Calvert
Variable
Series, Inc.
Calvert
Social
Portfolios
Semi-Annual Report
June 30, 1999
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Money Market Portfolio
Managed by Calvert Asset Management Company,
Inc.
Dear Investor:
The year began with a rapidly growing
economy accompanied by low inflation, low
unemployment, and the Dow in record
territory. Inflation
figures showed no signs of an overheating
economy, and the bond markets were focused
on the crises occurring in Brazil and Japan.
Concerns about the global markets and
treasury paydown were expected to keep
yields on bonds low. The Federal Reserve,
while watchful for signs of inflation,
showed no bias towards a rate move.
The Investment Climate
As the first quarter progressed, however,
rapidly rising rates in Japan and continuing
strong economic data at home pushed the U.
S. bond markets higher. Concerns over
Federal Reserve tightening became clear as
Chairman Alan Greenspan began commenting on
the robust economy. By May, talk of more
than one rate hike was leading the markets.
While inflation and unemployment remained
low, consumer spending and manufacturing
purchases soared. Inflation fears began to
plague the markets.
In June, Greenspan announced a rate hike of
25 basis points and an end to the tightening
bias. Market participants took this as a
sign that the Fed felt inflation was still
under control and that the economic pace,
while robust, was not threatening. Yields on
short-term instruments plunged and remain
low at this time.
Performance And Strategy
For the six month period ending June 30,
1999 your portfolio modestly outperformed
the average variable annuity money market
fund tracked by Lipper.
The Portfolio continues to be heavily
weighted in variable rate demand notes
backed by letters of credit from commercial
banks. Most of these securities reset their
coupon rate each week. In an environment of
rising rates fueled by inflation concerns,
these bonds will increase their yield as
rates move up.
Most of the variable rate demand notes are
issued by municipalities and are taxable
notes that fund municipal projects such as
hospitals and roads.
<PAGE>
Outlook
Looking forward, we believe that the markets
will continue to watch for any signs of
inflation. Additional strength in economic
numbers will have to be weighed against
possible global crises and continued paydown
fundamentals in the treasury market. Trading
ranges should remain tight for the near
future, although we expect to see rates rise
toward the second half of the year. The fund
has been structured to accommodate these e
xpectations.
We appreciate your investment in the Calvert
Variable Series Social Money Market
Portfolio.
Sincerely,
Laurie Webster
Calvert Asset Management Company
July 20, 1999
Calvert Social Money Market Portfolio of
Calvert Variable Series, Inc.,
should not be confused with the Calvert
Social Investment Fund Money Market
Portfolio. Performance of the two funds will
differ.
<PAGE>
Money Market Portfolio
Portfolio of Investments
June 30, 1999
Principal
Corporate Obligations - 69.0% Amount
Value
Alabama State IDA VRDN, Mitchell Grocery,
5.15%, 5/1/10,
LOC: Regions Bank * $185,000 $185,000
Alabama State IDA VRDN, Simcala, Inc.,
5.20%, 12/1/19,
LOC: Nationsbank * 460,000 460,000
American Baptist Homes COPs VRDN, 5.15%,
10/1/27,
LOC: Banque Natl de Paris * 47,000
47,000
Aspen Institute, Inc. VRDN, 5.32%, 12/1/04,
LOC: First National Bank of Maryland *34
0,000 340,000
Bel Air, LLC. VRDN, 5.20%, 12/1/15, LOC:
Amsouth Bank *
420,000 420,000
Betters Group LP. VRDN, 5.20%, 2/1/12, LOC:
Century
National Bank and Trust, Confirming LOC:
Mellon Bank *
430,000 430,000
Blount Strange Realty Holdings, LLC. VRDN,
5.20%, 7/1/16,
LOC: Regions Bank * 500,000 500,000
Botsford General Hospital VRDN, 6.00%,
2/15/27,
LOC: Michigan National * 350,000
350,000
Colorado Health Facilities Authority Revenue
VRDN,
5.45%, 2/1/25, LOC: Kredietbank *
460,000 460,000
Healthtrack Sports and Wellness VRDN, 5.05%,
2/15/27,
LOC: American National Bank & Trust *600
,000 600,000
IPC Industries, Inc. VRDN, 5.20%, 10/1/11,
LOC: National Bank of Canada *
340,000 340,000
Meriter Management Services, Inc., VRDN,
5.15%, 12/1/16,
LOC: Firstar Bank * 575,000 575,000
Montgomery Cancer Center, LLC. VRDN, 5.20%,
10/1/12,
LOC: Southtrust Bank * 130,000 130,000
Montgomery County, Kentucky Industrial
Development Revenue
VRDN, Fireblanking, 5.20%, 8/1/06,
LOC: Fleet Bank * 209,000 209,000
Physicians Plus Medical Group VRDN, 6.00%,
8/1/16,
LOC: LaSalle Bank * 600,000 600,000
Roosevelt Paper Co. VRDN, 5.20%, 6/1/12,
LOC: Corestates * 465,000 465,000
San Jose Financing Authority Revenue VRDN,
5.00%, 12/1/25,
BPA: Bank of Nova Scotia,
INSUR: AMBAC * 400,000 400,000
Sault Ste Marie, Michigan VRDN, 5.55%,
6/1/03,
LOC: First America Bank, MI *
275,000 275,000
St. Paul, Minnesota Housing and
Redevelopment Authority
VRDN, 5.15%, 3/1/18,
LOC: Credit Local D France * 580,000
580,000
St. Joseph County Economic Development
Revenue
VRDN, 5.31%, 6/1/27,
LOC: FHLB - Indianapolis * 540,000
540,000
South Cent Communications Corp. VRDN, 5.13%,
6/1/13,
LOC: Citizens National Bank,
Confirming LOC: Suntrust Bank *
180,000 180,000
TLC Holdings, LLC. VRDN, 5.20%, 6/1/26,
LOC: Columbus Bank and Trust *
450,000 450,000
Washington State Housing Finance Authority
VRDN,
Glenbrook Apartments, 5.20%, 7/1/29,
LOC: Bank One* 600,000 600,000
Waukesha Health System, Inc. VRDN, 5.15%,
8/15/26,
LOC: Bank of America * 600,000 600,000
<PAGE>
Principal
Corporate Obligations - (Cont'd)
Amount Value
Wenatchee Valley Clinic VRDN, 5.10%,
11/23/24,
LOC: US Bank, National Association *
$600,000 $600,000
W.L. Petrey Wholesale, Inc., Industrial
Development
VRDN, 5.20%, 3/1/11,
LOC: Southtrust Bank, AL * 345,000
345,000
Total Corporate Obligations (Cost
$10,681,000) 10,681,000
U.S. Government Agencies and
Instrumentalities - 1.7%
Federal Farm Credit Bank, 4.73%, 9/16/99
100,000 98,988
Federal National Mortgage Assn.,
4.75%, 8/12/99 163,000 162,097
Total U.S. Government Agencies and
Instrumentalities
(Cost $261,085) 261,085
Municipal Obligations - 24.9%
California Pollution Solid Waste Disposal
Revenue VRDN,
5.28%, 7/1/06, LOC: Wells Fargo Bank *50
0,000 500,000
California Statewide Community Development
Authority
MFH Revenue VRDN, 5.65%, 7/1/27, LOC:
Sanwa Bank,
Confirming LOC: California State Teacher's
Retirement System * 280,000 280,000
Episcopal Health Services, Inc. Revenue
VRDN, 5.20%, 3/1/28,
LOC: Paribas * 285,000 285,000
Gardena, California COPs VRDN, 7.31%,
7/1/25,
LOC: Sumitomo Trust and Banking,
Confirming LOC: Dai-Ichi Kango Bank *400
,000 400,000
Health Insurance Plan Greater NY Revenue
VRDN,
5.06%, 7/1/16,
LOC: Morgan Guaranty Trust * 500,000
500,000
Maricopa County IDA Revenue VRDN, 5.15%,
2/1/29,
LOC: Banque National De Paris *
390,000 390,000
Texas State VRDN, 5.003%, 12/1/27,
TOA: Citibank * 501,000 501,000
Virginia State Housing Development Authority
VRDN,
5.20%, 7/1/07, BPA: Bayer Hypobank *
350,000 350,000
Virginia State Housing Development Authority
VRDN,
5.05%, 1/1/47, GA:
Virginia Housing Development Authority *
635,000 635,000
Total Municipal Obligations (Cost
$3,841,000) 3,841,000
<PAGE>
Principal
Repurchase Agreements - 3.9% Amount
Value
State Street Bank: 4.85%, dated 6/30/99, due
7/1/99
(Collateral: $631,167,
FHLB, 5.125%, 9/15/03) $600,000 $600,000
Total Repurchase Agreements (Cost
$600,000) 600,000
TOTAL INVESTMENTS (Cost $15,383,085) -
99.5% 15,383,085
Other assets and liabilities, net -
0.5% 73,693
Net Assets - 100% $15,456,778
* Optional tender features give these
securities a shorter effective maturity
date.
Explanation of Guarantees: Abbreviati
ons:
BPA: Bond-Purchase Agreement COPs: Cert
ificates of
Participation
GA: Guaranty AgreementIDA: Industrial
Development
Authority
LOC: Letter of Credit INSUR: Insurance
TOA: Tender Option Agreement VRDN: Vari
able Rate Demand Notes
See notes to financial statements.
<PAGE>
Money Market Portfolio
Statement of Assets and Liabilities
June 30, 1999
Assets
Investments in securities, at value
$15,383,085
Cash 18,402
Interest receivable 68,360
Other assets 137
Total assets 15,469,984
Liabilities
Payable to Calvert Asset
Management Company, Inc. 5,922
Payable to Calvert Administrative
Services Company, Inc. 2,035
Payable to Calvert Shareholder Services,
Inc. 98
Accrued expenses and other liabilities
5,151
Total liabilities 13,206
Net assets $15,456,778
Net Assets Consist of:
Par value and paid-in capital applicable to
15,460,556 shares of commonstock
outstanding;
$0.01 par value, 35,000,000
shares authorized $15,455,981
Undistributed net investment income (loss)
797
Net Assets $15,456,778
Net Asset Value per Share $1.00
See notes to financial statements.
<PAGE>
Money Market Portfolio
Statement of Operations
Six Months Ended June 30, 1999
Net Investment Income
Investment Income
Interest income $373,419
Total investment income 373,419
Expenses
Investment advisory fee 25,892
Transfer agency fees and expenses
2,187
Administrative Services fees 8,010
Accounting fees 4,289
Directors' fees and expenses 537
Custodian fees 6,090
Reports to shareholders 505
Professional fees 717
Miscellaneous 316
Total expenses 48,543
Fees paid indirectly (1,316)
Net expenses 47,227
Net Investment Income 326,192
Increase (Decrease) in Net Assets
Resulting From Operations
$326,192
See notes to financial statements.
<PAGE>
Money Market Portfolio
Statements of Changes in Net Assets
Six Months EndedY
ear ended
June 30,December
31,
Increase (Decrease) in Net Assets
1999 1998
Operations
Net investment income $326,192 $489,926
Increase (Decrease) in Net Assets
Resulting From Operations 326,192
489,926
Distributions to shareholders from
Net investment income (325,704)(490,032)
Capital share transactions
Shares sold 23,533,51731,692,
032
Reinvestment of distributions 325,116
488,559
Shares redeemed (19,607,336)(27,2
17,376)
Total capital share transactions
4,251,297 4,963,215
Total Increase (Decrease) in Net Assets
4,251,785 4,963,109
Net Assets
Beginning of period 11,204,9936,241,884
End of period (including undistributed net
investment
income of $797 and $309, respectively)
$15,456,778 $11,204,993
Capital Share Activity
Shares sold 23,533,517
31,692,032
Reinvestment of distributions 325,116
488,559
Shares redeemed (19,607,336)(27,2
17,376)
Total capital share activity 4,251,297
4,963,215
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Calvert Social Money Market
Portfolio (formerly, Calvert Responsibly
Invested Money Market Portfolio) (the
"Portfolio"), a series of Calvert Variable
Series, Inc. (formerly Acacia Capital
Corporation) (the "Fund"), is registered
under the Investment Company Act of 1940 as
a diversified, open-end management
investment company. The operations of each
series of the Fund are accounted for
separately. The shares of the Portfolio are
sold to affiliated and unaffiliated
insurance companies for allocation to
certain of their variable separate accounts.
Security Valuation: All securities are
valued at amortized cost, which approximates
market.
Repurchase Agreements: The Portfolio may
enter into repurchase agreements with
recognized financial institutions or
registered broker/dealers and, in all
instances, holds underlying securities with
a value exceeding the total repurchase
price, including accrued interest. Although
risk is mitigated by the collateral, the
Fund could experience a delay in recovering
its value and a possible loss of income or
value if the counterparty fails to perform
in accordance with the terms of the
agreement.
Security Transactions and Investment Income:
Security transactions are accounted for on
trade date. Realized gains and losses are
recorded on an identified cost basis.
Interest income, accretion of discount and
amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions
to shareholders are recorded by the
Portfolio on ex-dividend date. Dividends
from net investment income are accrued daily
and paid monthly. Distributions from net
realized capital gains, if any, are paid at
least annually. Distributions are determined
in accordance with income tax regulations
which may differ from generally accepted
accounting principles; accordingly, periodic
reclassifications are made within the
Portfolio's capital accounts to reflect
income and gains available for distribution
under income tax regulations.
Estimates: The preparation of financial
statements in conformity with generally
accepted accounting principles requires
management to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of income and expenses during the
reporting period. Actual results could
differ from those estimates.
Expense Offset Arrangements: The Portfolio
has an arrangement with its custodian bank
whereby the custodian's and transfer agent's
fees may be paid indirectly by credits
earned on the Portfolio's cash on deposit
with the bank. Such a deposit arrangement is
an alternative to overnight investments.
