SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
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Calvert Variable Series, Inc.
(formerly known as Acacia Capital Corporation)
(Name of Registrant as Specified in Its Charter)
William M. Tartikoff, Esq.
Secretary
(Name of Person Filing Proxy Statement if other than the Registrant)
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<PAGE>
December 28, 1998
Dear Policyholder:
I am writing to inform you of the upcoming special meeting for shareholders of
the Calvert Variable Series, Inc. Social Money Market, Social Balanced, Social
Mid Cap Growth, Social International Equity and Social Small Cap Portfolios.
A summary of the proposals and the formal Notice of Meeting appears on the
next few pages, followed by the detailed proxy statement. Please take a few
minutes to read the enclosed material and vote on these important issues. The
Board of Directors, including myself, believe these changes are in your best
interest and that of your Portfolio.
Regardless of the number of units you own, it is important that you take the
time to read the enclosed proxy materials, and vote on the issues as soon as
you can. You may vote by mail, by telephone, through the internet, by
facsimile machine, or in person. If you do not cast your vote, you may be
contacted by our proxy solicitation service, Shareholder Communications
Corporation, or by a Calvert Group employee. All shareholders benefit from the
speedy return of proxy votes.
I appreciate the time you will take to review these important matters. If we
may be of any assistance or if you have any questions about the proxy issues,
please call us at (800) 368-2748. Our hearing-impaired shareholders may call
(800) 541-1524 for a TDD connection.
Sincerely,
Barbara J. Krumsiek
President and Chief Executive Officer
Calvert Group, Ltd.
<PAGE>
Quick Overview of Proposals
................................................................................
Proposal 1
................................................................................
To elect the Board of Directors.
Affected Portfolios: All
Reason for the Proposal
It has been several years since the Board members have been voted on by
shareholders. Recently, a new member has been added; thus, it is appropriate
for the shareholders to vote on the complete slate.
................................................................................
Proposal 2
................................................................................
To approve amended fundamental investment restrictions to: (a) delete
restrictions that are no longer required to be fundamental due to changes in
state laws or which otherwise need not be fundamental; and (b) revise the
language of those restrictions that are still required to be fundamental.
Affected portfolios: All
Reason for Proposal
Current investment restrictions (and policies, for some of the Portfolios) are
more restrictive than Federal law. A shareholder vote is required to change
the restrictions and policies because they are considered fundamental. Calvert
Asset Management Company, Inc. ("CAMCO") has recommended to the Board that the
investment restrictions of the Portfolios be changed to conform to, but not be
more restrictive than, federal law, and has recommended changing the policies
so that they can be altered by the Board without a shareholder vote
(nonfundamental policies or restrictions). This would give each of the
Portfolios more flexibility and may help each Portfolio to more easily adapt
to different investment environments.
................................................................................
Proposal 3
................................................................................
To approve a new investment advisory agreement with the investment advisor,
CAMCO.
Affected Portfolios: All
Reason for Proposal
CAMCO is a subsidiary of Calvert Group, Ltd. which is owned by Acacia Mutual
Life Insurance Company ("Acacia"). Acacia plans to merge with another
insurance company, Ameritas Insurance Holding Company. Because of the merger
of the ultimate parent company, the investment advisory contract is being
submitted for approval by shareholders. CAMCO is also proposing:
................................................................................
1. the deletion of references to administrative services (because they are
performed by a different subsidiary); and
................................................................................
................................................................................
2. the elimination of fees based on the performance of a fund compared to a
particular index.
................................................................................
................................................................................
Proposal 4
................................................................................
To approve a new investment subadvisory agreement between CAMCO and the
investment subadvisor, NCM Capital Management Group, Inc.
Affected Portfolios: CVS Social Balanced
Reason for Proposal
In addition to the merger described in Proposal 3, the ownership of NCM
Capital is changing. CAMCO is also proposing the elimination of fees based on
the performance of CVS Social Balanced compared to a particular index.
Therefore, according to Federal law, the subadvisory agreement must be
approved by shareholders.
<PAGE>
................................................................................
Proposal 5
................................................................................
To approve a new investment subadvisory agreement between CAMCO and the
investment subadvisor, Brown Capital Management, Inc.
Affected Portfolios: CVS Social Mid Cap Growth
Reason for Proposal
In addition to the merger described in Proposal 3, CAMCO is proposing the
elimination of fees based on the performance of CVS Social Mid Cap Growth
compared to a particular index. Therefore, according to Federal law, the
subadvisory agreement must be approved by shareholders.
................................................................................
Proposal 6
................................................................................
To authorize CVS and/or CAMCO to enter into a new and/or materially amended
existing investment subadvisory agreement with a subadvisor in the future
without having to first obtain shareholder approval.
Affected Portfolios: CVS Social Balanced, CVS Social Mid Cap Growth, CVS
Social International Equity and CVS Social Small Cap
Reason for Proposal
Under current Federal law, as discussed above, shareholders must approve a
subadvisory agreement with an investment subadvisor. CAMCO has received an
exemption from this law so that it can enter into new subadvisory contracts,
with Board approval, provided it then informs shareholders. This exemption
will only go into effect as to a Portfolio if shareholders have authorized its
use.
................................................................................
Proposal 7
................................................................................
To approve a revised investment objective which is more reflective of current
economic times.
Affected Portfolios: CVS Social Balanced
Reason for Proposal
CAMCO believes that the current investment objective's reference to inflation
is outdated. Therefore, with shareholder approval, the objective will change
from "to achieve a total return above the rate of inflation" to "to achieve a
competitive total return."
................................................................................
Proposal 8
................................................................................
To change the par value of the common stock from $1.00 to $0.01.
Affected Portfolios: All
Reason for Proposal
For the purposes of computing capitalization fees, the State of Maryland
requires that an arbitrary par value be assigned to the stock issued by CVS.
The par value is used for state fee computations and fund accounting purposes
only, and does not in any way reflect the net asset value or price per share
of the portfolios. CVS would save money on fees at the state level, if
shareholders agree to change the par value.
................................................................................
Proposal 9
................................................................................
To ratify the Board's selection of auditors, PricewaterhouseCoopers, L.L.P.
Affected Portfolios: All
Reason for Proposal
Periodically, shareholders will be asked to approve independent auditors for
Calvert Funds. The auditors review certain reports and documents filed with
federal and state governments, and audit financial statements to ensure that
the Portfolios conform with generally accepted accounting principles.
<PAGE>
Calvert Variable Series, Inc.
Social Money Market Portfolio
Social Balanced Portfolio
Social Mid Cap Growth Portfolio
Social International Equity Portfolio
Social Small Cap Portfolio
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on February 24, 1999
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders of the Calvert
Variable Series, Inc. ("CVS") will be held in the Tenth Floor Conference Room
of Calvert Group, Ltd., Air Rights North Tower, 4550 Montgomery Avenue, Suite
1000N, Bethesda, Maryland at 2:30 p.m. on Wednesday, February 24, 1999 for the
following purposes:
I. For each Portfolio: To elect the Board of Directors.
II. For each Portfolio: To approve amended fundamental investment
restrictions to: (a) delete restrictions that are no longer required
to be fundamental due to changes in state laws or which otherwise
need not be fundamental; and (b) revise the language of those
restrictions that are still required to be fundamental.
III. For each Portfolio: To approve a new investment advisory agreement
with the investment advisor, Calvert Asset Management Company, Inc.
("CAMCO"), identical to the current investment advisory agreement in
all material respects, except that it:
a) does not provide for a performance fee adjustment for CVS Social
Balanced or CVS Social Mid Cap Growth; and
b) for CVS Social Money Market and CVS Social Balanced, will no
longer have references to administrative services because they are
performed by a different subsidiary and should therefore be covered
in a separate contract.
IV. CVS Social Balanced: To approve a new investment subadvisory
agreement between CAMCO and the investment subadvisor, NCM Capital
Management Group, Inc. This agreement is identical to the current
investment subadvisory agreement in all material respects, except
that it does not provide for a performance fee adjustment.
V. CVS Social Mid Cap Growth: To approve a new investment subadvisory
agreement with the new investment subadvisor, Brown Capital
Management, Inc., otherwise identical to the current investment
subadvisory agreement in all material respects, except that it does
not provide for a performance fee adjustment.
VI. CVS Social Balanced, CVS Social Mid Cap Growth, CVS Social
International Equity and CVS Social Small Cap: To authorize CVS
and/or CAMCO to enter into a new and/or materially amended existing
investment subadvisory agreement with a subadvisor in the future
without having to first obtain shareholder approval.
VII. CVS Social Balanced: To approve a revised investment objective which
is more reflective of current economic times.
VIII. For each Portfolio: To change the par value of common stock from
$1.00 to $0.01.
