
risks involved in investing in foreign securities. You
should consider these risks carefully. For example,
there is generally less publicly available information
about foreign companies than is available about
companies in the U.S. Foreign companies are generally
not subject to uniform audit and financial reporting
standards, practices, and requirements comparable to
those in the U.S.
For many foreign securities, there are U.S.
dollar-denominated American Depositary Receipts
("ADRs"), which are traded in the U.S. on exchanges or
over the counter and are generally sponsored and issued
by domestic banks. ADRs represent the right to receive
securities of foreign issuers deposited in a domestic
bank or a correspondent bank. ADRs do not eliminate all
the risk inherent in investing in the securities of
foreign issuers. However, by investing in ADRs rather
than directly in foreign issuers' stock, the Portfolio
may avoid currency risks during the settlement period
for either purchases or sales. In general, there is a
large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the
accounting, auditing and financial reporting standards
of the domestic market or exchange on which they are
traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be
subject. The Portfolio may also invest in European
Depositary Receipts ("EDRs"), which are receipts
evidencing an arrangement with a European bank similar
to that for ADRs and are designed for use in the
European securities markets. EDRs are not necessarily
denominated in the currency of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign
withholding taxes, thus reducing the net amount
available for distribution to the Portfolio's
shareholders.
Repurchase agreements are arrangements under which the
Portfolio buys securities and the seller simultaneously
agrees to repurchase the securities at a specified time
and price. The Portfolio may engage in repurchase
agreements to earn a higher rate of return than it could
earn simply by investing in the obligation which is the
subject of the repurchase agreement. In order to
minimize the risk of investing in repurchase agreements,
the Portfolio may engage in such transactions only with
recognized securities dealers and banks and in all
instances holds underlying securities with a value equal
to the total repurchase price the dealer or bank has
agreed to pay. Repurchase agreements are always for
periods of less than one year, and are considered
illiquid if not terminable within seven days.
The Portfolio may lend its portfolio securities to
member firms of the New York Stock Exchange and
commercial banks with assets of one billion dollars or
more, provided the value of the securities loaned from
the Portfolio will not exceed 10% of the Portfolio's
assets. Any such loans must be secured continuously in
the form of cash or cash equivalents such as U.S.
Treasury bills; the amount of the collateral must on a
current basis equal or exceed the market value of the
loaned securities, and the Portfolio must be able to
terminate such loans upon notice at any time. The
Portfolio will exercise its right to terminate a
securities loan in order to preserve its right to vote
on matters of importance affecting holders of the
securities.
The advantage of such loans is that the Portfolio
continues to receive the equivalent of the interest
earned or dividends paid by the issuers on the loaned
securities while at the same time earning interest on
the cash or equivalent collateral which may be invested
in accordance with the Portfolio's investment objective,
policies and restrictions.
Securities loans are usually made to broker-dealers and
other financial institutions to facilitate their
delivery of such securities. As with any extension of
credit, there may be risks of delay in recovery and
possible loss of rights in the loaned securities should
the borrower of the loaned securities fail financially.
However, the Portfolio will make loans of its portfolio
securities only to those firms the Advisor deems
creditworthy and only on such terms the Advisor believes
should compensate for such risk. On termination of the
loan the borrower is obligated to return the securities
to the Portfolio. The Portfolio will realize any gain or
loss in the market value of the securities during the
loan period. The Portfolio may pay reasonable custodial
fees in connection with the loan.
The Portfolio seeks to achieve its stated objectives by
following the investment policies established for that
purpose. The investment returns and degrees of market
and financial risk depend on the types of investments
the Portfolio undertakes to make as established by its
policies. Policies that are designated fundamental may
not be changed without the approval of the holders of a
majority of the outstanding shares of each portfolio
affected by the proposed change. As a Policyholder, you
may be given an opportunity to indicate how you believe
the Insurance Company should vote the shares underlying
your Policy.
..........................................................
ADDITIONAL RISK FACTORS
Nondiversified Portfolio
There may be risks associated with the Portfolio being
nondiversified. Specifically, since a relatively high
percentage of the assets of the Portfolio may be
invested in the obligations of a limited number of
issuers, the value of the shares of a nondiversified
Portfolio may be more susceptible to any single
economic, political or regulatory event than the shares
of a diversified Portfolio would be.
Interest Rate Risk
All fixed income instruments are subject to
interest-rate risk: that is, if market interest rates
rise, the current principal value of a bond will
decline. In general, the longer the maturity of the
bond, the greater the decline in value will be.
..........................................................
Small-Cap Stocks
The Portfolio may purchase the securities of small-cap
issuers. The securities of small-cap issuers tend to be
less actively traded than the securities of larger
issuers, may trade in a more limited volume, and may
change in value more abruptly than securities of larger
companies. Information concerning these securities may
not be readily available so that the companies may be
less actively followed by stock analysts. Small-cap
issuers do not usually participate in market rallies to
the same extent as more widely-known securities, and
they tend to have a relatively higher percentage of
insider ownership. There is no limit on the percentage
of assets that may be invested in small-cap issuers.
..........................................................
Noninvestment-grade Securities
Noninvestment-grade securities tend to be less sensitive
to interest rate changes than higher-rated investments,
but are more sensitive to adverse economic changes and
individual corporate developments. This may affect the
issuer's ability to make principal and interest payments
on the debt obligation. There is also a greater risk of
price declines due to changes in the issuer's
creditworthiness. Because the market for lower-rated
securities may be less active ("thinner") than for
higher-rated securities, it may be difficult for the
Portfolio to sell the securities. Because of a lack of
objective data, a thinly-traded market may make it
difficult to value the securities, so that the Board of
Directors may have to exercise its judgment in assigning
a value. See the Appendix in the Statement of Additional
Information for more information on bond ratings.
Calvert Social Mid Cap Growth Portfolio's fixed-income
investment strategies caused it to have a relatively
high portfolio turnover compared to other portfolios. A
portfolio with high turnover may incur higher
transaction costs, such as custodian and settlement
fees. During fiscal 1997, brokerage commission expenses
remained relatively level even though turnover increased
significantly, since the fixed-income investments are
traded on a spread, rather than a commission basis.
..........................................................
INVESTMENT SCREENS
- ----------------------------------------------------------
Once securities are determined to fall within the
investment objective of the Portfolio and are deemed
financially viable investments, they are screened
according to the social criteria described below. These
social screens are applied to potential investment
candidates by the Advisor in consultation with the
Subadvisor.
The following criteria may be changed by the Portfolio's
Board of Directors without shareholder approval:
1. The Portfolio avoids investing in companies that,
in the Advisor's opinion, have significant or
historical patterns of violating environmental
regulations, or otherwise have an egregious
environmental record. Additionally, the Portfolio
will avoid investing in nuclear power plant
operators and owners, or manufacturers of key
components in the nuclear power process.
2. The Portfolio will not invest in companies that are
significantly engaged in weapons production. This
includes weapons systems contractors and major
nuclear weapons systems contractors.
3. The Portfolio will not invest in companies that, in
the Advisor's opinion, have significant or
historical patterns of discrimination against
employees on the basis of race, gender, religion,
age, disability or sexual orientation, or that have
major labor-management disputes.
4. The Portfolio will not invest in companies that are
significantly involved in the manufacture of
tobacco or alcohol products. The Portfolio will not
invest in companies that make products or offer
services that, under proper use, in the Advisor's
opinion, are considered harmful.
The Advisor will seek to review companies' overseas
operations consistent with the social criteria stated
above. While the Portfolio may invest in companies that
exhibit positive social characteristics, it makes no
explicit claims to seek out companies with such
practices.
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------
Calvert Variable Series, Inc. (the "Fund") is an
open-end management investment company registered under
the Investment Company Act of 1940, as amended. The Fund
was incorporated under the laws of the State of Maryland
on September 27, 1982. Calvert Social Mid Cap Growth is
one of the Fund's portfolios, and is designed to provide
opportunities for investing in enterprises that make a
significant contribution to society through their
products and services and through the way they do
business. Shares of the Portfolio are sold only to
insurance companies (collectively, the "Insurance
Companies") for allocation to their separate accounts to
fund the benefits under certain variable annuity and
variable life insurance policies (collectively, the
"Policies").
Shares of the Portfolio may only be sold to Insurance
Companies for their separate accounts, and not to
individual investors. As such, the "shareholders"
referred to in this prospectus are the Insurance
Companies. The Insurance Companies' prospectuses explain
the relationship between changes in the net asset value
of the Portfolio's shares and the benefits provided
under a policy. The prospectuses also detail your
interests as a policyholder in the shares of the
separate account and your ability to determine the type
of investment underlying the Policy. You should
carefully review the appropriate prospectus when you
consider buying a Policy.
The Fund has several other portfolios or series, which
are sold to other insurance companies to fund the
benefits under certain variable annuity and variable
life insurance policies issued by the insurance
companies. The Board of Directors supervises the
business affairs and investments of the Portfolio, which
is managed on a daily basis by the Investment Advisor.
..........................................................
Investment Advisor
Calvert Asset Management Company, Inc. (the"Advisor"),
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to the Portfolio. It is
a wholly-owned subsidiary of Calvert Group, Ltd., which
is in turn an indirect wholly-owned subsidiary of Acacia
Mutual Life Insurance Company. As of December 31, 1997,
Calvert Group, Ltd. had assets under management and
administration in excess of $5.0 billion. Pursuant to
its investment advisory agreement with the Fund, the
Investment Advisor manages the investment and
reinvestment of the assets of the Portfolio and is
responsible for the overall management of the business
affairs of the Portfolio, subject to the direction and
authority of the Fund's Board of Directors.
..........................................................
Subadvisor
Brown Capital Management, Inc. of Baltimore, Maryland is
the subadvisor to the Portfolio. Brown Capital
Management believes that capital can be enhanced in
times of opportunity and preserved in times of adversity
without timing the market. The firm uses a bottom-up
approach that incorporates growth-adjusted price
earnings. Stocks purchased are generally undervalued and
have momentum, have earnings per share growth rates
greater than the market, are more profitable than the
market, and have relatively low price-earnings ratios. A
team of experienced investment managers manage the
Portfolio.
Mr. Brown is founder and President of Brown Capital
Management. He has over 22 years of investment
experience, having served as a Vice President and
Portfolio Manager for 10 years at T. Rowe Price
Associates immediately prior to starting his own firm.
Mr. Brown holds an M.S. in Business Administration from
the Indiana University School of Business. Additionally,
he is a professionally-designated Chartered Financial
Analyst ("CFA") and Chartered Investment Counselor.
Mr. Oppenheim has had 25 years' investment experience
for institutions, including the State of Maryland, T.
Rowe Price Associates, Inc., the National Rural Electric
Pension and Brown Capital Management. He holds a B.S. in
Economics and Juris Doctor from the University of
Wisconsin, and is a CFA.
Mr. Hall has over 30 years' investment experience
including 18 years with T. Rowe Price Associates, Inc.,
seven years with Emerging Growth Partners, Inc., and
four years with The Investment Center, prior to joining
Brown Capital Management. Mr. Hall is a former Trustee
of the Peabody Institute of Johns Hopkins University.
..........................................................
Advisory Fee
For fiscal year 1997, the Advisor received from the
Portfolio a base fee of 0.80% of the average daily net
assets of the Portfolio. From this base fee, the Advisor
pays the Subadvisor a base fee of 0.25% of average net
assets. In addition, under the circumstances described
below, the Advisor and the Subadvisor may earn (or have
their fees reduced by) performance fee adjustments based
on the extent to which performance of the Portfolio
exceeds or trails the index against which it is
measured. The performance fee adjustment began February
1997. The specific adjustments are as follows, and are
calculated monthly:
Calvert Social Mid Cap Growth Portfolio: Advisor's
Performance Fee Adjustment
Performance versus the Performance Fee
S&P 400 Mid-Cap Index Adjustment
- ----------------------------------------------------------
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
Calvert Social Mid Cap Growth Portfolio: Subadvisor's
Performance Fee Adjustment
Performance versus Performance Fee
the Index* Adjustment
- ----------------------------------------------------------
10% to less than 25% 0.02%
25% to less than 40% 0.05%
40% or more 0.10%
*The Index is a blend of 60% of the Russell 1000 Growth
Index and 40% of the Russell 2000 Index.
Payment of an upward performance fee adjustment will be
from the Portfolio to the Advisor, and the Advisor will
pass on the appropriate amount to the Subadvisor; fees
adjusted downward from the base fee as a result of
under-performance will be retained by the Portfolio.
Payment of an upward performance adjustment will be
conditioned on: (1) the performance of the Portfolio as
a whole having exceeded the S&P 400 Mid-Cap Index; and
(2) payment of the performance adjustment not causing
the Portfolio's performance to fall below the S&P 400
Mid-Cap Index.
Calvert Administrative Services Company ("CASC"), an
affiliate of the Advisor, has been retained by the
Portfolio to provide certain administrative services
necessary to the conduct of its affairs, including the
preparation of regulatory filings and shareholder
reports, the daily determination of net asset value per
share and dividends, and the maintenance of portfolio
and general accounting records. For providing such
services, CASC is entitled to receive a fee from the
Portfolio of 0.10% of net assets per year.
..........................................................
Expenses
The Advisor provides the Fund with investment
supervision and management; certain administrative
services and office space; furnishes executive and other
personnel to the Fund; and pays the salaries and fees of
all Directors who are affiliated persons of the Advisor.
The Advisor may also assume and pay certain advertising
and promotional expenses of the Funds and reserves the
right to compensate broker-dealers in return for their
promotional or administrative services. The Fund pays
all other operating expenses, including the fee of the
Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian
and transfer agent fees; legal and auditing fees;
bookkeeping and dividend disbursing expenses; and
certain other expenses relating to operations. Certain
expenses are paid by the Portfolio, while other expenses
are allocated among the various portfolios of the Fund
on the basis of their relative size (based on net
assets), or as designated by the Board of Directors, as
appropriate. Expenses constituted 1.04% of the average
net assets of the Portfolio for 1997, including fees
paid indirectly, and 0.96% net of fee paid indirectly.
..........................................................
Capital Stock
The Fund issues separate shares of stock for each of its
Portfolios. Shares of each of the Portfolios have equal
rights with regard to voting, redemptions, dividends,
distributions, and liquidations. No Portfolio has
preference over another Portfolio. When issued, shares
are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting
rights. The Insurance Companies will vote Portfolio
shares allocated to registered separate accounts in
accordance with instructions received from
policyholders. Shares for which the Portfolio does not
receive voting instructions will be voted in proportion
to shares for which it has already received votes. Aegon
Financial Services Group, Inc. (formerly, Providian Life
and Health Insurance Company) owns more than 25% of the
outstanding stock of the Portfolio. Under certain
circumstances, which are described in the accompanying
prospectus of the variable life or annuity policy, the
voting instructions received from variable life or
annuity policyholders may be disregarded.
..........................................................
PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------
The Portfolio offers its shares, without sales charge,
only for purchase by various Insurance Companies for
allocation to their Variable Accounts. Shares are
purchased by
the Variable Accounts at the net asset value of the
Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously
offers its shares in the Portfolio at a price equal to
the net asset value per share. Initial and subsequent
payments allocated to the Portfolio are subject to the
limits applicable in the Policies issued by the
Insurance Companies.
It is conceivable that in the future it may be
disadvantageous for both annuity Variable Accounts and
life insurance Variable Accounts, or for Variable
Accounts of different Insurance Companies, to invest
simultaneously in the Portfolio, although currently
neither the Insurance Companies nor the Fund foresee any
such disadvantages to either variable annuity or
variable life insurance policyholders of any Insurance
Company. The Fund's Board of Directors intends to
monitor events in order to identify any material
conflict between such policyholders and to determine
what action, if any, should be taken in response to the
problem.
The Insurance Companies redeem shares of the Portfolio
to make benefit and surrender payments under the terms
of their Policies. Redemptions are processed on any day
on which the Fund is open for business (each day the New
York Stock Exchange is open), and are made at the
Portfolio's net asset value next determined after the
appropriate Insurance Company receives a surrender
request in acceptable form.
Payment for redeemed shares will be made promptly, and
in no event later than seven days. However, the right of
redemption may be suspended or the date of payment
postponed in accordance with the Rules under the
Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or
less than the amount paid for the shares, depending on
the fluctuations in the market value of the assets owned
by the Portfolio. The Fund redeems all full and
fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the
New York Stock Exchange, on days when the Exchange is
open for business, or for any other day when there is a
sufficient degree of trading in the investments of the
Portfolio to affect materially its net asset value per
share (except on days when no orders to purchase or
redeem shares of the Portfolio have been received). The
net asset value is determined by adding the values of
all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by
the number of outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days
or less, securities held by the Portfolio are valued at
their market value if market quotations are readily
available. Otherwise, securities are valued at fair
value as determined in good faith by the Board of
Directors, although the actual calculations may be made
by persons acting pursuant to the direction of the Board.
..........................................................
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------------------------------------
It is the Fund's intention to distribute substantially
all of the net investment income, if any, of the
Portfolio. The net investment income consists of all
payments of dividends or interest received by the
Portfolio less estimated expenses, including the
investment advisory fee. All net realized capital gains,
if any, are declared and distributed periodically, at
least annually. All dividends and distributions are
reinvested in additional shares of the Portfolio at net
asset value.
..........................................................
TOTAL RETURN INFORMATION
- ----------------------------------------------------------
The Portfolio may advertise "total return." Total return
refers to the total change in value of an investment in
the Portfolio over a specified period. It includes not
only the effect of income dividends but also any change
in net asset value, or principal amount, during the
stated period. Total return shows the Portfolio's
overall change in value, including changes in share
price and assuming all of the Portfolio's dividends and
capital gain distributions are reinvested. A cumulative
total return reflects the Portfolio's performance over a
stated period of time. An average annual total return
reflects the hypothetical annual compounded return that
would have produced the same cumulative total return if
the Portfolio's performance had been constant over the
entire period. Because average annual returns tend to
smooth out variations in the Portfolio's returns, you
should recognize that they are not the same as actual
year-by-year results. The total return of the Portfolio
does not include the effect of paying the charges and
expenses on the particular insurance policy or annuity
contract for which the Portfolio serves as the
investment vehicle.
..........................................................
TAXES
- ----------------------------------------------------------
As a "regulated investment company" under the Internal
Revenue Code of 1986, as amended, the Fund is not
subject to federal income or excise tax to the extent
that it distributes its net investment income and net
capital gains. The Portfolio is treated as a separate
entity for federal income tax purposes. Since the sole
shareholders of the Fund are Insurance Companies, no
discussion is included here as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of
the annuity or life insurance policies, see the
prospectuses for the Policies.
..........................................................
TRANSFER AND DIVIDEND DISBURSING AGENT
- ----------------------------------------------------------
Calvert Shareholder Services, Inc., 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the
shareholder servicing agent. National Financial Data
Services, Inc. "NFDS"), has been retained by the Fund
to act as transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - APRIL 30, 1998
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL
INTERNATIONAL EQUITY PORTFOLIO
4550 MONTGOMERY AVENUE, BETHESDA, MARYLAND 20814 (800) 368-2748
Calvert Social International Equity Portfolio (formerly,
Calvert Responsibly Invested Global Equity Portfolio)
(the "Portfolio") is a series of Calvert Variable
Series, Inc. (formerly, Acacia Capital Corporation) (the
"Fund"), an open-end management investment company whose
investment advisor is Calvert Asset Management Company,
Inc. (the "Investment Advisor").
The investment objective of the Portfolio is to achieve
a high total return consistent with reasonable risk by
investing primarily in a globally diversified portfolio.
There can be no assurance that the objective of the
Portfolio will be realized. See "Investment Objective
and Policies."
This Prospectus sets forth the information that a
prospective policyholder should know before directing
investment in the Portfolio and it should be read and
kept for future reference. A Statement of Additional
Information dated April 30, 1998, which contains further
information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated
by reference into this Prospectus. A copy of the
Statement of Additional Information may be obtained
without charge by calling the Fund at the number above,
or by writing the Fund at 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. The Commission
maintains a web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference, and other
information regarding registrants that file
electronically with the Commission.
Shares of the Fund are offered only to insurance
companies for allocation to certain of their variable
separate accounts.
..........................................................
FINANCIAL HIGHLIGHTS
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The following table provides information about the
Portfolio's financial history. It expresses the
information in terms of a single share outstanding
throughout each period. The table has been audited by
those independent accountants whose reports are included
in the Fund's Annual Report to Shareholders, for each of
the respective periods presented. The table should be
read in conjunction with the financial statements and
their related notes. The current Annual Report to
Shareholders is incorporated by reference into the
Statement of Additional Information.
- ----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE
COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. WHEN INVESTORS
SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER OR
LOWER THAN THE AMOUNT ORIGINALLY PAID.
Years Ended
December 31, December 31, December 31,
SOCIAL INTERNATIONAL
EQUITY PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------
Net asset value, beginning $18.74 $17.15 $15.89
- ----------------------------------------------------------
Income from investment operations
Net investment income .19 .17 .27
Net realized and unrealized
gain (loss) 2.28 2.40 1.69
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Total from investment operations 2.47 2.57 1.96
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Distributions from
Net investment income (.20) (.14) (.25)
Net realized gains (1.91) (.84) (.45)
- ----------------------------------------------------------
Total distributions (2.11) (.98) (.70)
Total increase (decrease) in
net asset value .36 1.59 1.26
Net asset value, ending $19.10 $18.74 $17.15
- ----------------------------------------------------------
Total return* 13.23% 14.99% 12.35%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income .85% 1.02% 1.48%
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Total expenses+ 1.56% 1.59% 1.51%
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Net expenses 1.17% 1.18% 1.12%
Expenses reimbursed .17% .23% .39%
Portfolio turnover 35% 85% 90%
Average commission rate paid $.0399 $.0352 NA
Net assets, ending (in thousands) $14,450 $14,027 $9,831
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 757 748 573
- ----------------------------------------------------------
Periods Ended
- ----------------------------------------------------------
December 31, December 31, December 31,
SOCIAL INTERNATIONAL EQUITY PORTFOLIO 1994 1993 1992^
- ----------------------------------------------------------
Net asset value, beginning $17.72 $14.57 $15.00
- ----------------------------------------------------------
Income from investment operations
Net investment income .11 .11 (.02)
Net realized and unrealized
gain (loss) (.49) 4.07 (.41)
- ----------------------------------------------------------
Total from investment operations (.38) 4.18 (.43)
- ----------------------------------------------------------
Distributions from
Net investment income (.13) (.08) -
Net realized gains (1.32) (.95) -
- ----------------------------------------------------------
Total distributions (1.45) (1.03) -
Total increase (decrease) in net
asset value (1.83) 3.15 (.43)
Net asset value, ending $15.89 $17.72 $14.57
- ----------------------------------------------------------
Total return* (2.13%) 29.72% (3.27%)
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income .59% 1.00% (.98%)(a)
- ----------------------------------------------------------
Total expenses+ NA NA NA
- ----------------------------------------------------------
Net expenses 1.24% .94% .98%(a)
Expenses reimbursed .29% .10% 1.07%(a)
Portfolio turnover 84% 64% -
Average commission rate paid NA NA NA
Net assets, ending (in thousands) $7,765 $4,529 $236
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 489 256 16
- ----------------------------------------------------------
(a) Annualized
+ Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such
reductions are included in the ratio of net epenses.
* Total return is for the Portfolio only and does not
reflect sales charges and expenses deducted by the Insurance
Companies. Total return is not annualized for periods of
less than one year.
^ From June 30, 1992 inception.
NA Disclosure not applicable to prior periods.
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective described below is fundamental
and may not be changed without the approval of the
holders of a majority of the outstanding shares of the
Portfolio. As a Policyholder, you may be given an
opportunity to indicate how you believe the Insurance
Company should vote the shares which underlie your
Policy.
The investment objective of Calvert Social International
Equity is to provide a high total return consistent with
reasonable risk by investing primarily in a globally
diversified portfolio of equity securities. The
Portfolio seeks total return through a globally
diversified investment portfolio. It is designed to
provide growth of capital or current income by investing
in enterprises that make a significant contribution to
society through their products and services and through
the way they do business. All investments are screened
for financial and social criteria. The Portfolio may
engage in hedging transactions involving options,
futures contracts and foreign currency transactions to
reduce its risk exposure (see "Investment Techniques").
Under normal circumstances, Calvert Social International
Equity will invest at least 65% of its assets in equity
securities. The Portfolio will invest primarily in
common stocks of established foreign and U.S. companies
believed to have potential for capital growth, income or
both. However, it may invest in any other type of
security including, but not limited, to convertible
securities, preferred stocks, bonds, notes and other
debt securities of companies (including Euro-currency
instruments and securities), or of any international
agency (such as the Asian Development Bank or
Inter-American Development Bank) or obligations of
domestic or foreign governments and their political
subdivisions, and in foreign currency transactions. The
Portfolio may establish and maintain reserves for
temporary defensive purposes or to enable it to take
advantage of buying opportunities. Calvert Social
International Equity's reserves may be invested in
domestic as well as foreign short-term money market
instruments including, but not limited to, government
obligations, certificates of deposit, bankers'
acceptances, time deposits, commercial paper, short-term
corporate debt securities and repurchase and reverse
repurchase agreements. The Portfolio may also engage in
certain options transactions, and enter into futures
contracts and related options for hedging purposes and
lend portfolio securities. See "Additional Fundamental
Investment Policies, Risks of Foreign Securities,
Foreign Currency Transactions, and Additional
Non-Fundamental Investment Policies."
Under normal circumstances, Calvert Social International
Equity will invest at least 65% of its assets in the
securities of issuers in no less than three countries,
other than the U.S. Under normal circumstances, business
activities in a number of different foreign countries
will be represented in the Portfolio's investments. The
Portfolio may, from time to time, have more than 25% of
its assets invested in any major industrial or developed
country which in the view of the Subadvisor poses no
unique investment risk. Under exceptional economic or
market conditions, Calvert Social International Equity
may invest substantially all of its assets in only one
or two countries, or in U.S. government obligations or
securities of companies incorporated in and having their
principal activities in the U.S. As an operating policy,
the Portfolio will limit its investment in securities of
U.S. issuers, to 5% of its net assets.
In determining the appropriate distribution of
investments among various countries and geographic
regions, the Subadvisor ordinarily will consider the
following factors: prospects for relative economic
growth among foreign countries; expected levels of
inflation; relative price levels of the various capital
markets; government policies influencing business
conditions; the outlook for currency relationships and
the range of individual investment opportunities
available to the global investor. The Portfolio may make
investments in developing countries, which involve
exposure to economic structures that are generally less
diverse and mature than in the United States, and to
political systems which may be less stable. A developing
country can be considered to be a country which is in
the initial stages of its industrialization cycle. In
the past, markets of developing countries have been more
volatile than the markets of developed countries;
however, such markets often have provided higher
long-term rates of return to investors. The Subadvisor
believes that these characteristics can be expected to
continue in the future.
Generally, Calvert Social International Equity will not
trade in securities for short-term profits, but, when
circumstances warrant, securities may be sold without
regard to the length of time held. The Portfolio may
write covered call options and purchase call and put
options on securities and security indices, and may
write secured put options and enter into option
transactions on foreign currency. It may also engage in
transactions in financial futures contracts and related
options for hedging purposes, and invest in repurchase
agreements. These investment techniques and the related
risks are summarized below and are described in more
detail in the Statement of Additional Information.
Calvert Social International Equity may purchase unrated
debt instruments, if the Advisor or Subadvisor
determines they are of comparable quality to permissible
rated instruments. Although the Portfolio may invest up
to 5% of its assets in noninvestment-grade bonds (those
rated below BBB by Standard & Poor's or equivalent), it
does not intend to purchase any such bonds unless the
instrument provides an opportunity to invest in an
attractive company in which an equity investment is not
currently available or desirable. (See
"Noninvestment-grade Debt Securities.")
..........................................................
ADDITIONAL FUNDAMENTAL INVESTMENT POLICIES
Calvert Social International Equity may, in pursuit of
its investment objectives, purchase put and call options
and engage in the writing of covered call options and
secured put options on securities of issuers that meet
its social criteria, and employ a variety of other
investment techniques, including the purchase and sale
of market index futures contracts, financial futures
contracts and options on such futures. Investing in
options may involve a greater degree of risk than those
inherent in more conservative investment approaches. The
Portfolio will engage in futures contracts and related
options only to protect against market declines. The
Portfolio will not engage in such transactions for
speculation or leverage. It is an operating policy of
the Fund that no Portfolio may invest in options and
futures contracts if as a result more than 5% of its
assets would be so invested.
The Portfolio may engage in repurchase agreements and
reverse repurchase agreements. In a repurchase
agreement, the Portfolio buys a security subject to the
right and obligation to sell it back at a higher price.
In order to minimize any risk involved, the Portfolio
engages in such transactions only with recognized
securities dealers and banks determined by the Advisor
to present a minimal credit risk. Repurchase agreements
are fully collateralized and always have a maturity of
less than one year. No more than 10 percent of the
Portfolio's assets may be invested in repurchase
agreements not terminable within seven days. In a
reverse repurchase agreement, the Portfolio sells a
security subject to the right and obligation to buy it
back at a higher price. The Portfolio then invests the
proceeds from the transaction in another obligation in
which it is authorized to invest. For reverse repurchase
agreements, the Portfolio maintains a segregated account
with liquid assets equal in value to the repurchase
price.