Federal Income Taxes: No provision for
federal income or excise tax is required
since the Portfolio intends to continue to
qualify as a regulated investment company
under the Internal Revenue Code and to
distribute substantially all of its
earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the
"Advisor") is wholly-owned
by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Ameritas Acacia
Mutual
<PAGE>
Holding Company. The Advisor provides
investment advisory services and pays the
salaries and fees of officers and affiliated
Directors of the Portfolio. For its
services, the Advisor received a monthly fee
based on an annual rate
of .50% through February 28, 1999, and
effective March 1, 1999 receives a
fee of .30%, based on the Portfolio's
average daily net assets.
Calvert Administrative Services Company,
Inc., an affiliate of the Advisor, provides
administrative services to the Portfolio for
an annual fee, payable monthly, of .20% of
the average daily net assets of the
Portfolio. The administrative service fee
was initiated on March 1, 1999.
Calvert Shareholder Services, Inc. ("CSSI"),
an affiliate of the Advisor, acts
as shareholder servicing agent for the
Portfolio. For its services, CSSI
received a fee of $656 for the six months
ended June 30, 1999. National Financial Data
Services, Inc. is the transfer and dividend
disbursing agent.
Each Director who is not affiliated with the
Advisor received a fee of $750
for each Board meeting attended plus an
annual fee of $3,000 for Directors
not serving on other Calvert Fund Boards.
Director's fees are allocated to
each of the portfolios served.
Note C -- Investment Activity
The cost of investments owned at June 30,
1999, was substantially the same for federal
income tax and financial reporting purposes.
As a cash management practice, the Portfolio
may sell or purchase short-term variable
rate demand notes from other Portfolios
managed by the Advisor. All transactions are
executed at independently derived prices.
Note D -- Line of Credit
A financing agreement is in place with all
Calvert Group Funds and State Street Bank
and Trust Company ("the Bank"). Under the
agreement, the Bank is providing an
unsecured line of credit facility, in the
aggregate amount of $50 million ($25 million
committed and $25 million uncommitted), to
be accessed by the Funds for temporary or
emergency purposes only.
Borrowings under this facility bear interest
at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per
annum will be incurred on the unused portion
of the committed facility which will be
allocated to all participating funds. The
Fund had no loans outstanding pursuant to
this line of credit at June 30, 1999.
<PAGE>
Money Market Portfolio
Financial Highlights
Periods Ended
June 30,December 31,Decem
ber 31,
1999 1998 1997
Net asset value, beginning $1.00 $1.00
$1.00
Income from investment operations
Net investment income.022 .050 .051
Total from investment
operations .022 .050 .051
Distributions from
Net investment income(.022)(.050) (.051)
Total increase (decrease) in net
asset value ---- -- --
Net asset value, ending$1.00$1.00 $1.00
Total return 2.25% 5.14%
5.20%
Ratios to average net assets:
Net investment income4.50% (a) 5.01%
5.10%
Total expenses +.67% (a) .66% .69%
Net expenses .65% (a) .63% .59%
Net assets, ending (in thousands) $15,457
$11,205 $6,242
Number of shares outstanding,
ending (in thousands)15,46111,209 6,246
Years Ended
December 31,December 31,Decem
ber 31,
1996 1995 1994
Net asset value, beginning $1.00 $1.00
$1.00
Income from investment operations
Net investment income.048 .055 .039
Total from investment operations .048
.055 .039
Distributions from
Net investment income(.048)(.055) (.039)
Total increase (decrease) in net
asset value -- -- --
Net asset value, ending$1.00$1.00 $1.00
Total return 4.95% 5.37%
3.96%
Ratios to average net assets:
Net investment income4.82%5.23% 3.91%
Total expenses + .75% .66% NA
Net expenses .62% .59% .45%
Expenses reimbursed---- -- .36%
Net assets, ending (in thousands) $4,378
$5,129 $6,479
Number of shares outstanding,
ending (in thousands)4,3825,133 6,484
(a) Annualized
+ Effective December 31, 1995, this ratio
reflects total expenses
before reduction for fees paid indirectly;
such reductions are included in the
ratio of net expenses. Total expenses are
presented net of expense
waivers and reimbursements.
NA Disclosure not applicable to prior
periods.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Money Market Portfolio
A special meeting of shareholders was
scheduled for February 24, 1999.
There were several proposals voted upon at
the meeting. A brief description
of each proposal is shown below.
All proposals were passed.
Proposal 1 - To elect the Board of
Directors.
Nominees
Frank H. Blatz, Jr.
Alice Gresham Bullock
Charles E. Diehl
Barbara J. Krumsiek
M. Charito Kruvant
Arthur J. Pugh
South Trimble III
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)
to revise the language of those restrictions
that are still required to be fundamental.
Proposal 3 - To approve a new investment
advisory agreement with the investment
advisor, Calvert Asset Management Company,
Inc. ("CAMCO").
Proposal 4 - To change the par value of the
common stock from $1.00 to $0.01.
Proposal 5 - To ratify the Board's selection
of auditors, PricewaterhouseCoopers LLP.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Small Cap Growth Portfolio
Managed by Awad Asset Management, Inc.
CVS Calvert Social
Small Cap Growth Portfolio
GRAPH HERE
Comparison of change in value of a
hypothetical $10,000 investment.
CVS Calvert Social Small Cap Growth
Portfolio - $12,698
Russell 2000 Index TR - $18,640
Average Annual Total Return
(period ended 6.30.99)
One year -9.35%
Since inception 5.71%
*Performance information is for the
Portfolio only and does not reflect
charges and expenses of the variable annuity
or variable universal life
contract.
For comparison purposes, Portfolio and Index
performance is shown from
the month end date of 3.31.95.
Past performance does not indicate future
results.
New Subadvisor assumed management of the
Portfolio effective October 1997.
Dear Investor:
The Investment Climate
1999 can be described in two distinct
discussions:
1) The first quarter was a momentum market,
with many investors focusing
on large cap technology and internet
companies. During this time, a small number
of stocks did extremely well while the
majority of equities did poorly. Small
capitalization stocks performed poorly
during this period, and investors with
strict earnings and valuation disciplines
did less well than others. Within the small
cap sector, the stocks of companies with no
earnings did better than the stocks of
companies that made money, and the larger
cap stocks within
the small cap universe did better than the
remainder.
During this period, CVS Calvert Social Small
Cap Growth underperformed both absolutely
and relatively to its benchmark. While we
continued to seek out growing companies with
favorable valuations, investors at large did
not, and small cap companies remained
undervalued. Not only did small cap perform
poorly, but most small cap stocks did worse
than the Russell 2000
which is heavily influenced by internet
stocks.
2) A dramatic change occurred at the end of
March. As the momentum stock began to falter
and as the perception about the strength of
worldwide growth improved, the prospects for
small cap stocks began to improve and the
stocks of companies with growing earnings
and modest valuations did better. The stock
of companies with low P/E ratios did better
than the stock of companies with high P/E
ratios. During this period,
<PAGE>
CVS Calvert Social Small Cap Growth did well
absolutely and relatively to
its benchmark.
Performance
In the six month period ending June 30,
1999, the Portfolio significantly
underperformed the Lipper VA Small Cap
Index. Despite trailing both the Russell
2000 and the Lipper VA Small Cap Index in
the first quarter,
however, the Portfolio made up considerable
ground in the second quarter.
Outlook
Our patience and discipline was challenged
during the first six months of the year.
Still, the last two months of the period
have vindicated our philosophy
of seeking growth stocks trading at value
prices. Again, we expect to do well both
absolutely and relatively to our benchmark,
and we fully believe that rewards are there
as long as small cap stocks remain cheap
relative to large
cap stocks and as these stocks gain momentum
fueled by money flows and company takeovers.
Thank you for your confidence in Awad Asset
Management, Inc. and the
CVS Calvert Social Small Cap Growth
Portfolio. We will continue to work hard for
you.
Sincerely,
James D. Awad
Awad Asset Management
July 20, 1999
Calvert Social Small Cap Growth Portfolio of
Calvert Variable Series, Inc., should not be
confused with the New Vision Small Cap Fund.
Performance
of the two funds will differ.
<PAGE>
Small Cap Growth Portfolio
Portfolio of Investments
June 30, 1999
Equity Securities - 90.3% Shares
Value
Agricultural Products - 3.2%
Corn Products International, Inc.
3,800 $115,662
Air Freight - 0.7%
Air Express International Corp. 1,000
25,375
Banks - 6.3%
Hamilton Bancorp, Inc. * 2,000 48,000
Investors Financial Services Corp.
2,600 104,000
North Fork Bancorporation, Inc. 3,500
74,594
226,594
Biotechnology - 2.0%
Aviron *
2,500 71,875
Broadcast - 1.2%
Gaylord Entertainment Co. 1,500
45,000
Communications Equipment - 7.6%
American Tower Corp., Class A * 3,500
84,000
Periphonics Corp. * 8,000 131,000
Transaction Network Services, Inc. *
2,000 58,500
273,500
Computers - Peripherals - 2.1%
Printronix, Inc. * 5,500 77,000
Computer Software and Services - 7.0%
Barra, Inc. * 3,000
75,750
Eclipsys Corp * 3,150 75,403
LanVision Systems, Inc. * 7,900
9,134
Sterling Software, Inc. * 3,500
93,406
253,693
Financial - Diversified - 4.7%
Doral Financial Corp. 6,800 117,300
LTC Properties, Inc. 4,000 52,000
169,300
Food - 3.2%
Smucker (J.M.) Co., Class B 6,000
114,000
Health Care, Drug and Pharmaceutical - 0.6%
Twinlabs Corp. * 2,500 21,485
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Health Care, Medical Product and Supplies -
5.1%
ATS Medical, Inc. * 10,000 $78,750
Beckman Coulter, Inc. 2,000 97,250
Somanetics Corp. * 2,500 8,750
184,750
Insurance - Life/Health - 5.0%
Annuity and Life Re Holdings 4,000
89,750
Presidential Life Corp. 4,500 88,312
178,062
Investment Management - 0.3%
Excel Legacy Corp. * 2,000 9,500
Manufacturing - Diversified - 0.8%
Danaher Corp. 500 29,063
LTC Healthcare, Inc. * 400 775
29,838
Personal Care - 1.1%
NBTY, Inc. * 6,000 39,000
Photography & Imaging - 2.7%
Zebra Technologies Corp., Class A *
2,500 96,094
Publishing - 9.1%
Houghton Mifflin Co. 2,300 108,244
Penton Media, Inc. 5,000 121,250
Wiley (John) & Sons, Inc., Class A
5,600 98,700
328,194
Railroads - 0.6%
Genesee & Wyoming, Inc., Class A *
2,000 20,625
Retail - Discounters - 3.3%
Bradlees, Inc. * 8,000 120,000
Retail Specialty- 1.1%
Heilig Meyers Co. 500 3,406
U.S. Vision, Inc. * 7,000 36,531
39,937
Service Commercial and Consumers - 9.2%
American Retirement Corp. * 3,000
37,500
New Horizons Worldwide, Inc. * 8,750
172,813
StarTek, Inc. * 4,850 120,038
330,351
Services - Computer Systems - 9.4%
Comdisco, Inc. 5,500 140,937
Health Management Systems, Inc. *
12,000 66,000
Shared Medical System 2,000 130,495
337,432
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Services - Data Processing - 4.0%
National Data Corp. 3,400 $145,350
Total Equity Securities (Cost $2,799,185)
3,252,617
TOTAL INVESTMENTS (Cost $2,799,185) -
90.3% 3,252,617
Other assets and liabilities, net -
9.7% 347,913
Net Assets - 100% $3,600,530
* Non-income producing.
See notes to financial statements.
<PAGE>
Small Cap Growth Portfolio
Statement of Assets and Liabilities
June 30, 1999
Assets
Investments in securities, at value
$3,252,617
Cash 422,100
Dividends receivable 1,286
Other assets
44
Total assets 3,676,047
Liabilities
Payable for securities purchased
72,001
Payable to Calvert Asset Management Company,
Inc. 2,439
Payable to Calvert Administrative Services
Company 587
Accrued expenses and other liabilities
490
Total liabilities 75,517
Net assets $3,600,530
Net Assets Consist of:
Par value and paid-in capital applicable to
317,602 shares of common
stock outstanding; $0.01 par value,
5,000,000 shares authorized
$3,858,456
Undistributed net investment income (loss)
(4,110)
Accumulated net realized gain (loss) on
investments (707,248)
Net unrealized appreciation (depreciation)
on investments 453,432
Net Assets $3,600,530
Net Asset Value per Share
$11.34
See notes to financial statements.
<PAGE>
Small Cap Growth Portfolio
Statement of Operations
Six Months Ended June 30, 1999
Net Investment Income
Investment Income
Dividend income (net of foreign taxes of
$95) $12,341
Total investment income
12,341
Expenses
Investment advisory fee
13,171
Transfer agent fees and expenses
1,131
Accounting fees 2,761
Directors' fees and expenses
98
Administrative fees 3,021
Registration fees 174
Custodian fees 4,509
Reports to shareholders
204
Professional fees 160
Miscellaneous 156
Total expenses 25,385
Fees paid indirectly
(7,300)
Net expenses 18,085
Net Investment Income (Loss)
(5,744)
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) (440,195)
Change in unrealized appreciation or
(depreciation) 512,994
Net Realized and Unrealized Gain
(Loss) on Investments
72,799
Increase (Decrease) in Net Assets
Resulting From Operations
$67,055
See notes to financial statements.
