CALVERT
VARIABLE
SERIES, INC.
CALVERT
SOCIAL
PORTFOLIOS
ANNUAL REPORT
DECEMBER 31, 1999
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CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL MONEY MARKET PORTFOLIO
MANAGED BY CALVERT ASSET MANAGEMENT COMPANY, INC.
DEAR INVESTOR:
1999 MARKED A YEAR OF INCREASING RATES FOR FIXED INCOME MARKET PARTICIPANTS. AT
THE START OF THE YEAR, INTEREST RATES WERE NEAR LOWS, AND THE MARKET EXPECTED
THE FEDERAL RESERVE TO HOLD THE FED FUNDS RATE STEADY AT 4.75%. WHILE THE
ECONOMY WAS GROWING RAPIDLY, FINANCIAL DIFFICULTIES ABROAD KEPT THE US MARKETS
AS THE SAFE HAVEN. PAYDOWNS IN TREASURY FINANCING NEEDS MEANT LOW SUPPLY AND
KEPT DOWNWARD PRESSURE ON YIELDS. INSTABILITY IN FOREIGN ECONOMIES, NAMELY ASIA,
MEXICO AND BRAZIL, WERE EXPECTED TO CONTINUE AND KEEP US RATES LOW.
THE INVESTMENT CLIMATE
BY SUMMER IT WAS CLEAR THAT THE ECONOMY WAS HEATING UP AND THAT FOREIGN CONCERNS
WERE DISSIPATING. FED CHAIRMAN GREENSPAN BEGAN MAKING PUBLIC REMARKS ABOUT
INFLATION CONCERNS. THE FED EMBARKED ON WHAT WOULD TURN OUT TO BE THREE RATE
HIKES. LABOR MARKETS BECAME TIGHTER AND TIGHTER, UNEMPLOYMENT DROPPED TO NEW
LOWS, THE STOCK MARKETS HIT ALL TIME HIGHS, AND PURCHASING ON THE CONSUMER AND
MANUFACTURING LEVELS SOARED. WHILE SOME FELT THAT THIS INCREASE COULD BE OFFSET
WITH GAINS IN PRODUCTIVITY, THE MARKETS BECAME MORE CONVINCED THAT INFLATION
WOULD BECOME A PROBLEM.
RATE HIKES OF 25 BASIS POINTS OCCURRED IN JUNE, AUGUST AND NOVEMBER. THE FED
ALSO STARTED A NEW POLICY OF ANNOUNCING THEIR INTENTIONS FOR THE NEXT MEETING.
INTERPRETATION OF THE WORDING VARIED GREATLY AND CAUSED SOME VOLATILITY IN SHORT
RATES RATHER THAN INCREASING STABILITY AS THE FED HAD INTENDED. THE ENTIRE
TREASURY YIELD CURVE FLATTENED WITH SHORT RATES INCREASING FASTER THAN LONG BOND
RATES.
THE FOURTH QUARTER OF THE YEAR WAS DOMINATED BY Y2K CONCERNS. MARKET
PARTICIPANTS WORRIED THAT THERE COULD BE A RUSH ON BANKS AND THAT INDIVIDUALS
WOULD PULL SIGNIFICANT AMOUNTS OF MONEY OUT OF MUTUAL FUNDS. ISSUERS BECAME
WORRIED ABOUT LIQUIDITY AND ATTEMPTED TO ENTICE INVESTORS INTO OBLIGATIONS
MATURING IN THE NEW YEAR. RATES SPIKED TO LEVELS NOT SEEN IN YEARS. THE FED,
HOWEVER, INJECTED LARGE AMOUNTS OF LIQUIDITY INTO THE BANKING SYSTEM AND
EFFECTIVELY MANAGED TO ALLAY FEARS OF A SHORTFALL IN CASH. INVESTORS DID NOT
PANIC AS FEARED AND THE MARKETS ENJOYED A QUIET CLOSE TO THE YEAR.
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PERFORMANCE AND STRATEGY
FOR THE YEAR ENDED DECEMBER 31, 1999, YOUR PORTFOLIO RETURNED 4.82% VS 3.66% FOR
THE LIPPER VARIABLE ANNUITY MONEY MARKET INDEX.
THE PORTFOLIO INVESTS HEAVILY IN VARIABLE RATE DEMAND NOTES BACKED BY LETTERS OF
CREDIT FROM COMMERCIAL BANKS. THESE SECURITIES RESET THEIR RATES FREQUENTLY,
WHICH MEANS THE FUND REALIZED THE BENEFITS OF RAISING RATES. OVER THE LAST YEAR
THE PORTFOLIO HAS KEPT ITS AVERAGE DAYS TO MATURITY SHORTER THAN MOST MONEY
MARKET FUNDS. WITH THE SHARP RISE IN RATES AND OUR CONTINUED EXPECTATION OF
HIGHER RATES, THIS HAS PROVEN TO BE AN EFFECTIVE STRATEGY.