The Portfolio may borrow money from banks (and pledge
its assets to secure such borrowing) for temporary or
emergency purposes, but not for leverage. This type of
borrowing may not exceed 10% of the value of the
Portfolio's total assets. The Portfolio may also make
loans of the securities it holds. The advantage of
loaning securities is that the Portfolio continues to
receive the equivalent of the interest earned or
dividends paid by the issuers while at the same time
earning interest on the cash or equivalent collateral
that may be invested in accordance with the Portfolio's
investment objective, policies, and restrictions. The
purpose of the loans is usually to facilitate the
delivery of securities. As with any extension of credit,
there may be risks of delay in recovery and possible
loss of rights in the loaned security if the borrower
fails financially. The Investment Advisor attempts to
reduce the risk by lending only to borrowers that it
deems creditworthy and only on terms that it believes
compensates for any risk inherent in the transaction.
The Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with
assets of one billion dollars or more. All loans must be
secured continuously in the form of cash or cash
equivalents such as U.S. Treasury bills. In addition,
the amount of collateral must, on a current basis, equal
or exceed the market value of the loaned securities, and
the Portfolio may only make the loan if the value of the
securities loaned does not exceed 10% of its assets. The
Portfolio must be able to terminate loans at any time
with appropriate notice. The Portfolio will exercise its
right to terminate a securities loan in order to
preserve its right to vote on matters of importance
affecting holders of the securities. All securities must
be returned to the Portfolio when a loan terminates, and
the Portfolio absorbs any gain or loss in the market
value of the securities during the loan period.
RISKS OF FOREIGN SECURITIES
Calvert Social International Equity may invest all of
its assets in foreign securities. There are substantial
and different risks involved in investing in foreign
securities. You should consider these risks carefully.
For example, there is generally less publicly available
information about foreign companies than is available
about companies in the U.S. Foreign companies are
generally not subject to uniform audit and financial
reporting standards, practices and requirements
comparable to those in the U.S.
Foreign securities involve currency risks. The U.S.
dollar value of a foreign security tends to decrease
when the value of the dollar rises against the foreign
currency in which the security is denominated and tends
to increase when the value of the dollar falls against
such currency. Fluctuations in exchange rates may also
affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest
payments may be returned to the country of origin, based
on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and
other expenses may be incurred in converting between
various currencies in connections with purchases and
sales of foreign securities.
Foreign stock markets are generally not as developed or
efficient as those in the U.S. In most foreign markets
volume and liquidity are less than in the U.S. and, at
times, volatility of price can be greater than that in
the U.S. Fixed commissions on foreign stock exchanges
are generally higher than the negotiated commissions on
U.S. exchanges. There is generally less government
supervision and regulation of foreign stock exchanges,
brokers and companies than in the U.S.
There is also the possibility of adverse changes in
investment or exchange control regulations,
expropriation or confiscatory taxation, limitations on
the removal of funds or other assets, political or
social instability, or diplomatic developments which
could adversely affect investments, assets or securities
transactions of the Fund in some foreign countries. The
Fund is not aware of any investment or exchange control
regulations which might substantially impair the
operations of the Fund as described, although this could
change at any time.
Investing in emerging markets in particular, those
countries whose economies and capital markets are not as
developed as those of more industrialized nations,
carries its own special risks. Among other risks, the
economies of such countries may be affected to a greater
extent than in other countries by price fluctuations of
a single commodity, by severe cyclical climactic
conditions, lack of significant history in operating
under a market-oriented economy, or by political
instability, including risk of expropriation.
For many foreign securities, there are U.S.
dollar-denominated American Depositary Receipts
("ADRs"), which are traded in the U.S. on exchanges or
over the counter and are generally sponsored and issued
by domestic banks. ADRs represent the right to receive
securities of foreign issuers deposited in a domestic
bank or a correspondent bank. ADRs do not eliminate all
the risk inherent in investing in the securities of
foreign issuers. However, by investing in ADRs rather
than directly in foreign issuers' stock, the Portfolio
may avoid currency risks during the settlement period
for either purchases or sales. In general, there is a
large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the
accounting, auditing and financial reporting standards
of the domestic market or exchange on which they are
traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be
subject. The Portfolio may also invest in European
Depositary Receipts ("EDRs"), which are receipts
evidencing an arrangement with a European bank similar
to that for ADRs and are designed for use in the
European securities markets. EDRs are not necessarily
denominated in the currency of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign
withholding taxes, thus reducing the net amount
available for distribution to shareholders. You should
understand that the expense ratio of the Portfolio can
be expected to be higher than those of investment
companies investing only in domestic securities since
the costs of operations are higher.
..........................................................
Writing (Selling) Call and Put Options.
A call option on a security, security index or a foreign
currency gives the purchaser of the option, in return
for the premium paid to the writer (seller), the right
to buy the underlying security, index or foreign
currency at the exercise price at any time during the
option period. Upon exercise by the purchaser, the
writer of a call option on an individual security or
foreign currency has the obligation to sell the
underlying security or currency at the exercise price. A
call option on a securities index is similar to a call
option on an individual security, except that the value
of the option depends on the weighted value of the group
of securities comprising the index and all settlements
are made in cash. A call option may be terminated by the
writer (seller) by entering into a closing purchase
transaction in which it purchases an option of the same
series as the option previously written.
A put option on a security, security index, or foreign
currency gives the purchaser of the option, in return
for the premium paid to the writer (seller), the right
to sell the underlying security, index, or foreign
currency at the exercise price at any time during the
option period.
Upon exercise by the purchaser, the writer of a put
option has the obligation to purchase the underlying
security or foreign currency at the exercise price. A
put option on a securities index is similar to a put
option on an individual security, except that the value
of the option depends on the weighted value of the group
of securities comprising the index and all settlements
are made in cash.
The Portfolio may write exchange-traded call options on
its securities. Call options may be written on portfolio
securities, securities indices, or foreign currencies.
With respect to securities and foreign currencies, the
Portfolio may write call and put options on an exchange
or over-the-counter. Call options on portfolio
securities will be covered since the Portfolio will own
the underlying securities or other securities that are
acceptable for escrow at all times during the option
period. Call options on securities indices will be
written only to hedge in an economically appropriate way
portfolio securities which are not otherwise hedged with
options or financial futures contracts and will be
"covered" by identifying the specific portfolio
securities being hedged. Call options on foreign
currencies and put options on securities and foreign
currencies will be covered by securities acceptable for
escrow. The Portfolio may not write options on more than
50% of its total assets. Management presently intends to
cease writing options if and as long as 25% of such
total assets are subject to outstanding options
contracts or if required under regulations of state
securities administrators.
The Portfolio will write call and put options in order
to obtain a return on its investments from the premiums
received and will retain the premiums whether or not the
options are exercised. Any decline in the market value
of portfolio securities or foreign currencies will be
offset to the extent of the premiums received (net of
transaction costs). If an option is exercised, the
premium received on the option will effectively increase
the exercise price or reduce the difference between the
exercise price and market value.
During the option period, the writer of a call option
gives up the opportunity for appreciation in the market
value of the underlying security or currency above the
exercise price. It retains the risk of loss should the
price of the underlying security or foreign currency
decline. Writing call options also involves risks
relating to the Portfolio's ability to close out options
it has written.
During the option period, the writer of a put option has
assumed the risk that the price of the underlying
security or foreign currency will decline below the
exercise price. However, the writer of the put option
has retained the opportunity for appreciation above the
exercise price should the market price of the underlying
security or foreign currency increase. Writing put
options also involves risks relating to the Portfolio's
ability to close out options it has written.
..........................................................
Purchasing Call and Put Options.
The Portfolio may invest up to an aggregate of 5% of its
total assets in exchange-traded or over-the-counter call
and put options on securities and securities indices and
foreign currencies. Purchases of such options may be
made for the purpose of hedging against changes in the
market value of the underlying securities or foreign
currencies. The Portfolio may invest in call and put
options whenever, in the opinion of the Advisor or
Subadvisor, a hedging transaction is consistent with its
investment objectives. The Portfolio may sell a call
option or a put option which it has previously purchased
prior to the purchase (in the case of a call) or the
sale (in the case of a put) of the underlying security
or foreign currency. Any such sale would result in a net
gain or loss depending on whether the amount received on
the sale is more or less than the premium and other
transaction costs paid on the call or put which is sold.
Purchasing a call or put option involves the risk that
the Portfolio may lose the premium it paid plus
transaction costs.
..........................................................
Financial Futures and Related Options.
The Portfolio may enter into financial futures contracts
and related options as a hedge against anticipated
changes in the market value of its securities or
securities which it intends to purchase or in the
exchange rate of foreign currencies. Hedging is the
initiation of an offsetting position in the futures
market which is intended to minimize the risk associated
with a position's underlying securities in the cash
market. Investment techniques related to financial
futures and options are summarized below and are
described more fully in the Statement of Additional
Information.
Financial futures contracts consist of interest rate
futures contracts, foreign currency futures contracts
and securities index futures contracts. An interest rate
futures contract obligates the seller of the contract to
deliver, and the purchaser to take delivery of, the
interest rate securities called for in the contract at a
specified future time and at a specified price. A
foreign currency futures contract obligates the seller
of the contract to deliver, and the purchaser to take
delivery of, the foreign currency called for in the
contract at a specified future time and at a specified
price. A securities index assigns relative values to the
securities included in the index, and the index
fluctuates with changes in the market values of the
securities so included. A securities index futures
contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the
difference between the index value at the close of the
last trading day of the contract and the price at which
the futures contract is originally struck. An option on
a financial futures contract gives the purchaser the
right to assume a position in the contract (a long
position if the option is a call and a short position if
the option is a put) at a specified exercise price at
any time during the period of the option.
The Portfolio may purchase and sell financial futures
contracts which are traded on a recognized exchange or
board of trade and may purchase exchange or board-traded
put and call options on financial futures contracts. It
will engage in transactions in financial futures
contracts and related options only for hedging purposes
and not for speculation. In addition, the Portfolio will
not purchase or sell any financial futures contract or
related option if, immediately thereafter, the sum of
the cash or U.S. Treasury bills committed with respect
to its existing futures and related options positions
and the premiums paid for related options would exceed
5% of the market value of its total assets. At the time
of purchase of a futures contract or a call option on a
futures contract, an amount of cash, U.S. Government
securities or other appropriate high-grade debt
obligations equal to the market value of the futures
contract minus the Portfolio's initial margin deposit
with respect thereto, will be deposited in a segregated
account with the Fund's custodian bank to collateralize
fully the position and thereby ensure that it is not
leveraged. The extent to which the Portfolio may enter
into financial futures contracts and related options may
also be limited by requirements of the Internal Revenue
Code of 1986 for qualification as a regulated investment
company.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility of an
imperfect correlation between futures market prices and
cash market prices and the possibility that the Advisor
or Subadvisor could be incorrect in its expectations as
to the direction or extent of various interest rate
movements or foreign currency exchange rates, in which
case the Portfolio's return might have been greater had
hedging not taken place. There is also the risk that a
liquid secondary market may not exist. The risk in
purchasing an option on a financial futures contract is
that the Portfolio will lose the premium it paid. Also,
there may be circumstances when the purchase of an
option on a financial futures contract would result in a
loss to the Portfolio while the purchase or sale of the
contract would not have resulted in a loss.
..........................................................
FOREIGN CURRENCY TRANSACTIONS
The value of the Portfolio's assets as measured in
United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and the
Portfolio may incur costs in connection with conversions
between various currencies. The Portfolio will conduct
its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through forward
contracts to purchase or sell foreign currencies. A
forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at
a price set at the time of the contract. These contracts
are traded directly between currency traders (usually
large commercial banks) and their customers.
When the Portfolio enters into a contract for the
purchase or sale of a security denominated in a foreign
currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering
into a forward contract in United States dollars for the
purchase or sale of the amount of foreign currency
involved in the underlying security transaction, the
Portfolio is able to protect itself against a possible
loss between trade and settlement dates resulting from
an adverse change in the relationship between the United
States dollar and such foreign currency. However, this
tends to limit potential gains which might result from a
positive change in such currency relationships. The
Portfolio may also hedge its foreign currency exchange
rate risk by engaging in currency financial futures and
options transactions.
When the Advisor or the Subadvisor believes that the
currency of a particular foreign country may suffer a
substantial decline against the United States dollar, it
may enter into a forward contract to sell an amount of
foreign currency approximating the value of some or all
of the Portfolio's portfolio securities denominated in
such foreign currency. The forecasting of short-term
currency market movement is extremely difficult and
whether such a short-term hedging strategy will be
successful is highly uncertain.
It is impossible to forecast with precision the market
values of portfolio securities at the expiration of a
contract. Accordingly, it may be necessary for the
Portfolio to purchase additional currency on the spot
market (and bear the expense of such purchase) if the
market value of the security is less than the amount of
foreign currency the Portfolio is obligated to deliver
when a decision is made to sell the security and make
delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to
sell on the spot market some of the foreign currency
received upon the sale of the portfolio security if its
market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver.
If the Portfolio retains the portfolio security and
engages in an offsetting transaction, it will incur a
gain or a loss (as described below) to the extent that
there has been movement in forward contract prices. If
the Portfolio engages in an offsetting transaction, it
may subsequently enter into a new forward contract to
sell the foreign currency. Should forward prices decline
during the period between the Portfolio's entering into
a forward contract for the sale of a foreign currency
and the date it enters into an offsetting contract for
the purchase of the foreign currency, it would realize
gains to the extent the price of the currency it has
agreed to sell exceeds the price of the currency it has
agreed to purchase. Should forward prices increase, the
Portfolio would suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price
of the currency it has agreed to sell. Although such
contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also
tend to limit any potential gain which might result
should the value of such currency increase. The
Portfolio may have to convert its holdings of foreign
currencies into United States dollars from time to time.
Although foreign exchange dealers do not charge a fee
for conversion, they do realize a profit based on the
difference (the "spread") between the prices at which
they are buying and selling various currencies.
..........................................................
ADDITIONAL NONFUNDAMENTAL INVESTMENT POLICIES
Calvert Social International Equity has adopted the
following operating (i.e., nonfundamental) investment
policies which may be changed by the Board of Directors
without shareholder approval:
The Portfolio may not purchase illiquid securities if
more than 15% of the value of its net assets would be
invested in such securities. Further, the Portfolio may
not acquire private placement investments until the
value of its assets exceeds $20 million.
For further information on the Portfolio's investment
policies and restrictions, as well as a description of
the types of securities that may be purchased, see the
Statement of Additional Information.
ADDITIONAL RISK FACTORS
Interest Rate Risk
All fixed income instruments are subject to
interest-rate risk: that is, if market interest rates
rise, the current principal value of a bond will
decline. In general, the longer the maturity of the
bond, the greater the decline in value will be.
..........................................................
Noninvestment-grade Securities
Noninvestment-grade securities tend to be less sensitive
to interest rate changes than higher-rated investments,
but are more sensitive to adverse economic changes and
individual corporate developments. This may affect the
issuer's ability to make principal and interest payments
on the debt obligation. There is also a greater risk of
price declines due to changes in the issuer's
creditworthiness. Because the market for lower-rated
securities may be less active ("thinner") than for
higher-rated securities, it may be difficult for the
Portfolio to sell the securities. Because of a lack of
objective data, a thinly-traded market may make it
difficult to value the securities, so that the Board of
Directors may have to exercise its judgment in assigning
a value. See the Appendix in the Statement of Additional
Information for more information on bond ratings.
..........................................................
INVESTMENT SCREENS
- ----------------------------------------------------------
The Portfolio carefully reviews a company's policies and
behavior in the following social issues: environment,
nuclear energy, weapons systems, health care, human
rights, and alcohol/tobacco. The Portfolio currently
observes the following operating policies which may be
changed by the Portfolio's Board of Directors without
shareholder approval:
1. The Portfolio actively seeks to invest in companies
that achieve excellence in both financial return
and environmental soundness, selecting issuers that
take positive steps toward preserving our
environment and avoiding companies with poor
environmental records.
2. The Portfolio will not invest in issuers primarily
engaged in the manufacture of weapons systems, the
production of nuclear energy, or the manufacture of
equipment to produce nuclear energy.
3. The Portfolio actively seeks to invest in companies
whose products or services improve the quality of
or access to health care, including public health
and preventative medicine.
The Portfolio believes that there are long-term benefits
inherent in an investment philosophy that demonstrates
concern for the environment, human rights, economic
priorities, and international relations. Those
enterprises which exhibit a social awareness measured in
terms of the above attributes and considerations should
be better prepared to meet future societal needs for
goods and services. By responding to social concerns,
these enterprises should not only avoid the liability
that may be incurred when a product or services is
determined to have a negative social impact or has
outlived its usefulness, but also be better positioned
to develop opportunities to make a profitable
contribution to society. These enterprises should be
ready to respond to external demands and ensure that
over the longer term they will be viable to provide a
positive return to both investors and society as a whole.
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------
Calvert Variable Series, Inc. (the "Fund"), a Maryland
corporation, is an open-end investment company, which
was incorporated under the laws of the State of Maryland
on September 27, 1982. The Board of Directors supervises
the business affairs and investments of the Fund, which
are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios,
each issuing one class of stock. The shares of the Fund
currently are sold only to insurance companies
(collectively, the "Insurance Companies") for allocation
to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable
annuity and variable life insurance policies
(collectively, the "Policies") issued by such companies.
Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity
or life insurance policy and is described in the
attached prospectus for one of the Policies, which
should be reviewed carefully by a person considering the
purchase of a Policy. The rights of the Insurance
Companies as shareholders should be distinguished from
the rights of a policy owner which are described in the
Policies. Policy owners should consider that the
investment return experience of the Portfolio will
affect the value of the policy and the amount of annuity
payments or life insurance benefits received under a
policy. See the attached prospectus(es) for the Policies
for a description of the relationship between increases
or decreases in the net asset value of Portfolio shares
(and any distributions on such shares) and the benefits
provided under a policy.
..........................................................
Investment Advisor and Subadvisor
Calvert Asset Management Company, Inc. (the "Advisor"),
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to all of the Fund's
Portfolios. It is a wholly-owned subsidiary of Calvert
Group, Ltd., which is in turn an indirect wholly-owned
subsidiary of Acacia Mutual Life Insurance Company. As
of December 31, 1997, Calvert Group, Ltd. had assets
under management and administration in excess of $5.0
billion. Pursuant to its investment advisory agreement
with the Fund, the Investment Advisor manages the
investment and reinvestment of the assets of each
Portfolio and is responsible for the overall management
of the business affairs of each Portfolio, subject to
the direction and authority of the Fund's Board of
Directors. The Advisor has retained an investment
subadvisor ("Subadvisor") for Calvert Social
International Equity. The Advisor will continuously
monitor and evaluate the performance and investment
style of the Subadvisor.
The Subadvisor to Calvert Social International Equity is
Murray Johnstone International, Ltd. of Glasgow,
Scotland, which has its principal U.S. office in
Chicago, Illinois, and is a wholly-owned subsidiary of
United Asset Management Company. Murray Johnstone
manages the investment and reinvestment of the assets of
Calvert Social International Equity, although the
Advisor may manage part of Calvert Social International
Equity's cash reserves required for liquidity purposes.
Andrew Preston, Calvert Social International Equity
Portfolio Manager, studied at Melbourne University in
Australia and Ritsumeikan University in Japan prior to
working for the Australian Department of Foreign
Affairs. He joined Murray Johnstone in 1985 as an
analyst in the U.K. and U.S. departments, became Fund
Manager in the Japanese Department, and played a
prominent role in the establishment and operation of
Yamaichi-Murray Johnstone.
Advisory Fee
For its services, the Advisor receives a fee based on a
percentage of the average daily net assets of the
Portfolio. For 1997, the Advisor received a fee of 1.00%
of net assets of Calvert Social International Equity,
and from this paid a fee of 0.45% of the net assets of
Calvert Social International Equity to Murray Johnstone
International, Ltd. as a subadvisory fee.
Calvert Administrative Services Company ("CASC"), an
affiliate of the Advisor, has been retained by Calvert
Social International Equity to provide certain
administrative services necessary to the conduct of
their affairs, including the preparation of regulatory
filings and shareholder reports, the daily determination
of net asset value per share and dividends, and the
maintenance of portfolio and general accounting records.
For providing such services, CASC is entitled to receive
a fee from the Portfolio of 0.10% of net assets per year
with a minimum fee of $40,000 for Calvert Social
International Equity. During 1997, CASC received a fee
of 0.10%.
..........................................................
Expenses
The Portfolio's expenses, which are accrued daily,
include: the fee of the Investment Advisor; costs of
executing portfolio transactions; pricing costs;
interest; taxes; custodian and transfer agent fees;
legal and auditing fees; bookkeeping and dividend
disbursing expenses; and certain other expenses relating
to the Fund's operations. Certain expenses are paid by
the particular Portfolio that incurs them, while other
expenses are allocated among each Portfolio on the basis
of their relative size (based on net assets), or as
designated by the Board of Directors, as appropriate.
Expenses constituted 1.56% of the average net assets of
the Portfolio for 1997, including fees paid indirectly,
and 1.17% net of fees paid indirectly and reimbursements.
..........................................................
Capital Stock
The Fund issues separate stock for each of its
Portfolios. Shares of each of the Portfolios have equal
rights with regard to voting, redemptions, dividends,
distributions, and liquidations. No Portfolio has
preference over another Portfolio. When issued, shares
are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting
rights. The Insurance Companies and the Fund's
shareholders will vote Fund shares allocated to
registered separate accounts in accordance with
instructions received from policyholders. Aegon
Financial Services Group, Inc. (formerly, Providian Life
and Health Insurance Company) owns more than 25% of the
outstanding stock of the Portfolio. Under certain
circumstances, which are described in the accompanying
prospectus of the variable life or annuity policy, the
voting instructions received from variable life or
annuity policyholders may be disregarded.
..........................................................
PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------
The Fund offers its shares, without sales charge, only
for purchase by various Insurance Companies for
allocation to their Variable Accounts. Shares are
purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the
Insurance Company receives the premium payment. The Fund
continuously offers its shares in the Portfolio at a
price equal to the net asset value per share. Initial
and subsequent payments allocated to a Portfolio are
subject to the limits applicable in the Policies issued
by the Insurance Companies.
It is conceivable that in the future it may be
disadvantageous for both annuity Variable Accounts and
life insurance Variable Accounts, or for Variable
Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither
the Insurance Companies nor the Fund foresee any such
disadvantages to either variable annuity or variable
life insurance policyholders of any Insurance Company.
The Fund's Board of Directors intends to monitor events
in order to identify any material conflict between such
policyholders and to determine what action, if any,
should be taken in response to the problem.
The Insurance Companies redeem shares of the Fund to
make benefit and surrender payments under the terms of
their Policies. Redemptions are processed on any day on
which the Fund is open for business (each day the New
York Stock Exchange is open), and are made at the
Portfolio's net asset value next determined after the
appropriate Insurance Company receives a surrender
request in acceptable form.
Payment for redeemed shares will be made promptly, and
in no event later than seven days. However, the right of
redemption may be suspended or the date of payment
postponed in accordance with the Rules under the
Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or
less than the amount paid for the shares, depending on
the fluctuations in the market value of the assets owned
by the Portfolio. The Fund redeems all full and
fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the
New York Stock Exchange, on days when the Exchange is
open for business, or for any other day when there is a
sufficient degree of trading in the investments of the
Portfolio to affect materially its net asset value per
share (except on days when no orders to purchase or
redeem shares of the Portfolio have been received). The
net asset value is determined by adding the values of
all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by
the number of outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days
or less, securities held by the Portfolio are valued at
market value if market quotations are readily available.
Otherwise, securities are valued at fair value as
determined in good faith by the Board of Directors,
although the actual calculations may be made by persons
acting pursuant to the direction of the Board. All money
market instruments with a remaining maturity of 60 days
or less held by any Portfolio, are valued on an
amortized cost basis.
..........................................................
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------------------------------------
It is the Portfolio's intention to distribute
substantially all of the net investment income, if any.
The net investment income consists of all payments of
dividends or interest received by the Portfolio less
estimated expenses, including the investment advisory
fee. All net realized capital gains, if any, are
declared and distributed periodically, at least
annually. All dividends and distributions are reinvested
in additional shares of the Portfolio at net asset value.
TOTAL RETURN AND YIELD INFORMATION
- ----------------------------------------------------------
Total Return and Other Quotations
Calvert Social International Equity may advertise "total
return." Total return refers to the total change in
value of an investment in the Portfolio over a specified
period. Total return shows its overall change in value,
including changes in share price and assuming all of the
Portfolio's dividends and capital gain distributions are
reinvested. A cumulative total return reflects the
Portfolio's performance over a stated period of time. An
average annual total return reflects the hypothetical
annual compounded return that would have produced the
same cumulative total return if the Portfolio's
performance had been constant over the entire period.
Because average annual returns tend to smooth out
variations in the Portfolio's returns, you should
recognize that they are not the same as actual
year-by-year results. The total return of a Portfolio
generally does not include the effect of paying the
charges and expenses on the particular insurance policy
or annuity contract for which the Portfolio serves as
the investment vehicle.
..........................................................
TAXES
- ----------------------------------------------------------
As a "regulated investment company" under the Internal
Revenue Code of 1986, as amended, the Fund is not
subject to federal income or excise tax to the extent
that it distributes its net investment income and net
capital gains. Each Portfolio is treated as a separate
entity for federal income tax purposes. Since the sole
shareholders of the Fund are Insurance Companies, no
discussion is included here as to the federal income tax
consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of
the annuity or life insurance policies, see the
prospectuses for the Policies.
..........................................................
TRANSFER AND DIVIDEND DISBURSING AGENT
- ----------------------------------------------------------
Calvert Shareholder Services, Inc., 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the
shareholder servicing agent. National Financial Data
Services, Inc. ("NFDS"), has been retained by the Fund
to act as transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS -APRIL 30, 1998
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL BALANCED PORTFOLIO
4550 MONTGOMERY AVENUE, SUITE 1000N, BETHESDA, MARYLAND
20814 (800) 368-2748
Calvert Social Balanced Portfolio (formerly, Calvert
Responsibly Invested Balanced Portfolio) (the
"Portfolio") is a series of Calvert Variable Series, Inc.
(formerly, Acacia Capital Corporation) (the "Fund"), an
open-end management investment company whose investment
advisor is Calvert Asset Management Company, Inc. (the
"Investment Advisor").
The investment objective of the Portfolio is to achieve
a total return above the rate of inflation through an
actively managed, nondiversified portfolio of common and
preferred stocks, bonds, and money market instruments
which offer income and capital growth opportunity and
which satisfy the social concern criteria established
for the Portfolio. There can be no assurance that the
objective of the Portfolio will be realized. See
"Investment Objective and Policies."
This Prospectus sets forth the information that a
prospective policyholder should know before directing
investment in the Portfolio and it should be read and
kept for future reference. A Statement of Additional
Information dated April 30, 1998, which contains further
information about the Fund, has been filed with the
Securities and Exchange Commission and is incorporated
by reference into this Prospectus. A copy of the
Statement of Additional Information may be obtained
without charge by calling the Fund at the number above,
or by writing the Fund at 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland 20814. The Commission
maintains a web site (http://www.sec.gov) that contains
the SAI, material incorporated by reference, and other
information regarding registrants that file
electronically with the Commission.
Shares of the Fund are offered only to insurance
companies for allocation to certain of their variable
separate accounts.
..........................................................
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------
The following table provides information about the
Portfolio's financial history. It expresses the
information in terms of a single share outstanding
throughout each period. The table has been audited by
those independent accountants whose reports are included
in the Fund's Annual Report to Shareholders for each of
the respective periods presented. The table should be
read in conjunction with the financial statements and
their related notes. The current Annual Report to
Shareholders is incorporated by reference into the
Statement of Additional Information.
- ----------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK, AND ARE NOT
FEDERALLY INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE
AMOUNT ORIGINALLY PAID.