<PAGE>
Small Cap Growth Portfolio
Statements of Changes in Net Assets
Six Months EndedY
ear ended
June 30,December
31,
Increase (Decrease) in Net Assets
1999 1998
Operations
Net investment income (loss) ($5,744)
$4,843
Net realized gain (loss) (440,195)
(267,053)
Change in unrealized appreciation
or (depreciation) 512,994 36,357
Increase (Decrease) in Net Assets
Resulting From Operations 67,055
(225,853)
Distributions to shareholders from
Net investment income ---- (3,209)
Net realized gain on investments
- ---- (44,479)
Total distributions ---- (47,688)
Capital share transactions
Shares sold 500,361 1,296,087
Reinvestment of distributions ----
47,688
Shares redeemed (592,702)(1,590,8
37)
Total capital share transactions
(92,341) (247,062)
Total Increase (Decrease) in Net Assets
(25,286) (520,603)
Net Assets
Beginning of period 3,625,8164,146,419
End of period (including undistributed net
investment income
(loss) of ($4,110) and $1,634,
respectively) $3,600,530$3,625,
816
Capital Share Activity
Shares sold 48,664
111,161
Reinvestment of distributions ----
4,383
Shares redeemed (57,004)(134,628)
Total capital share activity (8,340)
(19,084)
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Calvert Social Small Cap Growth
Portfolio (formerly, Calvert Responsibly
Invested Strategic Growth Portfolio) (the
"Portfolio"), a series
of Calvert Variable Series, Inc. (formerly
Acacia Capital Corporation) (the "Fund"), is
registered under the Investment Company Act
of 1940 as a diversified, open-end
management investment company. The
operations of each series of the Fund are
accounted for separately. The shares of the
Portfolio are sold to affiliated and
unaffiliated insurance companies for
allocation to certain of their variable
separate accounts.
Security Valuation: Securities listed or
traded on a national securities exchange are
valued at the last reported sale price.
Unlisted securities and listed securities
for which the last sale price is not
available are valued at the most recent bid
price or based on a yield equivalent
obtained from the securities' market maker.
Other securities and assets for which market
quotations are not available or deemed
inappropriate are valued in good faith under
the direction of the Board of Directors.
Security Transactions and Investment Income:
Security transactions are accounted for on
trade date. Realized gains and losses are
recorded on an identified cost basis.
Dividend income is recorded on the ex-
dividend date. Interest income, accretion of
discount and amortization of premium are
recorded on an accrual basis. Dividends
declared on securities sold short are
reported as an expense.
Distributions to Shareholders: Distributions
to shareholders are recorded by the
Portfolio on ex-dividend date. Dividends
from net investment income and distributions
from net realized capital gains, if any, are
paid at least annually. Distributions are
determined in accordance with income tax
regulations which may differ from generally
accepted accounting principles; accordingly,
periodic reclassifications are made within
the Portfolio's capital accounts to reflect
income and gains available for distribution
under income tax regulations.
Estimates: The preparation of financial
statements in conformity with generally
accepted accounting principles requires
management to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of income and expenses during the
reporting period. Actual results could
differ from those estimates.
Expense Offset Arrangements: The Portfolio
has an arrangement with its custodian bank
whereby the custodian's and transfer agent's
fees may be paid indirectly by credits
earned on the Portfolio's cash on deposit
with the bank. Such a deposit arrangement is
an alternative to overnight investments.
Federal Income Taxes: No provision for
federal income or excise tax is required
since the Portfolio intends to continue to
qualify as a regulated investment company
under the Internal Revenue Code and to
distribute substantially all of its
earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the
"Advisor") is wholly-owned
by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Ameritas Acacia
Mutual
<PAGE>
Holding Company. The Advisor provides
investment advisory services and pays the
salaries and fees of officers and affiliated
Directors of the Portfolio. For its
services, the Advisor received a monthly fee
based on an annual rate
of .90% through February 28, 1999, and
effective March 1, 1999 receives a
fee of .75%, based on the Portfolio's
average daily net assets.
Calvert Administrative Services Company, an
affiliate of the Advisor, provides
administrative services to the Portfolio for
an annual fee, payable monthly of .10%
through February 28, 1999, and .25%
effective March 1, 1999, based on the
Portfolio's average daily net assets.
Calvert Shareholder Services, Inc. ("CSSI"),
an affiliate of the Advisor, acts
as shareholder servicing agent for the
Portfolio. For its services, CSSI
received a fee of $92 for the six months
ended June 30, 1999. National Financial Data
Services, Inc. is the transfer and dividend
disbursing agent.
Each Director who is not affiliated with the
Advisor received a fee of $750
for each Board meeting attended plus an
annual fee of $3,000 for Directors
not serving on other Calvert Fund Boards.
Director's fees are allocated to
each of the portfolios served.
Note C -- Investment Activity
During the period, purchases and sales of
investments, other than short-term
securities, were $1,090,194 and $1,050,896,
respectively.
The cost of investments owned at June 30,
1999 was substantially the same
for federal income tax and financial
reporting purposes. Net unrealized
depreciation aggregated
$453,432, of which $639,390 related to
appreciated securities and $185,958 related
to depreciated securities.
Net realized capital loss carryforward for
federal income tax purposes, of
approximately $263,528 at December 31, 1998
may be utilized to offset
future capital gains until expiration in
December 2006.
Note D -- Line of Credit
A financing agreement is in place with all
Calvert Group Funds and State Street Bank
and Trust Company ("the Bank"). Under the
agreement, the Bank is providing an
unsecured line of credit facility, in the
aggregate amount of $50 million ($25 million
committed and $25 million uncommitted), to
be accessed by the Funds for temporary or
emergency purposes only.
Borrowings under this facility bear interest
at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per
annum will be incurred on the unused portion
of the committed facility which will be
allocated to all participating funds. The
Fund had no loans outstanding pursuant to
this line of credit at June 30, 1999.
<PAGE>
Small Cap Growth Portfolio
Financial Highlights
Periods Ended
June 30,December 31,Decem
ber 31,
1999 1998 1997
Net asset value, beginning$11.12 $12.02
$14.65
Income from investment operations
Net investment income(.02) .02 (.12)
Net realized and unrealized
gain (loss) .24 (.77) (1.32)
Total from investment
operations .22 (.75) (1.44)
Distributions from
Net investment income----(.01) --
Net realized gains ---- (.14) (1.19)
Total distributions----(.15) (1.19)
Total increase (decrease) in net
asset value .22 (.90) (2.63)
Net asset value, ending$11.34$11.12 $12.02
Total return 1.98% (6.23%)
(9.86%)
Ratios to average net assets:
Net investment income(.35%) (a) .12%
(1.19%)
Total expenses +1.54% (a)1.33% 1.92%
Net expenses 1.10% (a) 1.12% 1.61%
Expenses reimbursed---- ---- .18%
Portfolio turnover 35% 72% 292%
Net assets, ending (in thousands) $3,601
$3,626 $4,146
Number of shares outstanding,
ending (in thousands)318 326 345
Periods Ended
December 31,Decem
ber 31,
1996 1995*
Net asset value, beginning $10.94
$10.00
Income from investment operations
Net investment income (.15) .25
Net realized and unrealized gain (loss)
3.90 .93
Total from investment operations
3.75 1.18
Distributions from
Net investment income -- (.24)
Net realized gains (.04) --
Total distributions (.04) (.24)
Total increase (decrease) in net asset value
3.71 .94
Net asset value, ending $14.65 $10.94
Total return 34.33%
9.65%
Ratios to average net assets:
Net investment income (1.60%) .43%(a)
Total expenses + 2.27% 2.17%(a)
Net expenses 1.81% 1.64%(a)
Expenses reimbursed .20% .20%(a)
Portfolio turnover 120% 223%
Net assets, ending (in thousands)
$3,031 $1,209
Number of shares outstanding,
ending (in thousands) 207 111
(a) Annualized
+ Effective December 31, 1995, this ratio
reflects total expenses before reduction for
fees paid indirectly;
such reductions are included in the
ratio of net expenses. Total expenses are
presented net of expense
waivers and reimbursements.
* From March 1, 1995 inception.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Small Cap Growth Portfolio
A special meeting of shareholders was
scheduled for February 24, 1999.
There were several proposals voted upon at
the meeting. A brief description
of each proposal is shown below.
All proposals were passed.
Proposal 1 - To elect the Board of
Directors.
Nominees
Frank H. Blatz, Jr.
Alice Gresham Bullock
Charles E. Diehl
Barbara J. Krumsiek
M. Charito Kruvant
Arthur J. Pugh
South Trimble III
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) to revise
the language of those restrictions that are
still required to be fundamental.
Proposal 3 - To approve a new investment
advisory agreement with the investment
advisor, Calvert Asset Management Company,
Inc. ("CAMCO").
Proposal 4 - 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.
Proposal 5 - To change the par value of the
common stock from $1.00 to $0.01.
Proposal 6 - To ratify the Board's selection
of auditors, PricewaterhouseCoopers LLP.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Mid Cap Growth Portfolio
Managed by Brown Capital Management, Inc.
CVS Calvert Social
Mid Cap Growth Portfolio1
GRAPH HERE
Comparison of change in value of a
hypothetical $10,000 investment.
CVS Calvert Social Mid Cap Growth Portfolio
- - $30,949
S & P Midcap 400 Index TR - $37,482
Average Annual Total Return
(period ended 6.30.99)
One year 16.42%
Five year 19.72%
Since inception (7.16.91) 15.20%
1Performance information is for the
Portfolio only and does not reflect
charges and expenses of the variable annuity
or variable universal life
contract.
2For comparison purposes, Portfolio and
Index performance is shown from
the month end date of 7.31.91, rather than
the actual inception date
of 7.16.91.
Past performance does not indicate future
results.
New subadvisors assumed management of the
Portfolio effective December 1994.
Dear Investor:
Certain numbers seem to recur more than
others in our daily lives. Take, for
example, the number three (three stooges,
three wise men, three blind mice, three
strikes and you're out! etc.). It seems that
Federal Reserve chairman
Alan Greenspan also likes the number three.
In his June 17th congressional testimony,
Greenspan declared that 2% productivity
growth plus 1% growth
in the labor force should support a 3%
sustainable level of economic growth
-- a proposition that counters the
previously held view that economic growth
much above 2 % was not sustainable without
igniting inflation.
The Investment Climate
The much anticipated broadening out of the
market was finally realized in the second
quarter of 1999 as small and midcap
companies wrestled the
leadership position away from large cap
companies
A closer look at the market's performance in
the second quarter reveals investor
preference for cyclical market sectors,
including basic materials/processing,
integrated oils, and other energy, and
capital goods/producer durables. But while
they generated strong relative performance,
their contribution was somewhat muted by the
more heavily weighted sectors of the indices
- -- which, with the exception of technology,
contributed negatively to market
performance.
Strong gains posted by the more cyclical
segments of the technology sector, i.e.,
semiconductors, fueled the positive
contribution in the second quarter. Internet
stocks, particularly certain large cap
companies, ceded the performance spotlight
in the second quarter evidenced by the
double-digit declines posted by America
Online, Amazon.com, and At Home. Despite the
diminutive revenue and earnings base of many
publicly traded inter-
<PAGE>
net companies, their impact on index returns
has grown significantly. While we have
historically avoided the internet companies,
we do believe that the internet/intranet
paradigm is powerful, sustainable, and
productivity enhancing. Consequently, we are
investing in companies that leverage an e-
commerce, business-to-business-based
operating model.
Performance
The CVS Calvert Social Mid Cap Growth
Portfolio outperformed the S&P Midcap 400
Index during the six-month period ended June
30, 1999. We attribute the relative
outperformance to strategic reallocation
decisions and stock selection. We decreased
exposure to larger cap companies, i.e.,
companies with a market capitalization
greater than $11 billion. In our opinion,
valuation levels are most stretched in the
large cap segment of the market, regardless
of the underlying future growth prospects of
individual companies. We continue to
identify fundamentally sound mid cap and
smaller cap companies at attractive
valuations. We were also very opportunistic
in raising our allocation to selected
technology stocks, purchasing those that we
believed were overly discounted due to the
omnipresent Y2K concerns. Such stocks as BMC
Software, Compuware, and Keane are now top
Portfolio holdings. In our opinion, these
companies have durable revenue and earnings
that will persist beyond the year 2000.
Outlook
We will continue to look for stocks that, in
our opinion, have been oversold
unjustifiably. During the first half of the
year, performance was also
enhanced by merger activity. Platinum
Technology is one such Portfolio holding (it
is being acquired by Computer Associates).
Looking forward, we will continue to make
changes to the Portfolio in a strategic and
opportunistic manner.
We remain cautiously optimistic for the
second half of 1999. On the
one hand, while corporate profit and growth
may slow, we see few signs indicating that
inflationary pressure will emerge and cause
interest rates to
rise further. On the other hand, equity
valuations do appear to be stretched.
Assuming a stable interest rate environment
in the latter half of the year, we would
expect appreciation in stock prices to be
driven primarily by earnings growth and
sustained investor confidence. Adverse
economic and political factors could upset
the delicate combination of low interest
rates and low equity risk premiums that
currently buttress the market's premium
valuation. We continue to focus our efforts
on bottom-up fundamental analysis while
looking for Growth-At-A-Reasonable-Price
investments.
Sincerely,
Ed Brown
Brown Capital Management
July 20, 1999
Calvert Social Mid Cap Growth Portfolio of
Calvert Variable Series, Inc., should not be
confused with the Calvert Capital
Accumulation Fund. Performance of the two
funds will differ.