OUTLOOK
WE BELIEVE THAT INFLATION CONCERNS WILL CONTINUE TO PLAGUE THE MARKETS AND FORCE
THE FED TO RAISE RATES AT LEAST ONE MORE TIME THIS YEAR. THE ECONOMY CONTINUES
TO GROW, CONSUMERS CONTINUE TO PURCHASE, CREDIT CARD DEBT IS RISING AND LABOR
MARKETS ARE VERY TIGHT. WITH THE STOCK MARKET AT HIGH LEVELS, THE AVAILABILITY
OF JOBS, AND HIGH CONSUMER CONFIDENCE, HIGHER RATES APPEAR A CERTAINTY. THE FED
WILL MOST LIKELY RAISE RATES AGAIN IN FEBRUARY AND SEE IF THE ECONOMY SLOWS DOWN
TO A SUSTAINABLE LEVEL. IF NO SIGNIFICANT SLOWDOWN IS SEEN, ANOTHER RATE HIKE
LATER IN THE FIRST HALF OF THE YEAR IS LIKELY. THE RISK HOWEVER REMAINS WITH THE
STOCK MARKET. A SIGNIFICANT DECLINE IN STOCK MARKET PRICES COULD FORCE A FLIGHT
TO QUALITY, CAUSING A RALLY IN SHORT-TERM FIXED INCOME MARKETS.
SINCERELY,
LAURIE WEBSTER
CALVERT ASSET MANAGEMENT COMPANY
JANUARY 24, 2000
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.
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REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF CALVERT VARIABLE SERIES, INC. AND SHAREHOLDERS OF
CALVERT SOCIAL MONEY MARKET PORTFOLIO:
IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING
THE SCHEDULE OF INVESTMENTS, AND THE RELATED STATEMENT OF OPERATIONS, STATEMENT
OF CHANGES IN NET ASSETS AND FINANCIAL HIGHLIGHTS PRESENT FAIRLY, IN ALL
MATERIAL RESPECTS, THE FINANCIAL POSITION OF CALVERT SOCIAL MONEY MARKET
PORTFOLIO, (ONE OF THE PORTFOLIOS COMPRISING CALVERT VARIABLE SERIES, INC.,
HEREINAFTER REFERRED TO AS THE "FUND"), AT DECEMBER 31, 1999, THE RESULTS OF ITS
OPERATIONS, THE CHANGES IN ITS NET ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH
OF THE PERIODS INDICATED THEREIN, IN CONFORMITY WITH ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN THE UNITED STATES. THESE FINANCIAL STATEMENTS AND
FINANCIAL HIGHLIGHTS (HEREINAFTER REFERRED TO AS "FINANCIAL STATEMENTS") ARE THE
RESPONSIBILITY OF THE FUND'S MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN
OPINION ON THESE FINANCIAL STATEMENTS BASED ON OUR AUDITS. WE CONDUCTED OUR
AUDITS OF THESE FINANCIAL STATEMENTS IN ACCORDANCE WITH AUDITING STANDARDS
GENERALLY ACCEPTED IN THE UNITED STATES, WHICH REQUIRE THAT WE PLAN AND PERFORM
THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS
ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS,
EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS,
ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY
MANAGEMENT, AND EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE
BELIEVE THAT OUR AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT DECEMBER
31, 1999 BY CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE
BASIS FOR THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
BALTIMORE, MARYLAND
FEBRUARY 4, 2000
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MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
TAXABLE VARIABLE RATE PRINCIPAL
DEMAND NOTES - 65.6% AMOUNT VALUE
ALABAMA STATE IDA, MITCHELL GROCERY, 5.85%, 5/1/10,
LOC: REGIONS BANK * $185,000 $185,000
ALABAMA STATE IDA, SIMCALA, INC., 6.00%, 12/1/19,
LOC: BANK OF AMERICA * 460,000 460,000
AMERICAN BAPTIST HOMES COPS, 6.10%, 10/1/27,
LOC: BANQUE NATIONAL DE PARIS * 47,000 47,000
ASPEN INSTITUTE, INC., 6.1038%, 12/1/04,
LOC: ALLFIRST BANK * 300,000 300,000
BEL AIR, LLC., 6.00%, 12/1/15, LOC: AMSOUTH BANK * 410,000 410,000
BETTERS GROUP LP., 6.00%, 2/1/12, LOC: CENTURY NATIONAL
BANK AND TRUST, CONFIRMING LOC: MELLON BANK * 430,000 430,000
BLOUNT STRANGE REALTY HOLDINGS, LLC., 6.00%, 7/1/16,
LOC: REGIONS BANK * 485,000 485,000
BOTSFORD GENERAL HOSPITAL, 5.95%, 2/15/27,
LOC: MICHIGAN NATIONAL * 650,000 650,000
COLORADO HEALTH FACILITIES AUTHORITY REVENUE, 6.75%, 2/1/25,