IX. For each Portfolio: To ratify the Board's selection of auditors,
PricewaterhouseCoopers, L.L.P.
X. To transact any other business that may properly come before the
Special Meeting or any adjournment or adjournments thereof.
By Order of the Directors,
William M. Tartikoff, Esq.
Vice President
<PAGE>
Calvert Variable Series, Inc.
Social Money Market Portfolio
Social Balanced Portfolio
Social Mid Cap Growth Portfolio
Social International Equity Portfolio
Social Small Cap Portfolio
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
PROXY STATEMENT
December 31, 1998
We are sending this proxy statement to you to ask you to approve several
important changes. You may vote by mail, by telephone, by facsimile, through a
secure internet website, or in person. Your vote is important. Please call
800-368-2748 if you have questions about this proxy.
This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of the Calvert Variable Series, Inc. (the "Board") to
be used at the Special Meeting of Shareholders. The Special Meeting will be
held in the Tenth Floor Conference Room of Calvert Group, Ltd., Air Rights
North Tower, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland at 2:30
p.m. on Wednesday, February 24, 1999, or at such later time or date made
necessary by adjournment for the purpose set forth in the Notice of Meeting.
The approximate date on which this proxy statement and form of proxy are first
being mailed to shareholders is December 31, 1998.
The Social Money Market, Social Balanced, Social Mid Cap Growth, Social
International Equity, and Social Small Cap Portfolios are each a Portfolio of
the Calvert Variable Series, Inc. ("CVS"), an open-end management investment
company incorporated in Maryland on September 27, 1982. Prior to January 1,
1998, CVS was known as Acacia Capital Corporation. CVS is authorized to issue
three hundred twenty-five million shares of stock, at a par value of $1.00 per
share. Issued shares are fully paid and non-assessable and have no preemptive
or conversion rights. Shareholder voting rights are not cumulative.
Summary of Proposals
1. For each Portfolio: To elect the Board of Directors.
2. For each Portfolio: To approve amended fundamental investment
restrictions to: (a) delete restrictions that are no longer required to
be fundamental due to changes in state laws or which otherwise need not
be fundamental; and (b) revise the language of those restrictions that
are still required to be fundamental.
3. For each Portfolio: To approve a new investment advisory agreement with
the investment advisor, Calvert Asset Management Company, Inc. ("CAMCO").
4. CVS Social Balanced: To approve a new investment subadvisory agreement
between CAMCO and the investment subadvisor, NCM Capital Management
Group, Inc.
5. CVS Social Mid Cap Growth: To approve a new investment subadvisory
agreement with the new investment subadvisor, Brown Capital Management,
Inc.
6. CVS Social Balanced, CVS Social Mid Cap Growth, CVS Social International
Equity and CVS Social Small Cap: To authorize CVS and/or CAMCO to enter
into a new and/or materially amended existing investment subadvisory
agreement with a subadvisor in the future without having to first obtain
shareholder approval.
7. CVS Social Balanced: To approve a revised investment objective which is
more reflective of current economic times.
8. For each Portfolio: To change the par value of common stock from $1.00
to $0.01.
9. For each Portfolio: To ratify the Board's selection of auditors,
PricewaterhouseCoopers, L.L.P.
PROPOSALS
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Proposal 1
- --------------------------------------------------------------------------------
For each Portfolio: To elect the Board of Directors.
Discussion
The purpose of this proposal is to elect the currently serving members of the
Board of Directors. All of the nominees listed below have served as directors
continuously since originally elected or appointed. Each of the nominees
elected will serve as a Director until the next meeting called for the purpose
of electing a Board of Director and until a successor is elected and
qualified, or until death, retirement, resignation or removal.
{This will be formatted in tabular format by the typesetter}
Name
Date of Birth, Principal Occupation
& Year Elected During Last Five Years
or Appointed and Other Directorships
Frank H. Blatz, Jr., Esq.
DOB: 10/29/35
1982
Mr. Blatz is a partner in the law firm of Snevily, Ely, Williams & Blatz. He
was formerly a partner with Abrams, Blatz, Gran, Hendricks & Reina, P.A.
Charles E. Diehl
DOB: 10/13/22
1983
Mr. Diehl is a self-employed consultant and is Vice President and Treasurer
Emeritus of the George Washington University. He has retired from University
Support Services, Inc. of Herndon, Virginia. Formerly, he was a Director of
Acacia Mutual Life Insurance Company, and is currently a Director of Servus
Financial Corporation.
<PAGE>
*Barbara J. Krumsiek
DOB: 8/9/52
1997
Ms. Krumsiek serves as President, Chief Executive Officer and Vice Chairman
of Calvert Group, Ltd. and as an officer and director of each of its
affiliated companies. She is a director of Calvert-Sloan Advisers, L.L.C.,
and a trustee/director of each of the investment companies in the Calvert
Group of Funds. Ms. Krumsiek is the President of each of the investment
companies, except for Calvert Social Investment Fund, of which she is the
Senior Vice President. Prior to joining Calvert Group, Ms. Krumsiek served as
a Managing Director of Alliance Fund Distributors, Inc.
Arthur J. Pugh
DOB: 9/24/37
1983
Mr. Pugh is a Director of Calvert Variable Series, Inc., and serves as a
director of Acacia Federal Savings Bank.
South Trimble, III
DOB: 06/25/25
1987
Mr. Trimble is special counsel to and formerly was a partner in the law firm
of Reasoner & Fox.
Executive officers of the Fund not mentioned above include William Tartikoff,
Esq., age 51, Vice President and Secretary, Ronald Wolfsheimer, age 51,
Treasurer, Reno J. Martini, age 48, Senior Vice President, and Daniel Hayes,
age 48, Vice President. Each has been an executive officer for more than five
years.
Directors marked with an *, above, are "interested persons" of the Funds,
under the Investment Company Act of 1940, because of their affiliation with
the Funds, the investment advisor, or the parent company. As a group, the
Directors and officers own less than 1% of each Fund's outstanding shares.
The Board met four (4) times during 1998. All Directors attended at least 75%
of the meetings held. Directors of the Fund not affiliated with CAMCO or any
other Calvert Board presently receive an annual fee of $3,000 for service as a
member of the Board of Directors of the Calvert Group of Funds, and a fee of
$750 for each regular Board meeting attended.
Directors of the Fund who are not affiliated with the Fund's Advisor may elect
to defer receipt of all or a percentage of their fees and invest them in any
fund in the Calvert Family of Funds through the Directors 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.
Director Compensation Table
Fiscal Year 1997 Aggregate Pension or Total Compensation
Compensation Retirement from Benefits
(unaudited numbers) from Registrant Accrued as Registrant and Fund
for Service part of Complex paid to
as Director of Registrant Director **
Expenses*
Name of Director
Frank H. Blatz, Jr. $3,000 $3,000 $46,000
Charles E. Diehl $3,000 $3,000 $44,500
Arthur J. Pugh $3,000 $3,000 $48,250
South Trimble, III $6,750 $6,750 $8,250
*Messrs. Blatz, Diehl and Pugh have chosen to defer a portion of their
compensation. As of December 31, 1997, total deferred compensation, including
dividends and capital appreciation, was $555,901.79, $545,259.10 and
$187,735.55, for each director, respectively.
**As of December 31, 1997. The Fund Complex consists of nine (9) registered
investment companies.
Recommendation
The Board recommends that you vote FOR each of the Directors listed above.
- --------------------------------------------------------------------------------
Proposal 2
For each Portfolio: To approve amended fundamental investment restrictions to:
(a) delete restrictions that are no longer required to be fundamental due to
changes in state laws or which otherwise need not be fundamental; and (b)
revise the language of those restrictions that are still required to be
fundamental.
- --------------------------------------------------------------------------------
Discussion
The federal and state laws governing mutual funds have been changed numerous
times in the last several years. The Prospectus and Statement of Additional
Information ("SAI") for each Portfolio contain investment restrictions that
are more restrictive than the current law. For example, Rule 2a-7 under the
1940 Act (the "Rule") states what types of money market securities can be
purchased for a money market fund. All money market funds must comply with the
Rule. However, the investment restrictions for the CVS Social Money Market
Portfolio are currently even more stringent than the Rule. This restricts the
CVS Social Money Market Portfolio's investments and could potentially reduce
its yield. The CVS Social Money Market Portfolio does not intend to change its
investment style but plans to operate under Rule 2a-7, as may be periodically
amended.
Also in the past few years, many state securities laws have changed or have
been superseded by federal securities laws. Each Portfolio, however, must
still comply with the old fundamental restrictions, unless you vote to change
these restrictions to be in line with the changed regulatory landscape.