Years Ended
December 31, December 31, December 31,
SOCIAL BALANCED PORTFOLIO 1997 1996 1995
- ----------------------------------------------------------
Net asset value, beginning $1.774 $1.703 $1.440
- ----------------------------------------------------------
Income from investment operations
Net investment income .047 .040 .050
Net realized and unrealized
gain (loss) .309 .175 .380
- ----------------------------------------------------------
Total from investment operations .356 .215 .430
Distributions from
Net investment income (.047) (.042) (.040)
Net realized gains (.101) (.102) (.127)
- ----------------------------------------------------------
Total distributions (.148) (.144) (.167)
Total increase (decrease) in net
asset value .208 .071 .263
Net asset value, ending $1.982 $1.774 $1.703
- ----------------------------------------------------------
Total return* 20.08% 12.62% 29.87%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 2.66% 2.71% 3.08%
- ----------------------------------------------------------
Total expenses+ .80% .81% .83%
Net expenses .77% .78% .81%
Expenses reimbursed -- -
Portfolio turnover 905% 99% 163%
Average commission rate paid $.0500 $.0481 NA
Net assets, ending (in thousands) $227,834 $161,473 $110,237
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 114,967 91,045 64,728
- ----------------------------------------------------------
Years Ended
- ----------------------------------------------------------
December 31, December 31,
SOCIAL BALANCED PORTFOLIO 1994 1993
- ----------------------------------------------------------
Net asset value, beginning $1.537 $1.465
- ----------------------------------------------------------
Income from investment operations
Net investment income .046 .045
Net realized and unrealized
gain (loss) (.097) .072
- ----------------------------------------------------------
Total from investment operations (.051) .117
Distributions from
Net investment income (.046) (.045)
Net realized gains - -
- ----------------------------------------------------------
Total distributions (.046) (.045)
Total increase (decrease) in net
asset value (.097) .072
Net asset value, ending $1.440 $1.537
- ----------------------------------------------------------
Total return* (3.30%) 8.00%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 3.39% 3.69%
- ----------------------------------------------------------
Total expenses+ NA NA
Net expenses .80% .81%
Expenses reimbursed - -
Portfolio turnover 43% 14%
Average commission rate paid NA NA
Net assets, ending (in thousands) $66,593 $54,000
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 46,244 35,142
- ----------------------------------------------------------
Years Ended
December 31, December 31, December 31,
SOCIAL BALANCED PORTFOLIO 1992 1991 1990
- ----------------------------------------------------------
Net asset value, beginning $1.403 $1.249 $1.247
- ----------------------------------------------------------
Income from investment operations
Net investment income .044 .050 .050
Net realized and unrealized
gain (loss) .062 .154 .002
- ----------------------------------------------------------
Total from investment operations .106 .204 .052
- ----------------------------------------------------------
Distributions from
Net investment income (.044) (.050) (.050)
Net realized gains - - -
- ----------------------------------------------------------
Total distributions (.044) (.050) (.050)
Total increase (decrease) in net
asset value .062 .154 .002
Net asset value, ending $1.465 $1.403 $1.249
- ----------------------------------------------------------
Total return* 7.61% 16.40% 4.18%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 4.05% 3.08% 5.69%
- ----------------------------------------------------------
Total expenses+ -.83% -
Net expenses .85% .81% .77%
Expenses reimbursed .87% .85% -
Portfolio turnover 15% 12% 11%
Average commission rate paid NA NA NA
Net assets, ending (in thousands) $28,471 $14,946 $6,760
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 19,433 10,656 5,410
- ----------------------------------------------------------
Years Ended
- ----------------------------------------------------------
December 31, December 31,
SOCIAL BALANCED PORTFOLIO 1989 1988
- ----------------------------------------------------------
Net asset value, beginning $1.068 $1.004
- ----------------------------------------------------------
Income from investment operations
Net investment income .042 .054
Net realized and unrealized
gain (loss) .179 .064
- ----------------------------------------------------------
Total from investment operations .221 .118
Distributions from
Net investment income (.042) (.054)
Net realized gains - -
- ----------------------------------------------------------
Total distributions (.042) (.054)
Total increase (decrease) in net
asset value .179 .064
Net asset value, ending $1.247 $1.068
- ----------------------------------------------------------
Total return* 20.69% 11.75%
- ----------------------------------------------------------
Ratio to average net assets:
Net investment income 4.85% 4.95%
- ----------------------------------------------------------
Total expenses+ .96% .80%
Net expenses .50% .50%
Expenses reimbursed - -
Portfolio turnover 28% 40%
- ----------------------------------------------------------
Average commission rate paid NA NA
- ----------------------------------------------------------
Net assets, ending (in thousands) $2,573 $1,294
- ----------------------------------------------------------
Number of shares outstanding,
ending (in thousands) 2,064 1,211
- ----------------------------------------------------------
(a) Annualized
+ Effective December 31, 1995, this ratio reflects total
expenses before reduction for fees paid indirectly; such
reductions are included in the ratio of net epenses.
* Total return is for the Portfolio only and does not
reflect sales charges and expenses deducted by the Insurance
Companies. Total return is not annualized for periods of
less than one year.
NA Disclosure not applicable to prior periods.
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Portfolio discussed
below is not fundamental and may be changed upon 60 days
written notice to shareholders without a shareholder
vote. There can be no assurance that the investment
objective of the Portfolio will be realized.
The investment objective of the Portfolio is to achieve
a total return above the rate of inflation through an
actively managed, nondiversified portfolio of common and
preferred stocks, bonds, and money market instruments
which offer income and capital growth opportunity and
which satisfy the social concern criteria established
for the Portfolio. The Portfolio invests in enterprises
that make a significant contribution to society through
their products and services and through the way they do
business. The Portfolio is designed for long-term
investment. It is not the policy of the Portfolio to
take great risks to obtain speculatively or aggressively
high returns. There is no predetermined percentage of
assets allocated to either stocks or bonds or money
market instruments, although, as an operating policy,
the Portfolio will have at least 25% of its assets in
fixed income senior securities. Equity investments are
selected by the Subadvisor, NCM Capital Management
Group, Inc., subject to direction and control by the
Fund's Advisor and Board of Directors. Fixed-income
investments are selected by the Advisor. The Investment
Advisors determine the mix for the Portfolio depending
upon their view of market conditions and the economic
outlook.
To implement its investment objectives, the Portfolio
uses the following strategies which, unless otherwise
specified as a fundamental policy, are operating
policies and may be changed without shareholder vote.
The Portfolio may purchase both common and preferred
stock. For its fixed-income investments, the Portfolio
normally invests in bonds which are considered
investment grade, including bonds which are direct or
indirect obligations of the U.S. Government, or which at
the date of investment are rated AAA, AA, A, or BBB by
Standard & Poor's Corporation or Aaa, Aa, A, or Baa by
Moody's Investors Service, Inc. Bonds rated Baa or BBB
are considered medium grade obligations and possess
speculative characteristics. The Portfolio may purchase
lower-rated obligations but no more than 20% of its
assets may be invested in obligations rated lower than
B. The Portfolio may purchase without limitation bonds
which are unrated but of comparable quality to bonds
rated B or better, as determined by the Advisors under
the supervision of the Board of Directors. See
Additional Risk Factors - Noninvestment-grade
Securities, and the Statement of Additional Information
for additional information concerning bond ratings.
The Portfolio may purchase money market instruments,
including repurchase agreements with recognized
securities dealers and banks secured by such
instruments, selected in accordance with the Portfolio's
social criteria. Such money market instruments may
include: obligations issued or guaranteed as to
principal by the U.S. Government, its agencies and
instrumentalities; U.S. dollar-denominated certificates
of deposit, time deposits and bankers' acceptances of
U.S. banks, generally banks with assets in excess of $1
billion; and commercial paper which at the date of
investment is rated A-1 by Standard and Poor's
Corporation or Prime-1 by Moody's Investors Service,
Inc., or if not rated, is of comparable quality.
Due to the particular social objective of the Portfolio,
opportunities may exist to promote promising approaches
to social goals through privately placed instruments.
Since private placement investments are restricted
securities and have no readily available market, the
Portfolio has a fundamental policy that such investments
in the Portfolio are limited to no more than 10% of the
Portfolio's assets.
All investments for the Portfolio are selected with a
concern for the social impact of each investment. The
Portfolio has developed the following criteria for the
selection of organizations in which the Portfolio
invests. The Portfolio seeks to invest in a producer or
service provider which:
1. Delivers safe products and services in ways that
sustain our natural environment.
2. Is managed with participation throughout the
organization in defining and achieving objectives.
3. Negotiates fairly with its workers, provides an
environment supportive of their wellness, does not
discriminate on the basis of race, gender,
religion, age, disability, ethnic origin or sexual
orientation, does not consistently violate
regulations of the Equal Employment Opportunity
Commission, and provides opportunities for women,
disadvantaged minorities and others from whom equal
opportunities have often been denied.
4. Fosters awareness of a commitment to human goals,
such as creativity, productivity, self-respect, and
responsibility, within the organization and the
world, and continually recreates a context within
which these goals can be realized.
The Portfolio will not invest in an issuer primarily
engaged in the production of nuclear energy or in the
manufacture of equipment to produce nuclear energy,
business activities in support of repressive regimes, or
the manufacture of weapons systems.
Each investment is selected on the basis of its
abilities to contribute to the dual objective of the
Portfolio. All potential investments are first screened
for financial soundness and then evaluated according to
the Portfolio's social criteria. To the greatest extent
possible, investments are made in companies exhibiting
unusual, positive accomplishment with respect to one or
more of the criteria. All companies must meet the
Portfolio's minimum standards for all the criteria. It
should be noted that the Portfolio's social criteria
tend to limit the availability of investment
opportunities more than is customary with other
investment companies.
The selection of an organization for investment by the
Portfolios does not constitute endorsement or validation
by the Fund, nor does the exclusion of an organization
necessarily reflect failure to satisfy the Portfolio's
social criteria. Policyholders directing investment in
the Portfolio are invited to send brief descriptions of
companies they believe might be suitable for investment
by the Portfolio.
..........................................................
RISKS OF FOREIGN SECURITIES
The Portfolio may invest up to 10% of its assets in the
securities of foreign issuers. There are substantial and
different risks involved in investing in foreign
securities. You should consider these risks carefully.
For example, there is generally less publicly available
information about foreign companies than is available
about companies in the U.S. Foreign companies are
generally not subject to uniform audit and financial
reporting standards, practices and requirements
comparable to those in the U.S.
Foreign securities involve currency risks. The U.S.
dollar value of a foreign security tends to decrease
when the value of the dollar rises against the foreign
currency in which the security is denominated and tends
to increase when the value of the dollar falls against
such currency. Fluctuations in exchange rates may also
affect the earning power and asset value of the foreign
entity issuing the security. Dividend and interest
payments may be returned to the country of origin, based
on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and
other expenses may be incurred in converting between
various currencies in connection with purchases and
sales of foreign securities.
Foreign stock markets are generally not as developed or
efficient as those in the U.S. In most foreign markets
volume and liquidity are less than in the U.S. and, at
times, volatility of price can be greater than that in
the U.S. Fixed commissions on foreign stock exchanges
are generally higher than the negotiated commissions on
U.S. exchanges. There is generally less government
supervision and regulation of foreign stock exchanges,
brokers, and companies than in the U.S.
There is also the possibility of adverse changes in
investment or exchange control regulations,
expropriation or confiscatory taxation, limitations on
the removal of funds or other assets, political or
social instability, or diplomatic developments which
could adversely affect investments, assets or securities
transactions of the Portfolio in some foreign countries.
The Portfolio is not aware of any investment or exchange
control regulations which might substantially impair the
operations of the Portfolio as described, although this
could change at any time.
Investing in emerging markets in particular, those
countries whose economies and capital markets are not as
developed as those of more industrialized nations,
carries its own special risks. Among other risks, the
economies of such countries may be affected to a greater
extent than in other countries by price fluctuations of
a single commodity, by severe cyclical climactic
conditions, lack of significant history in operating
under a market-oriented economy, or by political
instability, including risk of expropriation.
For many foreign securities, there are U.S.
dollar-denominated American Depositary Receipts
("ADRs"), which are traded in the U.S. on exchanges or
over the counter and are generally sponsored and issued
by domestic banks. ADRs represent the right to receive
securities of foreign issuers deposited in a domestic
bank or a correspondent bank. ADRs do not eliminate all
the risk inherent in investing in the securities of
foreign issuers. However, by investing in ADRs rather
than directly in foreign issuers' stock, the Portfolio
may avoid currency risks during the settlement period
for either purchases or sales. In general, there is a
large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the
accounting, auditing and financial reporting standards
of the domestic market or exchange on which they are
traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be
subject. The Portfolio may also invest in European
Depositary Receipts ("EDRs"), which are receipts
evidencing an arrangement with a European bank similar
to that for ADRs and are designed for use in the
European securities markets. EDRs are not necessarily
denominated in the currency of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign
withholding taxes, thus reducing the net amount
available for distribution to the Portfolio's
shareholders.
..........................................................
ADDITIONAL RISK FACTORS
Nondiversified Portfolio
There may be risks associated with the Portfolio being
nondiversified. Specifically, since a relatively high
percentage of the assets of the Portfolio may be
invested in the obligations of a limited number of
issuers, the value of the shares of a nondiversified
Portfolio may be more susceptible to any single
economic, political, or regulatory event than the shares
of a diversified Portfolio would be.
..........................................................
Interest Rate Risk
All fixed income instruments are subject to
interest-rate risk: that is, if market interest rates
rise, the current principal value of a bond will
decline. In general, the longer the maturity of the
bond, the greater the decline in value will be.
..........................................................
Noninvestment-grade Securities
Noninvestment-grade securities tend to be less sensitive
to interest rate changes than higher-rated investments,
but are more sensitive to adverse economic changes and
individual corporate developments. This may affect the
issuer's ability to make principal and interest payments
on the debt obligation. There is also a greater risk of
price declines due to changes in the issuer's
creditworthiness. Because the market for lower-rated
securities may be less active ("thinner") than for
higher-rated securities, it may be difficult for the
Portfolio to sell the securities. Because of a lack of
objective data, a thinly-traded market may make it
difficult to value the securities, so that the Board of
Directors may have to exercise its judgment in assigning
a value. See the Appendix in the Statement of Additional
Information for more information on bond ratings.
..........................................................
REPURCHASE AGREEMENTS
A repurchase agreement is a transaction where the
Portfolio buys a security at one price and
simultaneously agrees to sell that same security back to
the original owner at a higher price. Under the
direction and supervision of the Fund's Board of
Directors, the Investment Advisor reviews the
creditworthiness of the other party to the agreement and
must find it satisfactory before engaging in a
repurchase agreement. In all instances the Portfolio
holds underlying securities with a value equal to the
total repurchase price the other party has agreed to
pay. However, in the event of the bankruptcy of the
other party, the Portfolio could experience delays in
recovering its money, may realize only a partial
recovery or even no recovery, and may also incur
disposition costs. The Portfolio is not expected
generally to invest more than a very small portion of
its assets in repurchase agreements.
OTHER INFORMATION
In addition to the investment policies described above,
the investment program is subject to further policies
and restrictions which are described in the Statement of
Additional Information. The Portfolio may, to a limited
extent, lend its portfolio securities and engage in
reverse repurchase agreements.
Calvert Social Balanced Portfolio's fixed-income
investment strategies caused it to have a relatively
high portfolio turnover compared to other portfolios. A
portfolio with high turnover may incur higher
transaction costs, such as custodian and settlement
fees. During fiscal 1997, brokerage commission expenses
remained relatively level even though turnover increased
significantly, since the fixed-income investments are
traded on a spread, rather than a commission basis.
Unless otherwise specified, the policies and
restrictions for the Portfolio are not fundamental and
may be changed without shareholder approval.
Policyholder inquiries should be directed to the
Portfolio at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814, or by calling (800) 368-2745.
..........................................................
THE FUND AND ITS MANAGEMENT
- ----------------------------------------------------------
Calvert Variable Series, Inc. (the "Fund") is an
open-end investment company. The Fund was incorporated
under the laws of the State of Maryland on September 27,
1982. The Fund is a series fund which issues classes of
stock, one for each Portfolio.The shares of the Fund
currently are sold only to insurance companies
(collectively, the"Insurance Companies") for allocation
to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable
annuity and variable life insurance policies
(collectively, the "Policies") issued by such companies.
Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity
or life insurance policy and is described in the
attached prospectus for one of the Policies, which
should be reviewed carefully by a person considering the
purchase of a Policy. The rights of the Insurance
Companies as shareholders should be distinguished from
the rights of a policy owner which are described in the
Policies. Policy owners should consider that the
investment return experience of the Portfolio will
affect the value of the policy and the amount of annuity
payments or life insurance benefits received under a
policy. See the attached prospectus(es) for the Policies
for a description of the relationship between increases
or decreases in the net asset value of Portfolio shares
(and any distributions on such shares) and the benefits
provided under a policy.
..........................................................
Investment Advisor
The Fund's investment advisor is Calvert Asset
Management Company, Inc. (the "Investment Advisor"),
which is located at 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814. Calvert Asset Management is a
wholly-owned subsidiary of Calvert Group, Ltd., which is
in turn an indirect wholly-owned subsidiary of Acacia
Mutual Life Insurance Company. As of December 31, 1997,
Calvert Group, Ltd. had assets in excess of $5.0 billion
under management and administration. Pursuant to its
investment advisory agreement with the Fund, the
Investment Advisor manages the fixed-income investments
of the Portfolio and is responsible for the overall
management of the
business affairs of each Portfolio, subject to the
direction and authority of the Fund's Board of Directors.
The Subadvisor to the Portfolio is NCM Capital
Management Group, Inc. ("NCM"). Pursuant to its
Investment Subadvisory Agreement with the Investment
Advisor, NCM manages the equity portion of the
Portfolio. NCM was founded by Maceo K. Sloan in 1986 as
a subsidiary of North Carolina Mutual Life Insurance
Company, which was established by Mr. Sloan's ancestors
in 1898 and is one of the oldest and largest
minority-owned financial institutions in the country.
NCM has been an employee-owned subsidiary of Sloan
Financial Group since 1991. Sloan Financial Group is
controlled by Mr. Sloan and Justin F. Beckett, Executive
Vice President and a Director of NCM. NCM is one of the
largest minority-owned investment management firms in
the country, and provides products in equity,
fixed-income and balanced portfolio management. It is
also one of the industry leaders in the employment and
training of minority and women investment professionals.
NCM has served as subadvisor to the Portfolio since
February 1995. Sloan Holdings, also controlled by
Messrs. Sloan and Beckett, receives a 0.05% consultation
fee, paid by the Advisor (not the Fund) for
noninvestment advice, such as marketing assistance.
RenoJ. Martini, Senior Vice President and Chief
Investment Officer of the Advisor, heads the
fixed-income portion of the Portfolio. Mr. Martini
oversees the management of all Calvert portfolios and
has served as manager of the Portfolio Investment
Department since 1985. He has extensive experience
evaluating and purchasing fixed-income securities.
..........................................................
Advisory Fee
For fiscal year 1997, the Investment Advisor received
from the Portfolio a monthly base fee, computed on a
daily basis at an annual rate of 0.70% of the average
daily net assets of the Portfolio, plus a performance
fee adjustment of 0.053% as described below.
The Advisor pays the Subadvisor a base fee of 0.25% of
the Portfolio's average net assets. In addition, under
the circumstances described below, the Advisor and
Subadvisor may earn (or have their fees reduced by)
performance fee adjustments based on the extent to which
performance of the Portfolio exceeds or trails the
Lipper Balanced Funds Index. Payment of the performance
fee adjustment began July 1, 1996. The specific
adjustments are as follows:
Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
- ----------------------------------------------------------
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
Subadvisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
- ----------------------------------------------------------
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
The performance fee adjustment to the Subadvisor is paid
out of the fee the Advisor receives from the Portfolio.
The initial performance period is the twelve month
period from July 1, 1995, and July 1, 1996. Each month
an additional month's performance will be factored into
the calculation until a total of 36 months comprises the
performance computation period. Payment by the Portfolio
of the performance adjustment will be conditioned on:
(1) the performance of the Portfolio as a whole having
exceeded the Lipper Balanced Funds Index; and (2)
payment of the performance adjustment not causing the
Portfolio's performance to fall below the Lipper
Balanced Funds Index.
..........................................................
Expenses
The Advisor provides the Fund with investment
supervision and management; certain administrative
services and office space; furnishes executive and other
personnel to the Fund; and pays the salaries and fees of
all Directors who are affiliated persons of the Advisor.
The Advisor may also assume and pay certain advertising
and promotional expenses of the Funds and reserves the
right to compensate broker-dealers in return for their
promotional or administrative services. The Fund pays
all other operating expenses, including the fee of the
Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian
and transfer agent fees; legal and auditing fees;
bookkeeping and dividend disbursing expenses; and
certain other expenses relating to operations. Certain
expenses are paid by the Portfolio that incurs them,
while other expenses are allocated among each of the
Fund's Portfolios on the basis of its relative size (that
is, the amount of its net assets), or by the Board of
Directors as appropriate.
Expenses constituted 0.80% of the average net assets of
the Portfolio for 1997, including fees paid indirectly,
and 0.77% net of fees paid indirectly.
Capital Stock
The Fund issues separate shares of stock for each of its
Portfolios. Shares of each of the Portfolios have equal
rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that
Portfolio. No Portfolio has preference over another
Portfolio. When issued, shares are fully paid and
nonassessable and do not have preemptive or conversion
rights or cumulative voting rights. The Fund's
shareholders, the Insurance Companies, will vote Fund
shares allocated to the Variable Accounts in accordance
with instructions received from policy owners. Under
certain circumstances, which are described in the
accompanying prospectus of the variable life policy, the
voting instructions received from variable life
insurance policy owners may be disregarded.
..........................................................
PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------
The Fund offers its shares, without sales charge, only
for purchase by the Insurance Companies for allocation
to their Variable Accounts. Shares are purchased by the
Variable Accounts at the net asset value of the
Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously
offers its shares in the Portfolio at a price equal to
the net asset value per share. Initial and subsequent
payments allocated to the Fund are subject to the limits
applicable in the Policies issued by the Insurance
Companies.
It is conceivable that in the future it may be
disadvantageous for both annuity Variable Accounts and
life insurance Variable Accounts, or for Variable
Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither
the Insurance Companies nor the Fund foresee any such
disadvantages to either variable annuity or variable
life insurance policy owners of any Insurance Company.
The Fund's Board of Directors intends to monitor events
in order to identify any material conflicts between such
policy owners and to determine what action, if any,
should be taken in response thereto.
The Insurance Companies redeem shares of the Portfolio
to make benefit and surrender payments under the terms
of Policies. Redemptions are processed on any day on
which the Fund is open for business (each day the New
York Stock Exchange is open), and are effected at the
Portfolio's net asset value next determined after the
appropriate Insurance Company receives a surrender
request in acceptable form.
Payment for redeemed shares will be made promptly, but
in no event later than seven days. However, the right of
redemption may be suspended or the date of payment
postponed in accordance with the Rules under the 1940
Act. The amount received upon redemption of the shares
of the Fund may be more or less than the amount paid for
the shares, depending upon the fluctuations in the
market value of the assets owned by the Fund. The Fund
redeems all full and fractional shares of the Portfolio
for cash. The redemption price is the net asset value
per share.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the
New York Stock Exchange, on days when the Exchange is
open for business, or for any other day when there is a
sufficient degree of trading in the investments of the
Portfolio to affect materially its net asset value per
share (except on days when no orders to purchase or
redeem shares of the Portfolio have been received). The
net asset value is determined by adding the values of
all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by
the number of outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days
or less, securities held by the Portfolio are valued at
their market value if market quotations are readily
available. Otherwise, such securities are valued at fair
value as determined in good faith by the Board of
Directors, although the actual calculations may be made
by persons acting pursuant to the direction of the
Board. All money market instruments with a remaining
maturity of 60 days or less are valued on an amortized
cost basis.
..........................................................
DIVIDENDS AND DISTRIBUTIONS
- ----------------------------------------------------------
It is the Fund's intention to distribute substantially
all of the net investment income, if any, of the
Portfolio. For dividend purposes, net investment income
of the Portfolio consists of all payments of dividends
or interest received by such Portfolio less estimated
expenses (including the investment advisory fee). All
net realized capital gains, if any, of each Portfolio
are declared and distributed periodically, no less
frequently than annually. All dividends and
distributions are reinvested in additional shares of the
Portfolio at net asset value.
TOTAL RETURN INFORMATION
- ----------------------------------------------------------
The Portfolio may advertise its "total return" from time
to time. Total return refers to the total change in
value of an investment in the Portfolio over a specified
period. It differs from yield in that yield figures
measure only the income component of the Portfolio's
portfolio investments, while total return includes not
only the effect of income dividends but also any change
in net asset value, or principal amount, during the
stated period. The total return of the Portfolio is the
ratio of the increase (or decrease) in value of a
hypothetical investment in the Portfolio at the end of a
measuring period to the amount initially invested in the
Portfolio. Total return is computed by taking the total
number of shares purchased by a hypothetical $1,000
investment, adding all additional shares purchased
within the period with reinvested dividends and
distributions, calculating the value of those shares at
the end of the period, and dividing the result by the
initial $1,000 investment. For periods of more than one
year, the cumulative total return is then adjusted for
the number of years, taking compounding into account, to
calculate average annual total return during that
period. Total return is historical in nature and is not
intended to indicate future performance.
Actual total return quotations may also be advertised
for other specified periods, such as calendar years and
calendar quarters. Cumulative total return for periods
of more than one year may also be quoted. These figures
will be accompanied by the standard, average annual
total return quotations. The total return of the
Portfolio does not include the effect of paying the
charges and expenses on the particular insurance policy
or annuity contract for which the Portfolio serves as
the investment vehicle.
..........................................................
TAXES
- ----------------------------------------------------------
As a "regulated investment company" under the provisions
of Subchapter M of the Internal Revenue Code, as
amended, the Fund is not subject to federal income tax,
nor to the federal excise tax imposed by the Tax Reform
Act of 1986, to the extent that it distributes its net
investment income and realized capital gains. Since the
only shareholders of the Fund are the Insurance
Companies, no discussion is included herein as to the
federal income tax consequences at the shareholder
level. For information concerning the federal tax
consequences to purchasers of the annuity or life
insurance policies, see the prospectuses for the
Policies.
..........................................................
TRANSFER AND DIVIDEND DISBURSING AGENT
- ----------------------------------------------------------
Calvert Shareholder Services, Inc., 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the
shareholder servicing agent. National Financial Data
Services, Inc. ("NFDS"), has been retained by the Fund
to act as transfer agent and dividend disbursing agent.
<PAGE>
CALVERT VARIABLE SERIES, INC.
Statement of Additional Information
April 30, 1998
- -----------------------------------------------------
This Statement of Additional Information
is not a prospectus. Investors should read the
Statement of Additional Information in conjunction
with each of the separate Calvert Social Portfolio
Prospectuses, dated April 30, 1998, which may be
obtained free of charge by calling (800) 368-2748
or by writing to the Portfolio at 4550 Montgomery
Avenue, Bethesda, Maryland 20814.
- -----------------------------------------------------
TABLE OF CONTENTS
InvestmentObjective and Policies 1
Investment Restrictions 9
Investment Selection Process 16
Portfolio Turnover 16
Purchase and Redemption of Shares 17
Determination of Net Asset Value 17
Taxes 18
Calculation of Yield and Total Return 19
Investment Advisory Agreement 20
Directors and Officers 22
Method of Distribution 24
Transfer and Shareholder Servicing Agent 24
General Information 24
Reports to Shareholders and Policyholders 25
Additional Information 25
Financial Statements 25
Control Persons and Principal Holders
of Securities 25
Independent Accountants and Custodians 27
Appendix 27
- -----------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- -----------------------------------------------------
Calvert Variable Series, Inc., ("the
Fund") (formerly Acacia Capital Corporation) offers
investors the opportunity to invest in several
professionally managed securities portfolios which
may be more diversified, stable and liquid than
might be obtainable by an investor on an individual
basis. In addition, the Fund's Calvert Social
Portfolios (formerly, Calvert Responsibly Invested
Portfolios ("CRI")) offer the opportunity for
growth of capital or current income through
investment in enterprises that make a significant
contribution to society through their products and
services and through the way they do business. The
Calvert Social Portfolios offer investors a choice
of five separate portfolios selected with a concern
for the social impact of each investment: Calvert
Social Money Market, Balanced, Mid Cap Growth,
International Equity and Small Cap Growth
Portfolios. References to the "Investment Advisor"
refer to the advisor appropriate to the Portfolio
being discussed. (See "Investment Advisors")
Foreign Securities
Calvert Social International Equity and
Small Cap Growth may invest all of their assets in
foreign securities, although Calvert Social Small
Cap Growth does not presently intend to invest in
foreign securities. Calvert Social Money Market,
Balanced and Mid Cap Growth may each invest up to
25%, and Calvert Social Balanced may invest up to
10% of its assets in the securities of foreign
issuers. Calvert Social Money Market may purchase
only high quality, U.S. dollar-denominated
instruments. Investments in foreign securities may
present risks not typically involved in domestic
investments. Foreign securities may be affected by
such circumstances as possible adverse changes in
exchange control or investment regulations,
expropriation or confiscatory taxation, political
or economic instability, and diplomatic or other
developments. In purchasing foreign securities, the
Portfolios may purchase American Depositary
Receipts for such securities. These are
certificates issued by United States banks
evidencing the right to receive securities of the
foreign issuer deposited in that bank or its
correspondent bank.
It is contemplated that the Portfolios may
trade foreign securities on U.S. securities markets
and stock exchanges located in the countries in
which the respective principal offices of the
issuers of the various securities are located, if
that is the best available market. Foreign
securities markets may not be as developed or
efficient as those in the United States. While
growing in volume, they usually have substantially
less volume than U.S. securities markets, and
securities of some foreign companies are less
liquid and more volatile than securities of
comparable United States companies. Similarly,
volume and liquidity in most foreign bond markets
is less than in the United States and, at times,
volatility of price can be greater than in the
United States.
Additional costs may be incurred which are
related to any international investment, since
foreign brokerage commissions and the custodial
costs associated with maintaining foreign portfolio
securities are generally higher than in the United
States. Fee expense may also be incurred on
currency exchanges when the Portfolios change
investments from one country to another or convert
foreign securities holdings into U.S. dollars.
