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. 33 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
Amendment No. 33 XX
Calvert Variable Series, Inc.
Formerly named Acacia Capital Corporation
(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 __ on (date)
pursuant to paragraph (b) pursuant to paragraph (b)
XX 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
<PAGE>
Acacia Capital Corporation
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 Small Cap PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814
(800) 368-2748
The Calvert Social Small Cap Portfolio (formerly, Calvert Responsibly Invested
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 companies1 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."
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.
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.
1 Currently those with a total capitalization of less than $1 billion
at the time of the Fund's initial investment.
<PAGE>
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
DEC. 31, DEC. 31, DEC.31,
1997 1996 1995*
Net asset value, beginning $ $10.94 $10.00
Income from investment
operations
Net investment income (.15) .25
Net realized and unrealized
gain (loss) 3.90 .93
Total from investment operations 3.75 1.18
Distributions from
Net investment income - (.24)
Net realized gains (.04) -
Total distributions (.04) (.24)
Total increase (decrease)
in net asset value 3.71 .94
Net asset value, ending $ $14.65 $10.94
Total return^ 34.33% 9.65%
Ratios to average net assets:
Net investment income (1.60%) .43%(a)
Total expenses + 2.27% 2.17%(a)
Net expenses 1.81% 1.64%(a)
Expenses reimbursed .20% .20%(a)
Portfolio turnover 120% 223%
Average commission rate
paid $ $.0499 NA
Net assets, ending
(in thousands) $ $3,031 $1,209
Number of shares outstanding,
ending (in thousands) 207 111
(a) Annualized
+ This ratio reflects total expenses before reduction for fees paid
indirectly; such reductions are included in the ratio of net expenses.
^ 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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 (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 $ 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.
<PAGE>
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 0.90% of the
average daily net assets of the Portfolio.
Prior to October 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 adjustment
of 0.01%.
For fiscal year 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 Subadvisor a base fee of 0.95%
of the Portfolio's average net assets. In addition, under the circumstances
described below, the Advisor and the Subadvisor could have earned (or had
their fees reduced by) performance fee adjustments based on the extent to
which performance of the Portfolio exceeded or trailed the Russell 2000 Index.
Payment of the performance fee adjustment began April 1, 1996. The specific
adjustments were as follows:
Small Cap: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
30% to less than 60% 0.05%
60% to less than 90% 0.10%
90% or more 0.15%
Small Cap: Subadvisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
30% to less than 60% 0.025%
60% to less than 90% 0.050%
90% or more 0.075%
The performance fee adjustment to the Subadvisor was paid out of the fee the
Advisor receives from the Portfolio.
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 0.20% of net assets per year, [but waived
this fee for fiscal year 1997].
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
%, annualized, of the average net assets of the Portfolio for 1997,
including fees paid indirectly, and %, 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. [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>
CALVERT VARIABLE SERIES,INC.
CALVERT SOCIAL PORTFOLIO
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
Investment Objectives and Policies 1
Investment Restrictions 9
Investment Selection Process 16
Portfolio Turnover 19
Purchase and Redemption of Shares 19
Determination of Net Asset Value 19
Taxes 20
Calculation of Yield and Total Return 21
Investment Advisory Agreement 22
Directors and Officers 24
Method of Distribution 26
Transfer and Shareholder Servicing Agent 26
General Information 26
Reports to Shareholders and Policyholders 27
Additional Information 27
Financial Statements 27
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 ("CS") 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 (formerly
Calvert Responsibly Invested Portfolios) offer investors a choice of five
separate portfolios selected with a concern for the social impact of each
investment: CS (formerly CRI) 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
CS International Equity and Small-Cap Growth may invest all of their
assets in foreign securities, although CS International Equity intends to
invest part of its assets in securities of U.S. issuers, and CS Small-Cap
Growth does not presently intend to invest in foreign securities. CS Money
Market, Balanced and Mid-Cap Growth may each invest up to 25%, and CS Balanced
may invest up to 10% of its assets in the securities of foreign issuers. CS
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
CS 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 CS 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-CS Balanced
The CS 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
CS 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. CS International Equity may invest up to 5%
of its assets in lower quality debt securities, and CS 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
CS 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. CS 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.
To preserve the Portfolio's status as a regulated investment company
under Subchapter M of the Internal Revenue Code, it is the Portfolio's policy
to limit any gains on put or call options and other securities held less than
three months to less than 30% of a Portfolio's annual gross income.
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 CS 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 CS 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.
INVESTMENT RESTRICTIONS
CS 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.
CS 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
CS 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.
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.
CS 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.