As explained above, federal law in many cases controls what a mutual fund can
purchase. Federal law also specifies certain investment restrictions that must
be fundamental and cannot be changed without a shareholder vote. The
policies/restrictions that are required by law to be fundamental are those
concerning diversification, borrowing money, the issuance of senior
securities, underwriting of securities issued by other persons, the purchase
and sale of real estate and commodities, the policy about making loans to
other persons, and the concentration of investments in a particular industry
or group of industries.
CAMCO has recommended to the Board that the investment restrictions of the
Portfolios be changed to conform to, but not be more restrictive than, the
federal law. That way, if the federal law changes, the Portfolio restrictions
can change accordingly. This gives each of the Portfolios more flexibility and
may help each Portfolio to more easily adapt to different investment
environments. This is expected to enhance the management of a non-money market
Portfolio in a changing investment environment and will increase investment
management opportunities. Further, it is not anticipated that these proposed
changes will substantially affect the way any of the Portfolios are currently
managed.
The current investment restrictions for the Social Money Market, Social
Balanced, Social Mid Cap Growth, Social International Equity, and Social Small
Cap Portfolios, excerpted from the SAI, are shown below. After careful
consideration, and with the advice of outside counsel, the Board has approved
several changes, subject to shareholder approval:
...............................................................................
Current Fundamental Restriction
1. The Portfolios may not, 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).
Recommended Change
Management recommends that this investment restriction be changed to a
standard recitation concerning the Portfolios' diversification policy.
Proposed Fundamental Investment Restriction
Each Portfolio may not make any investment inconsistent with its
classification as a diversified investment company under the 1940 Act.
...............................................................................
Current Fundamental Restriction
2. The Portfolios may not 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, and there is no limitation with respect to
investments in money market instruments of banks.(Additionally for CVS Social
Balanced: For purposes of this restriction, gas, gas transmission, electric,
water, and telephone utilities each will be considered a separate industry).
Recommended Change
Management recommends that this be changed to a more accurate standard policy
concerning concentration as shown immediately below.
Proposed Fundamental Investment Restriction
The Portfolios may not concentrate investments in the securities of issuers
primarily engaged in any particular industry (other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities and
repurchase agreements secured thereby), or, for CVS Social Money Market,
domestic bank money market instruments.
...............................................................................
Current Fundamental Restriction for CVS Social Money Market, CVS Social Mid
Cap Growth and CVS Social International Equity
3. The Portfolios may not purchase more than 10% of the outstanding
voting securities of any issuer. In addition, the Portfolios may not in the
aggregate purchase more than 10% of the outstanding voting securities of any
issuer.
Current Fundamental Restriction for CVS Social Balanced
The Portfolio may not 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.
Recommended Change
Management recommends that these investment restrictions be deleted. The
restriction expresses a part of the diversification rules, which are
addressed above in the Proposed Fundamental Investment Restriction number 1.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
4. The Portfolios may not 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 a 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.
Current Fundamental Restriction for CVS Social Balanced
CVS Social Balanced may not make loans, except 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), and except that it may lend its securities (up to 10% of
its total assets), provided that such loan shall be made in accordance with
the guidelines set forth in the SAI.
Recommended Change
Management proposes to modify this restriction by adding standard language
used for other Calvert Group Funds, as shown immediately below.
Proposed Fundamental Investment Restriction
The Portfolios may not make loans other than as permitted by law, through the
purchase of money market instruments and repurchase agreements or by the
purchase of bonds, debentures or other debt securities. The purchase by a
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.
...............................................................................
Current Fundamental Restriction
5. The Portfolios may not underwrite securities of other issuers except
insofar as a 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.
Recommended Change
Management proposes to modify this restriction by adding standard language
used for other Calvert Group Funds, as shown immediately below.
Proposed Fundamental Investment Restriction (with the above change)
The Portfolios may not underwrite the securities of other issuers, except as
permitted by the Board of Trustees/Directors within applicable law, and except
to the extent that in connection with the disposition of its portfolio
securities, a Portfolio may be deemed to be an underwriter.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
6. The Portfolio may not purchase from or sell to any of the Portfolios'
officers or Trustees, or firms of which any of them are members, any
securities (other than capital stock of the Portfolios), but such persons or
firms may act as brokers for the Portfolios for customary commissions.
Recommended Change
Management recommends that this investment restriction be deleted. It was
originally required by one or more states, but no longer applies due to
changes in federal laws which supersede such state-imposed restrictions.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
7. The Portfolios may not borrow money, except from banks for temporary
or emergency purposes and then only in an amount up to 10% (for CVS Social
Money Market and CVS Social International Equity) or 33 1/3% (for CVS Social
Mid Cap Growth and CVS Social Small Cap) 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.
Current Fundamental Restriction for CVS Social Balanced
The Portfolio may not 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.
Recommended Change
Management recommends that the 10% limitation be changed to 33 1/3% for
maximum flexibility. The Board also recommends the use of the standard
borrowing policy of other Calvert Group Funds. As part of the standardization,
the last sentence above is proposed to be deleted. If shareholders approve the
change to this restriction, the Board intends to adopt a new nonfundamental
operating policy: No Portfolio intends to make any purchases of securities if
borrowing exceeds 5% of its total assets. A nonfundamental policy can be
changed by the Board at any time without a shareholder vote.
Proposed Fundamental Investment Restriction (with the above changes)
The Portfolios may not issue senior securities or borrow money, except from
banks for temporary or emergency purposes and then only in an amount up to 33
1/3% of the value of the Portfolio's total assets or as permitted by law and
except by engaging in reverse repurchase agreements, where allowed. In order
to secure any permitted borrowings and reverse repurchase agreements under
this section, the Portfolio may pledge, mortgage or hypothecate its assets.
...............................................................................
Current Fundamental Restriction
8. The Portfolio may not 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.
Recommended Change
Management recommends that this restriction be deleted since it is not
required to be fundamental. If shareholders approve deleting this restriction,
the Board intends to adopt a new nonfundamental policy concerning short sales.
A nonfundamental policy can be changed by the Board at any time without a
shareholder vote.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
9. The Portfolio may not 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.
Current Fundamental Restriction for CVS Social Balanced
The Portfolio may not write, purchase or sell puts, calls or combinations
thereof, except in connection with when-issued securities.
Recommended Change
Management recommends that this restriction be deleted since it is not
required to be fundamental. If shareholders approve deleting this restriction,
the Board intends to adopt a new nonfundamental policy imposing substantially
the same limitations as the deleted restriction. A nonfundamental policy can
be changed by the Board at any time without a shareholder vote.
...............................................................................
Current Fundamental Restriction
10. The Portfolios may not invest for the purpose of exercising control
or management of another issuer.
Recommended Change
Management recommends that this investment restriction be deleted. It was
originally required by one or more states, but no longer applies due to
changes in federal laws which supersede such state-imposed restrictions.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
11. The Portfolios may not invest in commodities, commodities futures,
real estate interests, oil, gas, or mineral exploration: 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.
Current Fundamental Restriction for CVS Social Balanced
The Portfolio may not invest in commodities, commodities futures, real estate
interests, oil, gas, or mineral exploration: 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.
Recommended Change
Management recommends that this be changed to the standard policy concerning
commodities for other Calvert Group Funds.
Proposed Fundamental Investment Restriction
The Portfolios may not invest directly in commodities 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 the
Mid Cap, International Equity, and Small Cap Portfolios may purchase or sell
stock index futures, foreign currency futures, interest rate futures and
options thereon.
...............................................................................
Current Fundamental Restriction (for all Portfolios except CVS Social
Balanced)
12. The Portfolio may not purchase or retain securities issued by
investment companies except to the extent permitted by the Investment Company
Act of 1940, as amended, and in connection with a trustee's/director's
deferred compensation plan.
Current Fundamental Restriction for CVS Social Balanced
The Portfolio may not 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.
Recommended Change
Management recommends that this investment restriction be deleted. It was
originally required by one or more states, but no longer applies due to
changes in federal laws which supersede such state-imposed restrictions.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
13. The Portfolio may not 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.
Recommended Change
Management recommends that this restriction be deleted since it is not
required to be fundamental. If shareholders approve deleting this restriction,
the Board intends to adopt a new nonfundamental policy imposing substantially
the same limitations as the deleted restriction. A nonfundamental policy can
be changed by the Board at any time without a shareholder vote.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
14. The Portfolio may not invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days and other illiquid
investments.