<PAGE>
Mid Cap Growth Portfolio
Portfolio of Investments
June 30, 1999
Equity Securities - 97.1% Shares
Value
Communication Equipment - 3.0%
ADC Telecommunications, Inc. * 19,300
$879,356
Nortel Networks Corp. 15,320 461,842
1,341,198
Computer - Software and Services - 18.3%
Advent Software, Inc. * 18,300 1,226,100
BMC Software, Inc. * 39,300 2,122,200
Compuware Corp. * 65,300 2,077,356
Parametric Technology Corp. * 65,700
911,587
Sterling Commerce, Inc. * 21,600
788,400
Sterling Software, Inc. * 42,600
1,136,888
8,262,531
Distributors - Food and Health - 2.1%
Cardinal Health, Inc. 15,100 968,288
Electrical Equipment - 2.6%
Sanmina Corp. * 15,500 1,176,063
Electronics - Semiconductors - 1.7%
Altera Corp. * 20,400 750,975
Financial - Diversified - 3.2%
SLM Holding Corp. 31,200 1,429,350
Health Care - Drug, General and Others -
4.2%
ALZA Corp. * 36,900 1,877,287
Health Care - Hospital Management - 2.6%
Health Management Associates, Inc., Class A
* 102,750 1,155,938
Health Care - Medical Products and Supplies
- - 3.3%
Biomet, Inc. 16,600
659,850
St. Jude Medical, Inc. * 22,700 808,688
1,468,538
Health Care - Special Services - 5.5%
Covance, Inc.* 42,300 1,012,556
Omnicare, Inc. 44,300 559,287
Quintiles Transnational Corp. * 21,600
907,200
2,479,043
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Household Product - Non Durable - 2.4%
Dial Corp New 28,800 $1,071,000
Housewares - 2.9%
Newell Rubbermaid, Inc. 28,300 1,315,950
Insurance - Life and Health - 0.8%
AFLAC, Inc. 7,900 378,212
Investment - Banking and Brokerage - 2.7%
Legg Mason, Inc. 31,600 1,216,600
Investment Management - 6.1%
Franklin Resources, Inc. 30,286 1,230,369
T. Rowe Price Associates, Inc. 39,600
1,519,650
2,750,019
Leisure Time - Products - 1.6%
Harley Davidson, Inc. 13,400 728,625
Retail - Building Supplies - 2.9%
Fastenal Co. 25,400
1,331,912
Retail - Discounters - 5.1%
Dollar General Corp. 40,291 1,168,439
Dollar Tree Stores, Inc. * 25,500
1,122,000
2,290,439
Retail - Specialty - 3.0%
AutoZone, Inc. * 10,200 307,275
Office Depot, Inc. * 47,600 1,050,175
1,357,450
Services - Advertising and Marketing - 4.8%
Acxiom Corp. * 38,400 957,600
Catalina Marketing Corp. * 13,100
1,205,200
2,162,800
Services - Commercial and Consumer - 4.3%
G & K Services, Inc., Class A 15,700
822,288
Sylvan Learning Systems, Inc. * 40,500
1,101,094
1,923,382
Services - Computer Systems - 2.7%
Keane, Inc. * 53,900
1,219,487
Services - Data Processing - 6.6%
Equifax, Inc. 27,200
970,700
Fiserv, Inc. * 24,450
765,591
Paychex, Inc. 38,350 1,222,406
2,958,697
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Services - Employment - 4.7%
Interim Services, Inc. * 52,000 $1,072,500
Robert Half International, Inc. *
39,700 1,032,200
2,104,700
Total Equity Securities (Cost
$37,135,963) 43,718,484
TOTAL INVESTMENTS (Cost $37,135,963) -
97.1% 43,718,484
Other assets and liabilities, net -
2.9% 1,305,044
Net Assets - 100% $45,023,528
*Non-income producing.
See notes to financial statements.
<PAGE>
Mid Cap Growth Portfolio
Statement of Assets and Liabilities
June 30, 1999
Assets
Investments in securities, at value
$43,718,484
Cash 1,334,509
Interest and dividends receivable
10,361
Other assets
601
Total assets 45,063,955
Liabilities
Payable to Calvert Asset Management Company,
Inc. 24,436
Payable to Calvert Administrative Services
Company 8,985
Payable to Calvert Shareholder Services,
Inc. 376
Accrued expenses and other liabilities
6,630
Total liabilities 40,427
Net assets $45,023,528
Net Assets Consist of:
Par value and paid-in capital applicable to
1,365,432 shares of common
stock outstanding; $0.01 par value,
5,000,000 shares authorized
$32,921,159
Undistributed net investment income (loss)
(146,282)
Accumulated net realized gain (loss) on
investments 5,666,135
Net unrealized appreciation (depreciation)
on investments 6,582,521
Net Assets $45,023,533
Net Asset Value per Share
$32.97
See notes to financial statements.
<PAGE>
Mid Cap Growth Portfolio
Statement of Operations
Six Months Ended June 30, 1999
Net Investment Income
Investment Income
Dividend income (net of foreign taxes of
$306) $54,982
Total investment income
54,982
Expenses
Investment advisory fee
139,856
Transfer agency fees and expenses
16,607
Accounting fees 5,049
Directors' fees and expenses
1,414
Administrative fees 41,002
Custodian fees 7,329
Reports to shareholders
2,752
Professional fees 1,964
Miscellaneous 1,105
Total expenses 217,078
Fees paid indirectly
(15,814)
Net expenses 201,264
Net Investment Income (Loss)
(146,282)
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) 5,176,147
Change in unrealized appreciation or
(depreciation) (1,522,664)
Net Realized and Unrealized Gain
(Loss) on Investments
3,653,483
Increase (Decrease) in Net Assets
Resulting From Operations
$3,507,201
See notes to financial statements.
<PAGE>
Mid Cap Growth Portfolio
Statements of Changes in Net Assets
Six Months EndedY
ear ended
June 30,December
31,
Increase (Decrease) in Net Assets
1999 1998
Operations
Net investment income (loss) ($146,282)
$(188,017)
Net realized gain (loss) 5,176,147
5,089,060
Change in unrealized appreciation
or (depreciation) (1,522,664)3,487,
530
Increase (Decrease) in Net Assets
Resulting From Operations 3,507,201
8,388,573
Distributions to shareholders from
Net realized gain on investments
- ---- (4,698,137)
Total distributions ----(4,698,137)
Capital share transactions
Shares sold 10,043,08317,443,
253 Reinvestment of distributions
- ---- 4,698,137
Shares redeemed (8,064,490)(12,41
0,597)
Total capital share transactions
1,978,593 9,730,793
Total Increase (Decrease) in Net Assets
5,485,794 13,421,229
Net Assets
Beginning of period 39,537,73926,116,
510
End of period (including undistributed net
investment income (loss) of ($146,282)
and $0, respectively) $45,023,533$39,53
7,739
Capital Share Activity
Shares sold 333,511
573,133
Reinvestment of distributions ----
157,974
Shares redeemed (267,315)(412,755)
Total capital share activity 66,196
318,352
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Calvert Social Mid Cap Growth
Portfolio (formerly, Calvert Responsibly
Invested Capital Accumulation Portfolio)
(the "Portfolio"), a series of Calvert
Variable Series, Inc. (formerly Acacia
Capital Corporation) (the "Fund"), is
registered under the Investment Company Act
of 1940 as a diversified, open-end
management investment company. The
operations of each series of the Fund are
accounted for separately. The shares of the
Portfolio are sold to affiliated and
unaffiliated insurance companies for
allocation to certain of their variable
separate accounts.
Security Valuation: Securities listed or
traded on a national securities exchange are
valued at the last reported sale price.
Unlisted securities and listed securities
for which the last sale price is not
available are valued at the most recent bid
price. Other securities and assets for which
market quotations are not available or
deemed inappropriate are valued in good
faith under the direction of the Board of
Directors.
Security Transactions and Investment Income:
Security transactions are accounted for on
trade date. Realized gains and losses are
recorded on an identified cost basis.
Dividend income is recorded on the ex-
dividend date. Interest income, accretion of
discount and amortization of premium are
recorded on an accrual basis.
Distributions to Shareholders: Distributions
to shareholders are recorded by the
Portfolio on ex-dividend date. Dividends
from net investment income and distributions
from net realized capital gains, if any, are
paid at least annually. Distributions are
determined in accordance with income tax
regulations which may differ from generally
accepted accounting principles; accordingly,
periodic reclassifications are made within
the Portfolio's capital accounts to reflect
income and gains available for distribution
under income tax regulations.
Estimates: The preparation of financial
statements in conformity with generally
accepted accounting principles requires
management to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of income and expenses during the
reporting period. Actual results could
differ from those estimates.
Expense Offset Arrangements: The Portfolio
has an arrangement with its custodian bank
whereby the custodian's and transfer agent's
fees may be paid indirectly by credits
earned on the Portfolio's cash on deposit
with the bank. Such a deposit arrangement is
an alternative to overnight investments.
Federal Income Taxes: No provision for
federal income or excise tax is required
since the Portfolio intends to continue to
qualify as a regulated investment company
under the Internal Revenue Code and to
distribute substantially all of its
earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the
"Advisor") is wholly-owned
by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Ameritas Acacia
Mutual Holding Company. The Advisor provides
investment advisory services and pays the
salaries and fees of officers and affiliated
Directors of the Portfolio. For its
services, the Advisor received a monthly fee
based on an annual rate of .80% through
February 28, 1999, and effective March 1,
1999 receives a fee of .65%, based on the
Portfolio's average
<PAGE>
daily net assets. The Portfolio paid a
monthly performance fee of plus or minus up
to .05%, on an annual basis, of average
daily net assets of the performance period
depending on the Portfolio's performance
compared to
the S&P Mid-Cap 400 Index. The performance
fee was eliminated on February 28, 1999.
Calvert Administrative Services Company, an
affiliate of the Advisor, provides
administrative services to the Portfolio for
an annual fee, payable monthly, of .10%
through February 28, 1999, and .25%
effective March 1, 1999, based on the
Portfolio's annual average daily net assets.
Calvert Shareholder Services, Inc. ("CSSI"),
an affiliate of the Advisor, acts
as shareholder servicing agent for the
Portfolio. For its services, CSSI
received a fee of $2,635 for the six months
ended June 30, 1999. National Financial Data
Services, Inc. is the transfer and dividend
disbursing agent.
Each Director who is not affiliated with the
Advisor received a fee of $750
for each Board meeting attended plus an
annual fee of $3,000 for Directors
not serving on other Calvert Fund Boards.
Director's fees are allocated to
each of the portfolios served.
Note C -- Investment Activity
During the period, purchases and sales of
investments, other than short-term
securities, were $18,333,641 and
$16,701,902, respectively.
The cost of investments owned at June 30,
1999, was substantially the same for federal
income tax and financial reporting purposes.
Net unrealized appreciation aggregated
$6,582,521, of which $8,282,379 related to
appreciated securities and $1,699,858
related to depreciated securities.
Note D -- Line of Credit
A financing agreement is in place with all
Calvert Group Funds and State Street Bank
and Trust Company ("the Bank"). Under the
agreement, the Bank is providing an
unsecured line of credit facility, in the
aggregate amount of $50 million ($25 million
committed and $25 million uncommitted), to
be accessed by the Funds for temporary or
emergency purposes only.
Borrowings under this facility bear interest
at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per
annum will be incurred on the unused portion
of the committed facility which will be
allocated to all participating funds. The
Fund had no loans outstanding pursuant to
this line of credit at June 30, 1999.
<PAGE>
Mid Cap Growth Portfolio
Financial Highlights
Periods Ended
June 30,December 31,Decem
ber 31,
1999 1998 1997
Net asset value, beginning$30.43 $26.63
$24.05
Income from investment operations
Net investment income(.11)(.14) (.04)
Net realized and unrealized
gain (loss) 2.65 8.00 5.70
Total from investment
operations 2.54 7.86 5.66
Distributions from
Net investment income---- -- --
Net realized gains ---- (4.06) (3.08)
Total distributions----(4.06) (3.08)
Total increase (decrease) in net
asset value 2.54 3.80 2.58
Net asset value, ending$32.97$30.43 $26.63
Total return 8.35% 29.88%
23.53%
Ratios to average net assets:
Net investment income(.73%) (a) (.60%)
(.17%)
Total expenses +1.08% (a)1.05% 1.04%
Net expenses 1.00% (a) 1.00% .96%
Portfolio turnover 42% 65% 96%
Net assets, ending (in thousands) $45,024
$39,538 $26,117
Number of shares outstanding,
ending (in thousands)1,3651,299 981
Years Ended
December 31,December 31,Decem
ber 31,
1996 1995 1994
Net asset value, beginning$22.42 $16.97
$18.95
Income from investment operations
Net investment income(.12)(.15) .10
Net realized and unrealized
gain (loss) 1.79 6.85 (1.98)
Total from investment
operations 1.67 6.70 (1.88)
Distributions from
Net investment income-- (.01) (.10)
Net realized gains(.04) (1.24) --
Total distributions(.04)(1.25) (.10)
Total increase (decrease) in net
asset value 1.63 5.45 (1.98)
Net asset value, ending$24.05$22.42 $16.97
Total return 7.44% 39.46%
(9.92%)
Ratios to average net assets:
Net investment income(.60%)(.84%) .68%
Total expenses + 1.33% 1.56% NA
Net expenses 1.00% 1.25% .79%
Expenses reimbursed -- .10% --
Portfolio turnover 124% 135% 79%
Net assets, ending (in thousands) $19,904
$8,935 $5,689
Number of shares outstanding,
ending (in thousands)828 398 335
(a) Annualized
+ Effective December 31, 1995, this ratio
reflects total expenses before reduction for
fees paid indirectly;
such reductions are included in the
ratio of net expenses. Total expenses are
presented net of expense
waivers and reimbursements.
NA Disclosure not applicable to prior
periods.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Mid Cap Growth Portfolio
A special meeting of shareholders was
scheduled for February 24, 1999.
There were several proposals voted upon at
the meeting. A brief description
of each proposal is shown below.
All proposals were passed.
Proposal 1 - To elect the Board of
Directors.
Nominees
Frank H. Blatz, Jr.
Alice Gresham Bullock
Charles E. Diehl
Barbara J. Krumsiek
M. Charito Kruvant
Arthur J. Pugh
South Trimble III
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) to revise
the language of those restrictions that are
still required to be fundamental.
Proposal 3 - To approve a new investment
advisory agreement with the investment
advisor, Calvert Asset Management Company,
Inc. ("CAMCO").
Proposal 4 - To approve a new investment
subadvisory agreement between CAMCO and the
investment subadvisor, Brown Capital
Management, Inc.
Proposal 5 - 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.
Proposal 6 - To change the par value of the
common stock from $1.00 to $0.01.
Proposal 7 - To ratify the Board's selection
of auditors, PricewaterhouseCoopers LLP.
<PAGE>
Calvert Variable Series, Inc.
Calvert social International Equity
Portfolio
Managed by Murray Johnstone International,
Ltd.
CVS Calvert Social
International Equity Portfolio
GRAPH HERE
Comparison of change in value of a
hypothetical $10,000 investment.