Foreign companies and foreign investment practices
are not generally subject to uniform accounting,
auditing and financial reporting standards and
practices or regulatory requirements comparable to
those applicable to United States companies. There
may be less public information available about
foreign companies.
United States Government policies have at
times, in the past, through imposition of interest
equalization taxes and other restrictions,
discouraged certain investments abroad by United
States investors. While such taxes or restrictions
are not presently in effect, they may be
reinstituted from time to time as a means of
fostering a favorable United States balance of
payments. In addition, foreign countries may impose
withholding and taxes on dividends and interest.
Since investments in securities of issuers
domiciled in foreign countries usually involve
currencies of the foreign countries, and since the
Portfolios may temporarily hold funds in foreign
currencies during the completion of investment
programs, the value of the assets of the Portfolios
as measured in United States dollars may be
affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange
control regulations. For example, if the value of
the foreign currency in which a security is
denominated declines in relation to the value of
the U.S. dollar, the value of the security in U.S.
dollars will decline. Similarly, if the value of
the foreign currency in which a security is
denominated appreciates in relation to the value of
the U.S. dollar, the value of the security in U.S.
dollars will appreciate. The Portfolios will
conduct foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign exchange market, or
through entering into forward contracts to purchase
or sell foreign currencies. A forward foreign
currency contract involves an obligation to
purchase or sell a specific currency at a future
date which may be any fixed number of days from the
date of the contract agreed upon by the parties, at
a price set at the time of the contract. These
contracts are traded in the interbank market
conducted directly between currency traders
(usually large, commercial banks) and their
customers. A forward foreign currency contract
generally has no deposit requirement, and no
commissions are charged at any stage for trades.
A Portfolio may enter into forward foreign
currency contracts for two reasons. First, the
Portfolio may desire to preserve the United States
dollar price of a security when it enters into a
contract for the purchase or sale of a security
denominated in a foreign currency. The Portfolio
will be able to protect itself against possible
losses resulting from changes in the relationship
between the United States dollar and foreign
currencies during the period between the date the
security is purchased or sold and the date on which
payment is made or received by entering into a
forward contract for the purchase or sale, for a
fixed amount of dollars, of the amount of the
foreign currency involved in the underlying
security transactions.
Second, when the Advisor or Subadvisor
believes that the currency of a particular foreign
country may suffer a substantial decline against
the United States dollar, the Portfolio enters into
a forward foreign currency contract to sell, for a
fixed amount of dollars, the amount of foreign
currency approximating the value of some or all of
the Portfolio's investment securities denominated
in such foreign currency. The precise matching of
the forward foreign currency contract amounts and
the value of the portfolio securities involved will
not generally be possible since the future value of
the securities will change as a consequence of
market movements between the date the forward
contract is entered into and the date it matures.
The projection of short-term currency market
movement is difficult, and the successful execution
of this short-term hedging strategy is uncertain.
Although forward foreign currency contracts tend to
minimize the risk of loss due to a decline in the
value of the hedged currency, at the same time they
tend to limit any potential gain which might result
should the value of such currency increase. The
Portfolios do not intend to enter into such forward
contracts under this circumstance on a regular or
continuous basis.
Foreign Money Market Instruments
Calvert Social Money Market may invest
without limitation in money market instruments of
banks, whether foreign or domestic, including
obligations of U.S. branches of foreign banks
("Yankee" instruments) and obligations of foreign
branches of U.S. banks ("Eurodollar" instruments).
All such instruments must be high-quality, U.S.
dollar-denominated obligations. It is an operating
(i.e., nonfundamental) policy of Calvert Social
Money Market that it may invest only in foreign
money market instruments if they are of comparable
quality to the obligations of domestic banks.
Although these instruments are not subject to
foreign currency risk since they are U.S.
dollar-denominated, investments in foreign money
market instruments may involve risks that are
different than investments in securities of U.S.
issuers. See "Foreign Securities" above.
Private Placements and Illiquid Securities
Due to the particular social objective of
the Portfolios, opportunities may exist to promote
especially promising approaches to social goals
through privately-placed investments. The private
placement investments undertaken by the Portfolios,
if any, may be subject to a high degree of risk.
Such investments may involve relatively small and
untried enterprises that have been selected in the
first instance because of some attractive social
objectives or policies. The Investment Advisors
seek to structure the Portfolios' investments to
provide the greatest assurance of attaining the
intended investment return. It is an operating
policy of the Portfolios that no private placements
shall be acquired until the value of that
Portfolio's investments exceeds $20 million.
Many private placement investments have no
readily available market and may therefore be
considered illiquid. It is an operating policy of
the Portfolios not to purchase illiquid securities
if more than a certain percentage of the value of
its net assets would be invested in such
securities. Securities eligible for resale pursuant
to Rule 144A under the Securities Act of 1933 may
be determined by the Board of Directors to be
liquid. The Board may delegate such determinations
of liquidity to the Advisor, pursuant to guidelines
and oversight by the Board. Portfolio investments
in private placements and other securities for
which market quotations are not readily available
are valued at fair market value as determined by
the Advisor under the direction and control of the
Board.
Repurchase Agreements
The Portfolios may purchase debt
securities subject to repurchase agreements, which
are arrangements under which the Portfolio buys a
security and the seller simultaneously agrees to
repurchase the security at a specified time and
price. The Portfolios engage in repurchase
agreements in order to earn a higher rate of return
than it could earn simply by investing in the
obligation which is the subject of the repurchase
agreement. Repurchase agreements are not, however,
without risk. In the event of the bankruptcy of a
seller during the term of a repurchase agreement, a
legal question exists as to whether the Portfolio
would be deemed the owner of the underlying
security or would be deemed only to have a security
interest in and lien upon such security. The
Portfolios will only engage in repurchase
agreements with recognized securities dealers and
banks determined to present minimal credit risk by
the Advisor under the direction and supervision of
the Board of Directors. In addition, the Portfolios
will only engage in repurchase agreements
reasonably designed to secure fully during the term
of the agreement the seller's obligation to
repurchase the underlying security and will monitor
the market value of the underlying security during
the term of the agreement. If the value of the
underlying security declines and is not at least
equal to the repurchase price due the Portfolio
pursuant to the agreement, the Portfolio will
require the seller to pledge additional securities
or cash to secure the seller's obligations pursuant
to the agreement. If the seller defaults on its
obligation to repurchase and the value of the
underlying security declines, the Portfolio may
incur a loss and may incur expenses in selling the
underlying security. Repurchase agreements are
always for periods of less than one year.
Repurchase agreements not terminable within seven
days are considered illiquid.
Reverse Repurchase Agreements
The Portfolios may also engage in reverse
repurchase agreements. Under a reverse repurchase
agreement, a Portfolio sells securities to a bank
or securities dealer and agrees to repurchase those
securities from such party at an agreed upon date
and price reflecting a market rate of interest. The
Portfolio invests the proceeds from each reverse
repurchase agreement in obligations in which it is
authorized to invest. The Portfolios intend to
enter into a reverse repurchase agreement only when
the interest income provided for in the obligation
in which the Portfolio invests the proceeds is
expected to exceed the amount the Portfolio will
pay in interest to the other party to the agreement
plus all costs associated with the transactions.
The Portfolios do not intend to borrow for leverage
purposes. The Portfolios will only be permitted to
pledge assets to the extent necessary to secure
borrowings and reverse repurchase agreements.
During the time a reverse repurchase
agreement is outstanding, the Portfolio will
maintain in a segregated custodial account an
amount of cash, U.S. Government securities or other
liquid, high-quality debt securities equal in value
to the repurchase price. The Portfolio will mark to
market the value of assets held in the segregated
account, and will place additional assets in the
account whenever the total value of the account
falls below the amount required under applicable
regulations.
The Portfolios' use of reverse repurchase
agreements involves the risk that the other party
to the agreements could become subject to
bankruptcy or liquidation proceedings during the
period the agreements are outstanding. In such
event, the Portfolio may not be able to repurchase
the securities it has sold to that other party.
Under those circumstances, if at the expiration of
the agreement such securities are of greater value
than the proceeds obtained by the Portfolio under
the agreements, the Portfolio may have been better
off had it not entered into the agreement. However,
the Portfolio will enter into reverse repurchase
agreements only with banks and dealers which the
Advisor believes present minimal credit risks under
guidelines adopted by the Fund's Board of
Directors. In addition, the Portfolio bears the
risk that the market value of the securities sold
by the Portfolio may decline below the agreed-upon
repurchase price, in which case the dealer may
request the Portfolio to post additional collateral.
GNMA Certificates- Calvert Social Balanced
The Calvert Social Balanced Portfolio is
not expected generally to invest more than a small
portion of its assets in GNMA Certificates. GNMA
Certificates are mortgage-backed securities
representing part ownership of a pool of mortgage
loans that are issued by lenders such as mortgage
bankers, commercial banks and savings and loan
associations and are either insured by the Federal
Housing Administration or guaranteed by the
Veterans Housing Administration. A "pool" or group
of such mortgages is assembled and, after being
approved by GNMA, is offered to investors through
securities dealers.
Once approved by GNMA, the timely payment
of interest and principal on each mortgage is
guaranteed by GNMA and backed by the full faith and
credit of the U.S. Government. GNMA Certificates
differ from bonds in that principal is paid back
monthly by the borrower over the term of the loan
rather than returned in a lump sum at maturity.
GNMA Certificates are called "pass-through"
securities because both interest and principal
payments (including prepayments) are passed through
to the holder of the Certificate. Upon receipt,
principal payments will be reinvested by the Series
in additional securities.
Because interest and principal payments on
the underlying mortgages pass through to holders,
the average life of GNMA Certificates varies with
the maturities of the underlying mortgage
instruments, which have maximum maturities of 30
years. However, because unscheduled principal
payments on the underlying mortgages resulting from
prepayment, refinancing or foreclosure are also
passed through to holders, the average life of GNMA
Certificates is normally substantially shorter than
the original maturity of the underlying mortgage
pools.
The occurrence of mortgage prepayments is
affected by factors including the level of interest
rates, the degree of the increase or decrease in
interest rates over time, general economic
conditions, the location and age of the mortgage,
and social and demographic conditions. Prepayments
generally occur when interest rates have fallen;
thus, reinvestments of principal prepayments will
usually be at lower rates. Prepayments also tend to
occur more frequently in mortgage pools with rates
significantly higher than prevailing mortgage
rates. The coupon rate of GNMA Certificates is
lower than the interest rate paid on the underlying
mortgages only by the amount of the fee paid to
GNMA and the issuer, usually 1/2 of 1%. Therefore,
GNMA Certificates trading at a premium, which are
usually Certificates with coupon rates
significantly higher than the rates of Certificates
being issued at the time of purchase, are subject
to greater risk of prepayment at par.
The Investment Advisor will attempt,
through careful evaluation of available GNMA issues
and prevailing market conditions, to invest in GNMA
Certificates which provide a high income return but
are not subject to substantial risk of loss of
principal. Accordingly, the Advisor may forego the
opportunity to invest in certain issues of GNMA
Certificates which would provide a high current
income yield if the Advisor determines that such
issues would be subject to a risk of prepayment and
loss of principal over the long term that would
outweigh the short-term increment in yield.
Noninvestment-grade Debt Securities
Calvert Social Balanced may invest in
lower quality debt securities (generally those
rated BB or lower by S&P or Ba or lower by
Moody's). Subject to the Portfolio's investment
policy provides that it may not invest more than
20% of its assets in securities rated below B by
either rating service, or in unrated securities
determined by the Advisor to be comparable to
securities rated below B by either rating service.
Calvert Social International Equity may invest up
to 5% of its assets in lower quality debt
securities, and Calvert Social Small Cap Growth may
invest up to 35% of its assets in debt securities
without regard to investment grade.
Noninvestment-grade securities have moderate to
poor protection of principal and interest payments
and have speculative characteristics. (See Appendix
for a description of the ratings.) These securities
involve greater risk of default or price declines
due to changes in the issuer's creditworthiness
than investment-grade debt securities. Because the
market for lower-rated securities may be thinner
and less active than for higher-rated securities,
there may be market price volatility for these
securities and limited liquidity in the resale
market. Market prices for these securities may
decline significantly in periods of general
economic difficulty or rising interest rates.
Unrated debt securities may fall into the lower
quality category. Unrated securities usually are
not attractive to as many buyers as rated
securities are, which may make them less marketable.
The quality limitation set forth in the
Portfolios' investment policy is determined
immediately after a Portfolio's acquisition of a
given security. Accordingly, any later change in
ratings will not be considered when determining
whether an investment complies with the Portfolio's
investment policy.
When purchasing high-yielding securities,
rated or unrated, the Advisors prepare their own
careful credit analysis to attempt to identify
those issuers whose financial condition is adequate
to meet future obligations or is expected to be
adequate in the future. Through portfolio
diversification and credit analysis, investment
risk can be reduced, although there can be no
assurance that losses will not occur.
Options and Futures Contracts
Calvert Social International Equity, Small
Cap Growth and Mid Cap Growth may, in pursuit of
their investment objectives, purchase put and call
options and engage in the writing of covered call
options and secured put options on securities which
meet the Portfolios' social criteria, and employ a
variety of other investment techniques.
Specifically, these Portfolios may also engage in
the purchase and sale of stock index future
contracts, foreign currency futures contracts,
interest rate futures contracts, and options on
such futures, as described more fully below.
These Portfolios will engage in such
transactions only to hedge the existing positions
in the respective Portfolios. They will not engage
in such transactions for the purposes of
speculation or leverage. Such investment policies
and techniques may involve a greater degree of risk
than those inherent in more conservative investment
approaches.
These Portfolios will not engage in such
options or futures transactions unless they receive
appropriate regulatory approvals permitting them to
engage in such transactions. Calvert Social
International Equity, Small Cap Growth and Mid Cap
Growth may not write options on more than 50% of
their total assets. These Portfolios may write
"covered options" on securities in standard
contracts traded on national securities exchanges.
These Portfolios will write such options in order
to receive the premiums from options that expire
and to seek net gains from closing purchase
transactions with respect to such options.
Put and Call Options - These Portfolios
may purchase put and call options, in standard
contracts traded on national securities exchanges,
on securities of issuers which meet the Portfolios'
social criteria. These Portfolios will purchase
such options only to hedge against changes in the
value of securities the Portfolios hold and not for
the purposes of speculation or leverage. In buying
a put, a Portfolio has the right to sell the
security at the exercise price, thus limiting its
risk of loss through a decline in the market value
of the security until the put expires. The amount
of any appreciation in the value of the underlying
security will be partially offset by the amount of
the premium paid for the put option and any related
transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction
and any profit or loss from the sale will depend on
whether the amount received is more or less than
the premium paid for the put option plus the
related transaction costs.
These Portfolios may purchase call options
on securities that they may intend to purchase and
that meet the Portfolios' social criteria. Such
transactions may be entered into in order to limit
the risk of a substantial increase in the market
price of the security which the Portfolio intends
to purchase. Prior to its expiration, a call option
may be sold in a closing sale transaction. Any
profit or loss from such a sale will depend on
whether the amount received is more or less than
the premium paid for the call option plus the
related transaction costs.
Covered Options - These Portfolios may
write only covered options on equity and debt
securities in standard contracts traded on national
securities exchanges. For call options, this means
that so long as a Portfolio is obligated as the
writer of a call option, that Portfolio will own
the underlying security subject to the option and,
in the case of put options, that Portfolio will,
through its custodian, deposit and maintain either
cash or securities with a market value equal to or
greater than the exercise price of the option.
When a Portfolio writes a covered call
option, the Portfolio gives the purchaser the right
to purchase the security at the call option price
at any time during the life of the option. As the
writer of the option, the Portfolio receives a
premium, less a commission, and in exchange
foregoes the opportunity to profit from any
increase in the market value of the security
exceeding the call option price. The premium serves
to mitigate the effect of any depreciation in the
market value of the security. Writing covered call
options can increase the income of the Portfolio
and thus reduce declines in the net asset value per
share of the Portfolio if securities covered by
such options decline in value. Exercise of a call
option by the purchaser, however, will cause the
Portfolio to forego future appreciation of the
securities covered by the option.
When a Portfolio writes a secured put
option, it will gain a profit in the amount of the
premium, less a commission, so long as the price of
the underlying security remains above the exercise
price. However, the Portfolio remains obligated to
purchase the underlying security from the buyer of
the put option (usually in the event the price of
the security funds below the exercise price) at any
time during the option period. If the price of the
underlying security falls below the exercise price,
the Portfolio may realize a loss in the amount of
the difference between the exercise price and the
sale price of the security, less the premium
received.
These Portfolios may purchase securities
that may be covered by call options solely on the
basis of considerations consistent with the
investment objectives and policies of the
Portfolios. The Portfolio turnover rate may
increase through the exercise of a call option;
this will generally occur if the market value of a
"covered" security increases and the portfolio has
not entered into a closing purchase transaction.
Risks Related to Options Transactions -
The Portfolios can close out their respective
positions in exchange-traded options only on an
exchange which provides a secondary market in such
options. Although these Portfolios intend to
acquire and write only such exchange-traded options
for which an active secondary market appears to
exist, there can be no assurance that such a market
will exist for any particular option contract at
any particular time. This might prevent the
Portfolios from closing an options position, which
could impair the Portfolios' ability to hedge
effectively. The inability to close out a call
position may have an adverse effect on liquidity
because the Portfolio may be required to hold the
securities underlying the option until the option
expires or is exercised.
Futures Transactions - These Portfolios
may purchase and sell futures contracts ("futures
contracts") but only when, in the judgment of the
Advisor, such a position acts as a hedge against
market changes which would adversely affect the
securities held by the Portfolios. These futures
contracts may include, but are not limited to,
market index futures contracts and futures
contracts based on U.S. Government obligations.
A futures contract is an agreement between
two parties to buy and sell a security on a future
date which has the effect of establishing the
current price for the security. Although futures
contracts by their terms require actual delivery
and acceptance of securities, in most cases the
contracts are closed out before the settlement date
without the making or taking of delivery of
securities. Upon buying or selling a futures
contract, the Portfolio deposits initial margin
with its custodian, and thereafter daily payments
of maintenance margin are made to and from the
executing broker. Payments of maintenance margin
reflect changes in the value of the futures
contract, with the Portfolio being obligated to
make such payments if its futures position becomes
less valuable and entitled to receive such payments
if its positions become more valuable.
These Portfolios may only invest in
futures contracts to hedge their respective
existing investment positions and not for income
enhancement, speculation or leverage purposes.
Although some of the securities underlying the
futures contract may not necessarily meet the
Portfolios' social criteria, any such hedge
position taken by these Portfolios will not
constitute a direct ownership interest in the
underlying securities.
Futures contracts have been designed by
boards of trade which have been designated
"contracts markets" by the Commodity Futures
Trading Commission ("CFTC"). As series of a
registered investment company, the Portfolios are
eligible for exclusion from the CFTC's definition
of "commodity pool operator," meaning that the
Portfolios may invest in futures contracts under
specified conditions without registering with the
CFTC. Among these conditions are requirements that
each Portfolio invest in futures only for hedging
purposes and that the aggregate initial margin on
futures contracts and premium on options relating
to futures shall not exceed 5% of the Portfolio's
assets. Futures contracts trade on contracts
markets in a manner that is similar to the way a
stock trades on a stock exchange and the boards of
trade, through their clearing corporations,
guarantee performance of the contracts.
Options on Futures Contracts - These
Portfolios may purchase and write put or call
options and sell call options on futures contracts
in which a Portfolio could otherwise invest and
which are traded on a U.S. exchange or board of
trade. The Portfolios may also enter into closing
transactions with respect to such options to
terminate an existing position; that is, to sell a
put option already owned and to buy a call option
to close a position where the Portfolio has already
sold a corresponding call option.
The Portfolios may only invest in options
on futures contracts to hedge their respective
existing investment positions and not for income
enhancement, speculation or leverage purposes.
Although some of the securities underlying the
futures contract underlying the option may not
necessarily meet the Portfolios' social criteria,
any such hedge position taken by these Portfolios
will not constitute a direct ownership interest in
the underlying securities.
An option on a futures contract gives the
purchaser the right, in return for the premium
paid, to assume a position in a futures contract-a
long position if the option is a call and a short
position if the option is a put-at a specified
exercise price at any time during the period of the
option. The Portfolios will pay a premium for such
options purchased or sold. In connection with such
options bought or sold, the Portfolios will make
initial margin deposits and make or receive
maintenance margin payments which reflect changes
in the market value of such options. This
arrangement is similar to the margin arrangements
applicable to futures contracts described above.
Put Options on Futures Contracts - The
purchase of put options on futures contracts is
analogous to the sale of futures contracts and is
used to protect the portfolio against the risk of
declining prices. These Portfolios may purchase put
options and sell put options on futures contracts
that are already owned by that Portfolio. The
Portfolios will only engage in the purchase of put
options and the sale of covered put options on
market index futures for hedging purposes.
Call Options on Futures Contracts - The
sale of call options on futures contracts is
analogous to the sale of futures contracts and is
used to protect the portfolio against the risk of
declining prices. The purchase of call options on
futures contracts is analogous to the purchase of a
futures contract. These Portfolios may only buy
call options to close an existing position where
the Portfolio has already sold a corresponding call
option, or for a cash hedge. The Portfolios will
only engage in the sale of call options and the
purchase of call options to cover for hedging
purposes.
Writing Call Options on Futures Contracts
- - The writing of call options on futures contracts
constitutes a partial hedge against declining
prices of the securities deliverable upon exercise
of the futures contract. If the futures contract
price at expiration is below the exercise price,
the Portfolio will retain the full amount of the
option premium which provides a partial hedge
against any decline that may have occurred in the
Portfolio's securities holdings.
Risks of Options and Futures Contracts -
If one of these Portfolios has sold futures or
takes options positions to hedge its portfolio
against decline in the market and the market later
advances, the Portfolio may suffer a loss on the
futures contracts or options which it would not
have experienced if it had not hedged. Correlation
is also imperfect between movements in the prices
of futures contracts and movements in prices of the
securities which are the subject of the hedge. Thus
the price of the futures contract or option may
move more than or less than the price of the
securities being hedged. Where a Portfolio has sold
futures or taken options positions to hedge against
decline in the market, the market may advance and
the value of the securities held in the Portfolio
may decline. If this were to occur, the Portfolio
might lose money on the futures contracts or
options and also experience a decline in the value
of its portfolio securities. However, although this
might occur for a brief period or to a slight
degree, the value of a diversified portfolio will
tend to move in the direction of the market
generally.
The Portfolios can close out futures
positions only on an exchange or board of trade
which provides a secondary market in such futures.
Although the Portfolios intend to purchase or sell
only such futures for which an active secondary
market appears to exist, there can be no assurance
that such a market will exist for any particular
futures contract at any particular time. This might
prevent the Portfolios from closing a futures
position, which could require a Portfolio to make
daily cash payments with respect to its position in
the event of adverse price movements.
Options on futures transactions bear
several risks apart from those inherent in options
transactions generally. The Portfolios' ability to
close out their options positions in futures
contracts will depend upon whether an active
secondary market for such options develops and is
in existence at the time the Portfolios seek to
close their positions. There can be no assurance
that such a market will develop or exist.
Therefore, the Portfolios might be required to
exercise the options to realize any profit.
Foreign Currency Transactions (Not applicable to
Calvert Social Money Market Portfolio)
Forward Foreign Currency Exchange
Contracts. A forward foreign currency exchange
contract involves an obligation to purchase or sell
a specific currency at a future date, which may be
any fixed number of days ("Term") from the date of
the contract agreed upon by the parties, at a price
set at the time of the contract. These contracts
are traded directly between currency traders
(usually large commercial banks) and their
customers.
The Portfolios will not enter into such
forward contracts or maintain a net exposure in
such contracts where it would be obligated to
deliver an amount of foreign currency in excess of
the value of its portfolio securities and other
assets denominated in that currency. The Advisors
and Subadvisors believes that it is important to
have the flexibility to enter into such forward
contract when it determines that to do so is in a
Portfolio's best interests.
Foreign Currency Options (Not applicable
to Calvert Social Money Market or Balanced
Portfolios). A foreign currency option provides the
option buyer
with the right to buy or sell a stated amount of
foreign currency at the exercise price on or before
a specified date. A call option gives its owner the
right, but not the obligation, to buy the currency,
while a put option gives its owner the right, but
not the obligation, to sell the currency. The
option seller buyer may close its position any time
prior to expiration of the option period. A call
rises in value if the underlying currency
appreciates. Conversely, a put rises in value if
the underlying currency depreciates. Purchasing a
foreign currency option can protect a Portfolio
against adverse movement in the value of a foreign
currency.
Foreign Currency Futures Transactions. The
Portfolio may use foreign currency futures
contracts and options on such futures contracts.
Through the purchase or sale of such contracts, it
may be able to achieve many of the same objectives
attainable through the use of foreign currency
forward contracts, but more effectively and
possibly at a lower cost.
Unlike forward foreign currency exchange
contracts, foreign currency futures contracts and
options on foreign currency futures contracts are
standardized as to amount and delivery period and
are traded on boards of trade and commodities
exchanges. It is anticipated that such contracts
may provide greater liquidity and lower cost than
forward foreign currency exchange contracts.
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INVESTMENT RESTRICTIONS
- -----------------------------------------------------
CALVERT SOCIAL BALANCED
Fundamental Investment Restrictions
The Portfolio has adopted the following
investment restrictions which, together with the
foregoing investment objectives and fundamental
policies, cannot be changed without the approval of
the holders of a majority of the outstanding shares
of the Portfolio. As defined in the Investment
Company Act of 1940, this means the lesser of the
vote of (a) 67% of the shares of the Portfolio at a
meeting where more than 50% of the outstanding
shares are present in person or by proxy or (b)
more than 50% of the outstanding shares of the
Portfolio. Shares have equal rights as to voting,
except that only shares of a Portfolio are entitled
to vote on matters affecting only that Portfolio
(such as changes in investment objective, policies
or restrictions).
The Portfolio may not:
1. Issue senior securities
(except that it may borrow money
as described in restriction 11
below).
2. With respect to at least
75% of the value of its total
assets, invest more than 5% of its
total assets in the securities
(other than securities issued or
guaranteed by the United States
Government or its agencies or
instrumentalities) of any one
issuer (including repurchase
agreements with any one bank).
3. Purchase more than either
(1) 10% in principal amount of the
outstanding debt securities of an
issuer, or (ii) 10% of the
outstanding voting securities of
an issuer, except that such
restrictions shall not apply to
securities issued or guaranteed by
the United States Government or
its agencies or instrumentalities.
4. Invest more than 25% of
its total assets in the securities
of issuers primarily engaged in
the same industry. For purposes of
this restriction, gas, gas
transmission, electric, water, and
telephone utilities each will be
considered a separate industry.
This restriction does not apply to
obligations of domestic branches
of domestic banks or savings and
loan associations or to
obligations issued or guaranteed
by the United States Government,
its agencies or instrumentalities.
5. Invest in companies for
the purpose of exercising control
(along or together with the other
Portfolios).
6. Purchase securities of
other investment companies,
[except in connection with a
trustee's/director's deferred
compensation plan, as long as
there is no duplication of
advisory fees; or] except in
connection with a merger,
consolidation, acquisition or
reorganization, or by purchase in
the open market of securities of
closed-end investment companies
where no underwriter or dealer's
commission or profit, other than
customary broker's commission, is
involved, if immediately
thereafter the Portfolio would
own: (a) securities of investment
companies having an aggregate
value in excess of 10% of such
Portfolio's total assets; (b) more
than 3% of the outstanding voting
stock of the investment company;
or (c) securities of the
investment company having an
aggregate value in excess of 5% of
the Portfolio's total assets.
7. Purchase or sell
interests in oil, gas or other
mineral exploration or development
programs, commodities, commodity
contracts, real estate mortgage
loans, except that each Portfolio
may purchase securities of issuers
which invest or deal in any of the
above, and except that each
Portfolio may invest in securities
that are secured by real estate or
real estate mortgages. This
restriction does not apply to
obligations issued or guaranteed
by the United States Government,
its agencies or instrumentalities.
8. Purchase any securities
on margin (except that the
Portfolio may obtain such
short-term credit as may be
necessary for the clearance of
purchases and sales of portfolio
securities) or make short sales of
securities or maintain a short
position.
9. Make loans, except as
provided in (10) below or through
the purchase of obligations in
private placements or by entering
into repurchase agreements (the
purchase of publicly-traded
obligations are not to be
considered the making of a loan).
10. Lend its securities in
excess of 10% of its total assets,
provided that such loan shall be
made in accordance with the
guidelines set forth below under
"Lending of Portfolio Securities."
11. Borrow amounts in excess
of 10% of its total assets taken
at market value at the time of the
borrowing, and then only from
banks as a temporary measure for
extraordinary or emergency
purposes, or to meet redemption
requests that might otherwise
require the untimely disposition
of securities, and not for
investment or leveraging, except
by entering into reverse
repurchase agreements. Borrowings
and reverse repurchase agreements
combined will not exceed 1/3 of a
Portfolio' total assets, and
additional investments will not be
made by a Portfolio if borrowings
exceed 5% of its total assets.