Recommended Change
Management recommends that this restriction be deleted since it is not
required to be fundamental. If shareholders approve deleting this restriction,
the Board intends to adopt a new nonfundamental policy imposing substantially
the same limitations as the deleted restriction except to increase the
restriction to 15%. A nonfundamental policy can be changed by the Board at any
time without a shareholder vote.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
15. The Portfolio may not 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.
Recommended Change
Management recommends that this investment restriction be deleted. It was
originally required by one or more states, but no longer applies due to
changes in federal laws which supersede such state-imposed restrictions.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
16. The Portfolio may not 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.
Recommended Change
Management recommends that this investment restriction be deleted. It was
originally required by one or more states, but no longer applies due to
changes in federal laws which supersede such state-imposed restrictions.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
17. The Portfolio may not 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."
Recommended Change
Management recommends that this investment restriction be deleted. The
restriction expresses a part of the lending policy, which is addressed above
in the Proposed Fundamental Investment Restriction number 4.
...............................................................................
Current Fundamental Restriction (for CVS Social Balanced only)
18. The Portfolio may not 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 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.
Recommended Change
Management recommends that this investment restriction be deleted. The
restriction expresses a part of the borrowing policy, which is addressed
above in the Proposed Fundamental Investment Restriction number 7.
Recommendation
The Board has voted to change or delete each of these fundamental investment
restrictions as shown above and recommends that you vote FOR the changes or
deletions of each of these revised fundamental investment restrictions for the
Portfolios.
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Proposal 3
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For each Portfolio: To approve a new investment advisory agreement with the
investment advisor, CAMCO.
- --------------------------------------------------------------------------------
Discussion
The following circumstances affect the terms of the current investment
advisory agreement (the "Current Advisory Agreement"); therefore, Management
proposes that a new advisory agreement be executed:
CAMCO is an indirectly wholly-owned subsidiary of Acacia Mutual Life
Insurance Company ("Acacia"), which subject to certain conditions, plans
to merge with Ameritas Insurance Holding Company ("Ameritas") (such
planned transaction is hereafter referred to as the "Merger"). The
surviving company will be named Ameritas Acacia Mutual Holding Company.
Although the Merger could be considered a change in control of CAMCO,
terminating the Current Advisory Agreements, the Board has received
assurances that it does not cause such a change. Nonetheless, in order to
remove any possible doubt as to the status of the Current Advisory
Agreements, the Board has approved, and recommends that shareholders
approve, one standard investment advisory agreement between CVS and CAMCO
for each of the CVS Portfolios (the "New Advisory Agreement").
CVS Social Mid Cap Growth, Social International Equity and Social Small
Cap: Management has determined that the administrative services, and the
provision of compensation for such services, are best provided for in a
separate administrative services agreement. Accordingly, it is proposed
to remove the provision of these services (and compensation therefor)
from the advisory agreement.
CVS Social Balanced and Social Mid Cap Growth: Management proposes to
eliminate the performance fee adjustment so that compensation is based
solely on average net assets.
Despite the importance of the proposed changes, CAMCO anticipates there will
be no effect on the actual investment management operations with respect to
CVS.
The Current Advisory Agreements
Under the Current Advisory Agreement, CAMCO provides a continuous investment
program for CVS, subject to the control of the Board. The Current Advisory
Agreement was executed on June 30, 1992, pursuant to shareholder approval. The
Board, including a majority of the Independent Directors, has approved the
continuance of the Current Advisory Agreement on an annual basis, as part of
its annual contract review.
The terms of the Current Advisory Agreement between CAMCO and CVS
include:
1. The services to be provided to CVS (manage Portfolio assets,
place orders for securities trades and perform other
administrative services);
2. General obligations of CAMCO (manage the Portfolios in
accordance with Portfolio guidelines and restrictions, under the
direction of the Board);
3. Expenses of the Portfolios (advisory, legal, audit,
registration, taxes, printing and postage, mailing prospectuses);
4. Liability issues (CAMCO is not liable for actions unless it is
grossly negligent, acts in bad faith, or in reckless disregard
of its duties); and
5. The fees to be paid to CAMCO, based on average net assets:
CVS Social Money Market 0.50%
CVS Social Balanced 0.70%
CVS Social Mid Cap Growth 0.80%
CVS Social International Equity 1.00%
CVS Small Cap Growth 0.90%
The Current Advisory Agreement provides for automatic termination unless its
continuance is approved at least annually by (i) a majority of the Board,
including those who are not parties to the Agreement or interested persons,
within the meaning of the Investment Company Act of 1940 (the "1940 Act"), of
any such party ("Independent Directors"), and (ii) the holders of a majority
of the outstanding shares of CVS. The Current Advisory Agreement terminates
automatically upon its assignment and is terminable at any time, without
penalty, by the Board, CAMCO, or the holders of a majority of the outstanding
shares of CVS, upon 60 days' prior written notice.
The New Advisory Agreement
The terms and conditions of the New Advisory Agreement are identical to the
terms and conditions of the Current Advisory Agreement, except as to effective
and termination dates, deletion of the provision of administrative services as
discussed under B. below, and elimination of the performance fee adjustment as
discussed under C.
If approved by shareholders, the New Advisory Agreement will continue until
January 1, 2001 unless terminated earlier by either party, and provided that
at least annually thereafter its continuance is approved in the same manner as
prescribed in the Current Advisory Agreement.
Calvert Asset Management Company, Inc.
CAMCO has investment advisory contracts with eight investment companies: First
Variable Rate Fund for Government Income, Calvert Tax-Free Reserves, Calvert
Cash Reserves, Calvert Social Investment Fund, The Calvert Fund, Calvert
Municipal Fund, Inc., Calvert World Values Fund, Inc., and Calvert Variable
Series, Inc. Each has a substantially similar investment advisory contract
with CAMCO, though the actual fees and breakpoints may vary.
Reno J. Martini, Senior Vice President and Chief Investment Officer for CAMCO,
has primary responsibility for rendering investment advisory services to CVS.
Mr. Martini oversees the investment management of all Calvert Funds. It is
anticipated that each of the directors and officers of CAMCO will hold the
same position with CAMCO after the Merger. The address of the directors and
officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland, 20814,
unless otherwise noted. The directors and executive officers of CAMCO are
listed below:
Charles T. Nason, Director. Chairman, President and Chief Executive
Officer of The Acacia Group, 7315 Wisconsin Avenue, Bethesda, Maryland
20814.
*Barbara J. Krumsiek, Director. President of CAMCO and President, Chief
Executive Officer and Vice Chairman of Calvert Group, Ltd.
David R. Rochat, Director and Senior Vice President.
Robert-John H. Sands, Director. Senior Vice President and General
Counsel, The Acacia Group, 7315 Wisconsin Avenue, Bethesda, Maryland
20814.
*Reno J. Martini, Senior Vice President and Chief Investment Officer.
*Ronald M. Wolfsheimer, Senior Vice President and Chief Financial
Officer.
*William M. Tartikoff, Senior Vice President, Secretary, and General
Counsel.
Matthew D. Gelfand, Senior Vice President.
*Daniel K. Hayes, Vice President.
John Nichols, Vice President.
Persons marked with a *, above, are also Directors and/or officers of CVS.
A. The Merger of CAMCO's parent company
CAMCO is an indirect, wholly-owned subsidiary of Acacia. On September 14,
1998, seeking a strategic affiliation to create a stronger, more diversified
insurance and financial services enterprise, Acacia and Ameritas entered into
an agreement of merger which provides for the merger of their respective
mutual holding companies.
Acacia and its related subsidiaries offer traditional life insurance and
annuity products, as well as variable products, special banking products and
services, and a variety of mutual funds, and operate a full service financial
planning broker dealer, while Ameritas and its subsidiaries specialize in
variable life, fixed and variable annuities, group dental, low-load insurance
products and 401(k) and other investment products. This strategic affiliation
is expected to create a stronger, more diversified insurance and financial
services enterprise, with almost $11 billion in assets under management,
insurance assets of $6 billion, $21 billion life insurance in-force, over $750
million in revenues and approximately $750 million in equity/capital.
The Merger is subject to the approval of the members of both Acacia and
Ameritas and is further conditioned upon approval by the appropriate federal
and state regulatory authorities.
CAMCO will not be directly affected by the Merger and will remain a
wholly-owned subsidiary of Calvert Group, Ltd. As a result of the Merger,
however, CAMCO will become an indirect, wholly-owned subsidiary of Ameritas
Acacia Mutual Holding Company.
Acacia's current address is 7315 Wisconsin Avenue, Bethesda, Maryland 20814.
After consummation of the Merger, Ameritas Acacia Mutual Holding Company's
principal place of business will be 5900 "O" Street, Lincoln, Nebraska
68501-1889.
B. CVS Social Money Market and Social Balanced: Administrative Services
Management has taken the opportunity to re-examine the specific provisions for
services under the Current Advisory Agreement. In doing so, Management has
determined that it is better to delete the provision of administrative duties
and leave intact the investment advisory services to be provided by CAMCO.