CVS Calvert Social International Equity
Portfolio - $22,182
MSCI EAFE Index GD - $21,309
Average Annual Total Return
(period ended 6.30.99)
One year 6.92%
Five year 11.55%
Since inception (6.30.92) 12.04%
*Performance information is for the
Portfolio only and does not reflect
charges and expenses of the variable annuity
or variable universal life
contract.
Past performance does not indicate future
results.
Dear Investor:
The first half of 1999 saw a reversal of the
events of 1998 when the Asian financial
crisis led to the collapse of smaller
markets from the Far East, through Europe,
and finally to Latin America.
Performance
Through this period, CVS Calvert Social
International Equity benefited from
a full weighting in Japan, particularly as
other investors started to buy the market in
early 1999. The underweight exposure to the
European markets
was also beneficial, although the positive
move within Europe in cyclical stocks (oils,
chemicals, etc.) was difficult to capture.
Still, the Portfolio outperformed the EAFE
Index for the period.
The Investment Climate
The shift to lower interest rates, initiated
by the Federal Reserve Board in September
1998, took the pressure off tumbling
currencies and helped Asian economies to
rebuild. This marked a watershed for the
region and stock markets quickly began to
discount recovery in the real economy, even
though clear signs of a return to growth did
not emerge until well into 1999. During the
six months, the Hong Kong, Singapore, and
Australia markets (which had fallen less in
the downturn), all strengthened
significantly. Also, we had been confident
that we would see a return to growth in
Japan this year and had increased
investments in the market through 1998. Our
foresight was rewarded: Japan was one of the
best of the major markets. The Latin
American markets also benefited from both
the lower interest rates and the sustained
growth in the US.
Europe was the exception to the buoyant
trend. Slower to recover from the downturn
in 1998, the European markets also suffered
as assets were
switched to those regions such as
<PAGE>
Asia and Latin America, where real growth
was coming through. By the end of the
period, the MSCI Europe Index had declined.
Progress of the Euro
The initial stage of the new single European
currency, the euro, has been rocky. It was
inevitable that there would have to be
adjustments and compromises as eleven
disparate economies moved towards economic
union. Varying growth rates in the
respective economies and stringent budget
deficit criteria have further dampened
growth, with countries such as Italy and
Spain curtailing government expenditure to
achieve budget deficit targets. Other
countries, such as Germany and France, have
been trying to stimulate growth after a poor
1998. Despite these measures, Europe is
still looking to grow
only 1.5% this year, while economies in Asia
and Latin America can expect
to achieve 4% or 5%, albeit from a lower
base.
The upshot of this is that investors have
sold the euro and bought the currencies of
those markets where they perceived economic
growth to be
more attractive, namely the Asian markets,
Japan, and Latin America. The selling has so
far led to a de facto devaluation of the
Euro of 15% since its launch. Does this
undermine the future of the euro as a
reserve currency? Probably not. Fluctuations
in value have not harmed any other currency
perceived as a reserve currency, the US
dollar, sterling or the Japanese yen. All
have fluctuated through substantial ranges
without this influencing their "reserve"
status. We believe this will be the case for
the euro, which still represents an economic
block almost the size of the United States.
Currencies are often accurate forecasters of
economic cycles. If Europe lags the US and
Asia, as we believe it does, the coming
period may be an excellent
opportunity to buy European assets before
the situation is reversed and the dollar
begins to slip.
Another crucial issue evidently facing
investors is whether Japan is experiencing a
real turn in its economy or just another
false dawn. Our view
is that we are seeing an economy on the turn
- -- and there are several factors
to support this. Firstly, the
recapitalization of the banking system has
largely been achieved, and banks are once
again in a position to lend. Secondly, and
perhaps most importantly, there are
increasing signs that corporate Japan
realizes that profit is more important than
cash flow: For the first time in a decade,
companies are examining their operations,
deciding which parts are profitable, and
beginning to dismantle or sell-off the rest.
This is a very positive sign for the
Japanese economy as a whole. Thirdly, growth
in Asia is being stimulated, at least in
part by demand in Japan, especially from the
electronics industry. And fourthly, we have
recently seen signs of rising consumer
confidence in Japan where they are beginning
to spend after years
of being the world's best savers. If these
trends continue, corporate Japan will once
again be able to build its reputation on the
growth of profits and
earnings for some years to come.
The final question concerns the prospects
for global growth and the role played by the
US. While the US has clearly been the driver
of global growth for the last three years,
we do not think this is sustainable for
several reasons:
<PAGE>
1. The rising value of the US dollar will
have a dampening affect on the domestic
economy. Already US goods are finding it
harder to compete in international markets
while US consumers are enjoying a "bonanza"
of cheap imported products.
2. The US trade account is showing a rising
deficit and eventually this will be
reflected in a weaker dollar. Domestic
growth will be impacted through
import substitution. "Trade friction" will
become a more contentious issue.
Outlook
The converse of slower US growth, however,
will be strengthening
economies in Japan and Europe. These regions
are not closely synchronized with the US and
in this cycle are lagging by several months.
Over the next year, therefore, as the US
slows we expect at least some of the slack
to be absorbed in Japan and Europe. This
will see profits rising and returns to
investors improving in those markets.
For the coming period, the strategy for CVS
Calvert Social International Equity will be
to continue with a slightly overweight
exposure to the
Japanese market and to gradually increase
investments in Europe through the latter
part of the year. Although the launch of the
euro has been a
surprisingly turbulent event, its unexpected
weakness is setting the scene for strong
European economies in the year 2000.
We appreciate your investment and confidence
in our ability to deliver competitive
returns.
Sincerely,
Andrew Preston
Murray Johnstone International
July 20, 1999
Calvert Social International Equity
Portfolio of Calvert Variable Series, Inc.,
should not be confused with the Calvert
World Values International Equity Fund.
Performance of the two funds will differ.
<PAGE>
International Equity Portfolio
Portfolio of Investments
June 30, 1999
Equity Securities - 93.6% Shares
Value
Argentina - 2.6%
Banco Frances Del Rio La Plata (ADR)
15,000 $285,000
Telecom Argentina Stet-France (ADR)
7,000 187,250
472,250
Australia - 1.9%
National Australia Bank 21,000 347,051
Brazil - 2.4%
Unibanco (GDR) 17,500 421,093
Denmark - 0.9%
Novo-Nordisk As B 1,500 161,601
France - 9.9%
AXA UAP 2,389
291,338
Banque National de Paris 4,437 369,570
Cap Gemini 2,232
350,651
Equant *
2,532 238,324
Legrand
889 180,902
Pinault Printemps 1,155 198,121
Vivendi
1,800 145,752
1,774,658
Germany - 6.4%
Allianz
957 265,375
Douglas Holdings AG 3,590 160,983
Linde 210
125,774
Mannesmann 1,681
250,745
SAP 409 138,291
Volkswagen 3,310
211,892
1,153,060
Hong Kong - 1.2%
Cheung Kong Hldgs 25,000 222,334
Ireland - 2.7%
Allied Irish Banks 16,685 220,918
Global Telesystems Group, Inc. *
3,214 260,334
481,252
Italy - 5.9%
Banca Popolare Di Milano 27,718 214,013
Telecom Italia Mobile 51,707 308,620
Telecom Italia Spa 62,749 340,242
Unicredito Italian 44,034 193,372
1,056,247
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Japan - 23.0%
Fuji Machine Manufacturing 8,000
$246,673
Fujitsu
14,000 281,805
Hino Motors 25,000
117,798
Matsushita Comm 4,000 286,021
Meitec Corp. 8,400
281,227
Nippon Comsys 17,000 276,143
Nippon Express Co. 36,000 215,756
NTT 27 314,706
Olympus Optical Co. 19,000 280,987
Omron Corp. 10,000
173,597
Secom Co. 3,000
312,474
Sharp Corp. 24,000
283,707
Snow Brand Milk 22,000 107,481
Sony Corp. 2,400
258,907
Sumitomo Bank 21,000 260,569
Yamanouchi Pharmaceutical 7,000
267,918
York Benimaru Co. 4,300 162,445
4,128,214
Mexico - 1.5%
Cifra (ADR) * 8,000 153,434
Grupo Industrial Durango (ADR) *
11,000 112,750
266,184
Netherlands - 8.0%
Elsevier
24,842 288,094
ING Groep 5,318
287,808
Koninklijke KPN 6,506 305,155
Utd Pan-Europe Communicat 2,372
128,616
V.N.U 10,550
421,424
1,431,097
New Zealand - 1.7%
Telecom Corporation of New Zealand
70,000 300,198
Norway - 1.4%
Christiania Bank 67,652 242,948
Singapore - 1.5%
City Developments 42,000 268,978
South Africa - 0.7%
Liberty International PLC 932
6,170
Liberty Life Assocociation 2,000
25,621
Standard Bank Investment 28,000 92,575
124,366
Spain - 3.6%
Argentaria 13,815
314,018
Superdiplo * 2,905
64,384
Telefonica de Espana 5,338 257,690
Telefonica de Espana (rights) 106
5,104
641,196
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Switzerland - 2.0%
Zurich Allied 619 $351,872
United Kingdom - 16.3%
Abbey National 15,300 287,350
Anglian Group 2,400 12,283
Anglian Water 10,000 110,653
Barclays
12,500 363,523
Beazer Group 17,000 53,324
Bellway
10,000 56,272
British Telecom 16,000 267,836
Cadbury Schweppes 22,000 140,406
FirstGroup PLC 5,000 27,309
Johnson Matthey 12,000 117,273
Kingfisher 3,335
38,916
Mayflower Corp. 21,600 73,541
National Westminster Bank 9,000
190,805
Norwich Union 26,000 176,020
Pearson
15,000 304,768
Railtrack Group 4,000 81,776
Smithline Beecham 19,000 247,077
Somerfield 12,200
57,210
Vodafone Group 16,000 314,749
2,921,091
Total Equity Securities (Cost
$14,005,061) 16,765,690
Principal
TIME DEPOSITS - 2.8% Amount
Capital Markets, London, 6.00%, 7/1/99
$501,357 501,357
Total Time Deposits (Cost $501,357)
501,357
TOTAL INVESTMENTS
(Cost $14,506,418) - 96.4%
17,267,047
Other assets and liabilities, net -
3.6% 648,723
Net Assets - 100% $17,915,770
* Non-income producing.
Abbreviations:
ADR: American Depository Receipts
See notes to financial statements.
<PAGE>
International Equity Portfolio
Statement of Assets and Liabilities
June 30, 1999
Assets
Investments in securities, at value
$17,267,047
Cash 392,856
Receivable for securities sold
233,245
Receivable for shares purchased
10,694
Interest and dividends receivable
17,994
Other assets
19,799
Total assets 17,941,635
Liabilities
Payable to Calvert Asset Management Company,
Inc. 14,299
Payable to Calvert Administrative Services
Company 3,872
Payable to Calvert Shareholder Services,
Inc. 117
Accrued expenses and other liabilities
7,577
Total liabilities 25,865
Net assets $17,915,770
Net Assets Consist of:
Par value and paid-in capital applicable to
819,706 shares of common
stock outstanding; $0.01 par value,
5,000,000 shares authorized
$14,326,678
Undistributed net investment income (loss)
60,746
Accumulated net realized gain (loss) on
investments and foreign currency
transactions
769,071
Net unrealized appreciation (depreciation)
on investments and foreign currencies and
assets and liabilities denominated
in foreign currencies 2,759,275
Net Assets $17,915,770
Net Asset Value per Share
$21.86
See notes to financial statements.
<PAGE>
International Equity Portfolio
Statement of Operations
Six Months Ended June 30, 1999
Net Investment Income
Investment Income
Interest income $6,629
Dividend income (net of foreign taxes of
$21,582) 175,198
Total investment income
181,827
Expenses
Investment advisory fee
71,350
Transfer agency fees and expenses
2,888
Directors' fees and expenses
575
Administrative fees 22,290
Accounting fees 7,635
Custodian fees 36,816
Registration fees 508
Reports to shareholders
523
Professional fees 838
Miscellaneous 309
Total expenses 143,732
Reimbursement from Advisor
(3,908)
Fees paid indirectly
(7,536)
Net expenses 132,288
Net Investment Income (Loss)
49,539
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 670,654
Foreign currency transactions
(21,739)
648,915
Change in unrealized appreciation or
(depreciation):
Investments and foreign currency
transactions 124,145
Assets and liabilities denominated in
foreign currencies(2,012)
122,133
Net Realized and Unrealized Gain
(Loss) 771,048
Increase (Decrease) in Net Assets
Resulting From Operations
$820,587
See notes to financial statements.
<PAGE>
International Equity Portfolio
Statements of Changes in Net Assets
Six Months EndedY
ear ended
June 30, December
31,
Increase (Decrease) in Net Assets
1999 1998
Operations
Net investment income $49,539 $78,743
Net realized gain (loss) 648,915
1,168,855
Change in unrealized appreciation
or (depreciation) 122,133 1,335,513
Increase (Decrease) in Net Assets
Resulting From Operations 820,587
2,583,111
Distributions to shareholders from
Net investment income ---- (53,185)
Net realized gain on investments
- ---- (1,265,356)
Total distributions ----(1,318,541)
Capital share transactions
Shares sold 1,665,0983,075,675
Reinvestment of distributions ----
1,318,544
Shares redeemed (1,678,790)(2,999
,999)
Total capital share transactions
(13,692) 1,394,220
Total Increase (Decrease) in Net Assets
806,895 2,658,790
Net Assets
Beginning of period 17,108,87514,450,
085
End of period (including undistributed net
investment
income of $60,746 and $11,207,
respectively) $17,915,770$17,10
8,875
Capital Share Activity
Shares sold 77,150
142,752
Reinvestment of distributions ----
63,667
Shares redeemed (79,451)(141,023)
Total capital share activity (2,301)
65,396
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Calvert Social International Equity
Portfolio (formerly, Calvert Responsibly
Invested Global Equity Portfolio) (the
"Portfolio"), a series of Calvert Variable
Series, Inc. (formerly Acacia Capital
Corporation) (the "Fund"), is registered
under the Investment Company Act of 1940 as
a diversified, open-end management
investment company. The operations of each
series of the Fund are accounted for
separately. The shares of the Portfolio are
sold to affiliated and unaffiliated
insurance companies for allocation to
certain of their variable separate accounts.