LOC: KREDIETBANK * 460,000 460,000
HEALTH MIDWEST VENTURES GROUP, 6.60%, 8/1/19,
LOC: BANK OF AMERICA * 800,000 800,000
HEALTHTRACK SPORTS AND WELLNESS, 6.60%, 2/15/27,
LOC: AMERICAN NATIONAL BANK & TRUST * 600,000 600,000
IPC INDUSTRIES, INC., 6.00%, 10/1/11,
LOC: NATIONAL BANK OF CANADA * 310,000 310,000
MONTGOMERY COUNTY, KENTUCKY INDUSTRIAL DEVELOPMENT REVENUE,
FINEBLANKING PROJECT, 6.00%, 8/1/06, LOC: FLEET BANK *
189,000 189,000
NEW BRITAIN CONNECTICUT REVENUE, 5.70%, 2/1/00, LOC: AMBAC *
600,000 599,820
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY REVENUE,
6.20%, 11/1/06, LOC: FIRST UNION BANK * 360,000 360,000
PHYSICIANS PLUS MEDICAL GROUP, 6.75%, 8/1/16, LOC: LASALLE BANK *
600,000 600,000
SAULT STE MARIE, MICHIGAN, 6.47125%, 6/1/03,
LOC: FIRST AMERICA BANK, MI * 175,000 175,000
ST. JOSEPH COUNTY ECONOMIC DEVELOPMENT REVENUE,
6.10%, 6/1/27, LOC: FHLB - INDIANAPOLIS * 925,000 925,000
ST. PAUL, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY,
6.50%, 3/1/18, LOC: CREDIT LOCAL D FRANCE * 580,000 580,000
ST. PAUL, MINNESOTA PORT IDA, 6.50%, 6/1/11,
LOC: US BANK - NATIONAL ASSN. * 250,000 250,000
SOUTH CENT COMMUNICATIONS CORP., 6.60%, 6/1/13,
LOC: CITIZENS NATIONAL BANK, CONFIRMING LOC: SUNTRUST BANK *
380,000 380,000
W.L. PETREY WHOLESALE, INC., INDUSTRIAL DEVELOPMENT,
6.00%, 3/1/11, LOC: SOUTHTRUST BANK, AL * 345,000 345,000
WASHINGTON STATE HOUSING FINANCE AUTHORITY, GLENBROOK
APARTMENTS, 6.50%, 7/1/29, LOC: BANK ONE * 600,000 600,000
WAUKESHA HEALTH SYSTEM, INC., 6.45%, 8/15/26,
LOC: BANK OF AMERICA * 600,000 600,000
TOTAL TAXABLE VARIABLE RATE DEMAND NOTES (COST $10,740,820)
10,740,820
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PRINCIPAL
CORPORATE OBLIGATIONS - 6.8% AMOUNT VALUE
FLEET FINANCIAL GROUP, INC., 7.125%, 7/1/16 $170,000 $170,753
JEFFERSON-PILOT CORP., 5.70%, 2/3/00 500,000 497,388
NATIONSBANK CORP., 5.375%, 4/15/00 245,000 244,682
NORWEST FINANCIAL, INC., 5.125%, 4/15/00 200,000 199,668
TOTAL CORPORATE OBLIGATIONS (COST $1,112,491) 1,112,491
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES - 16.6%
FEDERAL FARM CREDIT BANK, 5.18%, 2/4/00 150,000 149,266
FEDERAL HOME LOAN BANK, 5.60%, 5/12/00 295,000 288,943
FEDERAL HOME LOAN MORTGAGE CORP., 5.45%, 2/7/00 500,000 497,199
FEDERAL HOME LOAN MORTGAGE CORP., 5.57%, 2/9/00 413,000 410,508
FEDERAL HOME LOAN MORTGAGE CORP., 5.59%, 2/24/00 140,000 138,826
FEDERAL HOME LOAN MORTGAGE CORP., 5.20%, 4/4/00 250,000 246,606
FEDERAL HOME LOAN MORTGAGE CORP., 5.60%, 6/28/00 480,000 466,635
FEDERAL NATIONAL MORTGAGE ASSN., 5.63%, 4/6/00 285,000 280,721
FEDERAL NATIONAL MORTGAGE ASSN., 5.22%, 6/15/00 250,000 243,982
TOTAL U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES
(COST $2,722,686) 2,722,686
MUNICIPAL OBLIGATIONS - 9.3%
CALIFORNIA STATEWIDE COMMUNITY DEVELOPMENT AUTHORITY
MFH REVENUE, 6.25%, 7/1/27, LOC: SANWA BANK,
CONFIRMING LOC: CALIFORNIA STATE TEACHER'S RETIREMENT SYSTEM *
280,000 280,000
HEALTH INSURANCE PLAN GREATER NY REVENUE, 6.00%, 7/1/16,500,000
LOC: MORGAN GUARANTY TRUST * 500,000 500,000
MARICOPA COUNTY IDA REVENUE, 6.00%, 2/1/29,
LOC: BANQUE NATIONAL DE PARIS * 390,000 390,000
VIRGINIA STATE HOUSING DEVELOPMENT AUTHORITY, 5.87%, 7/1/07,
BPA: BAYER HYPOBANK * 20,000 20,000
VIRGINIA STATE HOUSING DEVELOPMENT AUTHORITY, 5.80%, 1/1/47,
GA: VIRGINIA HOUSING DEVELOPMENT AUTHORITY * 335,000 335,000
TOTAL MUNICIPAL OBLIGATIONS (COST $1,525,000) 1,525,000
TOTAL INVESTMENTS (COST $16,100,997) - 98.3% 16,100,997
OTHER ASSETS AND LIABILITIES, NET - 1.7% 286,125
NET ASSETS - 100% $16,387,122
* OPTIONAL TENDER FEATURES GIVE THESE SECURITIES A SHORTER EFFECTIVE MATURITY
DATE.