CS 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 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.
In making investment selections, each Portfolio Manager determines
and evaluates the appropriate portfolio composition on the basis of asset
prices and the perceived consequences and probabilities of various economic
outcomes that it deems possible. It then evaluates numerous individual
securities as candidates to fulfill the Portfolio's investment objective and
policies. Securities remain candidates for inclusion in the Portfolios only if
their prices and other characteristics indicate that they have the potential
to perform in a way that is representative of their class of securities under
the different economic outcomes considered more probable by the Advisor or
Subadvisor.
Candidates for inclusion in any particular class of assets are then
examined according to the social Criteria. The issuers are classified into
three categories of suitability under the social Criteria. In the first
category are those issuers which exhibit unusual positive accomplishment with
respect to some of the Criteria and do not fail to meet minimum standards with
respect to the remaining Criteria. To the greatest extent possible, investment
selections are made from this group. In the second category are those issuers
which meet minimum standards with respect to all the Criteria but do not
exhibit outstanding accomplishment with respect to any Criteria. This category
includes issuers which may lack an affirmative record of accomplishment in
these areas but which are not known by the Advisor or Subadvisor to violate
any of the social Criteria. The third category under the social Criteria
consists of issuers which flagrantly violate, or have violated, one or more of
those values, for example, a company which repeatedly engages in unfair labor
practices. The Portfolios will not knowingly purchase the securities of
issuers in this third category.
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
within the first and second categories 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 Porfolio, 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 Portfolio's 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 CS Balanced were 163%, 99%, and 905%, respectively. For the same
time periods, the portfolio turnover rates for CS 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 CS Money Market due
to the short maturities of the instruments purchased. Portfolio turnover
should not affect the income or net asset value of CS 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. CS Money Market attempts to maintain a constant net
asset value of $1.00 per share; the net asset values of CS 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, 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 CS 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.
CS 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 CS 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 CS 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 1996 the Portfolios qualified, and in 1997 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
(i) 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, and (ii) derive less than 30% of its gross income in each taxable
year from gains (without deduction for losses) from the sale or other
disposition of stock or securities held less than three months. 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
CS Money Market: Yield
From time to time CS 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 CS 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. CS 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, CS Money Market's
yield was __% and its effective yield was __%.
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.
CS Balanced, International Equity, Mid-Cap Growth and Small-Cap Growth: Total
Return and Other Quotations
CS 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 $1,000; T = total return; n =
number of years; and ERV = the ending redeemable value of a hypothetical
$1,000 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 Series for the periods indicated are as follows:
Periods Ended
December 31, 1997 SEC Average Annual Return
CS Balanced
One Year %
Five Years %
Ten Years %
CS International Equity
One Year %
From Inception %
(June 30, 1992)
CS Mid-Cap Growth
One Year %
Five Years %
From Inception %
(July 16, 1991)
CS Small-Cap Growth
One Year %
From Inception %
(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 Investment Advisory agreement between the Fund's original
investment advisor, Acacia Investment Management Corporation, and the Fund
regarding CS Balanced was approved by the Fund's Board of Directors, including
a majority of the Directors who were not interested persons of Acacia
Investment Management Corporation, and by the shareholder of the Portfolio.
The Investment Advisory Agreement was also approved on July 9, 1986, by Acacia
National pursuant to the instructions of variable annuity and variable life
insurance policyowners. On February 29, 1988, Calvert Asset Management
Company, Inc. acquired all the assets and liabilities of Acacia Investment
Management Corporation, including the rights and duties under the Advisory
Agreement, pursuant to merger (see "Investment Advisor"). An amendment to the
Investment Agreement adding CS Money Market and International Equity were
presented to the Fund's Board for approval in May 1992. Unless earlier
terminated as described below, 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 fee described in the Prospectus will be
accrued daily and allocated to the various Portfolios on the basis of the size
of the respective Portfolio, as determined each day. There is no assurance
that the Portfolio will reach a net asset level high enough to realize
reduction to each Portfolio regardless of size on a "uniform percentage"
basis. Determination of the portion of the net assets of each Portfolio to
which a reduced rate is applicable is made by multiplying the net assets of
that Portfolio by the "uniform percentage," which is derived by dividing the
amount of the combined assets of all Portfolios to which such rate applies by
such combined assets.