Administrative services are not currently provided by CAMCO, but are provided
by CVS's Administrator, Calvert Administrative Services Company, ("CASC").
Thus, this change will more accurately reflect the services which CAMCO
provides. As a result of administrative services being provided to CVS under a
separate agreement, the investment advisory fees will be reduced so that the
proposed advisory fee under the New Advisory Agreement and the new
administrative fee will equal the current advisory fees. The Board has
approved a new Administrative Services contract with CASC. No shareholder
approval is required for that contract, and the fees may be changed by the
Board without shareholder approval.
CVS Social Money Market
Current Advisory Fee: 0.50%
Proposed Advisory Fee: 0.30%
New Administrative Fee: 0.20%
For the fiscal year ended December 31, 1997, CVS Social Money Market paid
$30,309 in advisory fees to CAMCO. For that same time period, under the New
Advisory Agreement, CAMCO would have received $18,185 in advisory fees, while
CASC would have received $12,124 in administrative services fees.
CVS Social Balanced- see also Performance Fees, below
Current Advisory Fee: 0.70%
Proposed Advisory Fee: 0.425%
New Administrative Fee: 0.275%
For the fiscal year ended December 31, 1997, CVS Social Balanced paid
$1,339,036 in advisory fees to CAMCO. For that same time period, under the New
Advisory Agreement, CAMCO would have received $812,986 in advisory fees, while
CASC would have received $526,050 in administrative services fees.
C. CVS Social Balanced and Social Mid Cap Growth: Performance Fees
Management has reviewed the effect of performance fees and found that a
performance fee does not effectively serve its intended goals. The performance
fee structure does not improve the capacity to manage the investment process
nor does it serve as an effective incentive tool for investment management. In
fact, there is a low level of current demand for this feature from investment
professionals. Thus, Management recommends the elimination of the performance
fee and adoption of an asset-based fee for compensating investment advisors
and investment subadvisors.
CVS Social Balanced
With respect to CVS Social Balanced, under the Current Advisory Agreement,
CAMCO is paid a base fee at an annual rate of 0.70%, based on the average
daily net assets of CVS Social Balanced. The base fee is subject to
adjustment, based on the extent to which performance exceeded or trailed the
Lipper Balanced Funds Index as follows:
Performance versus Performance Fee
the Index Adjustment
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
For the fiscal year ended December 31, 1997, the base fee was decreased by
$10,249 because the performance of the Portfolio trailed the Index. Including
the administrative services costs, CAMCO would have received $1,349,285 in
advisory fees had the performance fee not been in effect for that same time
period.
CVS Social Mid Cap Growth
With respect to CVS Social Mid Cap Growth, under the Current Advisory
Agreement, CAMCO is paid a base fee at an annual rate of 0.80%, based on the
average daily net assets of CVS. The fee is subject to adjustment, based on
the extent to which performance exceeded or trailed the Standard & Poor's
("S&P's) 400 Mid-Cap Index as follows:
Performance versus Performance Fee
the Index Adjustment
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
For the fiscal year ended December 31, 1997, the base fee was decreased by
$888 because the performance of the Portfolio trailed the Index. Including the
administrative services costs, CAMCO would have received $179,941 in advisory
fees had the performance fee not been in effect for that same time period.
Recommendation
Based on evaluation of the materials presented, the Board has determined that
the changes reflected in the proposed New Advisory Agreement are in the best
interests of the shareholders of CVS. The Board based this determination
primarily upon the following, giving equal weight to all the factors:
(a) After a review of all materials related to the Merger, the Board
determined that it was satisfied that CAMCO's services to CVS would not
be adversely affected by the Merger and that such Merger would not impose
an unfair burden on CVS;
(b) In evaluating the materials presented concerning administrative
services, the Board carefully considered the corporate structure,
advisory expenses, and anticipated overall expenses, and reviewed the
proposed form of a new Investment Advisory Agreement and form of
Administrative Services Agreement; and
(c) In recommending the elimination of the performance adjustment structure,
the Directors considered the nature and quality of the advisory services
rendered, giving due consideration to the negligible impact of the
performance adjustment on portfolio performance.
Thus, the Board, including a majority of the Independent Directors, approved
the New Advisory Agreement (subject to approval by shareholders) and
authorized submission of the New Advisory Agreement to shareholders for
approval. Accordingly, the Board recommends that shareholders vote FOR the
proposed New Advisory Agreement.
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Proposal 4
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CVS Social Balanced only: To approve a new investment subadvisory agreement
between CAMCO and CVS Social Balanced's investment subadvisor, NCM Capital
Management Group, Inc. ("NCM Capital").
Discussion
NCM Capital serves as CVS Social Balanced's investment subadvisor, pursuant to
an investment subadvisory agreement with CVS Social Balanced's investment
advisor, CAMCO (the "Current Subadvisory Agreement"). NCM Capital is a
subsidiary of Sloan Financial Group, Inc. ("Sloan Financial"). As discussed
further below, pursuant to ongoing negotiations, the ownership interests in
Sloan Financial are expected to be redistributed (such redistribution is
referred to herein as the "Transaction").
The Board has been advised that the contemplated Transaction is anticipated to
have no effect on NCM Capital's investment management operations. For purposes
of the 1940 Act, the Transaction would cause a change of control in NCM
Capital that would constitute an assignment of the Current Subadvisory
Agreement and thereby cause its automatic termination. The Board has approved,
and recommends that the shareholders of CVS Social Balanced approve, a new
investment subadvisory agreement between CAMCO and NCM Capital (the "New
Subadvisory Agreement") that eliminates the performance fee adjustment as
discussed below.
The Current Subadvisory Agreement
Under the Current Subadvisory Agreement, NCM Capital provides a continuous
investment program for CVS Social Balanced, pursuant to the directions of
CAMCO, which is subject to the control of the Board.
As compensation for NCM Capital's services under the Current Subadvisory
Agreement, CAMCO pays NCM Capital a subadvisory fee consisting of an annual
base fee of 0.25% of 50% of CVS Social Balanced's average daily net assets,
plus or minus a performance adjustment of up to 0.15%. The performance
adjustment is added to or subtracted from the base fee based on the extent to
which performance exceeded or trailed the Lipper Balanced Funds Index.
The Current Subadvisory Agreement provides that absent willful misfeasance,
bad faith, gross negligence, or reckless disregard, the Subadvisor shall not
be subject to liability to CAMCO, CVS Social Balanced or to any shareholder of
CVS Social Balanced for any act or omission in the course of performing its
duties thereunder. The Current Subadvisory Agreement provides for automatic
termination unless at least annually, its continuance is approved by (i) a
majority of the Board, including a majority of those who are not parties to
the Agreement or interested persons, within the meaning of the 1940 Act, of
any such party ("Independent Directors"), and (ii) the holders of a majority
of the outstanding shares of CVS Social Balanced. The Current Subadvisory
Agreement terminates automatically upon its assignment and is terminable at
any time, without penalty, by the Board, CAMCO, or the holders of a majority
of the outstanding shares of CVS Social Balanced upon not less than 60 days'
written notice. The Current Subadvisory Agreement may also be terminated
without penalty upon not less than 90 days' written notice by NCM Capital.
The Current Subadvisory Agreement was executed on February 13, 1995, pursuant
to shareholder approval. The Board, including a majority of the Independent
Directors, has annually approved the continuance of the Current Subadvisory
Agreement as part of its contract review.
The New Subadvisory Agreement
The terms and conditions of the New Subadvisory Agreement are identical to the
terms and conditions of the Current Subadvisory Agreement, except as to
effective and termination dates and the elimination of the performance fee
adjustment as discussed below. If approved by shareholders, the New
Subadvisory Agreement will continue until January 1, 2001 unless terminated
earlier by either party, and provided that its continuance is approved at
least annually in the same manner as prescribed in the Current Subadvisory
Agreement.
NCM Capital Management Group, Inc.
NCM Capital was founded by Maceo K. Sloan in 1986 as a subsidiary of North
Carolina Mutual Life Insurance Company, which was established by his ancestors
in 1898. NCM Capital is one of the oldest and largest minority-owned financial
institutions in the country and provides products in equity, fixed income and
balanced portfolio management. NCM Capital has been an employee-owned
subsidiary of Sloan Financial since 1991, with 60 percent co-owned by Mr.
Sloan and Justin E. Beckett, Executive Vice President and a Director of NCM
Capital.
It is anticipated that each of the directors and officers of NCM Capital will
hold the same position after consummation of the Transaction. The address of
the directors and officers is 103 West Main Street, Fourth Floor, Durham,
North Carolina 27701, unless otherwise noted. The directors and executive
officers of NCM Capital are listed below:
Maceo K. Sloan, CFA, Chairman, President and Chief Executive Officer.