EXPLANATION OF GUARANTEES: ABBREVIATIONS:
BPA: BOND-PURCHASE AGREEMENT COPS: CERTIFICATES OF PARTICIPATION
GA: GUARANTY AGREEMENT IDA: INDUSTRIAL DEVELOPMENT AUTHORITY
LOC: LETTER OF CREDIT
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE - SEE ACCOMPANYING PORTFOLIO
$16,100,997
CASH 218,468
INTEREST RECEIVABLE 81,632
OTHER ASSETS 353
TOTAL ASSETS 16,401,450
LIABILITIES
PAYABLE TO CALVERT ASSET MANAGEMENT COMPANY, INC. 7,228
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES COMPANY 2,187
PAYABLE TO CALVERT SHAREHOLDER SERVICES, INC. 174
ACCRUED EXPENSES AND OTHER LIABILITIES 4,739
TOTAL LIABILITIES 14,328
NET ASSETS $16,387,122
NET ASSETS CONSIST OF:
PAR VALUE AND PAID-IN CAPITAL APPLICABLE TO 16,391,693 SHARES OF COMMON
STOCK OUTSTANDING; $0.01 PAR VALUE, 2,000,000,000 SHARES AUTHORIZED
$16,387,118
UNDISTRIBUTED NET INVESTMENT INCOME 10
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (6)
NET ASSETS $16,387,122
NET ASSET VALUE PER SHARE $1.00
SEE NOTES TO FINANCIAL STATEMENTS.
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MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME
INTEREST INCOME $832,025
TOTAL INVESTMENT INCOME 832,025
EXPENSES
INVESTMENT ADVISORY FEE 50,712
TRANSFER AGENCY FEES AND EXPENSES 4,682
ADMINISTRATIVE SERVICES FEES 20,957
ACCOUNTING FEES 9,260
DIRECTORS' FEES AND EXPENSES 3,422
CUSTODIAN FEES 11,556
REPORTS TO SHAREHOLDERS 1,407
PROFESSIONAL FEES 1,357
MISCELLANEOUS 129
TOTAL EXPENSES 103,482
FEES PAID INDIRECTLY (4,184)
NET EXPENSES 99,298
NET INVESTMENT INCOME 732,727
REALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) ON INVESTMENTS (6)
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $732,721
SEE NOTES TO FINANCIAL STATEMENTS.
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MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
OPERATIONS
NET INVESTMENT INCOME $732,727 $489,926
NET REALIZED GAIN (LOSS) (6) --
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 732,721 489,926
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (733,026) (490,032)
CAPITAL SHARE TRANSACTIONS
SHARES SOLD 40,553,397 31,692,032
REINVESTMENT OF DISTRIBUTIONS 731,494 488,559
SHARES REDEEMED (36,102,457) (27,217,376)
TOTAL CAPITAL SHARE TRANSACTIONS 5,182,434 4,963,215
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,182,129 4,963,109
NET ASSETS
BEGINNING OF YEAR 11,204,993 6,241,884
END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $10 AND $309, RESPECTIVELY) $16,387,122 $11,204,993
CAPITAL SHARE ACTIVITY
SHARES SOLD 40,553,397 31,692,032
REINVESTMENT OF DISTRIBUTIONS 731,494 488,559
SHARES REDEEMED (36,102,457) (27,217,376)
TOTAL CAPITAL SHARE ACTIVITY 5,182,434 4,963,215
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: CALVERT SOCIAL MONEY MARKET PORTFOLIO (THE "PORTFOLIO"), A SERIES OF
CALVERT VARIABLE SERIES, INC. (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 HOLDING COMPANY. THE ADVISOR PROVIDES INVESTMENT ADVISORY SERVICES
AND PAYS THE
<PAGE>
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 $1,678 FOR THE YEAR ENDED DECEMBER 31, 1999. NATIONAL
FINANCIAL DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
FOR THE PERIOD ENDED JUNE 30,1999, 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. EFFECTIVE
JULY 1, 1999, EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A
FEE OF $1,500 FOR EACH BOARD MEETING ATTENDED PLUS AN ANNUAL FEE OF $15,000 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 DECEMBER 31, 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.
NET REALIZED CAPITAL LOSS CARRYFORWARD FOR FEDERAL INCOME TAX PURPOSES, OF $6 AT
DECEMBER 31, 1999 MAY BE UTILIZED TO OFFSET FUTURE CAPITAL GAINS UNTIL
EXPIRATION IN DECEMBER 2007.
NOTE D -- LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR THE
CALVERT SOCIAL INVESTMENT FUND MANAGED INDEX AND CVS AMERITAS INDEX 500
PORTFOLIOS) 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 DECEMBER 31, 1999.