12. Mortgage, pledge,
hypothecate or in any manner
transfer, as security for
indebtedness, any securities owned
or held by such Portfolio except
as may be necessary in connection
with reverse repurchase agreements
or borrowings mentioned in (11)
above, and then such mortgaging,
pledging or hypothecating may not
exceed 10% of such Portfolio'
total assets. In order to comply
with certain state statutes, such
Portfolio will not, as a matter of
operating policy, mortgage, pledge
or hypothecate its securities to
the extent that at any time the
percentage of the value of pledged
securities plus the maximum sales
charge will exceed 10% of the
value of such Portfolio shares at
the maximum offering price.
13. Underwrite securities of
other issuers except insofar as
the Portfolio may be deemed an
underwriter under the Securities
Act of 1933 in selling shares of
each Portfolio, and except as it
may be deemed such in a sale of
restricted securities.
14. Write, purchase or sell
puts, calls or combinations
thereof, except in connection with
when-issued securities.
15. Invest in securities of
foreign issuers if at the time of
acquisition more than 10% of its
total assets taken at market value
at the time of the investment,
would be invested in such
securities.
16. Participate on a joint
(or a joint and several) basis in
any trading account in securities
(but this does not prohibit the
"bunching" of orders for the sale
or purchase of Portfolio
securities with the other
Portfolio or with other accounts
advised or sponsored by the
Investment Advisor or any of its
affiliates to reduce brokerage
commissions or otherwise to
achieve best overall execution;
see "Investment Advisor," below):
17. Purchase or retain the
securities of any issuer, if, to
the knowledge of the Portfolio,
officers and directors of the
Portfolio, the Investment Advisor,
or any subsidiary thereof, each
owning beneficially more than 1/2
of 1% of the securities of such
issuer, own in the aggregate more
than 5% of the securities of such
issuer.
18. Invest more than 10% of
its total assets in repurchase
agreements maturing in more than
seven days and other illiquid
investments.
To comply with certain state investment
restrictions, the Portfolio will not, as a matter
of operating policy, permit any Portfolio to
purchase or otherwise acquire the securities of any
issuer, other than securities issued or guaranteed
as to principal and interest by the United States,
if immediately after such purchase or acquisition
the value of such investment, together with prior
investments of that Portfolio in the securities of
such issuer, would exceed 10% of the value of the
Portfolio's assets. The Portfolio may change or
modify this policy only if the Portfolio obtains a
waiver of the applicable requirement from the
commissioner of insurance of the state imposing the
requirement.
CALVERT SOCIAL MONEY MARKET AND INTERNATIONAL EQUITY
Fundamental Investment Restrictions
The Portfolios have adopted the following
investment restrictions which, together with the
foregoing investment objectives and fundamental
policies, cannot be changed without the approval of
the holders of a majority of the outstanding shares
of the Portfolio. As defined in the Investment
Company Act of 1940, this means the lesser of the
vote of (a) 67% of the shares of the Portfolio at a
meeting where more than 50% of the outstanding
shares are present in person or by proxy or (b)
more than 50% of the outstanding shares of the
Portfolio. Shares have equal rights as to voting,
except that only shares of a Portfolio are entitled
to vote on matters affecting only that Portfolio
(such as changes in investment objective, policies
or restrictions).
The Portfolios may not:
1. With respect to 75% of
assets, purchase securities of any
issuer (other than obligations of,
or guaranteed by, the United
States Government, its agencies or
instrumentalities) if, as a
result, more than 5% of the value
of its total assets would be
invested in securities of that
issuer.
2. Concentrate more than 25%
of the value of its assets in any
one industry; provided, however,
that there is no limitation with
respect to investments in
obligations issued or guaranteed
by the United States Government or
its agencies and
instrumentalities, and repurchase
agreements secured thereby or with
respect to investments in money
market instruments of banks.
3. Purchase more than 10% of
the outstanding voting securities
of any issuer.
4. Make loans other than
through the purchase of money
market instruments and repurchase
agreements or by the purchase of
bonds, debentures or other debt
securities. The purchase by the
Portfolio of all or a portion of
an issue of publicly or privately
distributed debt obligations in
accordance with its investment
objective, policies and
restrictions, shall not constitute
the making of a loan.
5. Underwrite the securities
of other issuers, except to the
extent that in connection with the
disposition of its portfolio
securities, the Portfolio may be
deemed to be an underwriter.
6. Purchase from or sell to
any of the Fund's officers or
Directors, or firms of which any
of them are members, any
securities (other than capital
stock of the Portfolio), but such
persons or firms may act as
brokers for the Portfolio for
customary commissions.
7. Borrow money, except from
banks for temporary or emergency
purposes and then only in an
amount up to 10% of the value of
the Portfolio's total assets and
except by engaging in reverse
repurchase agreements; provided,
however, that it may only engage
in reverse repurchase agreements
so long as, at the time it enters
into a reverse repurchase
agreement, the aggregate proceeds
from outstanding reverse
repurchase agreements, when added
to other outstanding borrowings
permitted by this section, do not
exceed 33 1/3% of the Portfolio's
total assets. In order to secure
any permitted borrowings and
reverse repurchase agreements
under this section, the Portfolio
may pledge, mortgage or
hypothecate its assets.
8. Make short sales of
securities or purchase any
securities on margin except that
the Portfolio may obtain such
short-term credits as may be
necessary for the clearance of
purchases and sales of securities.
The deposit or payment by the
Portfolio of initial or
maintenance margin in connection
with financial futures contracts
or related options transactions is
not considered the purchase of a
security on margin.
9. Write, purchase or sell
puts, calls or combinations
thereof except that the Portfolio
may (a) write exchange-traded
covered call options on portfolio
securities and enter into closing
purchase transactions with respect
to such options, and the Portfolio
may write exchange-traded covered
call options on foreign currencies
and secured put options on
securities and foreign currencies
and write covered call and secured
put options on securities and
foreign currencies traded over the
counter, and enter into closing
purchase transactions with respect
to such options, (b) purchase
exchange-traded call options and
put options and purchase call and
put options traded over the
counter, provided that the
premiums on all outstanding call
and put options do not exceed 5%
of its total assets, and enter
into closing sale transaction with
respect to such options, and (c)
engage in financial futures
contracts and related options
transactions, provided that the
sum of the initial margin deposits
on the Portfolio's existing
futures and related options
positions and the premiums paid
for related options would not
exceed 5% of its total assets.
10. Invest for the purpose of
exercising control or management
of another issuer.
11. Invest in commodities,
commodities futures contracts, or
real estate, although it may
invest in securities which are
secured by real estate or real
estate mortgages and securities of
issuers which invest or deal in
commodities, commodity futures,
real estate or real estate
mortgages and provided that it may
purchase or sell stock index
futures, foreign currency futures,
interest rate futures and options
thereon.
12. Purchase or retain
securities issued by investment
companies except to the extent
permitted by the Investment
Company Act of 1940, as amended;
or in connection with a
trustee's/director's deferred
compensation plan, as long as
there is no duplication of
advisory fees.
Nonfundamental Investment Restrictions
Calvert Social Money Market and
International Equity have adopted the following
operating (i.e., non-fundamental) investment
policies and restrictions which may be changed by
the Board of Directors without shareholder
approval. None of these Portfolios may:
1. Purchase illiquid
securities if more than 10% (15%
for International Equity) of the
value of a Portfolio's net assets
would be invested in such
securities. A Portfolio may buy
and sell securities outside the
U.S. that are not registered with
the SEC or marketable in the U.S.
For purposes of the Portfolio's
concentration policy contained in restriction (2),
above, the Fund intends to comply with the SEC
staff position that securities issued or guaranteed
as to principal and interest by any single foreign
government are considered to be securities of
issuers in the same industry.
Any investment restriction that involves a
maximum percentage of securities or assets will not
be considered to be violated unless an excess over
the applicable percentage occurs immediately after
an acquisition of securities or utilization of
assets, and the excess is attributable to that
event.
CALVERT SOCIAL SMALL CAP GROWTH
Fundamental Investment Restrictions
The Portfolio has adopted the following
investment restrictions which cannot be changed
without the approval of the holders of a majority
of the outstanding shares of the Portfolio. As
defined in the Investment Company Act of 1940, this
means the lesser of the vote of (a) 67% of the
shares of the Fund at a meeting where more than 50%
of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding
shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of
its assets, purchase securities of
any issuer (other than obligations
of, or guaranteed by, the United
States Government, its agencies or
instrumentalities) if, as a
result, more than 5% of the value
of its total assets would be
invested in securities of that
issuer. (The remaining 50% of its
total assets may be invested
without restriction except to the
extent other investment
restrictions may be applicable).
2. Concentrate 25% or more
of the value of its assets in any
one industry; provided, however,
that there is no limitation with
respect to investments in
obligations issued or guaranteed
by the United States Government or
its agencies and
instrumentalities, and repurchase
agreements secured thereby.
3. Make loans of more than
one-third of the assets of the
Fund, or as permitted by law. The
purchase by the Fund of all or a
portion of an issue of publicly or
privately distributed debt
obligations in accordance with its
investment objective, policies and
restrictions, shall not constitute
the making of a loan.
4. Underwrite the securities
of other issuers, except as
permitted by the Board of Trustees
within applicable law, and except
to the extent that in connection
with the disposition of its
portfolio securities, the Fund may
be deemed to be an underwriter.
5. Purchase from or sell to
any of the Fund's officers or
trustees, or companies of which
any of them are directors,
officers or employees, any
securities (other than shares of
beneficial interest of the Fund),
but such persons or firms may act
as brokers for the Fund for
customary commissions.
6. Except as required in
connection with permissible
options, futures and commodity
activities of the Fund, invest in
commodities, commodity futures
contracts, or real estate,
although it may invest in
securities which are secured by
real estate or real estate
mortgages and securities of
issuers which invest or deal in
commodities, commodity futures,
real estate or real estate
mortgages and provided that it may
purchase or enter into futures
contracts and options on futures
contracts, foreign currency
futures, interest rate futures and
options thereon.
Nonfundamental Investment Restrictions
The Portfolio has adopted the following
operating (i.e., non-fundamental) investment
policies and restrictions which may be changed by
the Board of Trustees without shareholder approval.
The Portfolio may not:
7. Invest, in the aggregate,
more than 15% of its net assets in
illiquid securities. Purchases of
securities outside the U.S. that
are not registered with the SEC or
marketable in the U.S. are not per
se illiquid.
8. Borrow money in an amount
exceeding one-third of the Fund's
total assets, or as permitted by
law. In order to secure any
permitted borrowings under this
section, the Fund may pledge,
mortgage or hypothecate its assets.
9. Purchase more than 10% of
the outstanding voting securities
of any issuer.
For purposes of the Portfolio's
concentration policy contained in restriction (2),
above, the Portfolio intends to comply with the SEC
staff position that securities issued or guaranteed
as to principal and interest by any single foreign
government are considered to be securities of
issuers in the same industry.
CALVERT SOCIAL MID CAP GROWTH
Fundamental Investment Restrictions
The Portfolio has adopted the following
investment restrictions which cannot be changed
without the approval of the holders of a majority
of the outstanding shares of the Portfolio. As
defined in the Investment Company Act of 1940, this
means the lesser of the vote of (a) 67% of the
shares of the Fund at a meeting where more than 50%
of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding
shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of
its assets, purchase securities of
any issuer (other than obligations
of, or guaranteed by, the United
States Government, its agencies or
instrumentalities) if, as a
result, more than 5% of the value
of its total assets would be
invested in securities of that
issuer. The remaining 50% of its
total assets may be invested
without restriction, except as
disclosed elsewhere in the
Prospectus or SAI and except that
no more than 25% may be invested
in the securities of any one
issuer.
2. Concentrate 25% or more
of the value of its assets in any
one industry; provided, however,
that there is no limitation with
respect to investments in
obligations issued or guaranteed
by the United States Government or
its agencies and
instrumentalities, and repurchase
agreements secured thereby.
3. Make loans of more than
one-third of the assets of the
Portfolio, or as permitted by law.
The purchase by the Portfolio of
all or a portion of an issue of
publicly or privately distributed
debt obligations in accordance
with its investment objective,
policies and restrictions, shall
not constitute the making of a
loan.
4. Underwrite the securities
of other issuers, except as
permitted by the Board of
Directors within applicable law,
and except to the extent that in
connection with the disposition of
its portfolio securities, the Fund
may be deemed to be an underwriter.
5. Purchase from or sell to
any of the Fund's officers or
directors, or companies of which
any of them are directors,
officers or employees, any
securities (other than shares of
beneficial interest of the
Portfolio), but such persons or
firms may act as brokers for the
Fund for customary commissions.
6. Except as required in
connection with permissible
options, futures and commodity
activities of the Portfolio,
invest in commodities, commodity
futures contracts, real estate or
real estate limited partnerships,
although it may invest in
securities which are secured by
real estate or real estate
mortgages and securities of
issuers which invest or deal in
commodities, commodity futures,
real estate or real estate
mortgages and provided that it may
purchase or sell stock index
futures, foreign currency futures,
interest rate futures and options
thereon.
7. Invest in the shares of
other investment companies, except
as permitted by the 1940 Act or
other applicable law, or pursuant
to Calvert's nonqualified deferred
compensation plan adopted by the
Board of Directors in an amount
not to exceed 10% or as permitted
by law.
8. Purchase more than 10% of
the outstanding voting securities
of any issuer.
Nonfundamental Investment Restrictions
Mid Cap Growth has adopted the following
operating (i.e., nonfundamental) investment
policies and restrictions which may be changed by
the Board of Directors without shareholder
approval. The Fund may not:
9. Invest, in the aggregate,
more than 15% of its net assets in
illiquid securities. Purchases of
securities outside the U.S. that
are not registered with the SEC or
marketable in the U.S. are not per
se illiquid.
10. Make short sales of
securities or purchase any
securities on margin except that
the Fund may obtain such
short-term credits as may be
necessary for the clearance of
purchases and sales of securities.
The depositor payment by the Fund
of initial or maintenance margin
in connection with financial
futures contracts or related
options transactions is not
considered the purchase of a
security on margin.
11. Borrow money, except from
banks for temporary or emergency
purposes, and then only in an
amount not to exceed one-third of
the Portfolio's total assets, or
as permitted by law. In order to
secure any permitted borrowings
under this section, the Portfolio
may pledge, mortgage or
hypothecate its assets.
For purposes of the Portfolio's
concentration policy contained in restriction (2),
above, the Fund intends to comply with the SEC
staff position that securities issued or guaranteed
as to principal and interest by any single foreign
government are considered to be securities of
issuers in the same industry.
Any investment restriction which involves
a maximum percentage of securities or assets shall
not be considered to be violated unless an excess
over the applicable percentage occurs immediately
after an acquisition of securities or utilization
of assets and results therefrom.
Virginia Law Restrictions
In addition to the investment restrictions
described above, the Portfolios will comply with
restrictions contained in the current Virginia
Insurance Laws in order that the assets of the
Variable Accounts may be invested in Portfolio
shares. The Virginia Insurance Laws currently
permit the Variable Accounts to invest in Portfolio
shares without restricting the Portfolios'
investments. However, those laws or their
interpretation may change.
Lending of Portfolio Securities
Subject to the investment restrictions
above, a Portfolio may lend its securities to
brokers, dealers and financial institutions and
receive as collateral cash or United States
Treasury securities. At all times while the loan is
outstanding, collateral will be maintained in
amounts equal to at least 100% of the current
market value of the loaned securities. Any cash
collateral will be invested in short-term
securities, which will increase the current income
the Portfolio lending its securities. Such loans
will be terminable by the Portfolio at any time and
will not be made to affiliates of the Portfolio.
The Portfolio will have the right to regain record
ownership of loaned securities to exercise
beneficial rights such as voting rights,
subscription rights and rights to dividends,
interest or other distributions. The Portfolio may
pay reasonable fees to persons unaffiliated with
the Portfolio for arranging loans. The dividends,
interest and other distributions received by the
Portfolio on loaned securities, for tax purposes,
may be treated as income other than qualified
income for purposes of the 90% test discussed below
under "Taxes." The Portfolios intend to lend their
securities only to the extent that such activity
does not jeopardize their qualification as a
regulated investment company under certain
provisions of the Internal Revenue Code. Loans of
securities will be made only to firms that the
Investment Advisor deems creditworthy. However, as
with any extensions of credit, there are risks of
delay in recovery and even loss of rights in the
collateral should the borrower of securities fail
financially.
When-Issued and Delayed Delivery Securities
From time to time, in the ordinary course
of business, each Portfolio may purchase securities
on a when-issued or delayed delivery basis -- that
is, delivery and payment can take place a month or
more after the date of the transactions. The
securities purchased in this manner are subject to
market fluctuation and no interest accrues to the
purchaser during this period. At the time a
Portfolio makes a commitment to purchase securities
on a when-issued or delayed delivery basis, the
price is fixed and the Portfolio will record the
transaction and thereafter reflect the value, each
day, of the security in determining the net asset
value of the Portfolio. At the time of delivery of
the securities, the value may be more or less than
the purchase price.
The Portfolio will enter commitments for
when-issued or delayed delivery securities only
when it intends to acquire the securities.
Accordingly, each Portfolio will establish a
segregated account with the Portfolio's custodian
bank in which it will maintain cash or cash
equivalents or other portfolio securities equal in
value to commitments for such when-issued or
delayed delivery securities. Subject to this
restriction, a Portfolio may purchase these
securities without limit.
- -----------------------------------------------------
INVESTMENT SELECTION PROCESS
- -----------------------------------------------------
Investments in the Portfolios are selected
on the basis of their ability to contribute to the
dual objective of the Portfolios. The Advisors and
Subadvisors have each developed a number of
techniques for evaluating the performance of
issuers in each of these areas. The primary sources
of information are reports published by the issuers
themselves, the reports of public agencies, and the
reports of groups which monitor performance in
particular areas. These sources of information are
sometimes augmented with direct interviews or
written questionnaires addressed to the issuers. It
should be recognized, however, that there are few
generally accepted measures by which achievement in
these areas can be readily distinguished;
therefore, the development of suitable measurement
techniques is largely within the discretion and
judgment of the Advisors and Subadvisors of the
Portfolio.
It should be noted that the Portfolios'
social criteria tend to limit the availability of
investment opportunities more than is customary
with other investment companies. The Advisor and
Subadvisors, however, believe that there are
sufficient investment opportunities to permit full
investment among issuers that satisfy the
Portfolios' social investment objective.
To the greatest extent possible, the same
social criteria is applied to the purchase of
non-equity securities as to equity investments.
Bank certificates of deposit, commercial paper,
repurchase agreements, and corporate bonds are
judged in the same way as a prospective purchase of
the bank's or issuing company's common stock. The
Portfolios may invest, however, in certificates of
deposit of banks and savings and loan associations
in which the Portfolios would not otherwise invest
because such institutions have assets of $1 billion
or less, but generally only to the extent all such
investments are fully insured as to principal by
the Federal Deposit Insurance Corporation.
Obligations issued by the U.S. Treasury,
such as U.S. Treasury bills, notes and bonds, are
supported by the full faith and credit of the U.S.
Government. Certain obligations issued or
guaranteed by a U.S. Government agency or
instrumentality are supported by the full faith and
credit of the U.S. Government. These include
obligations issued by the Export-Import Bank,
Farmers Home Administration, Government National
Mortgage Association, Postal Service, Merchant
Marine, and Washington Metropolitan Area Transit
Authority. The Portfolios may also invest in other
U.S. Government agency or instrumentality
obligations which are supported only by the credit
of the agency or instrumentality and may be further
supported by the right of the issuer to borrow from
the U.S. Treasury. Such obligations include
securities issued by the Bank for Cooperatives,
Federal Intermediate Credit Bank, Federal Land
Bank, Federal Home Loan Bank, Federal Home Loan
Mortgage Corporation, and Federal National Mortgage
Association.
CAM has retained NCM Capital Management
Group, Inc. as Subadvisor for the Balanced
Portfolio, Murray Johnstone International, Ltd. as
Subadvisor for the International Equity Portfolio,
Brown Capital Management, Inc., as Subadvisor for
the Mid Cap Growth Portfolio, and Awad & Associates
to serve as Subadvisor to the Small Cap Growth
Portfolio. "The Portfolios' Subadvisors are
described in the Prospectus. See "The Fund And Its
Management."
- -----------------------------------------------------
PORTFOLIO TURNOVER
- -----------------------------------------------------
Each Portfolio has a different expected
annual rate of portfolio turnover. Portfolio
turnover is defined as the lesser of annual
purchases or sales of portfolio securities divided
by the monthly average of the value of the
Portfolios' securities (excluding from the
computation all securities, including options, with
maturities or expiration dates at the time of
acquisition of one year or less). A high rate of
portfolio turnover generally involves
correspondingly greater brokerage commission
expenses, which must be borne directly by the
Portfolio. Notwithstanding increased brokerage
commission expenses, particular holdings may be
sold at any time if investment judgment or
Portfolio operations make a sale advisable.
For the fiscal years 1995, 1996, and 1997,
the portfolio turnover rates for Calvert Social
Balanced were 163%, 99%, and 905%, respectively.
For the same time periods, the portfolio turnover
rates for Calvert Social Mid Cap Growth were 135%,
124%, and 96%, respectively. For the same time
periods, the portfolio turnover rates for the
International Equity series were 90%, 85%, and 35%,
respectively. For the period from inception (March
1, 1995) through December 31, 1995, and for fiscal
year 1996, and 1997, the portfolio turnover rates
for Small Cap Growth were 223%, 120%, and 292%,
respectively.
No Portfolio turnover rate can be
calculated for Calvert Social Money Market due to
the short maturities of the instruments purchased.
Portfolio turnover should not affect the income or
net asset value of Calvert Social Money Market
because brokerage commissions are not normally
charged on the purchase or sale of money market
instruments.
- -----------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -----------------------------------------------------
The Portfolios continuously offer their
shares at prices equal to the respective net asset
values of the Portfolios determined in the manner
set forth below under "Determination of Net Asset
Value." The Portfolios offer their shares, without
sales charge, only for purchase by various
Insurance Companies for allocation to their
Variable Accounts. It is conceivable that in the
future it may be disadvantageous for both annuity
Variable Accounts and life insurance Variable
Accounts of different Insurance Companies, to
invest simultaneously in the Portfolios, although
currently neither the Insurance Companies nor the
Portfolio foresee any such disadvantages to either
variable annuity or variable life insurance policy
holders of any Insurance Company. The Portfolio's
Board of Directors intends to monitor events in
order to identify any material conflicts between
such policyholders and to determine what action, if
any, should be taken in response to any conflicts.
The Portfolios are required to redeem all
full and fractional shares for cash. The redemption
price is the net asset value per share, which may
be more or less than the original cost, depending
on the investment experience of the Portfolio.
Payment for shares redeemed will generally be made
within seven days after receipt of a proper notice
of redemption. The right to redeem shares or to
receive payment with respect to any redemption may
only be suspended for any period during which (a)
trading on the New York Stock Exchange is
restricted as determined by the Securities and
Exchange Commission, or the Exchange is closed for
other than weekends and holidays; (b) an emergency
exists, as determined by the Securities and
Exchange Commission, as a result of which disposal
of Portfolio securities or determination of the net
asset value of a Portfolio is not practicable; or
(c) the Securities and Exchange Commission by order
permits postponement for the protection of
shareholders.
- -----------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- -----------------------------------------------------
The net asset value of the shares of each
Portfolio of the Fund is determined by adding the
values of all securities and other assets of the
Portfolio, subtracting liabilities and expenses,
and dividing by the number of shares of the
Portfolio outstanding. Expenses are accrued daily,
including the investment advisory fee. Calvert
Social Money Market attempts to maintain a constant
net asset value of $1.00 per share; the net asset
values of Calvert Social Balanced, International
Equity, Small Cap Growth and Mid Cap Growth
fluctuate based on the respective market value of
the Portfolio's investments. The net asset value
per share of each of the Portfolios 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. The Portfolios do
not determine net asset value on certain national
holidays or other days on which the New York Stock
Exchange is closed: New Year's Day, Presidents'
Day, Dr. Martin Luther King, Jr. Day, Good Friday,
Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Each
Portfolio's net asset value per share is determined
by dividing that Portfolio's total net assets (the
value of its assets net of liabilities, including
accrued expenses and fees) by the number of shares
outstanding.
The assets of Calvert Social Balanced,
International Equity, Mid Cap Growth and Small Cap
Growth are valued as follows: (a) securities for
which market quotations are readily available are
valued at the most recent closing price, mean
between bid and asked price, or yield equivalent as
obtained from one or more market makers for such
securities; (b) securities maturing within 60 days
may be valued at cost, plus or minus any amortized
discount or premium, unless the Board of Directors
determines such method not to be appropriate under
the circumstances; and (c) all other securities and
assets for which market quotations are not readily
available will be fairly valued by the Advisor in
good faith under the supervision of the Board of
Directors. Securities primarily traded on foreign
securities exchanges are generally valued at the
preceding closing values on their respective
exchanges where primarily traded. Equity options
are valued at the last sale price unless the bid
price is higher or the asked price is lower, in
which event such bid or asked price is used.
Exchange traded fixed income options are valued at
the last sale price unless there is no sale price,
in which event current prices provided by market
makers are used. Over-the-counter fixed income
options are valued based upon current prices
provided by market makers. Financial futures are
valued at the settlement price established each day
by the board of trade or exchange on which they are
traded. Because of the need to obtain prices as of
the close of trading on various exchanges
throughout the world, the calculation of the
Portfolio's net asset value does not take place for
contemporaneously with the determination of the
prices of U.S. portfolio securities. For purposes
of determining the net asset value all assets and
liabilities initially expressed in foreign currency
values will be converted into United States dollar
values at the mean between the bid and offered
quotations of such currencies against United States
dollars at last quoted by any recognized dealer. If
an event were to occur after the value of an
investment was so established but before the net
asset value per share was determined which was
likely to materially change the net asset value,
then the instrument would be valued using fair
value consideration by the Directors or their
delegates.
Calvert Social Money Market's assets,
including securities subject to repurchase
agreements, are normally valued at their amortized
cost which does not take into account unrealized
capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating
interest rates on the market value of the
instrument. While this method provides certainty in
valuation, it may result in periods during which
value, as determined by amortized cost, is higher
or lower than the price that would be received upon
sale of the instrument.
Rule 2a-7 under the Investment Company Act
of 1940 permits Calvert Social Money Market's
assets to be valued at amortized cost if the
Portfolio maintains a dollar-weighted average
maturity of 90 days or less and only purchases
obligations having remaining maturities of thirteen
months or less. Rule 2a-7 requires, as a condition
of its use, that Calvert Social Money Market invest
only in obligations determined by the Directors to
be of good quality with minimal credit risks and
requires the Directors to establish procedures
designed to stabilize, to the extent reasonably
possible, the Portfolio's price per share as
computed for the purpose of sales and redemptions
at $1.00. Such procedures include review of the
Portfolio's investment holdings by the Directors,
at such intervals as they may deem appropriate, to
determine whether the Portfolio's net asset value
calculated by using available market quotations or
equivalents deviates from $1.00 per share based on
amortized cost. If such deviation exceeds 0.50%,
the Directors will promptly consider what action,
if any, will be initiated. In the event the
Directors determine that a deviation exists which
may result in material dilution or other unfair
results to investors or existing shareholders, the
Directors will take such corrective action as they
regard as necessary and appropriate, including: the
sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten
average portfolio maturity; the withholding of
dividends or payment of distributions from capital
or capital gains; redemptions of shares in kind; or
the establishment of a net asset value per share
based upon available market quotations.
- -----------------------------------------------------
TAXES
- -----------------------------------------------------
In 1997 the Portfolios qualified, and in
1998 the Portfolios intend to qualify, as a
"regulated investment company" under the provisions
of Subchapter M of the Internal Revenue Code (the
"Code"). To qualify for treatment as a regulated
investment company, each Portfolio must, among
other things, have assets that meet certain
requirements specified in the Code and derive in
each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to
securities loans, and gains (without deduction for
losses) from the sale or other disposition of stock
or securities. If the Portfolio distributes
substantially all of its net ordinary and capital
gains income, the Portfolio qualifies as a
regulated investment company and is relieved from
paying federal income tax on amounts distributed.
Each Portfolio will be taxed as a separate entity.
Since the shareholders of the Portfolios
are Insurance Companies, this Statement of
Additional Information does not contain a
discussion of the federal income tax consequences
at the shareholder level. For information
concerning the federal tax consequences to
purchasers of annuity or life insurance policies,
see the prospectus for the policies.
- -----------------------------------------------------
CALCULATION OF YIELD AND TOTAL RETURN
- -----------------------------------------------------
Calvert Social Money Market: Yield
From time to time Calvert Social Money
Market advertises its "yield" and "effective
yield." Both yield figures are based on historical
earnings and are not intended to indicate future
performance. The "yield" of Calvert Social Money
Market refers to the actual income generated by an
investment in the Portfolio over a particular base
period of time. If the base period is less than one
year, the yield is then "annualized." That is, the
net change, exclusive of capital changes, in the
value of a share during the base period is divided
by the net asset value per share at the beginning
of the period, and the result is multiplied by 365
and divided by the number of days in the base
period. Capital changes excluded from the
calculation of yield are: (1) realized gains and
losses from the sale of securities, and (2)
unrealized appreciation and depreciation. Calvert
Social Money Market's "effective yield" for a
seven-day period is its annualized compounded yield
during the period, calculated according to the
following formula:
Effective yield = [(base period return) + 1]365/7 -
1
For the seven-day period ended December
31, 1997, Calvert Social Money Market's yield was
5.35% and its effective yield was 5.50%.