Justin F. Beckett, Executive Vice President.
Edith H. Noel, Senior Vice President, Corporate Secretary/Treasurer.
Clifford Mpare, Executive Vice President, Co-Chief Investment Officer.
Benjamin Blakney, Executive Vice President, Chief Operating Officer.
Tammie F. Coley, Senior Vice President, Chief Financial Officer.
Victoria A. Treadwell, Senior Vice President, Director of Client
Services.
Michael J. Ferraro, Vice President, Director of Trading.
Reginald V. Weaver, Assistant Vice President.
Deborah P. Lane, Vice President.
Linda J. Jordan, Vice President.
Leander Baker, Vice President.
Betty L. Bynum, Assistant Vice President.
Change in Control of NCM Capital
Sloan Financial is the parent company of NCM Capital. In 1991, American
Express Asset Management Group Inc. (formerly, IDS Advisory Group) ("American
Express") purchased a 40% interest in Sloan Financial. At present, the equity
distribution profile of Sloan Financial is 43% owned by Mr. Sloan, 40% owned
by American Express, and 17% owned by Mr. Beckett.
Sloan Financial, also headquartered in Durham, North Carolina, is the nation's
largest minority-owned financial services firm. Presently, Sloan Financial
contains two investment management subsidiaries, NCM Capital and New Africa
Advisers, Inc. As of December 1, 1998, within its family of companies, Sloan
Financial manages assets of approximately $3 billion, and the firm's client
base includes many of the nation's largest employee benefit, foundation, and
endowment plans.
Pursuant to ongoing negotiations, Messrs. Sloan and Beckett plan to purchase
American Express's 40% interest in Sloan Financial in a transaction that will
be implemented in two separate phases. Phase I will consist of a 14.9%
assignment of American Express's interest to Messrs. Sloan and Beckett. This
assignment will adjust the equity distribution profile of Sloan Financial so
that Mr. Sloan will hold a 53.7% interest, American Express will hold a 25.1%
interest and Mr. Beckett will hold a 21.2% interest.
In Phase I, the assignment preserves American Express's position as a
controlling person of Sloan Financial. Phase I is expected to be completed
prior to year-end 1998. In Phase II, American Express will sell its remaining
25.1% interest to Messrs. Sloan and Beckett so that Mr. Sloan will hold a 72%
interest and Mr. Beckett will hold 28% in Sloan Financial. Phase II is
expected to be completed immediately following shareholder approval of the New
Subadvisory Agreement.
Since American Express will no longer have a controlling interest in Sloan
Financial at the completion of Phase II, shareholder approval ratifying the
Transaction is required before it is finalized.
Elimination of Performance Fees
After review, Management has found that the performance fee structure does not
effectively serve its intended goals. The performance fee does not improve the
capacity to manage the investment process nor does it serve as an effective
incentive tool for investment management. In fact, there is a low level of
current demand for this feature from investment professionals. Thus,
Management recommends the elimination of the performance fee and adoption of
an asset-based fee for compensating investment advisors and subadvisors.
For the fiscal year ended December 31, 1997, $240,932.41 in fees (without any
performance adjustment) were paid by CAMCO to NCM Capital for CVS Social
Balanced. NCM Capital would have received the same fees had the proposed fee
been in effect for that time period.
Recommendation
Based on evaluation of the materials presented, the Board has determined that
the changes reflected in the proposed New Subadvisory Agreement are in the
best interests of the shareholders of CVS Social Balanced. The Board based
this determination primarily upon the following, giving equal weights to the
factors:
(a) After a review of all materials related to the Transaction, the
Board determined that it was satisfied that CAMCO's services to CVS
would not be affected by the Transaction and that such Transaction
would not impose an unfair burden on CVS; and
(b) In recommending the elimination of the performance adjustment
structure, the Directors considered the nature and quality of the
advisory services rendered, giving due consideration to the
negligible impact of the performance adjustment on portfolio
performance.
Thus, the Board, including a majority of the Independent Directors, approved
the New Subadvisory Agreement, (subject to approval by CVS Social Balanced
shareholders) and authorized submission of the New Subadvisory Agreement to
shareholders for approval. Accordingly, the Board recommends that shareholders
vote FOR the proposed New Subadvisory Agreement.
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Proposal 5
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CVS Social Mid Cap Growth Portfolio only: To approve a new investment
subadvisory agreement between CAMCO and the investment subadvisor, Brown
Capital Management, Inc. ("Brown Capital").
Discussion
Brown Capital serves as the investment subadvisor to the CVS Social Mid Cap
Growth Portfolio pursuant to an investment subadvisory agreement with CAMCO
(the "Current Subadvisory Agreement"). Due to the ownership changes discussed
in Proposal 3 and the proposed elimination of the fees based on the
performance of CVS Social Mid Cap Growth compared to a particular index, the
shareholders are being asked to vote on a new investment subadvisory agreement
(the "New Subadvisory Agreement").
The Current Subadvisory Agreement
Under the Current Subadvisory Agreement, Brown Capital provides a continuous
investment program for CVS Social Mid Cap Growth, pursuant to the directions
of CAMCO, which is subject to the control of the Board.
As compensation for Brown Capital's services under the Current Subadvisory
Agreement, CAMCO pays Brown Capital a subadvisory fee consisting of an annual
base fee of 0.25% of average daily net assets, plus or minus a performance
adjustment of up to 0.10%. The performance adjustment is added to or
subtracted from the base fee based on the extent to which performance exceeded
or trailed the Index which is a blend of 60% of the Russell 1000 Growth Index
and 40% of the Russell 2000 Index.
For the fiscal year ended December 31, 1997, subadvisory fees of $43,640.68
were paid by CAMCO to Brown Capital. As proposed, the new subadvisory fee will
be a base rate of 0.25% of the average daily net assets, with no performance
fee adjustment.
After review, Management has found that the performance fee structure does not
effectively serve its intended goals. The performance fee does not improve the
capacity to manage the investment process nor does it serve as an effective
incentive tool for investment management. In fact, there is a low level of
current demand for this feature from investment professionals. Thus,
Management recommends the elimination of the performance fee and adoption of
an asset-based fee for compensating investment advisors and subadvisors.
The Current Subadvisory Agreement provides that absent willful misfeasance,
bad faith, gross negligence, or reckless disregard, the Subadvisor shall not
be subject to liability to CAMCO, the Fund or to any shareholder for any act
or omission in the course of performing its duties thereunder. The Current
Subadvisory Agreement provides for automatic termination unless, at least
annually, its continuance is approved by (i) a majority of the Board,
including a majority of those who are not parties to the Agreement or
interested persons, within the meaning of the 1940 Act, of any such party
("Independent Directors"), and (ii) the holders of a majority of the
outstanding shares of CVS Social Mid Cap Growth. The Current Subadvisory
Agreement terminates automatically upon its assignment and is terminable at
any time, without penalty, by the Board, CAMCO, Brown Capital, or the holders
of a majority of the outstanding shares of CVS Social Mid Cap Growth upon not
less than 60 days' written notice.
The Current Subadvisory Agreement was executed on November 22, 1994, pursuant
to shareholder approval. The Board, including a majority of the Independent
Directors, has approved the continuance of the Current Subadvisory Agreement
on an annual basis as part of its annual contract review.
Brown Capital Management, Inc.
Brown has managed part of the equity investments of the Portfolio since 1996.
The firm has over $3.6 billion in assets under management. It uses a bottom-up
approach that incorporates growth-adjusted price earnings, concentrating on
mid-/large-cap growth stocks.
Eddie C. Brown, founder and President of Brown Capital Management, Inc., heads
the portfolio management team for the Portfolio. He brings over 24 years of
management experience to the Portfolio, and has held positions with T. Rowe
Price Associates and Irwing Management Company. Mr. Brown is a frequent
panelist on "Wall Street Week with Louis Rukeyser" and is a member of the Wall
Street Week Hall of Fame.
Brown currently provides investment subadvisory services to one other mutual
fund with an investment objective similar to that of the CVS Social Balanced
Portfolio: The Nottingham Investment Trust II, The Brown Capital Management
Balanced Fund, with $5.9 million in assets under management. Brown receives a
fee of 0.65% of net assets; however, Brown is currently voluntarily waiving
all or a portion of its fee by reimbursing a portion of the Fund's operating
expenses (which includes the Management Fee).
The address of the directors and officers of Brown is 809 Cathedral Street,
Baltimore, Maryland 21201. The directors and executive officers are listed
below:
Eddie C. Brown, President.
Keith Lee, Vice President.
Robert Hall, Senior Vice President.
Stephon Jackson, Vice President.