<PAGE>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .047 .050 .051
TOTAL FROM INVESTMENT OPERATIONS .047 .050 .051
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.047) (.050) (.051)
TOTAL INCREASE (DECREASE)IN NET ASSET VALUE
-- -- --
NET ASSET VALUE, ENDING $1.00 $1.00 $1.00
TOTAL RETURN 4.82% 5.14% 5.20%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.72% 5.01% 5.10%
TOTAL EXPENSES .67% .66% .69%
EXPENSES BEFORE OFFSETS .67% .66% .69%
NET EXPENSES .64% .63% .59%
NET ASSETS, ENDING (IN THOUSANDS)$16,387 $11,205 $6,242
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .048 .055
TOTAL FROM INVESTMENT OPERATIONS .048 .055
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.048) (.055)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE -- --
NET ASSET VALUE, ENDING $1.00 $1.00
TOTAL RETURN 4.95% 5.37%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 4.82% 5.23%
TOTAL EXPENSES .75% .66%
EXPENSES BEFORE OFFSETS .75% .66%
NET EXPENSES .62% .59%
NET ASSETS, ENDING (IN THOUSANDS) $4,378 $5,129
<PAGE>
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL SMALL CAP GROWTH PORTFOLIO
MANAGED BY AWAD ASSET MANAGEMENT, INC.
DEAR INVESTOR:
1999 HAS BEEN A TRYING YEAR FOR SMALL-CAP INVESTORS. WHILE WE HAD GOOD, GROWING
COMPANIES WITHIN OUR PORTFOLIO, THESE WERE LARGELY IGNORED AS INVESTORS SWITCHED
MONEY OUT OF OUR SECTOR AND INTO THE MOMENTUM INTERNET SECTOR TO CHASE
SHORT-TERM RESULTS. IN CONTRAST, THE THREE INTEREST RATE HIKES DURING THE YEAR
HAD NEITHER A MATERIALLY POSITIVE NOR NEGATIVE IMPACT ON OUR PORTFOLIO. WE
REMAIN BOTTOM-UP STOCK-PICKERS AND AS SUCH ARE LITTLE IMPACTED BY MODEST
INTEREST RATE MOVEMENTS.
PERFORMANCE AND STRATEGY
THE FUND RETURNED 19.38% FOR THE YEAR ENDED DECEMBER 31, 1999 VS. THE RUSSELL
2000 INDEX TR WHICH RETURNED 21.26%. WHILE OUR GOAL IS NOT JUST TO MEET, BUT
BEAT THE INDEX, WE ARE STILL ENCOURAGED BY PROGRESS WE MADE IN THE LATER PARTS
OF THE YEAR. WITH ONLY OCCASIONAL EXCEPTIONS, INVESTOR FOCUS WAS DIRECTED WHOLLY
AT LARGE CAP TECHNOLOGY AND INTERNET COMPANIES IN 1999, DURING WHICH TIME A
SMALL NUMBER OF STOCKS DID EXTREMELY WELL, WHILE THE MAJORITY OF EQUITIES LAGGED
SIGNIFICANTLY.
EARLY IN THE YEAR, ONLY A FEW INTERNET STOCKS DID WELL AND THE REST OF THE SMALL
CAP MARKET SUFFERED. AS THE YEAR WENT ON TWO IMPORTANT THINGS HAPPENED: A DEGREE
OF DIVERSITY RETURNED TO THE SMALL CAP WORLD AND WE UPGRADED OUR RESEARCH EFFORT
TO ADD COMPANIES THAT ARE PART OF THE NEW INTERNET ECONOMY. WE WERE ABLE TO FIND
SEVERAL GOOD INVESTMENTS WHICH, LIKE OUR HOLDINGS IN OTHER INDUSTRIES, REPRESENT
GROWING COMPANIES SELLING AT A VALUE INVESTOR'S PRICE.
CVS CALVERT SOCIAL
SMALL CAP GROWTH PORTFOLIO
COMPARISON OF CHANGE IN
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
[INSERT LINE GRAPH HERE]
AVERAGE ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
ONE YEAR 19.38%
SINCE INCEPTION 8.60%
*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.
<PAGE>
DURING THE YEAR WE HAVE STEADFASTLY REMAINED TRUE TO OUR DISCIPLINE OF SEEKING
GROWTH STOCKS TRADING AT VALUE PRICES. THE MARKET HARDLY FAVORED THIS STRATEGY
IN 1999, BUT WE EXPECT FAIR TURNAROUND IN THE YEAR 2000. BEARING IN MIND OUT
TIGHT VALUATION DISCIPLINE, WE ARE REASONABLY HAPPY WITH OUR RETURNS.
OUTLOOK
WHILE THE BUILDING BLOCKS OF THE BULL MARKET REMAIN IN PLACE AND SHOULD RESULT
IN A FURTHER ADVANCEMENT IN STOCK PRICES, THERE IS A THREAT THAT A CORRECTION IN
MOMENTUM OF STOCKS COULD CREATE A TRANSITORY DOWN PERIOD FOR EQUITIES IN
GENERAL. LOOKING AT THE YEAR AS A WHOLE, WE EXPECT TO SEE BROADER AND MORE
BALANCED MARKET GROWTH IN THE YEAR 2000, AND THIS SHOULD HELP PORTFOLIO
PERFORMANCE.