The yield of the Money Market Portfolio
will fluctuate in response to changes in interest
rates and general economic conditions, portfolio
quality, portfolio maturity, and operating
expenses. Yield is not fixed or insured and
therefore is not comparable to a savings or other
similar type of account. Yield during any
particular time period should not be considered an
indication of future yield. It is, however, useful
in evaluating a Portfolio's performance in meeting
its investment objective.
Calvert Social Balanced, International Equity, Mid
Cap Growth and Small Cap Growth: Total Return and
Other Quotations
Calvert Social Balanced, International
Equity, Mid Cap Growth and Small Cap Growth may
each advertise "total return." Total return is
computed by taking the total number of shares
purchased by a hypothetical $1,000 investment,
adding all additional shares purchased within the
period with reinvested dividends and distributions,
calculating the value of those shares at the end of
the period, and dividing the result by the initial
$1,000 investment. For periods of more than one
year, the cumulative total return is then adjusted
for the number of years, taking compounding into
account, to calculate average annual total return
during that period.
Total return is computed according to the
following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of
$10,000; T = total return; n = number of years; and
ERV = the ending redeemable value of a hypothetical
$10,000 payment made at the beginning of the
period. Total return is historical in nature and is
not intended to indicate future performance. Total
return for the Portfolios for the periods indicated
are as follows:
- -------------------------------------------------------
Periods Ended
December 31, 1997 SEC Average Annual
Return
- -------------------------------------------------------
Calvert Social Balanced
One Year 20.08%
Five Years 12.90%
Ten Years 12.42%
Calvert Social International
Equity
One Year 13.23%
Five Years 12.91%
From Inception 11.06%
(June 30, 1992)
Calvert Social Mid Cap Growth
One Year 23.53%
Five Years 12.41%
From Inception 12.92%
(July 16, 1991)
Calvert Social Small Cap
Growth
One Year -9.86%
From Inception 10.61%
(March 15, 1995)
- -------------------------------------------------------
Total return, like yield and net asset
value per share, fluctuates in response to changes
in market conditions. Neither total return nor
yield for any particular time period should be
considered an indication of future return.
- -----------------------------------------------------
INVESTMENT ADVISORY AGREEMENT
- -----------------------------------------------------
The current Investment Agreement was
entered into on June 30, 1992. Unless earlier
terminated, the Agreement will remain in effect
indefinitely if approved annually (a) by the Board
of Directors of the Fund or by a majority of the
outstanding shares of the Portfolio, including a
majority of the outstanding shares of each
Portfolio, and (b) by a majority of the Directors
who are not parties to such contract or interested
persons (as defined by the Investment Company Act
of 1940) of any such party. The Agreement is not
assignable and may be terminated without penalty on
60 days' written notice at the option of either
party or by the vote of the shareholders of the
Portfolio.
The Investment Advisory Agreement provides
that the Advisor will not be liable to the
Portfolio or to any shareholder or policy owner for
any error of judgment or mistake of law or for any
loss suffered by the Portfolio or by any
shareholder or policy owner in connection with
matters to which the Investment Advisory Agreement
relates, except a loss resulting from willful
misfeasance, bad faith, gross negligence, or
reckless disregard on the part of the advisor in
the performance of its duties thereunder.
For the Fund's fiscal years ended December
31, 1995, 1996, and 1997, Calvert Social Balanced
paid CAM fees of $610,216, $963,829, and
$1,339,136, respectively. For 1995, 1996, and 1997,
Calvert Social Money Market paid investment adviser
fees of $27,591, $24,348, and $30,309,
respectively. For 1995, Calvert Social
International Equity paid CAM $93,418, and received
expense reimbursements from CAM of $36,720. In
1996, Calvert Social International Equity paid CAM
$122,600, and received expense reimbursements from
CAM of $27,740. In 1997, Calvert Social
International Equity paid CAM $148,107, and
received expense reimbursements from CAM of
$25,189. For 1995, 1996, and 1997, Calvert Social
Mid Cap Growth paid investment advisory fees of
$55,003, $126,374, and $179,053, respectively. For
fiscal year 1995, Calvert Social Small Cap Growth
paid CAM $10,886, and received expense
reimbursements from CAM of $1,505. For fiscal year
1996, Calvert Social Small Cap Growth paid CAM
$28,564, and received expense reimbursements from
CAM of $3,794. For fiscal year 1997, Calvert Social
Small Cap Growth paid CAM $48,611, and received
expense reimbursements from CAM of $6,208.
Securities Activities of the Investment Advisor
Securities held by the Portfolios may also
be held by the Insurance Companies, their separate
accounts or mutual funds for which the Investment
Advisor or a Subadvisor acts as an investment
advisor. Because of different investment objectives
or other factors, any of these parties may buy
shares of the Portfolios when one or more other
clients are selling the same security. Such
transactions will be done in a manner deemed
equitable to all parties. To the extent that such
transactions increase the demand for a Portfolio's
shares, there may be an effect on share prices.
When deemed to be in the best interest of
the Portfolios, the Investment Advisors or
Subadvisors may aggregate the securities with those
to be sold or purchased for other accounts or
companies in order to obtain favorable execution
and low brokerage commissions. In that event,
allocation of the securities purchased or sold, as
well as the expenses incurred in the transaction,
will be made by the Investment Advisor or
Subadvisor in the manner it considers to be most
equitable and consistent with its fiduciary
obligations to the Portfolios and to the other
accounts or companies involved. In some cases this
procedure may adversely affect the size of the
position obtainable for a Portfolio.
Payment of Expenses
In addition to the portfolio management
and investment advice described above, CAM also is
obligated to perform certain administrative and
management services and to provide all executive,
administrative, clerical and other personnel
necessary to operate the Portfolio and to pay the
salaries of all these persons. CAM will furnish the
Portfolio with office space, facilities, and
equipment and pay the day-to-day expenses related
to the operation and maintenance of such office
space, facilities and equipment. Legal, accounting
and all other expenses incurred in the organization
of the Portfolio, including costs of registering
under federal and state securities laws, will also
be paid by CAM except with respect to those
administrative services provided by Calvert
Administrative Services Company to Calvert Social
International Equity, Calvert Social Mid Cap
Growth, and Calvert Social Small Cap Growth
pursuant to their Administrative Services
Agreements.
Expenses of the Fund will be accrued
daily. Expenses that the respective Portfolios of
the Fund will pay individually include, but are not
limited to the following: brokerage commissions,
dealer markups and other expenses incurred in the
acquisition or disposition of any securities,
printing costs (including the daily calculation of
net asset value), interest, certain taxes, charges
of the custodian and transfer agent, and other
expenses attributable to a particular Portfolio.
Expenses which will be allocated to the various
Portfolios on the basis of the size of the
respective portfolio, determined each day, include
legal and auditing fees, expenses of shareholder
and director meetings, independent director fees,
bookkeeping expenses related to shareholder
accounts, insurance charges, cost of printing and
mailing shareholder reports and proxy statements,
the cost to pay dividends and capital gain
distributions, the costs of printing and mailing
registration statements, and updated prospectuses
to current shareholders, and the fees of any trade
association of which the Portfolio is a member.
Expenses resulting from legal actions involving the
Portfolio and any amount for which it may be
obligated to indemnify its officers, directors and
employees, may either be directly applicable to
particular Portfolios or allocated on the basis of
the size of the respective Portfolios, depending on
the nature of the legal action.
Securities Transactions and Brokerage
The Investment Advisor, and in some cases
the Subadvisor, is primarily responsible for the
investment decisions of each Portfolio, including
decisions to buy and sell securities, the selection
of brokers and dealers to effect the transactions,
the placing of investment transactions, and the
negotiation of brokerage commissions, if any. No
Portfolio has any obligation to deal with any
dealer or group of dealers in the execution of
transactions in Portfolio securities. In placing
orders, it is the policy of each Portfolio to
obtain the most favorable net results, taking into
account various factors, including price, dealer
spread or commission, the size of the transaction,
and difficulty of execution. While the Investment
Advisor and Subadvisors generally seek reasonably
competitive spreads or commissions, the Portfolios
will not necessarily be paying the lowest spread or
commission available.
If the securities in which a particular
Portfolio invests are traded primarily in the
over-the-counter market, the Portfolio will deal,
where possible, with the dealers who make a market
in the securities involved unless better prices and
execution are available elsewhere. These "market
makers" usually act as principals for their own
account. On occasion, the Portfolios may purchase
securities directly from the issuer. Bonds and
money market securities are generally traded on a
net basis and do not normally involve either
brokerage commission or transfer taxes. The cost of
Portfolio securities transactions will consist
primarily of brokerage commissions or dealer or
underwriter spreads.
Portfolio transactions are undertaken on
the basis of their desirability from an investment
standpoint. Investment decisions and the choice of
brokers and dealers are made by the Advisor and
Subadvisors under the direction and supervision of
the Board of Directors. The Advisor and Subadvisors
select broker-dealers on the basis of their
professional capability and the value and quality
of their services. The Advisor and Subadvisor
reserve the right to place orders for the purchase
or sale of portfolio securities with broker-dealers
that have sold shares of the Portfolios or that
provide the Portfolios with statistical, research,
or other information and services. Although any
statistical research or other information and
services provided by broker-dealers may be useful
to the Advisor and the Subadvisors, the dollar
value of such information and services is generally
indeterminable, and its availability or receipt
does not serve materially to reduce the Advisor's
or Subadvisor's normal research activities or
expenses.
The Advisors and Subadvisors may also
execute portfolio transactions with or through
broker-dealers that have sold shares of the
Portfolio. However, such sales will not be a
qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of
any broker-dealer be based on the volume of
Portfolio shares sold. The Advisors or Subadvisors
may compensate such broker-dealers at their own
expense in consideration of their promotional and
administrative services.
- -----------------------------------------------------
DIRECTORS AND OFFICERS
- -----------------------------------------------------
The directors and officers of the Fund and
their principal occupations are set forth below.
Directors and Officers who are active employees of
the Investment Advisor or its affiliates will not
receive any additional compensation for their
services to the Fund.
FRANK H. BLATZ, JR., Esq., Director. Mr.
Blatz is a partner in the law firm of Snevily, Ely,
Williams, Gurrieri & Blatz. He was formerly a
partner with Abrams, Blatz, Gran, Hendricks &
Reina, P.A. He is also a director/trustee of The
Calvert Fund, Calvert Cash Reserves, First Variable
Rate Fund, Calvert Tax-Free Reserves, and Calvert
Municipal Fund, Inc. Address: 308 East Broad
Street, Westfield, New Jersey 07091. DOB: 10/29/35.
*CHARLES E. DIEHL, Director. Mr. Diehl is
Vice President and Treasurer Emeritus of the George
Washington University, and has retired from
University Support Services, Inc. of Herndon,
Virginia. He is also a director of Acacia Mutual
Life Insurance Company. Address: 1658 Quail Hollow
Court, McLean, Virginia 22101. DOB: 10/13/22.
*BARBARA J. KRUMSIEK, President and
Director. Ms. Krumsiek serves as President, Chief
Executive Officer and Vice Chairman of Calvert
Group, Ltd. and as an officer and director of each
of its affiliated companies. She is a director of
Calvert-Sloan Advisers, L.L.C., and a
trustee/director of each of the investment
companies in the Calvert Group of Funds. Prior to
joining Calvert Group, Ms. Krumsiek served as
Senior Vice President of Alliance Capital LP's
Mutual Fund Division. DOB: 08/09/52.
ARTHUR J. PUGH, Trustee. Mr. Pugh serves
as a director of Acacia Federal Savings Bank.
Address: 4823 Prestwick Drive, Fairfax, Virginia
22030. DOB: 09/24/37.
SOUTH TRIMBLE, III, Director. Mr. Trimble
is special counsel to and formerly was a partner in
the law firm of Reasoner & Fox. Address: 888 17th
Street, N.W., Suite 800, Washington, DC 20006. DOB:
06/25/25.
RONALD M. WOLFSHEIMER, CPA, Treasurer. Mr.
Wolfsheimer is Senior Vice President and Chief
Financial Officer of Calvert Group, Ltd. and its
subsidiaries and an officer of each of the other
investment companies in the Calvert Group of Funds.
Mr. Wolfsheimer is Vice President and Treasurer of
Calvert-Sloan Advisers, L.L.C., and a director of
Calvert Distributors, Inc. DOB: 07/24/47.
WILLIAM M. TARTIKOFF, Esq., Vice President
and Secretary. Mr. Tartikoff is General Counsel,
Secretary, and Senior Vice President of Calvert
Group, Ltd., and its subsidiaries, and is an
officer of each of the other investment companies
in the Calvert Group of Funds. Mr. Tartikoff is
Vice President and Secretary of Calvert-Sloan
Advisers, L.L.C., a director of Calvert
Distributors, Inc., and is an officer of Acacia
National Life Insurance Company. DOB: 08/12/47.
RENO J. MARTINI, Senior Vice President.
Mr. Martini is a director and Senior Vice President
of Calvert Group, Ltd., and Senior Vice President
and Chief Investment Officer of Calvert Asset
Management Company, Inc. Mr. Martini is also a
director and President of Calvert-Sloan Advisers,
L.L.C., and a director and officer of Calvert New
World Fund, Inc. DOB: 1/13/50.
DANIEL K. HAYES, Vice President. Mr. Hayes
is Vice President of Calvert Asset Management
Company, Inc., and is an officer of each of the
other investment companies in the Calvert Group of
Funds, except for Calvert New World Fund, Inc. DOB:
09/09/50.
SUSAN WALKER BENDER, Esq., Assistant
Secretary. Ms. Bender is Associate General Counsel
of Calvert Group, and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She
is also an officer of each of the other investment
companies in the Calvert Group of Funds. DOB:
1/29/59.
KATHERINE STONER, Esq., Assistant
Secretary. Ms. Stoner is Associate General Counsel
of Calvert Group and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She
is also an officer of each of the other investment
companies in the Calvert Group of Funds. DOB:
10/21/56.
LISA CROSSLEY NEWTON, Esq., Assistant
Secretary and Compliance Officer. Ms. Newton is
Associate General Counsel of Calvert Group and an
officer of each of its subsidiaries and
Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies
in the Calvert Group of Funds. DOB: 12/31/61.
IVY WAFFORD DUKE, Esq., Assistant
Secretary. Ms. Duke is Assistant Counsel of Calvert
Group and an officer of each of its subsidiaries
and Calvert-Sloan Advisers, L.L.C. She is also an
officer of each of the other investment companies
in the Calvert Group of Funds. Prior to working at
Calvert Group Ms. Duke was an Associate in the
Investment Management Group of the Business and
Finance Department at Drinker Biddle and Reath.
DOB: 9/7/68.
The address of directors and officers,
unless otherwise noted, is 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814. Directors
and officers of the Fund as a group own less than
1% of the Fund's outstanding shares. Directors
marked with an *, above, are "interested persons"
of the Fund, under the Investment Company Act of
1940.
During fiscal 1997, directors of the Fund
not affiliated with the Fund's Advisor were paid
$638 by Calvert Social Money Market, $18,277 by
Calvert Social Balanced, $1,465 by Calvert Social
International Equity, $2,156 by Calvert Social Mid
Cap Growth and $358 by Calvert Social Small Cap
Growth. Each Director of the Fund who is not
affiliated with the Advisor receives a meeting fee
of $750 for each Board meeting attended; such fees
are allocated among the Series based upon their
relative net assets. Directors not on any other
Calvert Group Fund Boards receive an annual fee of
$3,000.
Directors of the Fund not affiliated with
the Fund's Advisor ("noninterested persons") may
elect to defer receipt of all or a percentage of
their annual fees and invest them in any fund in
the Calvert Family of Funds through the
Directors/Trustees Deferred Compensation Plan
(shown a "Pension or Retirement Benefits Accrued
as part of Fund Expenses," below). Deferral of the
fees is designed to maintain the parties in the
same position as if the fees were paid on a current
basis. Management believes this will have a
negligible effect on the Fund's assets,
liabilities, net assets, and net income per share.
Director Compensation Table Fiscal Year 1997
Aggregate Pension or Retirement Total
Compensation Benefits Accrued as Compensation
from Fund for part of Fund Expenses* from Registrant
Name of Director service as and Fund Complex
Director paid to
Directors**
- -----------------------------------------------------
Frank H. Blatz, Jr. $3,000 $3,000 $46,000
Charles E. Diehl $3,000 $3,000 $44,500
Arthur J. Pugh $3,000 $3,000 $48,250
South Trimble, III $6,750 $6,750 $8,250
*Messrs. Blatz, Diehl and Pugh have chosen to defer
a portion of their compensation. As of December 31,
1997, total deferred compensation, including
dividends and capital appreciation, was
$555,901.79, $545,259.10 and $187,735.55, for each
director, respectively.
**As of December 31, 1997. The Fund Complex
consists of nine (9) registered investment
companies.
- -----------------------------------------------------
METHOD OF DISTRIBUTION
- -----------------------------------------------------
The Fund has entered into an agreement
with Calvert Distributors, Inc. ("CDI") whereby
CDI, acting as principal underwriter for the Fund,
makes a continuous offering of the Fund's
securities on a "best efforts" basis.
Under the terms of the agreement, CDI is entitled
to compensation for services performed and expenses
assumed. Payments to CDI may be authorized by the
Fund's Board of Directors from time to time in
accordance with applicable law. No payments were
authorized in 1997. No associated person or
broker-dealer may have an interest in the fees
payable to CDI. CDI is responsible for paying (i)
all commissions or other fees to its associated
persons which are due for the sale of the Policies,
and (ii) any compensation to other broker-dealers
and their associated persons due under the terms of
any sales agreement between CDI and the
broker-dealers.
- -----------------------------------------------------
TRANSFER AND SHAREHOLDER SERVICING AGENT
- -----------------------------------------------------
National Financial Data Services, Inc.
("NFDS"), a subsidiary of State Street Bank &
Trust, has been retained by the Fund to act as
transfer agent and dividend disbursing agent. These
responsibilities include: responding to certain
shareholder inquiries and instructions, crediting
and debiting shareholder accounts for purchases and
redemptions of Fund shares and confirming such
transactions, and daily updating of shareholder
accounts to reflect declaration and payment of
dividends.
Calvert Shareholder Services, Inc.,
("CSSI"), a subsidiary of Calvert Group, Ltd., and
Acacia Mutual, has been retained by the Fund to act
as shareholder servicing agent. Shareholder
servicing responsibilities include responding to
shareholder inquiries and instructions concerning
their accounts, entering any telephoned purchases
or redemptions into the NFDS system, maintenance of
broker-dealer data, and preparing and distributing
statements to shareholders regarding their
accounts. Calvert Shareholder Services, Inc. was
the sole transfer agent prior to January 1, 1998.
For these services, NFDS and Calvert
Shareholder Services, Inc. receive a fee, from the
Fund, payable monthly, of 0.03% on the first $500
million of average daily net assets and 0.02% on
such assets over $500 million.
- -----------------------------------------------------
GENERAL INFORMATION
- -----------------------------------------------------
The Fund was incorporated in Maryland on
September 27, 1982. The authorized capital stock of
the Fund consists of three hundred twenty five
million shares of stock, par value of $1.00 per
share. The Fund's Board of Directors may, from time
to time, authorize the issuance of additional
shares having the descriptions, powers and rights,
and the qualifications, limitations, and
restrictions thereof, as the Board of Directors may
determine. The Board of Directors may also change
the designation of any portfolio and may increase
or decrease the number of shares of any portfolio,
but may not decrease the number of shares of any
Portfolio below the number of shares of that
portfolio then outstanding. All shares of common
stock have equal voting rights (regardless of the
net asset value per share) except that only shares
of the respective portfolio are entitled to vote on
matters concerning only that portfolio. Pursuant to
the Investment Company Act of 1940 and the rules
and regulations thereunder, certain matters
approved by a vote of all shareholders of the Fund
may not be binding on a portfolio whose
shareholders have not approved that matter. Each
issued and outstanding share is entitled to one
vote and to participate equally in dividends and
distributions declared by the respective portfolio
and, upon liquidation or dissolution, in net assets
of such portfolio remaining after satisfaction of
outstanding liabilities. The shares of each
portfolio, when issued, will be fully paid and
non-assessable and have no preemptive or conversion
rights. Holders of shares of any portfolio are
entitled to redeem their shares as set forth above
under "Purchase and Redemption of Shares." The
shares do not have cumulative voting rights and the
holders of more than 50% of the shares of the Fund
voting for the election of directors can elect all
of the directors of the Fund if they choose to do
so and in such event the holders of the remaining
shares would not be able to elect any directors.
The Fund's Board of Directors has adopted
a "proportionate voting" policy, meaning that
Insurance Companies will vote all of the Fund's
shares, including shares the Insurance Companies
hold, in return for providing the Fund with its
capital and in payment of charges made against the
variable annuity or variable life separate
accounts, in proportion to the votes received from
contractholders or policyowners.
- -----------------------------------------------------
REPORTS TO SHAREHOLDERS AND POLICYHOLDERS
- -----------------------------------------------------
The Fund will issue unaudited semi-annual
reports showing the Fund's investments and other
information, and it will issue annual reports
containing financial statements audited by
independent certified public auditors.
- -----------------------------------------------------
ADDITIONAL INFORMATION
- -----------------------------------------------------
The Prospectus and this Statement of
Additional Information do not contain all the
information set forth in the registration statement
and exhibits relating thereto, which the Fund has
filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933
and the Investment Company Act of 1940, to which
reference is hereby made.
- -----------------------------------------------------
FINANCIAL STATEMENTS
- -----------------------------------------------------
The audited financial statements for the
Fund included in the Annual Report to Shareholders
dated December 31, 1997, are expressly incorporated
by reference and made a part of this Statement of
Additional Information. Copies of the Annual Report
may be obtained free of charge by writing or
calling the Fund.
=====================================================
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
=====================================================
As of March 31, 1998, the following
shareholder owned of record 5% or more of Calvert
Variable Series Social Balanced Portfolio:
Name and Address % of Ownership
Ageon Financial Services Group, Inc. 6.83%
formerly Providian Life & Health Ins Co.
Seperate Account V
Attn Roger Hayes - 8th Floor
PO Box 32830
Louisville, KY 40232-2830
Name and Address % of Ownership
Keynote Series Account 8.53%
Attn Russell Warren
c/o Investors Bank & Trust Co.
Mail Code Mon 60
PO Box 9130
Boston, MA 02117-9130
Name and Address % of Ownership
Hartford Life Insurance Co. 13.37%
Seperate Account
Attn Carol Lewis
200 Hopmeadow ST
Simsbury, CT 06089-9625
Name and Address % of Ownership
Mutual of America TVIF Fund 14.41%
S/A #2
320 Park Avenue FL 8
New York, NY 10022-6815
Name and Address % of Ownership
Metropolitan Life Insurance Co. 15.22%
Attn Michael Lee
303 Perimeter Center N Suite 500
Atlanta, GA 30346-2402
Name and Address % of Ownership
Aetna Life Insurance & Annuity 24.20%
CO-ACES-Separate Account B
Attn Central Valuation Unit
Conveyor TS31
151 Farmington Avenue
Hartford, CT 06156-1000
As of March 31, 1998, the following
shareholder owned of record 5% or more of Calvert
Variable Series Social Mid Cap Portfolio:
Name and Address % of Ownership
American United Life Insurance Co. 7.38%
AUL American Individual Unit Trust
One American Square PO box 1995
Indianapolis, IN 46206-9102
Name and Address % of Ownership
American United Life Insurance Co. 7.42%
AUL American Unit Trust
One American Square PO box 1995
Indianapolis, IN 46206-9102
Name and Address % of Ownership
American United Life Insurance Co. 7.68%
Group Retirement Annuity
Separate Account II
One American Square PO box 1995
Indianapolis, IN 46206-9102
Name and Address % of Ownership
Metropolitan Life Insurance Co. 17.19%
Securities Accounting & Administration
Attn Michael Lee
303 Perimeter Center N Suite 500
Atlanta, GA 30346-2402
Name and Address % of Ownership
Ageon Financial Services Group, Inc. 58.66%
formerly Providian Life & Health Ins Co.
Seperate Account V
Attn Roger Hayes - 8th Floor
PO Box 32830
Louisville, KY 40232-2830
As of March 31, 1998, the following
shareholder owned of record 5% or more of Calvert
Variable Series Social International Equity
Portfolio:
Name and Address % of Ownership
Ageon Financial Services Group, Inc. 98.09%
formerly Providian Life & Health Ins Co.
Seperate Account V
Attn Roger Hayes - 8th floor
PO Box 32830
Louisville, KY 40232-2830
As of March 31, 1998, the following
shareholder owned of record 5% or more of Calvert
Variable Series Social Small Cap Growth Portfolio:
Name and Address % of Ownership
Ageon Financial Services Group, Inc. 72.53%
formerly Providian Life & Health Ins Co.
Seperate Account V
Attn Roger Hayes - 8th floor
PO Box 32830
Louisville, KY 40232-2830
- -----------------------------------------------------
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- -----------------------------------------------------
The Board of Directors has appointed
Coopers & Lybrand, L.L.P. as the Fund's independent
accountants for fiscal year 1998. State Street Bank
and Trust Company, N.A., 225 Franklin Street,
Boston, Massachusetts 02110, serves as custodian of
the Fund's investments. First National Bank of
Maryland, 25 South Charles Street, Baltimore,
Maryland 21203 also serves as custodian of certain
of the Fund's cash assets. The custodians have no
part in deciding the fund's investment policies or
the choice of securities that are to be purchased
or sold for the Fun's Portfolios.
- -----------------------------------------------------
APPENDIX
- -----------------------------------------------------
Corporate Bond Ratings
Description of Moody's Investors Service
Inc.'s/Standard & Poor's municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry
the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest
payments are protected by a large or by an
exceptionally stable margin and principal is
secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as
high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the
majority of instances they differ from AAA issues
only in small degree. They are rated lower than the
best bonds because margins of protection may not be
as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or
there may be other elements present which make
long-term risks appear somewhat larger than in Aaa
securities.
A/A: Upper-medium grade obligations.
Factors giving security to principal and interest
are considered adequate, but elements may be
present which make the bond somewhat more
susceptible to the adverse effects of circumstances
and economic conditions.
Baa/BBB: Medium grade obligations;
adequate capacity to pay principal and interest.
Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in
these categories is regarded as predominantly
speculative with respect to capacity to pay
interest and repay principal. There may be some
large uncertainties and major risk exposure to
adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest
income bonds.
D: Debt in default; payment of interest
and/or principal is in arrears.
Commercial Paper Ratings
Moody's Investors Services, Inc.
A Prime rating is the highest commercial
paper rating assigned by Moody's Investors Service,
Inc. Issuers rated Prime are further referred to by
use of numbers 1, 2, and 3 to denote relative
strength within this highest classification. Among
the factors considered by Moody's in assigning
ratings for an issuer are the following: (1)
management; (2) economic evaluation of the inherent
uncertain areas; (3) competition and customer
acceptance of products; (4) liquidity; (5) amount
and quality of long-term debt; (6) ten year
earnings trends; (7) financial strength of a parent
company and the relationships which exist with the
issuer; and (8) recognition by management of
obligations which may be present or may arise as a
result of public interest questions and
preparations to meet such obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard &
Poor's Corporation has the following
characteristics: Liquidity ratios are better than
the industry average. Long term senior debt rating
is "A" or better. In some cases BBB credits may be
acceptable. The issuer has access to at least two
additional channels of borrowing. Basic earnings
and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the
issuer's industry is well established, the issuer
has a strong position within its industry and the
reliability and quality of management is
unquestioned. Issuers rated A are further referred
to by use of numbers 1, 2, and 3 to denote relative
strength within this classification.
<PAGE>
CALVERT VARIABLE SERIES, INC.
(formerly named Acacia Capital Corporation)
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Financial statements incorporated by reference to:
Registrant's Annual Report to
Shareholders dated
December 31, 1997, and filed March
6, 1998.
Schedules II-VII, inclusive, for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission, are omitted because
they are not required under the related instructions,
or they are inapplicable, or the required information
is presented in the financial statements or notes
thereto.
(b) Exhibits
(1) Articles of Incorporation of Acacia Capital
Corporation, incorporated by reference to
Initial Filing, dated 11/3/82.
(a) Restated Articles of Incorporation of Acacia
Capital Corporation, incorporated by reference
to Post-Effective Amendment No. 31, dated
11/25/95.
(b) Articles Supplementary of Acacia Capital
Corporation, incorporated by reference to
Post-Effective Amendment No. 31, dated 2/22/96.
(c) Articles Supplementary of Acacia Capital
Corporation incorporated by reference to
Post-Effective Amendment No. 32, dated 4/22/97.
(d) Articles of Amendment of Acacia Capital
Corporation to change name to Calvert
Variable Series, Inc., and to change the name of
each series, incorporated by reference to
Post-Effective Amendment No. 33, dated 2/11/98.
(2) By-laws of Acacia Capital Corporation,
incorporated by reference to Pre-Effective
Amendment No. 1, dated 8/10/83.