Security Valuation: Securities listed or
traded on a national securities exchange are
valued at the last reported sale price.
Foreign security prices, furnished by
quotation services in the security's local
currency, are translated using the current
US dollar exchange rate. Unlisted securities
and listed securities for which the last
sale price is not available are valued at
the most recent bid price or based on a
yield equivalent obtained from the
securities' market maker. Other securities
and assets for which market quotations are
not available or deemed inappropriate are
valued in good faith under the direction of
the Board of Directors.
Security Transactions and Investment Income:
Security transactions are accounted for on
trade date. Realized gains and losses are
recorded on an identified cost basis.
Dividend income is recorded on the ex-
dividend date or, in the case of dividends
on certain foreign securities, as soon as
the Portfolio
is informed of the ex-dividend date.
Interest income, accretion of discount
and amortization of premium are recorded on
an accrual basis.
Foreign Currency Transactions: The
Portfolio's accounting records are
maintained in
US dollars. For valuation of assets and
liabilities on each date of net asset value
determination, foreign denominations are
translated into US dollars using the current
exchange rate. Security transactions, income
and expenses are translated at the
prevailing rate of exchange on the date of
the event. The effect of changes in foreign
exchange rates on securities and foreign
currencies is included with the net realized
and unrealized gain or loss on investments
and foreign currencies.
Distributions to Shareholders: Distributions
to shareholders are recorded by the
Portfolio on ex-dividend date. Dividends
from net investment income and distributions
from net realized capital gains, if any, are
paid at least annually. Distributions are
determined in accordance with income tax
regulations
which may differ from generally accepted
accounting principles;
accordingly, periodic reclassifications are
made within the Portfolio's
capital accounts to reflect income and gains
available for distribution under income tax
regulations.
Estimates: The preparation of financial
statements in conformity with generally
accepted accounting principles requires
management to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of income and expenses
during the reporting period. Actual results
could differ from those estimates.
Expense Offset Arrangements: The Portfolio
has an arrangement with its custodian bank
whereby the custodian's and transfer agent's
fees may be paid indirectly by credits
earned on the Portfolio's cash on deposit
with the bank. Such a deposit arrangement is
an alternative to overnight investments.
<PAGE>
Federal Income Taxes: No provision for
federal income or excise tax is required
since the Portfolio intends to continue to
qualify as a regulated investment company
under the Internal Revenue Code and to
distribute substantially all of its
earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the
"Advisor") is wholly-owned
by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Ameritas Acacia
Mutual Holding Company. The Advisor provides
investment advisory services and pays the
salaries and fees of officers and affiliated
Directors of the Portfolio. For its
services, the Advisor received a monthly fee
based on an annual rate of 1% through
February 28, 1999, and effective March 1,
1999 receives a fee of .75%, based on the
Portfolio's average daily net assets.
Calvert Administrative Services Company, an
affiliate of the Advisor, provides
administrative services to the Portfolio for
an annual fee, payable monthly, of the
greater of $40,000 or .10% through February
28, 1999, and .35% effective March 1, 1999,
based on the Portfolio's annual average
daily net assets. The Advisor voluntarily
reimbursed the Portfolio $3,908 for
administrative service fees.
Calvert Shareholder Services, Inc. ("CSSI"),
an affiliate of the Advisor, acts
as shareholder servicing agent for the
Portfolio. For its services, CSSI
eceived a fee of $892 for the six months
ended June 30, 1999. National Financial Data
Services, Inc. is the transfer and dividend
disbursing agent.
Each Director who is not affiliated with the
Advisor received a fee of $750
for each Board meeting attended plus an
annual fee of $3,000 for Directors
not serving on other Calvert Fund Boards.
Director's fees are allocated to
each of the portfolios served.
Note C -- Investment Activity
During the period, purchases and sales of
investments, other than short-term
securities, were $4,882,150 and $5,003,513,
respectively.
The cost of investments owned at June 30,
1999, was substantially the same for federal
income tax and financial reporting purposes.
Net unrealized appreciation aggregated
$2,760,629, of which $3,650,555 related to
appreciated investments and $889,926 related
to depreciated investments.
Note D -- Line of Credit
A financing agreement is in place with all
Calvert Group Funds and State Street Bank
and Trust Company ("the Bank"). Under the
agreement, the Bank is providing an
unsecured line of credit facility, in the
aggregate amount of $50 million ($25 million
committed and $25 million uncommitted), to
be accessed by the Funds for temporary or
emergency purposes only.
Borrowings under this facility bear interest
at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per
annum will be incurred on the unused portion
of the committed facility which will be
allocated to all participating funds. The
Fund had no loans outstanding pursuant to
this line of credit at June 30, 1999.
<PAGE>
International Equity Portfolio
Financial Highlights
Periods Ended
June 30,December 31,Decem
ber 31,
1999 1998 1997
Net asset value, beginning$20.81 $19.10
$18.74
Income from investment operations
Net investment income.06 .10 .19
Net realized and unrealized
gain (loss) .99 3.35 2.28
Total from investment
operations 1.05 3.45 2.47
Distributions from
Net investment income----(.07) (.20)
Net realized gains ---- (1.67) (1.91)
Total distributions----(1.74) (2.11)
Total increase (decrease) in net
asset value 1.05 1.71 .36
Net asset value, ending$21.86$20.81 $19.10
Total return 5.05% 18.09%
13.23%
Ratios to average net assets:
Net investment income.58% (a).49% .85%
Total expenses +1.63% (a)1.65% 1.56%
Net expenses 1.54% (a) 1.56% 1.17%
Expenses reimbursed.05% (a).15% .17%
Portfolio turnover 29% 92% 35%
Net assets, ending (in thousands) $17,916
$17,109 $14,450
Number of shares outstanding,
ending (in thousands)820 822 757
Years Ended
December 31,December 31,Decem
ber 31,
1996 1995 1994
Net asset value, beginning$17.15 $15.89
$17.72
Income from investment operations
Net investment income.17 .27 .11
Net realized and unrealized
gain (loss) 2.40 1.69 (.49)
Total from investment
operations 2.57 1.96 (.38)
Distributions from
Net investment income(.14)(.25) (.13)
Net realized gains(.84) (.45) (1.32)
Total distributions(.98)(.70) (1.45)
Total increase (decrease) in net
asset value 1.59 1.26 (1.83)
Net asset value, ending$18.74$17.15 $15.89
Total return 14.99% 12.35%
(2.13%)
Ratios to average net assets:
Net investment income1.02%1.48% .59%
Total expenses + 1.59% 1.51% NA
Net expenses 1.18% 1.12% 1.24%
Expenses reimbursed.23% .39% .29%
Portfolio turnover 85% 90% 84%
Net assets, ending (in thousands) $14,027
$9,831 $7,765
Number of shares outstanding,
ending (in thousands)748 573 489
(a) Annualized
+ Effective December 31, 1995, this ratio
reflects total expenses before reduction for
fees paid indirectly;
such reductions are included in the ratio
of net expenses. Total expenses are
presented net of expense
waivers and reimbursements.
NA Disclosure not applicable to prior
periods.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social International Equity
Portfolio
A special meeting of shareholders was
scheduled for February 24, 1999.
There were several proposals voted upon at
the meeting. A brief description
of each proposal is shown below.
All proposals were passed.
Proposal 1 - To elect the Board of
Directors.
Nominees
Frank H. Blatz, Jr.
Alice Gresham Bullock
Charles E. Diehl
Barbara J. Krumsiek
M. Charito Kruvant
Arthur J. Pugh
South Trimble III
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)
to revise the language of those restrictions
that are still required to be fundamental.
Proposal 3 - To approve a new investment
advisory agreement with the investment
advisor, Calvert Asset Management Company,
Inc. ("CAMCO").
Proposal 4 - 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.
Proposal 5 - To change the par value of the
common stock from $1.00 to $0.01.
Proposal 6 - To ratify the Board's selection
of auditors, PricewaterhouseCoopers LLP.
<PAGE>
Calvert Variable Series, iNc.
Calvert Social Balanced Portfolio
CVS Calvert Social Balanced Portfolio
INSERT GRAPH HERE
Average Annual Total Return
(period ended 6.30.99)
One year 11.00%
Five year 16.86%
Ten year 12.19%
Since inception (9.02.86) 11.57%
*Performance information is for the
Portfolio only and does not reflect charges
and expenses of the variable annuity or
variable universal life contract. Past
performance does not indicate future
results.
New subadvisors assumed management of the
Portfolio effective February 1995.
Dear Investor:
Performance
For the first six months of 1999, CVS
Calvert Social Balanced performed slightly
better than the Lipper VA Balanced Fund
Index. Throughout the period, the Fund
continued to maintain its asset allocation
at approximately 60% stocks and 40% bonds.
During the first quarter, when the equity
market favored our investing style, the Fund
outperformed the Lipper VA Balanced Fund
Index. The reversal of style preferences in
equity markets in the second quarter
accounted for the Portfolio's relative
underperformance against the Lipper VA
Balanced Fund Index.
The Investment Climate
The first six months of 1999 saw the
reversal of a long-standing trend in
equity markets. The first quarter of the
year was characterized by the continued
strong performance of large cap growth
stocks. Internet stocks, which had been on a
strong run since September of last year,
continued to power along. In the small cap
arena, the internet stocks prospered to the
almost complete exclusion of other small
companies. As the picture for
global growth improved and the picture for
domestic inflation worsened late
in the first quarter, markets changed in
tone. The much ignored value plays
in the market and smaller cap stocks lead
the way in the closing months of
this semi-annual period. Bonds rose
throughout the period as investors grew more
cautious about domestic inflation and
whether the Federal Reserve would hike short
term interest rates. This rising rate
environment was a catalyst for the changes
in investor preferences in stocks.
<PAGE>
Strategy
Fixed Income Investments -- Managed by
Calvert Asset Management Company, Inc.
As fear of a global crisis dissipated since
the beginning of the year, Treasury prices
dropped substantially and other fixed income
securities rallied relative to Treasuries as
the "flight to quality" reversed itself.
With a more stable market and "tighter"
credit spreads, the first quarter of this
year was characterized by massive issuance
of bonds and the proliferation of
megadeals (deals sized over 1 billion
dollars).
This continued through April, and Calvert
was an active and profitable participant in
the new issue bond market. During this
period of time, Calvert's bond funds
recaptured all of the underperformance
suffered during the global meltdown last
year -- and then some. In May and June, the
staggering amount of new issues and
inflation fears started to weigh on bond
markets and
resulted in falling bond prices.
Starting in November of last year, Calvert
taxable bond funds have rallied 8 straight
months relative to their benchmarks. Calvert
has attempted to be defensive by avoiding
high risk/high yield positions in both
emerging markets and the "junk arena",
unless they represent stellar value. The
manager has successfully implemented a
strategy such that the Portfolio has
performed
well in both a rallying and deteriorating
marketplace.
Equity Investments -- Managed by NCM Capital
Management, Inc.
The Investment Climate
The market environment for the first three
months of the year was for the
most part a continuation of 1998. Large
capitalized stocks continued to outperform
small stocks and growth continued to outpace
value. This was reflected by the divergent
performance of the S&P 500 versus the
Russell 2000 (small cap index). For the
first three months of the period, the S&P
outpaced the Russell 2000.
Strategy
The strongest sector during the first three
months of the year was Technology, followed
by Financials. Other traditional growth
industries did not perform nearly as well
with both Healthcare and Consumer Staples
posting below market returns. The Portfolio
enjoyed a healthy weighting in the
technology sector with technology stocks
contributing a significant portion of the
quarter's gain.
The next three months was an entirely
different matter. Following the release of
very strong first quarter economic data
attributable in part to stabilization
in Asia and Latin America, the Federal
Reserve switched from a neutral
stance on interest rates to a tightening
bias. The Fed's less accommodative stance
was the very catalyst the market needed to
abandon high growth stocks in favor of deep
value cyclical stocks which tend to perform
better than
growth stocks in a rising interest rate
environment. (As p/e multiples contract,
those stocks with the highest multiples -
growth stocks - suffer the most.)
<PAGE>
The second reason investors rotated into
value stocks is because corporate profits
are accelerating (S&P corporate profits are
expected to rise at a
double-digit pace this year) -- just as
worldwide economic growth is accelerating.
While Asia, Latin America, and parts of
Europe have been in recent recession, many
of these economies are now showing signs of
stability and even recovery.
During the past six months, the Portfolio
was positioned fairly aggressively toward
growth with heavy weightings in Technology,
Healthcare, and Consumer Staples. Needless
to say, when the rotation out of growth
occurred, Portfolio performance declined
accordingly.
Outlook
Looking out to the second half of 1999, the
market's performance will likely be dictated
by how the Federal Reserve responds to
upcoming economic
data. Many economists now accept that given
the surge in productivity due
to the use of technology, the non-
inflationary rate of economic growth is
now somewhere nearer 3% than the 2 to 2.5%
previously thought. Thus, I believe the Fed
will attempt to slow GDP growth to 3%, which
is still very healthy. The Fed raised the
federal funds rate by 25 basis points on the
last
day of the quarter and may move once again
before year-end. Should the
Fed's goal of 3% GDP growth be achieved, the
economic landscape will
be attractive for traditional large cap
growth investors.
Large cap growth will not always guarantee
the strongest return quarter to quarter, but
I feel very comfortable that over the long
term, large cap growth as an investment
style will remain highly competitive.
Sincerely,
John Nichols
Vice President of Equities
Calvert Asset Management Company
Calvert Social Balanced Portfolio of Calvert
Variable Series, Inc., should not be
confused with the Calvert Social Investment
Fund Balanced Portfolio. Performance of the
two funds will differ.