SINCERELY,
JAMES D. AWAD
AWAD ASSET MANAGEMENT
JANUARY 24, 2000
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>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF CALVERT VARIABLE SERIES, INC. AND SHAREHOLDERS OF
CALVERT SOCIAL SMALL CAP GROWTH PORTFOLIO:
IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING
THE SCHEDULE OF INVESTMENTS, AND THE RELATED STATEMENT OF OPERATIONS, STATEMENT
OF CHANGES IN NET ASSETS AND FINANCIAL HIGHLIGHTS PRESENT FAIRLY, IN ALL
MATERIAL RESPECTS, THE FINANCIAL POSITION OF CALVERT SOCIAL SMALL CAP GROWTH
PORTFOLIO, (ONE OF THE PORTFOLIOS COMPRISING CALVERT VARIABLE SERIES, INC.,
HEREINAFTER REFERRED TO AS THE "FUND"), AT DECEMBER 31, 1999, THE RESULTS OF ITS
OPERATIONS, THE CHANGES IN ITS NET AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE
PERIODS INDICATED THEREIN, IN CONFORMITY WITH ACCOUNTING PRINCIPLES GENERALLY
ACCEPTED IN THE UNITED STATES. THESE FINANCIAL STATEMENTS AND FINANCIAL
HIGHLIGHTS (HEREINAFTER REFERRED TO AS "FINANCIAL STATEMENTS") ARE THE
RESPONSIBILITY OF THE FUND'S MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN
OPINION ON THESE FINANCIAL STATEMENTS BASED ON OUR AUDITS. WE CONDUCTED OUR
AUDITS OF THESE FINANCIAL STATEMENTS IN ACCORDANCE WITH AUDITING STANDARDS
GENERALLY ACCEPTED IN THE UNITED STATES, WHICH REQUIRE THAT WE PLAN AND PERFORM
THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS
ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS,
EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS,
ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY
MANAGEMENT, AND EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE
BELIEVE THAT OUR AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT DECEMBER
31, 1999 BY CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE
BASIS FOR THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
BALTIMORE, MARYLAND
FEBRUARY 4, 2000
<PAGE>
SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 88.6% SHARES VALUE
AGRICULTURAL PRODUCTS - 2.8%
CORN PRODUCTS INTERNATIONAL, INC. 3,800 $124,450
AIR FREIGHT - 2.6%
IRON MOUNTAIN, INC. 3,000 117,938
BANKS - 3.2%
CAPITAL CROSSING BANK * 5,000 62,500
NORTH FORK BANCORPORATION, INC. 4,500 78,750
141,250
COMMUNICATIONS EQUIPMENT - 9.6%
AMERICAN TOWER CORP., CLASS A * 4,500 137,531
C-CUBE MICROSYSTEMS, INC. * 2,400 149,400
RESEARCH IN MOTION LTD. * 3,000 138,563
425,494
COMPUTER PERIPHERALS - 4.4%
PRINTRONIX, INC. * 7,000 159,250
QUANTUM CORP. * 5,000 34,687
193,937
COMPUTER SOFTWARE AND SERVICES - 10.9%
AUDIBLE, INC. 4,500 67,500
BARRA, INC. * 4,000 127,000
ECLIPSYS CORP * 5,150 131,969
STERLING SOFTWARE, INC. * 5,000 157,500
483,969
FINANCIAL - DIVERSIFIED - 5.3%
DORAL FINANCIAL CORP. 9,300 114,506
INVESTORS FINANCIAL SERVICES CORP. 2,600 119,600
234,106
ELECTRONICS EQUIPMENT - 7.1%
LTX CORP . 5,000 111,875
S3 INCORPORATED. 5,000 57,813
SILICON STORAGE TECHNOLOGY. 3,500 144,375
314,063
FOOD - 2.2%
SMUCKER (J.M.) CO., CLASS B 6,000 97,500
HEALTH CARE, DRUGS AND PHARMACEUTICALS - 2.0%
EMISPHERE TECHNOLOGIES, INC. * 3,000 90,188
HEALTH CARE, MEDICAL PRODUCT AND SUPPLIES - 2.9%
BECKMAN COULTER, INC. 2,500 127,187
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
INSURANCE - LIFE/HEALTH - 4.4%
ANNUITY AND LIFE RE HOLDINGS 4,000 $104,500
PRESIDENTIAL LIFE CORP. 5,000 91,875
196,375
INVESTMENT MANAGEMENT - 0.1%
EXCEL LEGACY CORP. * 2,000 6,625
MANUFACTURING - DIVERSIFIED - 0.5%
DANAHER CORP. 500 24,125
LTC HEALTHCARE, INC. * 400 800
24,925
PHOTOGRAPHY & IMAGING - 2.0%
ZEBRA TECHNOLOGIES CORP., CLASS A * 1,500 87,750
PUBLISHING - 11.3%
CUNNINGHAM GRAPHICS INTERNATIONAL, INC. * 1,000 13,937
HOUGHTON MIFFLIN CO. 3,650 153,984
PENTON MEDIA, INC. 8,000 192,000
WILEY (JOHN) & SONS, INC., CLASS A 8,600 144,050
503,971
RETAIL - DISCOUNTERS - 2.3%
BRADLEES, INC. * 12,000 102,000
RETAIL - SPECIALTY - 0.4%
U.S. VISION, INC. * 6,500 16,656
SERVICE COMMERCIAL AND CONSUMERS - 6.1%