(a) Amended By-laws of Acacia Capital Corporation,
incorporated by reference to Post-Effective
Amendment No. 31, dated 2/7/96.
(4) Specimen Stock Certificate, incorporated by
reference to Pre-Effective Amendment No. 1,
dated 8/10/83.
(5) Investment Advisory Agreement and
Sub-Investment Advisory Agreements, incorporated
by reference to Post-Effective Agreement No. 31,
dated 2/7/96.
(7) Deferred Compensation Agreement, incorporated
by reference to Post-Effective Agreement No. 31,
dated 2/7/96.
(8) Custody Agreement incorporated by reference to
Pre-Effective Amendment No. 1, dated 8/10/83.
(9) Shared Funding Agreement, incorporated by
reference to Post-Effective Amendment No. 10,
dated 3/2/89.
(9.a) Transfer Agency Contract and Shareholder Servicing
Contract, filed herewith.
(10) Opinion and Consent of Counsel.
(11) Consent of Independent Auditors to Use of
Report.
(13) Letter Regarding Initial Capital, incorporated
by reference to Pre-Effective Amendment No. 1,
dated 8/10/83.
(16) Schedule for Computation of Performance
Quotation incorporated by reference to
Registrant's Post-Effective Amendment No. 9,
dated 5/2/88, and Post-Effective Amendment No.
11, 4/20/90.
Exhibits 3, 6, 12, 14, 15, 17 and 18 are omitted because they are
inapplicable.
Item 25. Persons Controlled by or Under Common Control With Registrant
Not applicable.
Item 26. Number of Holders of Securities
Number of Record-
Holders as of
Title of Series March 31, 1998
Calvert Social Balanced 26
(formerly Calvert Responsibly Invested Balanced Series)
Calvert Social Mid-Cap Growth 10
(formerly Calvert Responsibly Invested Capital Accumulation Series)
Calvert Social Money Market 6
(formerly Calvert Responsibly Invested Money Market Series)
Calvert Social Small-Cap Growth 8
(formerly Calvert Responsibly Invested Strategic Growth Series)
Calvert Social International Equity 5
(formerly Calvert Responsibly Invested Global Equity Series)
Item 27. Indemnification
Registrant's Bylaws, Exhibit 2 to this Registration Statement,
provide that officers and directors will be indemnified by the Fund
against liabilities and expenses incurred by such persons in connection
with actions, suits, or proceedings arising out of their offices or
duties of employment, except that no indemnification can be made to a
person who has been adjudged liable of willful misfeasance, bad faith,
gross negligence, or reckless disregard of duties. In the absence of
such an adjudication, the determination of eligibility for
indemnification shall be made by independent counsel in a written
opinion or by the vote of a majority of a quorum of directors who are
neither "interested persons" of Registrant, as that term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, nor parties to
the proceeding.
Registrant's Articles of Incorporation also provide that
Registrant may purchase and maintain liability insurance on behalf of
any officer, director, employee or agent against any liabilities arising
from such status. In this regard, Registrant maintains a Directors &
Officers (Partners) Liability Insurance Policy with Chubb Group of
Insurance Companies, 15 Mountain View Road, Warren, New Jersey 07061,
providing Registrant with $5 million in directors and officers liability
coverage, plus $3 million in excess directors and officers liability
coverage for the independent trustees/directors only. Registrant also
maintains a $9 million Investment Company Blanket Bond issued by ICI
Mutual Insurance Company, P.O. Box 730, Burlington, Vermont, 05402, and
an additional $5 million in excess of $9 million blanket bond with Chubb
Group of Insurance Companies, 15 Mountain View Road, Warren,
New Jersey 07061.
Item 28. Business and Other Connections of Investment Adviser
Name of Company, Principal
Name Business and Address Capacity
Barbara J. Krumsiek Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Alliance Capital Mgmt. L.P. Sr. Vice President
Mutual Fund Division Director
1345 Avenue of the Americas
New York, NY 10105
--------------
Ronald M. Wolfsheimer First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Reno J. Martini Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and Director
Insurance Companies
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Director
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Corporation Officer
Real Estate Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Officer
Tax Return and
Preparation Services Director
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
The Advisors Group, Inc. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management, Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co. Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Susan Walker Bender Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Katherine Stoner Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Lisa Crossley Newton Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Ivy Wafford Duke Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Daniel K. Hayes Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Annette Krakovitz Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
John Nichols Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
David Leach Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Matthew D. Gelfand Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Strategic Investment Management Officer
Investment Advisor
1001 19th Street North
Arlington, Virginia 20009
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites shares
of Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves, The Calvert Fund, Calvert Municipal Fund, Inc., Calvert World
Values Fund, Inc., Calvert New World Fund, Inc., and Acacia Capital
Corporation.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Barbara J. Krumsiek Director and President President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Chief Financial Officer
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Craig Cloyed Senior Vice President None
Karen Becker Vice President, Operations None
Steve Cohen Vice President None
Geoffrey Ashton Regional Vice President None
Martin Brown Regional Vice President None
Janet Haley Regional Vice President None
Ben Ogbogu Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant Secretary
Katherine Stoner Assistant Secretary Assistant Secretary
Lisa Crossley Newton Assistant Secretary Assistant Secretary
and Compliance Officer
Ivy Wafford Duke Assistant Secretary Assistant Secretary
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Assistant Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
Not Applicable
Item 32. Undertakings
a) Not Applicable
b) Not Applicable
(c) The Registrant undertakes to furnish to each person to
whom a Prospectus is delivered, a copy of the
Registrant's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Bethesda, and
State of Maryland, on the 30th day of April, 1998.
CALVERT VARIABLE SERIES, INC.
(formerly named Acacia Capital Corporation)
By:
_______________**__________________
Barbara J. Krumsiek
President and Director
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities indicated.
Signature Title Date
__________**____________ President and 4/30/98
Barbara J. Krumsiek Director (Principal Executive Officer)
__________**____________ Principal Accounting 4/30/98
Ronald M. Wolfsheimer Officer
__________**____________ Director 4/30/98
Charles E. Diehl
__________**____________ Director 4/30/98
Arthur J. Pugh
__________**____________ Director 4/30/98
South Trimble, III
__________**____________ Director 4/30/98
Frank H. Blatz, Jr.
**By Ivy Wafford Duke as Attorney-in-fact, pursuant to Power of Attorney Forms
on file.
<PAGE>
EXHIBIT INDEX
Form N-1A
Item No.
Ex-1 Underwriting Agreement
Ex-23
24(b)(10) Form of Opinion and Consent of Counsel
Ex-23A
24(b)(11) Opinion of Accountants
Ex-24 Power of Attorney
Ex99.B9 Transfer Agent Contract
Ex99.B9 A Shareholder Servicing Contract
Ex-27 Financial Date Schedules
-10-
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, dated as of February 25, 1998
by and between EACH CALVERT FUND LISTED IN THE SCHEDULE OF FUNDS
ATTACHED HERETO AS SCHEDULE I (each a "Fund" and together the
"Funds"), as such schedule may, from time to time be amended, and
CALVERT DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
WHEREAS, each Fund is registered as an open-end investment
company under the Investment Company Act of 1940 (the "1940 Act") and
has registered its shares, including shares of its series portfolios
(the "Series"), for sale to the public under the Securities Act of
1933 (the "1933 Act") and various state securities laws;
WHEREAS, each Fund wishes to retain the Distributor as the
principal underwriter in connection with the offer and sale of shares
of the Series (the "Shares") and to furnish certain other services to
the Series as specified in this Agreement;
WHEREAS, this contract has been approved by the
Trustees/Directors of each Fund in anticipation of the Distributor's
transfer of its rights to receive the Class B Distribution Fees ( as
defined in the Distribution Plan for Class B and C Shares (the
"Distribution Plan")) and/or Class B contingent deferred sales
charges to a financing party in order to raise funds to cover
distribution expenditures; and
WHEREAS, the Distributor is willing to act as principal
underwriter and to furnish such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed as follows:
1. Each Fund hereby appoints the Distributor as
principal underwriter in connection with the offer and sale of its
Shares. The Distributor shall, as agent for each Fund, subject to
applicable federal and state law and the Declaration of Trust or
Articles of Incorporation, and By-laws of the applicable Fund and in
accordance with the representations in the applicable Fund's
Registration Statement and Prospectus, as such documents may be
amended from time to time: (a) promote the Series; (b) enter into
appropriate dealer agreements with other registered broker-dealers to
further distribution of the Shares; (c) solicit orders for the
purchase of the Shares subject to such terms and conditions as the
applicable Fund may specify; (d) transmit promptly orders and
payments for the purchase of Shares and orders for redemption of
Shares to the applicable Fund's transfer agent; and (e) provide
services agreed upon by the applicable Fund to Series shareholders;
provided, however, that the Distributor may sell no Shares pursuant
to this Agreement until the Distributor is notified that a Fund's
Registration Statement under the 1933 Act, authorizing the sale of
such Shares through the Distributor, has become effective. The
Distributor shall comply with all applicable federal and state laws
and offer the Shares on an agency or "best efforts" basis under which
a Fund shall only issue such Shares as are actually sold.
2. The public offering price of the Shares shall be
the net asset value ("NAV") per share (as determined by the
applicable Fund) of the outstanding Shares of the Series, plus the
applicable sales charge, if any, as set forth in the Fund's then
current Prospectus. Each Fund shall furnish the Distributor with a
statement of each computation of NAV and of the details entering into
such computation.
3. Compensation.
a. Distribution Fee.
i. Class A. In consideration of the Distributor's services
as distributor for the Class A Shares of a Fund, each Fund may pay to
the Distributor the Distribution Fee as set forth in Schedule II to
this Agreement that is payable pursuant to the Fund's Distribution
Plan.
ii. Class B. In consideration of the Distributor's services
as distributor for the Class B Shares of a Fund, each Fund shall pay
to the Distributor (or its designee or transferee) the Distributor's
Allocable Portion of the Distribution Fee; (as set forth in Schedule
II to this Agreement) that is payable pursuant to the Fund's
Distribution Plan in respect of the Class B Shares of a Fund. For
purposes of this Agreement, the Distributor's "Allocable Portion" of
the Distribution Fee shall be 100% of such Distribution Fee unless or
until the Fund uses a principal underwriter other than the
Distributor and thereafter the Allocable Portion shall be the portion
of the Distribution Fee attributable to (i) Class B Shares of a Fund
sold by the Distributor ("Commission Shares"), (ii) Class B Shares of
the Fund issued in connection with the exchange of Commission Shares
of another Fund, and (iii) Class B Shares of the Fund issued in
connection with the reinvestment of dividends and capital gains.
The Distributor's Allocable Portion of the Distribution Fee
and the contingent deferred sales charges arising in respect of Class
B Shares taken into account in computing the Distributor's Allocable
Portion shall be limited under Rule 2830 of the Conduct Rules or
other applicable regulations of the NASD as if the Class B Shares
taken into account in computing the Distributor's Allocable Portion
themselves constituted a separate class of shares of a Fund.
The services rendered by the Distributor for which the
Distributor is entitled to receive the Distributor's Allocable
Portion of the Distribution Fee shall be deemed to have been
completed at the time of the initial purchase of the Commission
Shares (whether of the Fund or another Fund in the Calvert Group of
Funds) taken into account in computing the Distributor's Allocable
Portion. Notwithstanding anything to the contrary in this Agreement,
the Distributor shall be paid its Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B Shares of a Fund, or any
termination of this Agreement other than in connection with a
Complete Termination (as defined in the Distribution Plan) of the
Class B Distribution Plan as in effect on the date of this Agreement.
Except as provided in the preceding sentence, a Fund's obligation to
pay the Distribution Fee to the Distributor shall be absolute and
unconditional and shall not be subject to any dispute, offset,
counterclaim or defense whatsoever, (it being understood that nothing
in this sentence shall be deemed a waiver by a Fund of its right
separately to pursue any claims it may have against the Distributor
and to enforce such claims against any assets (other than its rights
to be paid its Allocable Portion of the Distribution Fee and to be
paid the contingent deferred sales charges) of the Distributor.
iii. Class C. In consideration of the Distributor's services
as distributor for the Class C Shares of a Fund, each Fund shall pay
to the Distributor the Distribution Fee as set forth in Schedule II
to this Agreement that is payable pursuant to the Fund's Distribution
Plan.
b. Service Fee. As additional compensation, for Class
A, Class B and Class C Shares of each Series, applicable Funds shall
pay the Distributor a service fee (as that term is defined by the
National Association of Securities Dealers, Inc. ("NASD")) as set
forth in Schedule III to this Agreement that is payable pursuant to
the Fund's Distribution Plan.
c. Front-end Sales Charges. As additional compensation
for the services performed and the expenses assumed by the
Distributor under this Agreement, the Distributor may, in conformity
with the terms and conditions set forth in the then current
Prospectus of each Fund, impose and retain for its own account the
amount of the front-end sales charge, if any, and may reallow a
portion of any front-end sales charge to other broker-dealers, all in
accordance with NASD rules.
d. Contingent Deferred Sales Charge. Each Fund will
pay to the Distributor (or its designee or transferee) in addition to
the fees set forth in Section 3 hereof any contingent deferred sales
charge imposed on redemptions of that Fund's Class B and Class C
Shares upon the terms and conditions set forth in the then current
Prospectus of that Fund. Notwithstanding anything to the contrary in
this Agreement, the Distributor shall be paid such contingent
deferred sales charges in respect of Class B Shares taken into
account in computing the Distributor's Allocable Portion of the
Distribution Fee notwithstanding the Distributor's termination as
principal underwriter of the Class B shares of a Fund or any
termination of this Agreement other than in connection with a
Complete Termination of the Class B Distribution Plan as in effect on
the date of this Agreement. Except as provided in the preceding
sentence, a Fund's obligation to remit such contingent deferred sales
charges to the Distributor shall not be subject to any dispute,
offset, counterclaim or defense whatsoever, it being understood that
nothing in this sentence shall be deemed a waiver by a Fund of its
right separately to pursue any claims it may have against the
Distributor and to enforce such claims against any assets (other than
the Distributor's right to be paid its Allocable Portion of the
Distribution Fee and to be paid the contingent deferred sales
charges) of the Distributor. No Fund will waive any contingent
deferred sales charge except under the circumstances set forth in the
Fund's current Prospectus without the consent of the Distributor (or,
if rights to payment have been transferred, the transferee), which
consent shall not be unreasonably withheld.
4. Payments to Distributor's Transferees. The
Distributor may transfer the right to payments hereunder (but not its
obligations hereunder) in order to raise funds to cover distribution
expenditures, and any such transfer shall be effective upon written
notice from the Distributor to the Fund. In connection with the
foregoing, the Fund is authorized to pay all or a part of the
Distribution Fee and/or contingent deferred sales charges in respect
of Class B Shares directly to such transferee as directed by the
Distributor.
5. Changes in Computation of Fee, etc. As long as the
Class B Distribution Plan is in effect, a Fund shall not change the
manner in which the Class B Distribution Fee is computed (except as
may be required by a change in applicable law or a change in
accounting policy adopted by the Investment Companies Committee of
the AICPA and approved by FASB that results in a determination by a
Fund's independent accountants that any of the sales charges in
respect of such Fund, which are not contingent deferred sales charges
and which are not yet due and payable, must be accounted for by such
Fund as a liability in accordance with GAAP).
6. As used in this Agreement, the term "Registration
Statement" shall mean the registration statement most recently filed
by a Fund with the Securities and Exchange Commission and effective
under the 1933 Act, as such Registration Statement is amended by any
amendments thereto at the time in effect, and the term "Prospectus"
shall mean the form of prospectus filed by a Fund as part of the
Registration Statement.
7. The Distributor shall print and distribute to
prospective investors Prospectuses, and may print and distribute such
other sales literature, reports, forms, and advertisements in
connection with the sale of the Shares as comply with the applicable
provisions of federal and state law. In connection with such sales
and offers of sale, the Distributor shall give only such information
and make only such statements or representations, and require
broker-dealers with whom it enters into dealer agreements to give
only such information and make only such statements or
representations, as are contained in the Prospectus or in information
furnished in writing to the Distributor by a Fund. The Funds shall
not be responsible in any way for any other information, statements
or representations given or made by the Distributor, other
broker-dealers, or the representatives or agents of the Distributor
or such broker-dealers. Except as specifically permitted under the
Distribution Plan under Rule 12b-1 under the 1940 Act, as provided in
paragraph 3 of this Agreement, the Funds shall bear none of the
expenses of the Distributor in connection with its offer and sale of
the Shares.
8. Each Fund agrees at its own expense to register the
Shares with the Securities and Exchange Commission, state and other
regulatory bodies, and to prepare and file from time to time such
Prospectuses, amendments, reports and other documents as may be
necessary to maintain the Registration Statement. Each Fund shall
bear all expenses related to preparing and typesetting its
Prospectus(es) and other materials required by law and such other
expenses, including printing and mailing expenses related to the
Fund's communications with persons who are shareholders of such Fund.
9. Each Fund agrees to indemnify, defend and hold the
Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Distributor, its officers
or directors, or any such controlling person may incur, under the
1933 Act or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in its
Registration Statement or Prospectus or arising out of or based upon
any alleged omission to state a material fact required to be stated
in either thereof or necessary to make the statements in either
thereof not misleading, provided that in no event shall anything
contained in this Agreement be construed so as to protect the
Distributor against any liability to a Fund or its shareholders to
which the Distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of
its duties, or by reason of its reckless disregard of its obligations
and duties under this Agreement.
10. The Distributor agrees to indemnify, defend and
hold each Fund, their several officers and directors, and any person
who controls a Fund within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which a Fund, its officers or
directors, or any such controlling person may incur, under the 1933
Act or under common law or otherwise, arising out of or based upon
any alleged untrue statement or a material fact contained in
information furnished in writing by the Distributor to the Funds for
use in the Registration Statement or Prospectus(es) or arising out of
or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the
Registration Statement or Prospectus(es) or necessary to make such
information not misleading.
11. Each Fund reserves the right at any time to
withdraw all offerings of the Shares by written notice to the
Distributor at its principal office.
12. The Distributor is an independent contractor and
shall be agent for a Fund only in respect to the offer, sale and
redemption of that Fund's Shares.
13. The services of the Distributor to a Fund under
this Agreement are not to be deemed exclusive, and the Distributor
shall be free to render similar services or other services to others
so long as its services hereunder are not impaired thereby.
14. The Distributor acknowledges that it has received
notice of and accepts the limitations upon the liability of any Fund
organized as a business trust set forth in such Fund's Declaration of
Trust. The Distributor agrees that the obligations of such Funds
hereunder in any case shall be limited to such Funds and to their
assets and that the Distributor shall not seek satisfaction of any
such obligation from the shareholders of such a Fund nor from any
Trustee, officer, employee or agent of such Fund.
15. The Funds shall not use the name of the Distributor
in any Prospectus, sales literature or other material relating to the
Funds in any manner not approved prior thereto by the Distributor;
provided, however, that the Distributor shall approve all uses of its
name which merely refer in accurate terms to its appointment
hereunder or which are required by the Securities and Exchange
Commission or a State Securities Commission; and, provided further,
that in no event shall such approval be unreasonably withheld. The
Distributor shall not use the name of any Fund in any material
relating to the Distributor in any manner not approved prior thereto
by the Fund; provided, however that the Funds shall approve all uses
of their names which merely refer in accurate terms to the
appointment of the Distributor hereunder or which are required by the
Securities and Exchange Commission or a State Securities Commission;
and, provided further, that in no event shall such approval be
unreasonably withheld.
16. The Distributor shall prepare written reports for
the Board of Trustees/Directors of each Fund on a quarterly basis
showing information concerning services provided and expenses
incurred which are related to this Agreement and such other
information as from time to time shall be reasonably requested by a
Fund's Board of Trustees/Directors.
17. As used in this Agreement, the terms "assignment,"
"interested person," and "majority of the outstanding voting
securities" shall have the meaning given to them by Section 2(a) of
the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order;
provided, however that, in order to obtain financing, the Distributor
may assign to a lending institution the payments due to the
Distributor under this Agreement without it constituting an
assignment of the Agreement.
18. Subject to the provisions of sections 19 and 20
below, this Agreement will remain in effect for two years from the
date of is execution and from year to year thereafter, provided that
the Distributor does not notify a Fund in writing at least sixty (60)
days prior to the expiration date in any year that it does not wish
continuance of the Agreement as to such Fund for an additional year.
19. Termination. As to any particular Fund (or Series
thereof), this Agreement shall automatically terminate in the event
of its assignment and may be terminated at any time without the
payment of any penalty by a Fund or by the Distributor on sixty (60)
days' written notice to the other party. A Fund may effect such
termination by a vote of (i) a majority of the Board of
Trustees/Directors of the Fund, (ii) a majority of the
Trustees/Directors who are not interested persons of the Fund, who
are not parties to this Agreement or interested persons of such
parties, and who have no direct or indirect financial interest in the
operation of the Distribution Plan, in this Agreement or in any
agreement related to such Fund's Distribution Plan (the "Rule 12b-1
Trustees/Directors"), or (iii) a majority of the outstanding voting
securities of the relevant Series.
20. This Agreement shall be submitted for renewal to
the Board of Trustees/Directors of each Fund at least annually and
shall continue in effect only so long as specifically approved at
least annually (i) by a majority vote of the Fund's Board of
Trustees/Directors, and (ii) by the vote of the majority of the Rule
12b-1 Trustees/Directors of the Fund, cast in person at a meeting
called for the purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the date first above written by their
officers thereunto duly authorized.
Attest: EACH FUND LISTED IN THE
ATTACHED SCHEDULE I
By: /s/ Edwidge Saint-Felix By: /s/ William M.Tartikoff
Vice President
Attest: CALVERT DISTRIBUTORS, INC.
By: /s/ Edwidge Saint-Felix By: /s/ Ronald M. Wolfsheimer
Senior Vice President
<PAGE>
SCHEDULE I
The Calvert Fund
Calvert Tax-Free Reserves
Calvert Municipal Fund
Calvert Social Investment Fund
Calvert World Values Fund
Calvert New World Fund
First Variable Rate Fund
<PAGE>
SCHEDULE II
Fees are expressed as a percentage of average annual daily net
assets, and are payable monthly.
Distribution Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund N/A 0.75 0.75 N/A
Calvert Income Fund 0.25 0.75 0.75 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.10 0.75 0.75 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.75 0.75 N/A
Calvert Municipal Fund
National Intermediate Fund N/A 0.75 N/A N/A
California Intermediate Fund N/A 0.75 N/A N/A
Maryland Intermediate Fund N/A 0.75 N/A N/A
Virginia Intermediate Fund N/A 0.75 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.10 0.75 0.75 N/A
Equity Portfolio 0.10 0.75 0.75 N/A
Bond Portfolio 0.10 0.75 0.75 N/A
Managed Index Portfolio N/A 0.75 0.75 N/A
Money Market Portfolio N/A N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.10 0.75 0.75 N/A
International Equity Fund 0.10 0.75 0.75 N/A
Calvert New World Fund
Calvert New Africa Fund N/A 0.75 0.75 N/A
First Variable Rate Fund
Calvert First Gov't
Money Mkt N/A 0.75 N/A N/A
*Distributor reserves the right to waive all or a portion of the
distribution fee from time to time.
DATED: February 1998
<PAGE>
SCHEDULE III
Fees are expressed as a percentage of average annual daily net assets
and are payable monthly.
Service Fee
Class A* Class B Class C Class I
The Calvert Fund
New Vision Small Cap Fund 0.25 0.25 0.25 N/A
Calvert Income Fund 0.25 0.25 0.25 N/A
Calvert Tax-Free Reserves
Money Market Portfolio N/A N/A N/A N/A
Limited-Term Portfolio N/A N/A N/A N/A
Long-Term Portfolio 0.25 0.25 0.25 N/A
California Money Market Port. N/A N/A N/A N/A
Vermont Municipal N/A 0.25 0.25 N/A
Calvert Municipal Fund
National Intermediate Fund 0.25 0.25 N/A N/A
California Intermediate Fund 0.25 0.25 N/A N/A
Maryland Intermediate Fund 0.25 0.25 N/A N/A
Virginia Intermediate Fund 0.25 0.25 N/A N/A
Calvert Social Investment Fund
Managed Growth Portfolio 0.25** 0.25 0.25 N/A
Equity Portfolio 0.25 0.25 0.25 N/A
Bond Portfolio 0.25 0.25 0.25 N/A
Managed Index Portfolio 0.25 0.25 0.25 N/A
Money Market Portfolio 0.25 N/A N/A N/A
Calvert World Values Fund
Capital Accumulation Fund 0.25 0.25 0.25 N/A
International Equity Fund 0.25 0.25 0.25 N/A
Calvert New World Fund
Calvert New Africa Fund 0.25 0.25 0.25 N/A
First Variable Rate Fund
Calvert First Gov't Money Mkt N/A 0.25 N/A N/A
DATED: February 1998
- --------
* Distributor reserves the right to waive all or a portion of the
service fees from time to time. For money market portfolios, Class A
shall refer to Class O, or if the portfolio does not have multiple
classes, then to the portfolio itself.
** Distributor charges the service fee only on assets in excess of $30
million.
Exhibit 10
24(b)(10)
April 30, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Calvert Variable Series, Inc.
(formerly named Acacia Capital Corporation)
File numbers 811-3591, 2-80154
Ladies and Gentlemen:
As Counsel to Calvert Variable Series,
Inc., formerly named Acacia Capital Corporation, it
is my opinion, based upon an examination of the
Articles of Incorporation, Amendments, Restatements
and By-Laws and such other original or photostatic
copies of Fund records, certificates of public
officials, documents, papers, statutes, and
authorities as I deemed necessary to form the basis
of this opinion, that the securities being
registered by this Post-Effective Amendment No. 34
will, when sold, be legally issued, fully paid and
non-assessable.
Consent is hereby given to file this
opinion of counsel with the Securities and Exchange
Commission as an Exhibit to the Fund's
Post-Effective Amendment No. 34 to its Registration
Statement.
Sincerely,
/s/ Susan Walker Bender
Susan Walker Bender
Associate General Counsel
Exhibit 11
24(b)(11)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Calvert Variable
Series, Inc.
We consent to the incorporation by reference in
Post-Effective Amendment No. 34 to the Registration
Statement of Calvert Variable Series, Inc.,on Form N-1A
(File Numbers 2-80154 and 811-3591) of
our reports dated January 30, 1998, on our audit
of the financial statements and financial
highlights of Social Money Market, Social Small Cap,
Social Mid Cap Growth, Social International Equity Portfolio,
and Social Balanced Portfolios), which report
included in the Annual Report to Shareholders for
the year ended December 31, 1997, which is
incorporated by reference in the Registration
Statement. We also consent to the reference to our
Firm under the caption "Independent Accountants and
Custodians" in the Statement of Additional
Information.
COOPERS & LYBRAND, L.L.P.
Baltimore, Maryland
April 23, 1998
Exhibit 10
24(b)(10)
April 30, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Calvert Variable Series, Inc.
(formerly named Acacia Capital Corporation)
File numbers 811-3591, 2-80154
Ladies and Gentlemen:
As Counsel to Calvert Variable Series,
Inc., formerly named Acacia Capital Corporation, it
is my opinion, based upon an examination of the
Articles of Incorporation, Amendments, Restatements
and By-Laws and such other original or photostatic
copies of Fund records, certificates of public
officials, documents, papers, statutes, and
authorities as I deemed necessary to form the basis
of this opinion, that the securities being
registered by this Post-Effective Amendment No. 34
will, when sold, be legally issued, fully paid and
non-assessable.
Consent is hereby given to file this
opinion of counsel with the Securities and Exchange
Commission as an Exhibit to the Fund's
Post-Effective Amendment No. 34 to its Registration
Statement.
Sincerely,
/s/ Susan Walker Bender
Susan Walker Bender
Associate General Counsel
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Duties of the Bank 1
2. Fees and Expenses 3
3. Wire Transfer Operating Guidelines 4
4. Data Access and Proprietary Information 5
5. Indemnification 6
6. Standard of Care 8
7. Covenants of the Transfer Agent and the Bank 8
8. Representations and Warranties of the Bank 9
9. Representations and Warranties of the Transfer Agent 9
10. Termination of Agreement 10
11. Assignment 10
12. Amendment 10
13. Massachusetts Law to Apply 10
14. Force Majeure 11
15. Consequential Damages 11
16. Limitation of Shareholder Liability 11
17. Merger of Agreement 11
18. Survival 11
19. Severability 11
20. Counterparts 12
<PAGE>
SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 15th day of August, 1996, by and
between, Calvert Shareholder Services, Inc. a corporation, having its
principal office and place of business at 4550 Montgomery Ave. Suite
1000N, Bethesda, Maryland, 20814 (the "Transfer Agent"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank");
WHEREAS, the Transfer Agent has been appointed by each of the
investment companies (including each series thereof) listed on Schedule
A (the "Fund(s)"), each an open-end management investment company
registered under the Investment Company Act of 1940, as amended, as
transfer agent, dividend disbursing agent and shareholder servicing
agent in connection with certain activities, and the Transfer Agent has
accepted each such appointment;
WHEREAS, the Transfer Agent has entered into a Transfer Agency
and Service Agreement with each of the Funds (including each series
thereof) listed on Schedule A pursuant to which the Transfer Agent is
responsible for certain transfer agency and dividend disbursing
functions for each Fund's authorized and issued shares of common stock
or shares of beneficial interest as the case may be ("Shares") and each
Fund's shareholders ("Shareholders") and the Transfer Agent is
authorized to subcontract for the performance of its obligations and
duties thereunder in whole or in part with the Bank;
WHEREAS, the Transfer Agent desires to appoint the Bank as its
sub-transfer agent, and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenant herein
contained, the parties hereto agree as follows:
1. Duties of the Bank
1.1 Subject to the terms and conditions set forth in this
Agreement, the Bank shall act as the Transfer Agent's sub-transfer
agent for Shares in connection with any accumulation plan, open
account, dividend reinvestment plan, retirement plan or similar plan
provided to Shareholders and set out in each Fund's currently effective
prospectus and statement of additional information ("Prospectus"),
including without limitation any periodic investment plan or periodic
withdrawal program. As used herein the term '"Shares" means the
authorized and issued shares of common stock, or shares of beneficial
interest, as the case may be, for each Fund listed in Schedule A. In
accordance with procedures established from time to time by agreement
between the Transfer Agent and the Bank, the Bank shall provide the
services listed in this Section 1.