<PAGE>
Balanced Portfolio
Portfolio of Investments
June 30, 1999
Equity Securities - 60.4% Shares
Value
Banks - Major Regional - 3.2%
Fifth Third Bancorp. 33,700 $2,243,156
First Republic Bank Corp. 1,500
1,500,000
Firstar Corp 123,600
3,460,800
State Street Corp. 41,000 3,500,375
10,704,331
Banks - Money Center - 1.3%
Bank of America Corp. 59,700 4,376,756
Broadcast - TV, Radio and Cable - 1.6%
Clear Channel Communications. * 31,000
2,137,063
Comcast Corp. 47,200 1,814,250
Mediaone Group, Inc. * 18,700 1,390,813
5,342,126
Chemicals - 0.7%
Praxair, Inc. 47,300
2,314,744
Chemicals - Specialty - 0.7%
Sigma Aldrich Corp. 71,400 2,458,838
Communications Equipment - 4.3%
Alltel Corp 35,400
2,531,100
Lucent Technologies, Inc. 68,900
4,646,444
Nokia Corp. * 22,200 2,032,688
Tellabs Inc. * 79,800 5,391,488
14,601,720
Computer - Hardware - 3.5%
International Business Machines Corp.
34,400 4,446,200
Sun Microsystems, Inc. * 103,400 7,121,675
11,567,875
Computer - Networking - 1.4%
Cisco Systems, Inc. * 74,500 4,805,250
Computer - Peripherals - 1.4%
EMC Corp. * 87,800 4,829,000
Computer - Software & Services - 5.7%
America Online, Inc. * 26,400 2,917,200
At Home Corp. * 9,600 517,800
BMC Software, Inc. * 56,100 3,029,400
Microsoft Corp. * 79,180 7,141,046
Oracle Corp. * 146,902 5,453,737
19,059,183
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Distributors - Food and Health - 1.1%
Cardinal Health, Inc. 58,050 $3,722,456
Electronics - Semiconductors - 0.9%
Intel Corp. 51,600
3,070,200
Entertainment - 1.0%
Time Warner, Inc. 44,100 3,241,350
Financial - Diversified - 1.4%
Federal National Mortgage Assn. 44,600
3,049,525
Fusion Capital ^ 8,069,222 1,738,480
4,788,005
Health Care - Diversified - 1.1%
Johnson & Johnson 36,300 3,557,400
Health Care - Drugs, General and Others -
0.4%
Watson Pharmaceuticals, Inc. * 35,800
1,255,238
Health Care - Pharmaceutical and Drugs -
4.1%
Merck & Co., Inc. 71,400 5,283,600
Pfizer, Inc. 24,200
2,655,950
Schering Plough Corp. 110,900 5,877,700
13,817,250
Healthcare - Medical Products and Supplies -
0.5%
Medtronic, Inc. 22,800 1,775,550
Household Produces - Non-Durable - 1.3%
Dial Corp. 113,200
4,209,625
Insurance Broker - 1.1%
Marsh & McLennan Cos., Inc. 48,000
3,624,000
Insurance - Multi-Line - 1.2%
American International Group, Inc.
34,137 3,996,163
Investment Management - 0.9%
Equitable Companies, Inc. 43,000
2,881,000
Leisure Time - Products - 0.4%
Harley Davidson, Inc. 24,600 1,337,625
Manufacturing - Diversified - 3.6%
Illinois Tool Works, Inc. 53,800
4,411,600
Tyco International, Ltd. 80,100 7,589,475
12,001,075
Manufacturing - Specialized - 1.5%
Avery Dennison Corp. 48,200 2,910,075
Sealed Air Corp. 34,200 2,218,725
5,128,800
<PAGE>
Equity Securities - (Cont'd) Shares
Value
Office Equipment & Supplies - 0.8%
Pitney Bowes, Inc. 40,600 $2,608,550
Oil and Gas Products - 0.6%
Anadarko Petroleum Corp. 51,600 1,899,525
Photography and Imaging - 0.4%
Xerox Corp. 22,900
1,352,531
Real Estate Investment Trust - 0.4%
Highwoods Properties, Inc., Preferred,
Series A 1,500 1,296,600
Retail - Building Supplies - 1.8%
Home Depot, Inc. 63,740 4,107,246
Lowes Cos., Inc. 33,200 1,882,025
5,989,271
Retail - Department Stores - 0.6%
Federated Department Stores, Inc. *
39,200 2,075,150
Retail - Drug Stores - 1.7%
CVS Corp. 111,000
5,633,250
Retail - General Merchandise - 2.3%
Costco Cos., Inc. * 54,500 4,363,406
Dayton Hudson Corp. 50,500 3,282,500
7,645,906
Retail - Food Chains - 1.4%
Kroger Co. * 95,600
2,670,825
Safeway, Inc. * 42,300 2,093,850
4,764,675
Savings and Loan Companies - 0.4%
Washington Mutual, Inc. 35,500 1,255,812
Services - Data Processing - 0.4%
First Data Corp. 28,700 1,404,506
Telecomm-Long Distance 1.3%
MCI Worldcom, Inc. * 51,838 4,461,308
Telephone - 3.6%
BellSouth Corp. 80,300 3,764,063
Century Telephone Enterprises, Inc.
51,145 2,033,034
SBC Communications, Inc. 105,940 6,144,520
11,941,617
Water Utilities - 0.4%
American Water Works, Inc. 42,300
1,300,725
Total Equity Securities (Cost
$151,280,587) 202,094,986
<PAGE>
Principal
Corporate Obligations - 33.1% Amount
Value
Abbey National PLC, 8.20%, 10/15/04
$1,440,000 $1,522,958
AGL Capital Trust, 8.17%, 6/1/37
1,000,000 922,070
AMR Corp., 9.82%, 3/7/01 25,000 26,160
ARG Funding Corp., 5.88%, 5/20/02
2,000,000 1,978,437
Atlantic Mutual Insurance Co., 8.15%,
2/15/28 3,000,000 2,517,780
BCI US Funding Trust 1, 8.01%, 12/29/49
2,500,000 2,355,725
BNP US Funding, LLC, 7.738%, 12/31/49
2,000,000 1,877,646
Central LA Electric Co., 6.52%, 5/15/09
1,500,000 1,461,645
CMS Energy Corp., 8.375%, 7/1/03
1,500,000 1,495,531
Colonial Bank, 8.00%, 3/15/09 2,000,000
1,910,656
Columbia University, 6.83%, 12/15/20
3,000,000 2,920,500
Computer Associates International, Inc.,
6.25%, 4/15/03 2,685,000 2,604,396
Computer Associates International, Inc.,
6.375%, 4/15/05 3,000,000 2,859,330
Conseco, Inc., 6.80%, 6/15/05 4,000,000
3,821,160
Conseco, Inc., 8.796%, 4/1/27 220,000
202,138
Cox Enterprises, Inc., 7.375%, 6/15/09
500,000 500,085
Credit Suisse First Boston, 7.90%, 5/1/07
1,000,000 973,566
Deutsche Bank, 7.872%, 12/29/49 3,000,000
2,887,632
Discover Card Master Trust, 5.65%,
11/15/04 5,000,000
4,934,500
Dresdner Funding Trust, 8.151%, 6/30/31
2,500,000 2,392,602
First Data Corp., 6.75%, 7/15/05
1,000,000 997,440
Florida Windstorm Underwriting, 7.125%,
2/25/19 1,500,000
1,482,300
Fusion Capital, 10.00%, 1/16/02 364,919
311,702
Goldman Sachs Group, 6.625%, 12/1/04
2,000,000 1,976,660
Goldman Sachs Group, 6.34%, 3/1/06
2,000,000 1,920,508
Household Finance Corp., 6.40%, 6/17/08
2,000,000 1,894,120
Imperial Bank, 8.50%, 4/1/09 3,500,000
3,344,701
Interpool Capital Trust, 9.875%, 2/15/27
2,000,000 1,791,880
Interpool, Inc., 6.625%, 3/1/03 2,085,000
1,920,431
Interpool, Inc., 7.20%, 8/1/07 1,000,000
869,110
LG G Cap Corp., 5.75%, 11/1/01 2,500,000
2,438,425
Liberty Media, 7.875%, 7/15/09 1,000,000
997,270
Liberty Media, 8.50%, 7/15/29 1,650,000
1,645,496
Mark IV Industries, Inc., 7.50%, 9/1/07
250,000 229,800
MCN Investment Corp., 6.30%, 4/2/11
2,000,000 1,981,540
MCN Investment Corp., 6.35%, 4/2/12
1,000,000 981,810
Merita Bank Ltd., 7.15%, 12/29/49
4,500,000 4,411,530
Natexis SA, 8.44%, 12/29/49 2,000,000
1,909,054
National Rural Utilities Coop, 5.38%,
12/15/03 1,000,000
964,120
North America Mortgage, 7.315%, 8/25/03
1,500,000 1,492,845
Onbank Capital Trust I, 9.25%, 2/1/27
1,400,000 1,497,146
Orion Capital Trust, 7.70%, 4/15/28
3,500,000 2,856,945
Paine Webber Group, Inc., 6.375%, 5/15/04
1,000,000 971,960
Republic NY Corp., 7.75%, 5/15/02
5,000,000 5,160,200
Riggs Capital Trust, 8.625%, 12/31/26
1,000,000 962,950
Russell Frank Co, 5.625%, 1/15/09
3,200,000 2,926,368
Skandinaviska Enskilda Banken, 6.50%,
12/29/49 4,500,000
4,279,851
Sovereign Bancorp, Inc., 6.75%, 9/1/00
1,250,000 1,242,750
Swedbank Sparbank Svenge, 7.50%, 9/27/492,
000,000 1,916,932
Telecom Corp. of New Zealand, 6.50%,
2/10/08 2,500,000
2,427,565
Tyco International Group, 6.125%, 1/15/09
2,000,000 1,862,380
WNH L.P., 9.40%, 10/1/99 705,000 710,999
Xerox Corp., 5.875%, 5/15/04 7,500,000
7,281,150
<PAGE>
Principal
Corporate Obligations - (Cont'd)
Amount Value
Zurich Capital Trust, 8.376%, 6/1/37
$3,000,000 $3,065,220
Total Corporate Obligations
(Cost $113,513,177) 110,887,675
U.S. Government Agencies
and Instrumentalities - 0.3%
Federal Home Loan Mortgage Corp.,
7.12%, 6/25/28 1,000,000 1,009,010
Total U.S. Government Agencies and
Instrumentalities
(Cost $1,037,585) 1,009,010
Municipal Obligations - 1.7%
Chickasaw Nation Certificates of
Participation,
10.00%, 8/1/03# 469,060 422,154
Maryland State Economic Development Corp.,
8.00%, 10/1/05 905,000 912,765
Maryland State Economic Development Corp.,
8.625%, 10/1/19 750,000 857,588
San Mateo, CA Redevelopment Agency,
7.125%, 8/1/08 3,585,000 3,555,854
Total Municipal Obligations
(Cost $5,709,060) 5,748,361
U.S. Treasury - 1.3%
U.S. Treasury Notes, 6.875%, 5/15/06
500,000 526,570
U.S. Treasury Notes, 5.50%, 5/15/09
4,000,000 3,885,000
Total U.S. Treasury (Cost $4,408,977)
4,411,570
Repurchase Agreements - 5.1%
State Street Bank: 4.70%, dated 6/30/99, due
7/1/99
(Collateral: $17,899,898,
FNMA, 5.75%, 2/15/08) 17,000,000 17,000
,000
Total Repurchase Agreements
(Cost $17,000,000) 17,000,000
TOTAL INVESTMENTS
(Cost $292,949,386) - 101.9%
341,151,602
Other assets and liabilities, net -
(1.9%) (6,274,251)
Net Assets - 100% $334,877,351
* Non-income producing.
# This security was valued by the Board of
Directors. See Note A.
^ See note B.
See notes to financial statements.
<PAGE>
Balanced Portfolio
Statement of Assets and Liabilities
June 30, 1999
Assets
Investments in securities, at value
$341,151,602
Cash 2,319,268
Receivable for securities sold
35,099,687
Interest and dividends receivable
1,889,467
Other assets
7,948
Total assets 380,467,972
Liabilities
Payable for securities purchased
45,289,564
Payable to Calvert Asset Management Company,
Inc. 149,124
Payable to Calvert Administrative Services
Company 73,135
Payable to Calvert Shareholder Services,
Inc. 3,417
Payable for shares redeemed
4,402
Accrued expenses and other liabilities
70,979
Total liabilities 45,590,621
Net assets $334,877,351
Net Assets Consist of:
Par value and paid-in capital applicable to
149,023,657 shares of common
stock outstanding; $0.01 par value,
275,000,000 shares authorized
$265,232,388
Undistributed net investment income (loss)
4,329,759
Accumulated net realized gain (loss) on
investments and foreign currency
transactions 17,110,790
Net unrealized appreciation (depreciation)
on investments and
foreign currencies and assets and
liabilities denominated
in foreign currencies 48,204,414
Net Assets $334,877,351
Net Asset Value per Share
$2.247
See notes to financial statements.
<PAGE>
Balanced Portfolio
Statement of Operations
Six Months Ended June 30, 1999
Net Investment Income
Investment Income
Interest income $4,282,273
Dividend income 652,387
Total investment income
4,934,660
Expenses
Investment advisory fee
817,516
Transfer agency fees and expenses
140,901
Directors' fees and expenses
10,899
Administrative fees 297,796
Accounting fees 20,339
Custodian fees 33,002
Registration fees 2,706
Reports to shareholders
21,832
Professional fees 16,707
Miscellaneous 8,625
Total expenses 1,370,323
Fees paid indirectly
(50,989)
Net expenses 1,319,334
Net Investment Income 3,615,326
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments 15,597,070
Foreign currency transactions
352
15,597,422
Change in unrealized appreciation or
(depreciation):
Investments and foreign currencies
(3,331,487)
Assets and liabilities denominated in
foreign currencies 386
(3,331,101)
Net Realized and Unrealized Gain
(Loss) 12,266,321
Increase (Decrease) in Net Assets
Resulting From Operations
$15,881,647
See notes to financial statements.