NEW HORIZONS WORLDWIDE, INC. * 8,750 103,906
TELETECH HOLDINGS, INC. * 5,000 168,516
272,422
SERVICE COMPUTER SYSTEM - 5.7%
COMDISCO, INC. 5,000 186,250
HEALTH MANAGEMENT SYSTEMS, INC. * 11,000 69,438
255,688
SERVICES - DATA PROCESSING - 2.8%
NOVA CORP. 4,000 126,250
TOTAL EQUITY SECURITIES (COST $3,120,905) 3,942,744
TOTAL INVESTMENTS (COST $3,120,905) - 88.6% 3,942,744
OTHER ASSETS AND LIABILITIES, NET - 11.4% 506,736
NET ASSETS - 100% $4,449,480
* NON INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE - SEE ACCOMPANYING PORTFOLIO $3,942,744
CASH 510,324
DIVIDENDS RECEIVABLE 1,384
OTHER ASSETS 75
TOTAL ASSETS 4,454,527
LIABILITIES
PAYABLE TO CALVERT ASSET MANAGEMENT COMPANY, INC. 3,058
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES COMPANY 891
ACCRUED EXPENSES AND OTHER LIABILITIES 1,098
TOTAL LIABILITIES 5,047
NET ASSETS $4,449,480
NET ASSETS CONSIST OF:
PAR VALUE AND PAID-IN CAPITAL APPLICABLE TO 335,221 SHARES OF COMMON
STOCK OUTSTANDING; $0.01 PAR VALUE, 1,000,000,000 SHARES AUTHORIZED
$4,018,228
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS (390,587)
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 821,839
NET ASSETS $4,449,480
NET ASSET VALUE PER SHARE $13.27
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD OF $216) $22,623
TOTAL INVESTMENT INCOME 22,623
EXPENSES
INVESTMENT ADVISORY FEE 27,062
TRANSFER AGENT FEES AND EXPENSES 1,055
ACCOUNTING FEES 6,835
DIRECTORS' FEES AND EXPENSES 716
ADMINISTRATIVE FEES 6,835
REGISTRATION FEES 174
CUSTODIAN FEES 9,036
REPORTS TO SHAREHOLDERS 2,147
PROFESSIONAL FEES 336
MISCELLANEOUS 956
TOTAL EXPENSES 55,152
FEES PAID INDIRECTLY (14,827)
NET EXPENSES 40,325
NET INVESTMENT INCOME (LOSS) (17,702)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) (130,377)
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) 881,401
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 751,024
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $733,322
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SMALL CAP GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
OPERATIONS
NET INVESTMENT INCOME (LOSS) ($17,702) $4,843
NET REALIZED GAIN (LOSS) (130,377) (267,053)
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION)
881,401 36,357
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 733,322 (225,853)
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (1,634) (3,209)
NET REALIZED GAIN ON INVESTMENTS -- (44,479)
TOTAL DISTRIBUTIONS (1,634) (47,688)
CAPITAL SHARE TRANSACTIONS
SHARES SOLD 1,394,746 1,296,087
REINVESTMENT OF DISTRIBUTIONS 1,634 47,688
SHARES REDEEMED (1,304,404) (1,590,837)
TOTAL CAPITAL SHARE TRANSACTIONS 91,976 (247,062)
TOTAL INCREASE (DECREASE) IN NET ASSETS 823,664 (520,603)
NET ASSETS
BEGINNING OF YEAR 3,625,816 4,146,419
END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $0 AND $1,634, RESPECTIVELY) $4,449,480 $3,625,816
CAPITAL SHARE ACTIVITY
SHARES SOLD 127,963 111,161
REINVESTMENT OF DISTRIBUTIONS 124 4,383
SHARES REDEEMED (118,808) (134,628)
TOTAL CAPITAL SHARE ACTIVITY 9,279 (19,084)
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: CALVERT SOCIAL SMALL CAP GROWTH PORTFOLIO (THE "PORTFOLIO"), A SERIES
OF CALVERT VARIABLE SERIES, INC. (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 HOLDING COMPANY. THE ADVISOR PROVIDES INVESTMENT ADVISORY SERVICES
AND PAYS THE
<PAGE>
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 $228 FOR THE YEAR ENDED DECEMBER 31, 1999. NATIONAL FINANCIAL
DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
FOR THE PERIOD ENDED JUNE 30, 1999, 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. EFFECTIVE
JULY 1, 1999, EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A
FEE OF $1,500 FOR EACH BOARD MEETING ATTENDED PLUS AN ANNUAL FEE OF $15,000 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 YEAR PURCHASES AND SALES OF INVESTMENTS, OTHER THAN SHORT-TERM
SECURITIES, WERE $2,497,820 AND $2,446,620, RESPECTIVELY.