(a) The Bank shall:
(i) receive for acceptance, orders for the
purchase of Shares, and promptly deliver payment and
appropriate documentation thereof to the Custodian of
each Fund authorized pursuant to the Articles of
Incorporation or organization of each Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares in
the appropriate Shareholder account;
(iii) receive for acceptance redemption requests
and redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) in respect to the transactions in items (i),
(ii) and (iii) above, the Bank shall execute
transactions directly with broker-dealers authorized
by each Fund;
(v) at the appropriate time as and when it
receives monies paid to it by the Custodian with
respect to any redemption, pay over or cause to be
paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(vii) prepare and transmit payments for dividends
and distributions declared by each Fund;
(viii) issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of indemnification
satisfactory to the Bank and protecting the Bank and
each Fund, and the Bank at its option, may issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without
such indemnity;
(ix) maintain records of account for and advise
the Transfer Agent and its Shareholders as to the
foregoing; and
(x) Record the issuance of Shares of each Fund
and maintain pursuant to Rule 17Ad-10(e) of the
Securities Exchange Act of 1934 as amended (the
"Exchange Act of 1934") a record of the total number
of Shares of each Fund which are authorized, based
upon data provided to it by each Fund or the Transfer
Agent, and issued and outstanding. The Bank shall
also provide each Fund on a regular basis with the
total number of Shares which are authorized and
issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any
laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of
each Fund or the Transfer Agent.
1.2 (a) For reports, the Bank shall:
(i) maintain all Shareholder accounts, prepare
meeting, proxy, and mailing lists, withhold taxes on
US resident and non-resident alien accounts, prepare
and file US Treasury Department reports required with
respect to interest, dividends and distributions by
federal authorities for all Shareholders, prepare
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in
Shareholder account information.
(b) For blue sky reporting the Bank shall provide a
system that will enable each Fund or the Transfer Agent to
monitor the total number of Shares sold in each State, and
each Fund or the Transfer Agent shall:
(i) identify to the Bank in writing those
transactions and assets to be treated as exempt from
blue sky reporting for each State; and
(ii) verify the establishment of transactions for
each State on the System prior to the activity for
each State, the responsibility of the Bank for each
Fund's blue sky state registration status is solely
limited to the initial establishment of transactions
subject to blue sky compliance by the Fund or the
Transfer Agent and the reporting of such transactions
to the Fund as provided above.
1.3 Per the attached service responsibility schedule procedures as
to who shall provide certain of these services in Section 1 may be
established from time to time by agreement between the Transfer Agent
and the Bank. The Bank may at times perform only a portion of these
services and the Transfer Agent may perform these services on each
Fund's behalf.
1.4 The Bank shall provide additional services on behalf of the
Transfer Agent (i.e., escheat services) that may be agreed upon in
writing between the Bank and the Transfer Agent.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement,
the Transfer Agent agrees to pay the Bank an annual maintenance fee for
each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time
subject to mutual written agreement between the Transfer Agent and the
Bank.
2.2 In addition to the fee paid under Section 2.1 above, the
Transfer Agent agrees to reimburse the Bank for out-of-pocket expenses,
including, but not limited to confirmation production, postage, forms,
telephone, microfilm, microfiche, tabulating proxies, records storage,
or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by
the Bank at the request or with the consent of the Transfer Agent, will
be reimbursed by the Transfer Agent.
2.3 The Transfer Agent agrees to pay all fees and reimbursable
expenses within fifteen days following the receipt of the respective
billing notice. Postage for mailing of dividends, proxies, Fund reports
and other mailings to all shareholder accounts shall be advanced to the
Bank by the Transfer Agent at least seven (7) days prior to the mailing
date of such materials.
3. Wire Transfer Operating Guidelines/Articles 4A of the Uniform
Commercial Code
3.1 The Bank is authorized to promptly debit the appropriate
Transfer Agent account(s) upon the receipt of a payment order in
compliance with the selected security procedure (the "Security
Procedure") chosen for funds transfer and in the amount of money that
the Bank has been instructed to transfer. The Bank shall execute
payment orders in compliance with the Security Procedure and with the
Transfer Agent's instructions on the execution date provided that such
payment order is received by the customary deadline for processing such
a request, unless the payment order specifies a later time. All payment
orders and communications received after this time frame will be deemed
to have been received the next business day.
3.2 The Transfer Agent acknowledges that the Security Procedure it
has designated on the Transfer Agent Selection Form was selected by the
Transfer Agent from security procedures offered by the Bank. The
Transfer Agent shall restrict access to confidential information
relating to the Security Procedure to authorized persons as
communicated to the Bank in writing. The Transfer Agent must notify the
Bank immediately if it has reason to believe unauthorized persons may
have obtained access to such information or of any change in the
Transfer Agent's authorized personnel. The Bank shall verify the
authenticity of all such instructions according to the Security
Procedure.
3.3 The Bank shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
3.4 When a Transfer Agent initiates or receives Automated Clearing
House ("ACH") credit and debit entries pursuant to these guidelines and
the rules of the National Automated Clearing House Association and the
New England Clearing House Association, the Bank will act as an
Originating Depository Financial Institution and/or receiving
Depository Financial Institution, as the case may be, with respect to
such entries. Credits given by the Bank with respect to an ACH credit
entry are provisional until the Bank receives final settlement for such
entry from the Federal Reserve Bank. If the Bank does not receive such
final settlement, the Transfer Agent agrees that the Bank shall receive
a refund of the amount credited to the Transfer Agent in connection
with such entry, and the party making payment to the Transfer Agent via
such entry shall not be deemed to have paid the amount of the entry.
3.5 The Bank reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected
balance in the account to be charged at the time of the Bank's receipt
of such payment order, or (b) if the Bank, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
3.6 The Bank shall use reasonable efforts to act on all authorized
requests to cancel or amend payment orders received if requests are
received in a timely manner affording the Bank reasonable opportunity
to act. However, the Bank assumes no liability if the request for
amendment or cancellation cannot be satisfied.
3.7 The Bank shall assume no responsibility for failure to detect
any erroneous payment order provided that the Bank complies with the
payment order instructions as received and the Bank complies with the
Security Procedure. The Security Procedure is established for the
purpose of authenticating payment orders only and not for the detection
of errors in payment orders.
3.8 The Bank shall assume no responsibility for lost interest with
respect to the retransfer Agentable amount of any unauthorized payment
order unless the Bank is notified of the unauthorized payment order
within thirty (30) days of notification by the Bank of the acceptance
of such payment order. In no event (including failure to execute a
payment order) shall the Bank be liable for special, indirect or
consequential damages, even if advised of the possibility of such
damages.
3.9 Confirmation of Bank's execution of payment orders shall
ordinarily be provided within 24 hours notice of which may be delivered
through the Bank's proprietary information systems, or by facsimile or
call-back. Client must report any objections to the execution of an
order within 30 days.
4. Data Access and Proprietary Information
The Transfer Agent acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and
other information furnished to the Transfer Agent by the Bank are
provided solely in connection with the services rendered under this
Agreement and constitute copyrighted trade secrets or proprietary
information of substantial value to the Bank. Such databases, programs,
formats, designs, techniques and other information are collectively
referred to below as "Proprietary Information". The Transfer Agent
agrees that it shall treat all Proprietary Information as proprietary
to the Bank and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as
expressly permitted hereunder. The Transfer Agent agrees for itself and
its employees and Agents:
(a) to use such programs and databases (i) solely on the
Transfer Agent's computers, or (ii) solely from equipment at
the locations agreed to between the Transfer Agent and the
Bank and (iii) in accordance with the Bank's applicable user
documentation;
(b) to refrain from copying or duplicating in any way
(other than in the normal course of performing processing on
the Transfer Agent's computers) any part of any Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any
programs, data or other information not owned by the Transfer
Agent, and if such access is accidentally obtained, to respect
and safeguard the same Proprietary Information;
(d) to refrain from causing or allowing proprietary
information transmitted from the Bank's computer to the
Transfer Agent's terminal to be retransmitted to any other
computer terminal or other device except as expressly
permitted by the Bank, such permission not to be unreasonably
withheld;
(e) that the Transfer Agent shall have access only to
those authorized transactions as agreed to between the
Transfer Agent and the Bank; and
(f) to honor reasonable written requests made by the Bank
to protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law and under
applicable statutes.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 4.
5. Indemnification
5.1 Except as provided in Section 6, herein, the Bank shall not be
responsible for, and the Transfer Agent shall indemnify and hold the
Bank harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of
or attributable to:
(a) all actions of the Bank or its agent or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct;
(b) the Transfer Agent's lack of good faith, negligence
or willful misconduct;
(c) the reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are given to the Bank or its agents or
subcontractors, and (ii) have been prepared, maintained or
performed by the Transfer Agent or any other person or firm on
behalf of the Transfer Agent including but not limited to any
previous transfer agent or registrar excluding the Bank;
(d) the reliance on, or the carrying out by the Bank or
its agents or subcontractors of any instructions or requests
of the Transfer Agent; and
(e) the offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities laws or regulations of any state that such
Shares be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency
or any state with respect to the offer or sale of such Shares
in such state.
5.2 At any time the Bank may apply to any officer of the Transfer
Agent for instructions, and may consult with legal counsel with respect
to any matter arising in connection with the services to be performed
by the Bank under this Agreement, and the Bank and its Agents or
subcontractors shall not be liable and shall be indemnified by the
Transfer Agent for any action taken or omitted by it in reliance upon
such instructions or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on
behalf of the Transfer Agent, reasonably believed by the Batik as being
in good order and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents
provided the Bank or its Agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the
Transfer Agent, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from
the Transfer Agent. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Transfer Agent, and the proper
countersignature of the Transfer Agent or any former transfer agent or
former registrar, or of a co-transfer agent or co-registrar.
5.3 In order that the indemnification provisions contained in this
Section 5 shall apply, upon the assertion of a claim for which the
Transfer Agent may be required to indemnify the Bank, the Bank shall
promptly notify the Transfer Agent of such assertion, and shall keep
the Transfer Agent advised with respect to all developments concerning
such claim. The Transfer Agent shall have the option to participate
with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no
case confess any claim or make any compromise in any case in which the
Transfer Agent may be required to indemnify the Bank except with the
Transfer Agent's prior written consent.
6. Standard of Care
6.1 The Bank shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of
all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to errors
unless said errors are caused by its negligence, bad faith, or willful
misconduct or that of its employees.
6.2 The Bank shall work with the Transfer Agent to ensure that a
Fund is made whole by the responsible party for any material losses or
damages resulting from errors, material unreconciled items,
carelessness, negligence, bad faith, or willful misconduct by the Bank
or its agents or subcontractors, or that of their employees. Neither
the Bank, its agents or subcontractors, nor the Transfer Agent may
waive full liability for losses or damages based on the above.
6.3 Errors identified as caused by the sub-transfer agent will not
be charged to the Funds in the monthly billing.
7. Covenants of the Transfer Agent and the Bank
7.1 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Transfer Agent for
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for
keeping account of, such certificates, forms and devices.
7.2 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Bank agrees that all
such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of the
Transfer Agent and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered
promptly to the Transfer Agent on and in accordance with its request.
7.3 The Bank and the Transfer Agent agree that all books, records,
information and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not
be voluntarily disclosed to any other person, except as may be required
by law.
7.4 In case of any requests or demands for the inspection of the
Shareholder records of the Transfer Agent, the Bank will endeavor to
notify the Transfer Agent and to secure instructions from an authorized
officer of the Transfer Agent as to such inspection. The Bank reserves
the right, however, to exhibit the Shareholder records to any person
whenever it is advised by its counsel that it may be held liable for
the failure to exhibit the Shareholder records to such person.
8. Representations and Warranties of the Bank
The Bank represents and warrants to the Transfer Agent that:
(a) it is a trust company duly organized and existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
(b) it is duly qualified to carry on its business in The
Commonwealth of Massachusetts;
(c) it is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform this Agreement;
(d) all requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement;
(e) it has and will continue to have access to the
necessary facilities, equipment and personnel to perform its
duties and obligations under this Agreement; and
(f) it is registered as a transfer agent undo Section
17A(c)(2) of the Exchange Act.
9. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Bank that:
(a) it is a corporation duly organized and existing and
in good standing under the laws of the State of Delaware;
(b) it is empowered under applicable laws and by its
Articles of Incorporation and By-Laws to enter into and
perform this Agreement;
(c) all corporate proceedings required by said Articles
of Incorporation and By-Laws have been taken to authorize it
to enter into and perform this Agreement.
(d) it is registered as a transfer agent under Section
17A(c)(2) of the Exchange Act.
10. Termination of Agreement
10.1 This Agreement shall continue for a period of five years (the
"Initial Term") and be renewed or terminated as stated below.
10.2 This Agreement shall terminate upon the termination of the
Transfer Agency Agreement between the Funds and the Transfer Agent.
10.3 This Agreement may be terminated or renewed after the Initial
Term by either party upon ninety (90) days written notice to the other.
10.4 Should the Transfer Agent exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be borne by the Transfer Agent. Additionally,
the Bank reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the
average of three (3) months' fees.
11. Assignment
11.1 Except as provided in Section 11.3 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by
either party without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
11.3 The Bank will, without further consent on the part of the
Transfer Agent, subcontract for the performance hereof with National
Financial Data Services, Inc., a subsidiary of BFDS duly registered as
a transfer agent pursuant to Section 17A(c)(2) provided, however, that
the Bank shall be as fully responsible to the Transfer Agent for the
acts and omissions of any subcontractor as it is for its own acts and
omissions.
12. Amendment
This Agreement may be amended or modified by a written agreement
executed by both parties.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth
of Massachusetts.
14. Force Majeure
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be
liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act
hereunder.
16. Limitations of Shareholder Liability
Each party hereby expressly acknowledges that recourse against the
Funds shall be subject to those limitations provided by governing law
and the Declaration of Trust or Articles of Incorporation of the Funds,
as applicable, and agrees that obligations assumed by the Funds
pursuant to the Transfer Agency Agreement shall be limited in all cases
to the Funds and their respective assets. Each party shall not seek
satisfaction from the Shareholders or any individual Shareholder of the
Funds, nor shall any party seek satisfaction of any obligations from
the Directors\Trustees or any individual Director\Trustee of the Funds.
17. Merger of Agreement
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
18. Survival
All provisions regarding indemnification, warranty, liability, and
limits thereon, and confidentiality and/or protection of proprietary
rights and trade secrets shall survive the termination of this
Agreement.
19. Severability
If any provision or provisions of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or
impaired.
20. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day first written above.
CALVERT SHAREHOLDER SERVICES, INC.
BY: /s/ Karen Becker
TITLE: Vice President
ATTEST: Katherine Stoner
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
TITLE: Executive Vice President
ATTEST: Francine Hayes
<PAGE>
AMENDMENT TO SUB-TRANSFER AGENCY AND SERVICE AGREEMENT
between
CALVERT SHAREHOLDER SERVICES, INC.
and
STATE STREET BANK AND TRUST COMPANY
General Background:
Calvert Shareholder Services, Inc. ("CSSI"), and State Street Bank and
Trust Company ("State Street") entered into a sub-transfer agency and
service agreement ("Agreement") dated August 15, 1996.
For accounting reasons, CSSI desires to amend the Agreement by
assigning the contract for the transfer agent functions (except for
shareholder servicing) to each Calvert Group Fund. CSSI will continue
to be responsible for the shareholder servicing and for any
responsibilities currently shown as Transfer Agent responsibilities in
Fund Service Responsibilities attachment to the Agreement.
The Agreement must be assigned to the Calvert Group Funds for
accounting purposes.
CSSI and State Street must each consent to this assignment.
Changes caused by this assignment:
The current subtransfer agent, National Financial Data Services, Inc.
("NFDS"), will bill each Calvert Group Fund, rather than CSSI, and each
Calvert Group Fund shall pay State Street or its billing agent, NFDS,
all fees and expenses incurred under the Agreement on behalf of each
respective Calvert Group Fund.
NFDS will be shown in each Calvert Group Fund prospectus and statement
of additional information as the Transfer Agent, while CSSI will be
shown as the shareholder servicing agent.
State Street (NFDS) will continue to perform those functions shown in
the Agreement as Bank responsibilities.
CSSI will continue to perform the Transfer Agent responsibilities, as
shown in the Fund Service Responsibilities attachment to the Agreement.
The Assignment:
This Amendment, dated as of the first day of January, 1998, by and
among CSSI and State Street:
Now, Therefore, CSSI and State Street each hereby agree that the
Agreement will be between each Calvert Group Fund and State Street, and
each hereby agrees that the Agreement is so assigned.
In Witness Whereof, CSSI and State Street have caused this Amendment to
be executed by their duly authorized officers, effective as of January
1, 1998.
Calvert Shareholder Services, Inc. State
Street Bank and Trust Company
By: /s/ By: /s/
Name: Karen Becker Name: Ronald E. Logue
Title: Vice President, Operations Title: Executive Vice President
Date: February 18, 1998 Date: February 20, 1998
Acacia Capital Corporation
First Variable Rate Fund
Calvert Tax-Free Reserves
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund By: /s/
Calvert Municipal Fund, Inc. Name: William M. Tartikoff
Calvert World Values Fund, Inc. Title: Senior Vice President and Secretary
Calvert New World Fund, Inc. Date: February 18, 1998
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<GROSS-EXPENSE> 42
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<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 13349
<INVESTMENTS-AT-VALUE> 14651
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<ASSETS-OTHER> 350
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<TOTAL-ASSETS> 15026
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<OTHER-ITEMS-LIABILITIES> 233
<TOTAL-LIABILITIES> 576
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<PAID-IN-CAPITAL-COMMON> 12946
<SHARES-COMMON-STOCK> 757
<SHARES-COMMON-PRIOR> 748
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1302
<NET-ASSETS> 14450
<DIVIDEND-INCOME> 250
<INTEREST-INCOME> 49
<OTHER-INCOME> 0
<EXPENSES-NET> 173
<NET-INVESTMENT-INCOME> 126
<REALIZED-GAINS-CURRENT> 1407
<APPREC-INCREASE-CURRENT> 157
<NET-CHANGE-FROM-OPS> 1690
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 137
<DISTRIBUTIONS-OF-GAINS> 1299
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<NUMBER-OF-SHARES-REDEEMED> 250
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<PER-SHARE-NAV-BEGIN> 18.74
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<PER-SHARE-DIVIDEND> 0.20
<PER-SHARE-DISTRIBUTIONS> 1.91
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<PER-SHARE-NAV-END> 19.10
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000708950
<NAME> CALVERT VARIABLE SERIES, INC. (F/K/A ACACIA CAPITAL CORPORAT
<SERIES>
<NUMBER> 238
<NAME> CALVERT SOCIAL SMALL-CAP GROWTH (F/K/A CRI STRATEGIC GROWTH
<MULTIPLIER> 1000
<S> <C>
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<TOTAL-ASSETS> 4151
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<TOTAL-LIABILITIES> 4146
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<PAID-IN-CAPITAL-COMMON> 4198
<SHARES-COMMON-STOCK> 345
<SHARES-COMMON-PRIOR> 207
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 44
<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-GAINS> 372
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</TABLE>
SERVICING AGREEMENT
This Agency Agreement, effective January 1, 1998, by and
between Calvert Shareholder Services, Inc., a Delaware corporation
having its principal place of business in Bethesda, Maryland
("CSS"), and registered investment companies sponsored by Calvert
Group, Ltd. and its subsidiaries and set forth on Schedule A
("Calvert Group Funds" or "Funds"). The Funds have entered into a
transfer agency and service agreement with the State Street Bank and
Trust of Boston, Massachusetts ("State Street") ("State Street
Agreement").
1. Appointments. The Funds hereby appoints CSS as
servicing agent, agent and shareholder servicing agent for the
Funds, and CSS hereby accepts such appointment and agrees to perform
those duties in accordance with the terms and conditions set forth
in this Agreement.
2. Documentation. The Funds will furnish CSS with all
documents, certificates, contracts, forms, and opinions which CSS,
in its discretion, deems necessary or appropriate in connection with
the proper performance of its duties under this Agreement.
3. Services to be Performed. CSS will be responsible
for telephone servicing functions, system interface with State
Street and oversight of State Street's administering and performing
their duties pursuant to the State Street Agreement. The details of
the operating standards and procedures to be followed will be
determined from time to time by agreement between CSS and the Funds.
4. Recordkeeping and Other Information. CSS will,
commencing on the effective date of this Agreement, to the extent
necessary create and maintain all necessary shareholder accounting
records in accordance with all applicable laws, rules and
regulations, including but not limited to records required by
Section 31(a) of the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules thereunder, as amended from time to time.
All such records will be the property of the Fund and will be
available for inspection and use by such Fund.
5. Audit, Inspection and Visitation. CSS will make
available during regular business hours all records and other data
created and maintained pursuant to this Agreement for reasonable
audit and inspection by the SEC, a Fund or any person retained by a
Fund.
6. Compensation. The Funds will compensate CSS on a
monthly basis for the services performed pursuant to this Agreement,
at the rate of compensation set forth in Schedule A. Out of pocket
expenses incurred by CSS and not included in Schedule A will be
reimbursed to CSS by the Fund, as appropriate; such expenses may
include, but are not limited to, special forms and postage for
mailing the forms. These charges will be payable in full upon
receipt of a billing invoice. In lieu of reimbursing CSS for these
expenses, any Fund may, in its discretion, directly pay the expenses.
7. Use of Names. No Fund will not use the name of CSS
in any prospectus, sales literature or other material relating to
the Fund in any manner without prior approval by CSS; provided,
however, that CSS will approve all uses of its name that merely
refer in accurate terms to its appointment under this Agreement or
that are required by the SEC or a State Securities Commission; and,
provided, further, that in no event will approval be unreasonably
withheld.
8. Security. CSS represents and warrants that, to the
best of its knowledge, the various procedures and systems that CSS
proposes to implement with regard to safeguarding from loss or
damage attributable to fire, theft or any other cause (including
provision for twenty-four hour a day restricted access) the Fund's,
records and other data and CSS's records, data, equipment,
facilities and other property used in the performance of its
obligations under this Agreement are adequate and that it will
implement them in the manner proposed and make such changes from
time to time as in its judgment are required for the secure
performance of obligations under this Agreement.
9. Limitation of Liability. Each Fund will indemnify
and hold CSS harmless against any losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) resulting from any claim, demand, action or suit brought
by any person (including a shareholder naming such Fund as a party)
other than such Fund not resulting from CSS's bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
negligence arising out of, or in connection with, CSS's performance
of its obligations under this Agreement.
To the extent CSS has not acted with bad faith, willful
misfeasance, reckless disregard of its obligations and duties, or
gross negligence, each Fund will also indemnify and hold CSS
harmless against any losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit resulting from the negligence
of such Fund, or CSS's acting upon any instructions reasonably
believed by it to have been executed or communicated by any person
duly authorized by such Fund, or as a result of CSS's acting in
reliance upon advice reasonably believed by CSS to have been given
by counsel for the Fund, or as a result of CSS's acting in reliance
upon any instrument reasonably believed by it to have been genuine
and signed, countersigned or executed by the proper person.
CSS's liability for any and all claims of any kind,
including negligence, for any loss or damage arising out of,
connected with, or resulting from this Agreement, or from the
performance or breach thereof, or from the design, development,
lease, repair, maintenance, operation or use of data processing
systems and the maintenance of a Funds' shareholder account records
as provided for by this Agreement will in the aggregate not exceed
the total of CSS's compensation hereunder for the six months
immediately preceding the discovery of the circumstances giving rise
to such liability.
In no event will CSS be liable for indirect, special, or
consequential damages (even if CSS has been advised of the
possibility of such damages) arising from the obligations assumed
hereunder and the services provided for by this Agreement, including
but not limited to lost profits, loss of use of the shareholder
accounting system, cost of capital, cost of substitute facilities,
programs or services, downtime costs, or claims of shareholders for
such damage.
10. Limitation of Liability of the Fund. CSS
acknowledges that it accepts the limitations upon the liability of
the Funds. CSS agrees that each Fund's obligations under this
Agreement in any case will be limited to such Fund and to its assets
and that CSS will not seek satisfaction of any obligation from the
shareholders of the Fund nor from any director, trustee, officer,
employee or agent of such Fund.
11. Force Majeure. CSS will not be liable for delays or
errors occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military authority,
national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot, or failure of communication or
power supply. In the event of equipment breakdowns beyond its
control, CSS will take reasonable steps to minimize service
interruptions but will have no liability with respect thereto.
12. Amendments. CSS and each Fund will regularly
consult with each other regarding CSS's performance of its
obligations under this Agreement. Any change in a Fund's
registration statements under the Securities Act of 1933, as
amended, or the 1940 Act or in the forms relating to any plan,
program or service offered by the current prospectus which would
require a change in CSS's obligations under this Agreement will be
subject to CSS's approval, which will not be unreasonably withheld.
Neither this Agreement nor any of its provisions may be changed,
waived, discharged, or terminated orally, but only by written
instrument which will make specific reference to this Agreement and
which will be signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
13. Termination. This Agreement will continue in effect
until January 1, 1999, and thereafter as the parties may mutually
agree; provided, however, that this Agreement may be terminated at
any time by either party upon at least sixty days' prior written
notice to the other party; and provided further that this Agreement
may be terminated immediately at any time for cause either by any
Fund or CSS in the event that such cause remains unremedied for no
less than ninety days after receipt of written specification of such
cause. Any such termination will not affect the rights and
obligations of the parties under Paragraphs 9 and 10 hereof. In the
event that a Fund designates a successor to any of CSS's obligations
hereunder, CSS will, at the expense and direction of such Fund,
transfer to such successor all relevant books, records and other
data of such Fund established or maintained by CSS under this
Agreement.
15. Miscellaneous. Each party agrees to perform such
further acts and execute such further documents as are necessary to
effectuate the purposes of this Agreement. This Agreement will be
construed and enforced in accordance with and governed by the laws
of the State of Maryland. The captions in this Agreement are
included for convenience only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
CALVERT GROUP FUNDS
By:/s/ William M. Tartikoff
CALVERT SHAREHOLDER SERVICES, INC.
By:/s/ Ronald M. Wolfsheimer
<PAGE>
SERVICING AGREEMENT
SCHEDULE A
For its services under this Servicing Agreement, Calvert
Shareholder Services, Inc., is entitled to receive from the Calvert
Funds (Except Acacia Capital Corporation) fees as set forth below:
Annual
Transaction
Fund and Portfolio Account Fee* Fee
FIRST VARIABLE RATE FUND
First Variable Rate Fund (d/b/a Calvert First $11.59 $.84
Government Money Market)
Calvert Florida Municipal Intermediate Fund 2.23 .26
CALVERT TAX-FREE RESERVES
Money Market 13.35 .97
Limited-Term 3.37 .42
Long-Term 2.67 .31
California Money Market 12.74 .93
Vermont Municipal 3.40 .39
CALVERT MUNICIPAL FUND, INC
California Intermediate 3.48 .40
National Intermediate 3.31 .38
Maryland Intermediate 4.64 .53
Michigan Intermediate 3.88 .44
New York Intermediate 4.23 .48
Virginia Intermediate 3.35 .38
Arizona Intermediate 2.10 .24
Pennsylvania Intermediate 2.82 .32
THE CALVERT FUND
Income 4.22 .48
New Vision Small Cap 5.90 .67
CALVERT SOCIAL INVESTMENT FUND
Money Market 11.92 .87
Bond 4.85 .55
Managed Growth 4.63 .72
Equity 5.24 .60
CALVERT WORLD VALUES FUND, INC.
International Equity 5.36 .61
Capital Accumulation 6.26 .72
CALVERT NEW WORLD FUND
New Africa Fund 3.91 .45
* Account fees are charged monthly based on the highest number of
non-zero balance accounts outstanding during the month.
Acacia Capital Corporation fee is as follows:
.03% (three basis points) on the first $500 million of average
net assets and .02% (two basis points) over $500 million of average
net assets, minus the fees paid by Acacia Capital Corporation to
State Street Bank and Trust pursuant to the State Street Agreement
(except for out of pocket expenses).