Tonya Ingersol, Director of Marketing.
Noreen Frost, Vice President.
The New Subadvisory Agreement
The terms and conditions of the New Subadvisory Agreement are identical to the
terms and conditions of the Current Subadvisory Agreement, except as to
effective and termination dates and the elimination of the performance fee
adjustment as discussed above. If approved by shareholders, the New
Subadvisory Agreement will continue until January 1, 2001 unless terminated
earlier by either party, and provided that its continuance is approved at
least annually in the same manner as prescribed in the Current Subadvisory
Agreement.
Recommendation
Based on evaluation of the materials presented, the Board has determined that
the changes reflected in the proposed New Subadvisory Agreement are in the
best interests of the shareholders of CVS Social Mid Cap Growth. The Board
based this determination primarily upon the following, giving equal weights to
the factors:
(a) After a review of all materials related to the Merger, the Board
determined that it was satisfied that CAMCO's services to CVS would
not be affected by the Merger and that such Merger would not impose
an unfair burden on CVS; and
(b) In recommending the elimination of the performance adjustment
structure, the Board considered the nature and quality of the
advisory services rendered, giving due consideration to the
negligible impact of the performance adjustment on portfolio
performance.
Thus, the Board, including a majority of the Independent Directors, approved
the New Subadvisory Agreement, (subject to approval by the CVS Social Mid Cap
Growth shareholders) and authorized submission of the New Subadvisory
Agreement to shareholders for approval. Accordingly, the Board recommends that
CVS Social Mid Cap Growth shareholders vote FOR the proposed New Subadvisory
Agreement.
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Proposal 6
- --------------------------------------------------------------------------------
CVS Social Balanced, CVS Social Mid Cap Growth, CVS Social International
Equity and CVS Social Small Cap: To authorize CVS and/or CAMCO to enter into a
new and/or materially amended existing investment subadvisory agreement with a
subadvisor in the future without having to first obtain shareholder approval.
Discussion
The SEC has issued an Order to CVS permitting it to enter into a new and/or to
materially amend an investment subadvisory agreement without shareholder
approval. Management believes that CAMCO's continuous supervision of the
subadvisor will permit the proportion of shareholders' assets subject to
particular subadvisor styles to be reallocated (or a new subadvisor
introduced) in response to changing market conditions or subadvisor
performance, in an attempt to improve performance.
Management believes that your interests as a shareholder are adequately
protected by your voting rights with respect to the advisory agreement and the
responsibilities assumed by CAMCO and the Board. It has found that requiring
shareholder approval of a subadvisor and the subadvisory agreement imposes
costs on the affected Portfolio without advancing shareholder interests.
Further, there is the concern that requiring shareholder approval of changes
to the existing subadvisory arrangements would prevent CVS from promptly and
timely employing the subadvisor best suited to the needs of the affected
Portfolio. Therefore, Management is seeking to streamline the process so that
an affected Portfolio can more efficiently continue toward achieving its
investment objective with a subadvisor recommended by CAMCO and approved by
the Board.
If CAMCO and/or CVS are authorized to make changes to the existing subadvisory
arrangements outside of the proxy solicitation process, shareholders will
continue to benefit by knowing that CAMCO has applied the same safeguards and
criteria in making its selection while continuing to fulfill its same duties
to shareholders and to CVS. Although Management would be authorized to make a
subadvisory change without a shareholder vote, as shareholders, you are
entitled to and would continue to receive the same disclosure and details
about the selection process and the background of the newly selected manager
as you have received in this solicitation, but in the form of an information
statement instead of a proxy statement. This information would be delivered to
shareholders within 90 days of the subadvisory change.
Recommendation
The Board has approved Management's recommendation to implement the Order and
seek the authority to enter into a new and/or to materially amend an existing
investment subadvisory agreement without shareholder approval and recommends
that shareholders vote FOR the Proposal.
- --------------------------------------------------------------------------------
Proposal 7
- --------------------------------------------------------------------------------
CVS Social Balanced: To approve a revised investment objective which is more
reflective of current economic times.
Discussion
After reviewing the current investment objective of CVS Social Balanced, and
recognizing that the investment objective, when written in 1986, reflected a
very different economic time than today, Management determined that the
investment objective should be updated.
Thus, Management has proposed a revised current investment objective and has
recommended that the revised investment objective be adopted. The revised
investment objective will not have an effect on the investment style or
practices of CVS Social Balanced and will remain fundamental.
The current investment objective provides that CVS Social Balanced seeks "to
achieve a total return above the rate of inflation through an actively
managed, diversified portfolio of common and preferred stocks, bonds and money
market instruments which offer income and capital growth opportunity and which
satisfy the investment and social concern criteria."
The revised investment objective eliminates the reference linking total return
to the rate of inflation. Thus the investment objective, as proposed to be
revised, states that CVS Social Balanced seeks "to achieve a competitive total
return through an actively managed portfolio of stocks, bonds and money market
instruments which offer income and capital growth opportunity and which
satisfy the investment and social concern criteria."
Recommendation
After reviewing the current investment objective, and comparing it to the
revised investment objective, the Board found that there will be no effect in
the application of the revised investment objective upon the management of CVS
Social Balanced. Therefore, the Board, including a majority of the Independent
Directors, approved the new investment objective for CVS Social Balanced,
subject to approval by its shareholders. The Board recommends that
shareholders vote FOR the revised investment objective.
- --------------------------------------------------------------------------------
Proposal 8
- --------------------------------------------------------------------------------
For each Portfolio: To change the par value of the common stock.
Discussion
The purpose of this proposal is to change the par value of the common stock of
Calvert Variable Series, Inc., from $1.00 per share to $0.01 per share. CVS is
a Maryland corporation, and therefore issues shares of common stock to its
portfolios, including CVS Social Money Market, CVS Social Balanced, CVS Social
Small Cap, CVS Social Mid Cap Growth, and CVS Social International Equity.
For the purposes of computing capitalization fees, the State of Maryland
requires that an arbitrary par value be assigned to the stock issued by CVS.
Par value is used for state fee computations and fund accounting purposes
only, and does not in any way reflect the net asset value ("NAV") or price per
share of the portfolios.
When the stock is issued to the policyholders, it is issued at a price that
reflects the worth of one share. NAV is computed by adding the value of all
portfolio holdings, plus other assets, deducting liabilities, and then
dividing the result by the number of shares outstanding. The NAV varies daily,
while the par value remains the same. CVS would save money on fees, at the
state level, if you agree to change this par value.
Recommendation
Management recommends that you vote FOR the proposal to change the par value
of CVS from $1.00 per share to $0.01 per share.
- --------------------------------------------------------------------------------
Proposal 9
- --------------------------------------------------------------------------------
For each Portfolio: To ratify the Board's selection of auditors,
PricewaterhouseCoopers, L.L.P.
Discussion
Shareholders are requested to ratify the action of the Board in selecting the
firm of PricewaterhouseCoopers, L.L.P. ("PricewaterhouseCoopers") as the
independent auditors for the current fiscal year. The Board believes that the
firm is well qualified, and has accordingly selected PricewaterhouseCoopers,
L.L.P. to act as independent auditors, subject to ratification by shareholders.
Coopers & Lybrand, L.L.P. has experience in accounting and auditing and has
served as independent auditors for CVS since 1994. On July 1, 1998, Coopers &
Lybrand merged with Price Waterhouse, L.L.P. to form PricewaterhouseCoopers,
L.L.P.
Neither PricewaterhouseCoopers, L.L.P., nor any of its partners has any direct
or indirect connection (other than as independent auditors) with CVS or any of
its affiliates. No representative of PricewaterhouseCoopers, L.L.P. will be
present at the Special Meeting, but a representative will be available via
telephone to respond to appropriate questions from shareholders.
Recommendation
The Board recommends a vote FOR ratification of the selection of
PricewaterhouseCoopers, L.L.P. as independent auditors.
- --------------------------------------------------------------------------------
OTHER BUSINESS
- --------------------------------------------------------------------------------
The Board does not intend to present any other business at the meeting. If,
however, any other matters are properly brought before the meeting, William M.
Tartikoff, Esq., and Barbara J. Krumsiek will vote on the matters in
accordance with their judgment.
- --------------------------------------------------------------------------------
ANNUAL REPORTS
- --------------------------------------------------------------------------------
The audited Annual Report to Shareholders of CVS are incorporated by reference
into this proxy statement. Copies of the most recent Annual Report may be
obtained without charge if you:
write to:
Calvert Variable Series, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
call (800) 368-2745
visit Calvert's website at www.calvertgroup.com
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
CVS is not required to hold annual shareholder meetings. Shareholders who
would like to submit proposals for consideration at future shareholder
meetings should send written proposals to the Calvert Group Legal Department,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland, 20814.