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,
respectively, CS Balanced paid CAM fees of $610,216, $963,829, and $__ ,
respectively. For 1995, 1996, and 1997, respectively, CS Money Market paid
investment adviser fees of $27,591, $24,348, and $__ , respectively. For 1995,
CS International Equity paid CAM $93,418, and received expense reimbursements
from CAM of $36,720. In 1996, CS International Equity paid CAM $122,600, and
received expense reimbursements from CAM of $27,740. In 1997, CS International
Equity paid CAM $__, and received expense reimbursements from CAM of $__. For
1995, 1996, and 1997, CS Mid-Cap Growth paid investment advisory fees of
$55,003, $126,374, and $__. For fiscal year 1996 and 1997, CS Small-Cap Growth
paid CAM $28,564 and $__, and received expense reimbursements from CAM of
$3,794 and $__.
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 CS
International Equity, CS Mid-Cap Growth, and CS 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, 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 form 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.
*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.
ARTHUR J. PUGH, Director. Mr. Pugh also 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 has been a partner in the
law firm of Reasoner, Davis & Fox since 1956. Address: 888 17th Street, N.W.,
Suite 800, Washington, DC 20006. DOB: 06/25/25.
FRANK H. BLATZ, JR., Esq., Director. Mr. Blatz is a partner in the
law firm of Abrams, Blatz, Gran, Hendricks, & Reina, P.A. He is also a
director/trustee of The Calvert Fund, Calvert Cash Reserves d/b/a Money
Management Plus, First Variable Rate Fund, Calvert Tax-Free Reserves, and
Calvert Municipal Fund, Inc. Address: 900 Oak Tree Road, South Plainfield, New
Jersey 07080. DOB: 10/29/35.
*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., co-chair of the Board of Directors
of Calvert World Values Fund, Inc., and a trustee/director of each of the
investment companies in the Calvert Group of Funds. DOB: 08/09/52.
RONALD M. WOLFSHEIMER, Treasurer. Mr. Wolfsheimer is an officer of
each of the Calvert Group Funds. He is also Senior Vice President and
Controller of Calvert Group, Ltd. and its affiliated companies. Mr.
Wolfsheimer is Vice President and Treasurer of Calvert-Sloan Advisers, L.L.C.
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., and is an officer
of Acacia National Life Insurance Company.
RENO J. MARTINI, Senior Vice President. Mr. Martini is 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 officer of Calvert-Sloan Advisers, L.L.C.
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.
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. DOB: 9/7/68.
The address of directors and officers, unless otherwise noted, is
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Trustees and
officers of the Fund as a group own less than 1% of the Fund's outstanding
shares. Trustees 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 $__ by CS Money Market, $__ by CS Balanced, $__ by CS
Equity, $__ by CS Mid-Cap Growth and $__ by CS 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 as "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, and will ensure that there is no duplication of advisory
fees.
Director Compensation Table - Fiscal Year 1997
Aggregate Pension or Retirement Total
Compensation Benefits Accrued as part Compensation
from Fund for of Fund Expenses* from Registrant
Name of Director service as and Fund Complex
Director paid to
Directors**
Frank H. Blatz, Jr. $ $ $
Charles E. Diehl $ $ $
Arthur J. Pugh $ $ $
South Trimble, III $ $ $
*Messrs. Blatz, Diehl, Pugh and Trimble have chosen to defer a portion of
their compensation. As of December 31, 1997, total deferred compensation,
including dividends and capital appreciation, was $__, $__, $__, and $__,
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 receive a fee from the
Fund of $15,000 per year. However, in the past CDI has waived this fee. 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., 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.
receives 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 fifty 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 April 2, 1998, the following shareholder owned of record % or
more of Calvert Variable Series:
Name and Address % of Ownership
%
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 Fund'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:
Not applicable
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, filed herewith as Exhibit 99.B1A.
(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.
(7) Deferred Compensation Agreement, incorporated
by reference to Post-Effective Agreement No. 31.
(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.
(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
Registrant is controlled by its Board of Directors. Members of
the Board may also serve on a Board of Trustees/Directors with other
registered investment companies, including First Variable Rate Fund,
Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert
Cash Reserves, The Calvert Fund, Calvert Municipal Fund, Inc., Calvert
New World Fund, Inc., and Calvert World Values Fund, Inc.
Insurance Companies that invest in the Fund will vote Fund
shares they hold in accordance with instructions received from variable
annuity contractholders and variable life insurance policyowners.
Item 26. Number of Holders of Securities
Number of Record-
Holders as of
Title of Series December 31, 1997
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 Calvert Variable Series, Inc. 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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
Calvert Variable Series, Inc.
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
------------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter also underwrites
shares of First Variable Rate Fund for Government Income,
Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert
Cash Reserves, The Calvert Fund, Calvert Municipal Fund, Inc.,
Calvert World Values Fund, Inc., and Calvert New World Fund, Inc.