<PAGE>
Balanced Portfolio
Statements of Changes in Net Assets
Six Months EndedY
ear ended
June 30,December
31,
Increase (Decrease) in Net Assets
1999 1998
Operations
Net investment income $3,615,326$6,989,
471
Net realized gain (loss) 15,597,422
15,581,784
Change in unrealized appreciation
or (depreciation) (3,331,101)17,878
,260
Increase (Decrease) in Net Assets
Resulting From Operations 15,881,647
40,449,515
Distributions to shareholders from
Net investment income ----(6,779,908)
Net realized gain on investments
- ---- (15,194,510)
Total distributions ----(21,974,418)
Capital share transactions
Shares sold 27,350,74054,108,
882
Reinvestment of distributions ----
21,974,418
Shares redeemed (12,309,443)(18,4
37,965)
Total capital share transactions
15,041,297 57,645,335
Total Increase (Decrease) in Net Assets
30,922,944 76,120,432
Net Assets
Beginning of period 303,954,407227,83
3,975
End of period (including undistributed net
investment
income of $4,329,759
and $714,433, respectively) $334,877,351
$303,954,407
Capital Share Activity
Shares sold 12,467,118
25,653,403
Reinvestment of distributions ----
10,336,200
Shares redeemed (5,644,330)(8,755
,271)
Total capital share activity 6,822,788
27,234,332
See notes to financial statements.
<PAGE>
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Calvert Social Balanced Portfolio
(formerly, Calvert Responsibly Invested
Balanced Portfolio) (the "Portfolio"), a
series of Calvert Variable Series, Inc.
(formerly Acacia Capital Corporation) (the
"Fund"), is registered under the Investment
Company Act of 1940 as a diversified, open-
end management investment company. The
operations of each series of the Fund are
accounted for separately. The shares of the
Portfolio are sold to affiliated and
unaffiliated insurance companies for
allocation to certain of their variable
separate accounts.
Security Valuation: Securities listed or
traded on a national securities exchange are
valued at the last reported sale price.
Foreign security prices, furnished by
quotation services in the security's local
currency, are translated using the current
U.S. dollar exchange rate. Unlisted
securities and listed securities for which
the last sale price is not available are
valued at the most recent bid price or based
on a yield equivalent obtained from the
securities' market maker. Municipal
securities are valued utilizing the average
of bid prices or at bid prices based on a
matrix system (which considers such factors
as security prices, yields, maturities and
ratings) furnished by dealers through an
independent pricing service. Other
securities and assets for which market
quotations are not available or deemed
inappropriate are valued in good faith under
the direction of the Board of Directors.
In determining fair value, the Board
considers all relevant qualitative and
quantitative information available. These
factors are subject to change over time and
are reviewed periodically. The values
assigned to fair value investments are based
on available information and do not
necessarily represent amounts that might
ultimately be realized, since such amounts
depend on future developments inherent in
long-term investments. Because
of the inherent uncertainty of valuation,
those estimated values may differ
significantly from the values that would
have been used had a ready market
of the investments existed, and the
differences could be material.
At June 30, 1999, $422,154 or 0.1% of net
assets were valued by the Board
of Directors.
Repurchase Agreements: The Portfolio may
enter into repurchase agreements with
recognized financial institutions or
registered broker/dealers and, in all
instances, holds underlying securities with
a value exceeding the total repurchase
price, including accrued interest. Although
risk is mitigated by
the collateral, the Fund could experience a
delay in recovering its value
and a possible loss of income or value if
the counterparty fails to perform
in accordance with the terms of the
agreement.
Security Transactions and Investment Income:
Security transactions are accounted for on
trade date. Realized gains and losses are
recorded on an identified cost basis.
Dividend income is recorded on the ex-
dividend date or, in the case of dividends
on certain foreign securities, as soon as
the Portfolio
is informed of the ex-dividend date.
Interest income, accretion of discount
and amortization of premium are recorded on
an accrual basis.
Foreign Currency Transactions: The
Portfolio's accounting records are
maintained in U.S. dollars. For valuation of
assets and liabilities on each date of net
asset value determination, foreign
denominations are converted into U. S.
dollars using the current exchange rate.
Security transactions, income and expenses
are translated at the prevailing rate of
exchange on the date of the event. The
effect of changes in foreign exchange rates
on securities is
included with the net realized and
unrealized gain or loss on investments.
<PAGE>
Distributions to Shareholders: Distributions
to shareholders are recorded by the
Portfolio on ex-dividend date. Dividends
from net investment income and distributions
from net realized capital gains, if any, are
paid at least annually. Distributions are
determined in accordance with income tax
regulations
which may differ from generally accepted
accounting principles;
accordingly, periodic reclassifications are
made within the Portfolio's capital accounts
to reflect income and gains available for
distribution under income tax regulations.
Estimates: The preparation of financial
statements in conformity with generally
accepted accounting principles requires
management to make estimates and assumptions
that affect the reported amounts of assets
and liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of income and expenses
during the reporting period. Actual results
could differ from those estimates.
Expense Offset Arrangements: The Portfolio
has an arrangement with its custodian bank
whereby the custodian's and transfer agent's
fees may be paid indirectly by credits
earned on the Portfolio's cash on deposit
with the bank. Such a deposit arrangement is
an alternative to overnight investments.
Federal Income Taxes: No provision for
federal income or excise tax is required
since the Portfolio intends to continue to
qualify as a regulated investment company
under the Internal Revenue Code and to
distribute substantially all of its
earnings.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the
"Advisor") is wholly-owned
by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Ameritas Acacia
Mutual Holding Company. The Advisor provides
investment advisory services and pays the
salaries and fees of officers and affiliated
Directors of the Portfolio. For its
services, the Advisor received a monthly fee
based on an annual rate of .70% through
February 28, 1999, and effective March 1,
1999 receives a fee of .425%, based on the
Portfolio's average daily net assets. The
Portfolio paid a monthly performance fee of
plus or minus up to .15%, on an annual
basis, of average daily net assets of
the performance period depending on the
Portfolio's performance compared
to the Lipper Balanced Funds Index. The
performance fee was eliminated on February
28, 1999.
Calvert Administrative Services Company,
Inc., an affiliate of the Advisor, provides
administrative services to the Portfolio for
an annual fee, payable monthly, of .275% of
the average daily net assets of the
Portfolio. The administrative service fee
was initiated on March 1, 1999.
Calvert Shareholder Services, Inc. ("CSSI"),
an affiliate of the Advisor, acts
as shareholder servicing agent for the
Portfolio. For its services, CSSI
received a fee of $21,789 for the six months
ended June 30, 1999. National Financial Data
Services, Inc. is the transfer and dividend
disbursing agent.
Each Director who is not affiliated with the
Advisor received a fee of $750
for each Board meeting attended plus an
annual fee of $3,000 for Directors
not serving on other Calvert Fund Boards.
Director's fees are allocated to
each of the portfolios served.
Fusion Capital (formerly Umbono), which is
an affiliate because the Portfolio owns over
11% of the voting securities, was purchased
at a cost of $2,228,799 for 8,069,222
shares.
<PAGE>
Note C -- Investment Activity
During the period, purchases and sales of
investments, other than short-term
securities, were $1,015,129,092 and
$996,084,306, respectively. U.S. government
security purchases were $594,003,340 and
sales were $582,848,689. The cost of
investments owned at June 30, 1999, was
substantially the same for federal income
tax purposes and financial reporting
purposes. Net unrealized appreciation
aggregated $48,202,216, of which $54,477,825
related to appreciated securities and
$6,275,609 related to depreciated
securities.
As a cash management practice, the Portfolio
may sell or purchase securities from other
Portfolios managed by the Advisor. For the
period ended June 30, 1999, the Portfolio
effected transactions with other Calvert
Portfolios, which resulted in net realized
losses on sales of securities of $231,857.
These purchases and sales transactions,
executed at independently derived prices
pursuant to Rule 17a-7 under the Investment
Company Act of 1940, were $16,486,514 and
$11,247,350, respectively.
Note D -- Line of Credit
A financing agreement is in place with all
Calvert Group Funds and State Street Bank
and Trust Company ("the Bank"). Under the
agreement, the Bank is providing an
unsecured line of credit facility, in the
aggregate amount of $50 million ($25 million
committed and $25 million uncommitted), to
be accessed by the Funds for temporary or
emergency purposes only.
Borrowings under this facility bear interest
at the overnight Federal Funds Rate plus
.50% per annum. A commitment fee of .10% per
annum will be incurred on the unused portion
of the committed facility which will be
allocated to all participating funds. The
Fund had no loans outstanding pursuant to
this line of credit at June 30, 1999.
<PAGE>
Balanced Portfolio
Financial Highlights
Periods Ended
June 30,December 31,Decem
ber 31,
1999 1998 1997
Net asset value, beginning$2.138 $1.982
$1.774
Income from investment operations
Net investment income.024 .052 .047
Net realized and unrealized
gain (loss) .085 .271 .309
Total from investment
operations .109 .323 .356
Distributions from
Net investment income----(0.52) (.047)
Net realized gains ---- (.115) (.101)
Total distributions----(.167) (.148)
Total increase (decrease) in net
asset value .109 .156 .208
Net asset value, ending$2.247$2.138 $1.982
Total return 5.10% 16.33%
20.08%
Ratios to average net assets:
Net investment income2.29% (a) 2.66%
2.66%
Total expenses +.87% (a) .87% .80%
Net expenses .83% (a) .85% .77%
Portfolio turnover 324% 539% 905%
Net assets, ending
(in thousands) $334,877$303,954 $227,834
Number of shares outstanding,
ending (in thousands)149,024142,201114,967
Years Ended
December 31,December 31,Decem
ber 31,
1996 1995 1994
Net asset value, beginning$1.703 $1.440
$1.537
Income from investment operations
Net investment income.040 .050 .046
Net realized and unrealized
gain (loss) .175 .380 (.097)
Total from investment
operations .215 .430 (.051)
Distributions from
Net investment income(.042)(.040) (.046)
Net realized gains(.102)(.127) --
Total distributions(.144)(.167)(.046)
Total increase (decrease) in net
asset value .071 .263 (.097)
Net asset value, ending$1.774$1.703 $1.440
Total return 12.62% 29.87%
(3.30%)
Ratios to average net assets:
Net investment income2.71%3.08% 3.39%
Total expenses + .81% .83% NA
Net expenses .78% .81% .80%
Portfolio turnover 99% 163% 43%
Net assets, ending (in thousands) $161,473
$110,237 $66,593
Number of shares outstanding,
ending (in thousands)91,04564,728 46,244
(a) Annualized
+ Effective December 31, 1995, this ratio
reflects total expenses
before reduction for fees paid
indirectly;
such reductions are included in the
ratio of net expenses. Total expenses are
presented net of expense
waivers and reimbursements.
NA Disclosure not applicable to prior
periods.
<PAGE>
Calvert Variable Series, Inc.
Calvert Social Balanced Portfolio
A special meeting of shareholders was
scheduled for February 24, 1999.
There were several proposals
voted upon at the meeting. A brief
description of each proposal is shown below.
All proposals were passed.
Proposal 1 - To elect the Board of
Directors.
Nominees
Frank H. Blatz, Jr.
Alice Gresham Bullock
Charles E. Diehl
Barbara J. Krumsiek
M. Charito Kruvant
Arthur J. Pugh
South Trimble III
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)
to revise the language of those restrictions
that are still required to be fundamental.
Proposal 3 - To approve a new investment
advisory agreement with the investment
advisor, Calvert Asset Management Company,
Inc.
("CAMCO").
Proposal 4 - To approve a new investment
subadvisory agreement between CAMCO and the
investment subadvisor, NCM Capital
Management Group, Inc.
Proposal 5 - 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.
Proposal 6 - To approve a revised investment
objective which is more reflective of
current economic times.
Proposal 7 - To change the par value of the
common stock from $1.00 to $0.01.
Proposal 8 - To ratify the Board's selection
of auditors, PricewaterhouseCoopers LLP.
<PAGE>
Calvert Group and the Year 2000
Plans and Progress
We are now less than a year away from the
year 2000, a problematic date for computer
systems coded for two-character year format.
Entered as "00," the year 2000 would be
processed as 1900, a mistake that could foul
a variety of date-sensitive transactions.
As your mutual fund sponsor, our goal is
make sure there is no interruption
in the level of service you receive. In the
summary below, we've outlined the steps
Calvert Group is taking to ensure our
systems perform reliably.
Step One--Assess Systems and Software.
Develop an Action Plan.
In 1997, we identified all systems,
operating platforms and software potentially
affected by the millennium bug. These
included:
Calvert Group systems--portfolio trading,
sales contact and reporting
and internal management reporting
transfer agency systems--shareholder
record-keeping and transaction processing
subadvisor systems--investment accounting
other third-party data and service
systems.
We also formed a Y2K task force, led by
Calvert's vice president of technology. This
group has identified and prioritized our
efforts to achieve year 2000 compliance.
Step Two--Test for Compliance. Repair
Systems as Necessary.
Internal systems have been tested. We've
made repairs and moved modified code into
production. These systems are now fully
compliant. Transfer
agency systems were re-engineered for
compliance in 1989. Recent tests indicate
these are, in fact, compliant. The readiness
of third-party systems, including subadvisor
systems, has been evaluated. Based on
information received from these groups, we
have found no significant obstacles to
compliance.
Step Three--Confirm Compliance. Finalize
Contingency Plan.
Testing of transfer agency systems will
continue through 1999 to ensure
these remain compliant and continue to
interact correctly with external systems and
processes. The transfer agency has
established a back-up site, should main
systems fail, and compliance testing of
these contingency measures are also
underway. We are developing contingency
plans to ensure that any unforeseen systems
failures will not adversely affect our
operations
or inconvenience our shareholders.
For more information or to get an update on
remediation and testing efforts, please
visit us online at www.calvertgroup.com.