- --------------------------------------------------------------------------------
VOTING INFORMATION
- --------------------------------------------------------------------------------
Proxies are solicited initially by mail. Additional solicitations may be made
by telephone, computer communications, facsimile or other such means, or by
personal contact by officers or employees of Calvert Group and its affiliates
or by Shareholder Communications Corporation, a proxy soliciting firm retained
for this purpose. CVS may bear solicitation costs. By voting as soon as
possible, you can save your Fund the expense of follow-up mailings and calls.
A proxy may be revoked at any time before the meeting or during the meeting by
oral or written notice to William M. Tartikoff, Esq., 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814. Unless revoked, all valid proxies will
be voted in accordance with the specification thereon or, in the absence of
specification, for approval of the proposals. Calvert Variable Series, Inc.
variable annuities are owned by insurance companies. As the shareowners, the
insurance companies will vote in proportion to the votes received for and
against the issues.
Each proposal must be approved by a majority of the outstanding shares, which
is defined as the lesser of: (1) the vote of 67% or more of the shares of each
Portfolio at the Special Meeting if the holders of more than 50% of the
outstanding shares of each Portfolio are present in person or by proxy, or (2)
the vote of more than 50% of the outstanding shares of each Portfolio. All
classes of each Portfolio vote together.
Shareholders of each Portfolio of record at the close of business on December
7, 1998 ("record date") are entitled to notice of and to vote at the Special
Meeting or any adjournment thereof. Shareholders are entitled to one vote for
each share held on that date. As of December 7, 1998, as shown on the books of
each respective Portfolio, there were issued and outstanding:
11,608,938.170 shares of CVS Social Money Market Portfolio
130,934,706.708 shares of CVS Social Balanced Portfolio
1,140,164.993 shares of CVS Social Mid Cap Growth Portfolio
764,241.173 shares of CVS Social International Equity Portfolio
323,658.831 shares of CVS Social Small Cap Portfolio
As of the record date, the officers and Directors of CVS as a group
beneficially owned less than 1% of the outstanding shares of any CVS Portfolio.
- --------------------------------------------------------------------------------
ADJOURNMENT
- --------------------------------------------------------------------------------
In the event that sufficient votes in favor of the proposals set forth in the
Notice of Meeting and Proxy Statement are not received by the time scheduled
for the meeting, William M. Tartikoff, Esq., or Barbara J. Krumsiek may move
one or more adjournments of the meeting to permit further solicitation of
proxies with respect to any such proposals. Any such adjournment will require
the affirmative vote of a majority of the shares present at the meeting. Mr.
Tartikoff and Ms. Krumsiek will vote in favor of such adjournment those shares
that they are entitled to vote which have voted in favor of such proposals.
They will vote against any such adjournment on behalf of those proxies that
have voted against any such proposals.
Investment Advisor
Calvert Asset Management
Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Principal Underwriter
Calvert Distributors, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
Administrator
Calvert Administrative Services Company, Inc.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
<PAGE>
PROXY CARD
The undersigned, revoking previous proxies, hereby appoint(s) William M.
Tartikoff, Esq. and Barbara J. Krumsiek, attorneys, with full power of
substitution, to vote all shares that the undersigned is entitled to vote at
the Special Meeting of Shareholders to be held in the Tenth Floor Conference
Room of Calvert Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814 on Wednesday, February 24, 1999 at 2:30 p.m. and at any adjournment
thereof. All powers may be exercised by a majority of the proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that one.
This Proxy shall be voted on the proposals described in the Proxy Statement.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement is
hereby acknowledged.
You may cast your vote using one of the following methods:
1. By internet (through a secure internet site): www.calvertgroup.com
2. By telephone (through a secure telephone system): call 1-800-368-2745
3. By facsimile: fax to ______________
4. By mail: postage-paid envelope enclosed
5. In person: Wednesday, February 24, 1999
NOTE: If you plan to vote by mail or by facsimile, please sign the proxy card
exactly as your name appears on the card. If you have a joint account, either
person may sign the proxy card. When signing in a fiduciary capacity, such as
executor, administrator, Director, guardian, etc., please sign your name and
indicate your title. Corporate and partnership proxies should be signed by an
authorized person indicating the person's title.
Date: ________________________, 1999
__________________________________
__________________________________
Signature(s) (and Title(s), if applicable)
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSALS.
As to any other matter, the attorneys shall vote in accordance with their best
judgment.
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE FOLLOWING:
1. For each Portfolio: To approve the Board of Directors for CVS:
1. Frank H. Blatz, Jr.
2. Charles E. Diehl
3. Barbara J. Krumsiek
4. Arthur J. Pugh
5. South Trimble, III
6. Alice Gresham Bullock, Esq.
7. M. Charito Kruvant
For all [ ] Against all [ ] Abstain on all [ ]
[ ] To abstain from voting on or to vote against one or more of the
proposed Directors listed above, but to approve the others, place an "x"
in the box at left and indicate the number(s) of the person on the
appropriate line: I vote against _____________. I abstain on
_____________.
2. For each Portfolio: To approve amended fundamental investment
restrictions to: (a) delete restrictions that are no longer required
to be fundamental due to changes in state laws or which otherwise
need not be fundamental; and (b) to revise the language of those
restrictions that are still required to be fundamental.
1) Diversification policy
2) Concentration policy
3) 10% outstanding voting securities
4) Loan policy
5) Underwriting policy
6) Securities and Fund officers or Directors
7) Borrowing policy
8) Short sales
9) Puts and calls
10) Exercise control
11) Commodities
12) Investment company securities
13) Foreign Issuers
14) Repurchase agreements
15) Joint participation
16) Officer or Director Ownership
17) Lending portfolio securities
18) Mortgage, pledge or hypothecate
For all [ ] Against all [ ] Abstain on all [ ]
[ ] To abstain from voting on or to vote against the proposed
changes to one or more of the specific fundamental investment
restrictions, but to approve the others, place an "x" in the box at
left and indicate the number(s) (as set forth in the proxy statement)
of the affected investment restriction(s) on the appropriate line: I
vote against _____________. I abstain on _____________.
3. For each Portfolio: To approve a new investment advisory agreement
with the investment advisor, Calvert Asset Management Company, Inc.
("CAMCO").
For [ ] Against [ ] Abstain [ ]
4. CVS Social Balanced: To approve a new investment subadvisory
agreement between CAMCO and the investment subadvisor, NCM Capital
Management Group, Inc.
For [ ] Against [ ] Abstain [ ]
5. CVS Social Mid Cap Growth: To approve a new investment subadvisory
agreement between CAMCO and the investment subadvisor, Brown Capital
Management, Inc.
For [ ] Against [ ] Abstain [ ]
6. CVS Social Balanced, CVS Social Mid Cap Growth, CVS Social
International Equity and CVS Social Small Cap: To authorize CVS
and/or CAMCO to enter into a new and/or materially amending an
existing investment subadvisory agreement in the future without
having to first obtain shareholder approval.
For [ ] Against [ ] Abstain [ ]
7. CVS Social Balanced: To approve a revised investment objective which
is more reflective of current economic times.
For [ ] Against [ ] Abstain [ ]
8. For each Portfolio: To change the par value of common stock.
For [ ] Against [ ] Abstain [ ]
9. For each Portfolio: To ratify the Board's selection of CVS auditors,
PricewaterhouseCoopers, L.L.P.
For [ ] Against [ ] Abstain [ ]
<PAGE>
Supplement to:
Calvert Variable Series, Inc.
Social Money Market Portfolio
Social Balanced Portfolio
Social Mid Cap Growth Portfolio
Social International Equity Portfolio
Social Small Cap Portfolio
Proxy Statement dated December 31, 1998
Date of this Supplement: January 20, 1999
Page 9(a)
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PROPOSAL 1: To elect the Board of Directors - Additional Candidates
- --------------------------------------------------------------------------------
{This will be formatted in tabular format by the typesetter}
Name
Date of Birth, Principal Occupation
& Year Elected During Last Five Years
or Appointed and Other Directorships
Alice Gresham Bullock, Esq.
DOB: 05/17/50
1999
Ms. Bullock is a Dean and Professor at Howard University School of Law. She
was formerly Deputy Director of the Association of American Law Schools. Ms.
Bullock is a member of the Board of Visitors of J. Reuben Clark Law School,
Brigham Young University and the Board of Directors of Council on Legal
Education Opportunity.
M. Charito Kruvant
DOB: 12/8/45
1996
Ms. Kruvant is President and CEO of Creative Associates International, Inc.,
a firm that specializes in human resources development, information
management, public affairs and private enterprise development. She is also a
director of Acacia Federal Savings Bank.