(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
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
All management-related service contracts are discussed in Part
A or B of this Registration Statement.
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 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 13th
day of February, 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 2/13/98
Barbara J. Krumsiek Director (Principal Executive Officer)
__________**____________ Principal Accounting 2/13/98
Ronald M. Wolfsheimer Officer
__________**____________ Director 2/13/98
Charles E. Diehl
__________**____________ Director 2/13/98
Arthur J. Pugh
__________**____________ Director 2/13/98
South Trimble, III
__________**____________ Director 2/13/98
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-23
24(b)(10) Form of Opinion and Consent of Counsel
Ex-24 Power of Attorney
Ex99.B1A Articles of Amendment to change name from Acacia Capital
Corporation to Calvert Variable Series, Inc., and to change names of series.
Exhibit 10
24(b)(10)
February 13, 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., it is my opinion,
based upon an examination of the Articles of Incorporation 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. 33 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. 33 to its Registration Statement.
Sincerely,
/s/ Ivy Wafford Duke
Ivy Wafford Duke
Assistant Counsel
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan
Walker Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true
and lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do all
such things in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Fund with any government
agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Arthur J. Pugh South Trimble, III
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan
Walker Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true
and lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do all
such things in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Fund with any government
agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
South Trimble, III Arthur J. Pugh
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan
Walker Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true
and lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do all
such things in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Fund with any government
agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Frank H. Blatz, Jr. Charles E. Diehl
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan
Walker Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true
and lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do all
such things in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Fund with any government
agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Officer of Acacia Capital Corporation (the
"Fund"), hereby constitute William M. Tartikoff, Susan Walker Bender,
Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true and lawful
attorneys, with full power to each of them, to sign for me and in my name in
the appropriate capacities, all registration statements and amendments filed
by the Fund with any federal or state agency, and to do all such things in my
name and behalf necessary for registering and maintaining registration or
exemptions from registration of the Fund with any government agency in any
jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Edwidge Saint-Felix Ronald M. Wolfsheimer
Witness Name of Officer
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff, Susan
Walker Bender, Katherine Stoner, Lisa Crossley, and Ivy Wafford Duke my true
and lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do all
such things in my name and behalf necessary for registering and maintaining
registration or exemptions from registration of the Fund with any government
agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things in my
name and behalf to comply with the provisions of all federal, state and
foreign laws, regulations, and policy pronouncements affecting the Fund,
including, but not limited to, the Securities Act of 1933, the Securities
Exchange Act of 1934, the Investment Company Act of 1940, the Investment
Advisers Act of 1940, the Internal Revenue Code of 1986, and all state laws
regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in connection
with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the Fund, the
signing is automatically ratified and confirmed by me by virtue of this Power
of Attorney.
WITNESS my hand on the date set forth below.
May 7, 1997
Date /Signature/
Frank H. Blatz, Jr. Barbara J. Krumsiek
Witness Name of Director
ARTICLES OF AMENDMENT
FIRST: Acacia Capital Corporation (the "Corporation") is a Maryland
corporation whose mailing address is 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland, 20814.
SECOND: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
THIRD: In accordance with Section 2-605(a)(4) of the Corporations
and Associations Article of the Laws of the State of Maryland, the Corporation
does hereby change the name of the Corporation and its series as shown below,
effective January 1, 1998:
Old Corporate Name: Acacia Capital Corporation
New Corporate Name: Calvert Variable Series, Inc.
Old Series Names New Series Names
CRI Balanced Portfolio Calvert Social Balanced
CRI Money Market Portfolio Calvert Social Money Market
CRI Global Equity Portfolio Calvert Social International Equity
CRI Capital Accumulation Portfolio Calvert Social Mid-Cap Growth
CRI Strategic Growth Portfolio Calvert Social Small-Cap Growth
FOURTH: A majority of the entire Board of Directors expressly approved the
amendment to change the names above.
FIFTH: This amendment is limited to a change expressly permitted to
be made without action by the stockholders, under Section 2-605 of the
Corporations and Associations Article of the Laws of the State of Maryland.
IN WITNESS WHEREOF, Acacia Capital Corporation has caused these
Articles of Amendment to be signed in its name and on its behalf by its
Chairman of the Board of Directors on this 18th day of December, 1997. Under
penalties of perjury, the matters and facts set forth herein are true in all
material respects.
Acacia Capital Corporation
Acknowledgment:_____________________
Barbara J. Krumsiek
Chairman of the Board of Directors
ATTEST:____________________________
William M. Tartikoff
Secretary