THE COST OF INVESTMENTS OWNED AT DECEMBER 31, 1999 WAS SUBSTANTIALLY THE SAME
FOR FEDERAL INCOME TAX AND FINANCIAL REPORTING PURPOSES. NET UNREALIZED
APPRECIATION AGGREGATED
$821,839, OF WHICH $986,759 RELATED TO APPRECIATED SECURITIES AND $164,920
RELATED TO DEPRECIATED SECURITIES.
NET REALIZED CAPITAL LOSS CARRYFORWARDS FOR FEDERAL INCOME TAX PURPOSES, OF
$263,528 AND $128,940 AT DECEMBER 31, 1999 MAY BE UTILIZED TO OFFSET FUTURE
CAPITAL GAINS UNTIL EXPIRATION IN DECEMBER 2006 AND 2007, RESPECTIVELY.
NOTE D -- LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR THE
CALVERT SOCIAL INVESTMENT FUND MANAGED INDEX AND CVS AMERITAS INDEX 500
PORTFOLIOS) 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 DECEMBER 31, 1999.
TAX INFORMATION (UNAUDITED)
FOR CORPORATE SHAREHOLDERS OF THE PORTFOLIO, A TOTAL OF 100% OF THE ORDINARY
DIVIDENDS PAID DURING THE TAXABLE YEAR ENDING DECEMBER 31, 1999 QUALIFY FOR THE
DIVIDENDS RECEIVED DEDUCTION.
<PAGE>
SMALL CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $11.12 $12.02 $14.65
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (.05) .02 (.12)
NET REALIZED AND UNREALIZED GAIN (LOSS)
2.20 (.77) (1.32)
TOTAL FROM INVESTMENT OPERATIONS 2.15 (.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
2.15 (.90) (2.63)
NET ASSET VALUE, ENDING $13.27 $11.12 $12.02
TOTAL RETURN 19.38% (6.23%) (9.86%)
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.51%) .12% (1.19%)
TOTAL EXPENSES 1.58% 1.33% 2.10%
EXPENSES BEFORE OFFSETS 1.58% 1.33% 1.92%
NET EXPENSES 1.15% 1.12% 1.61%
PORTFOLIO TURNOVER 79% 72% 292%
NET ASSETS, ENDING (IN THOUSANDS) $4,449 $3,626 $4,146
PERIODS ENDED
DECEMBER 31, DECEMBER 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 2.47% 2.37%(A)
EXPENSES BEFORE OFFSETS 2.27% 2.17%(A)
NET EXPENSES 1.81% 1.64%(A)
PORTFOLIO TURNOVER 120% 223%
NET ASSETS, ENDING (IN THOUSANDS) $3,031 $1,209
(A) ANNUALIZED
* FROM MARCH 1, 1995 INCEPTION.
** DISTRIBUTION WAS LESS THAN .01 PER SHARE.
<PAGE>
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO
MANAGED BY BROWN CAPITAL MANAGEMENT, INC.
DEAR INVESTOR:
THIS PAST YEAR, AND ESPECIALLY THE FOURTH QUARTER, WAS THE MOST PERPLEXING IN
RECENT MEMORY. WE DON'T EVER REMEMBER SEEING SUCH WIDE DISPARITIES BETWEEN
PUBLISHED INDICES PURPORTEDLY REPRESENTATIVE OF THE BROAD STOCK MARKET, SPECIFIC
SEGMENTS OF THE MARKET SUCH AS LARGE CAP AND SMALL CAP, AND SPECIFIC STYLES
WITHIN THOSE SEGMENTS SUCH AS GROWTH.
PERFORMANCE AND STRATEGY
FOR THE YEAR ENDED DECEMBER 31, 1999, THE PORTFOLIO PRODUCED A TOTAL RETURN OF
6.97%, AND UNDERPERFORMED THE S&P MIDCAP 400 INDEX WHICH RETURNED 14.72%.
WE ATTRIBUTE THE RELATIVE UNDERPERFORMANCE TO TWO FACTORS. FIRST, THE ABSENCE OF
HIGH-FLYING STOCKS THAT WERE, AND CONTINUE TO BE, SUPPORTED BY HYPE RATHER THAN
BY EARNINGS. SECOND, THE MARKET SEVERELY PUNISHED SELECTED HEALTH CARE STOCKS IN
1999 AND THE FUND'S HOLDINGS CERTAINLY WERE NOT SPARED. THOUGH WE HAVE NO
CONTROL OVER THE FORMER, WE HAVE REVISITED OUR ORIGINAL FUNDAMENTAL THESIS FOR
INVESTING IN SELECTED HEALTH CARE COMPANIES AND OUR CONVICTION HAS BEEN
STRENGTHENED.
INVESTMENT CLIMATE
AGAIN, THE MARKET WAS PERPLEXING LAST YEAR. WE RECENTLY ATTENDED ONE OF THE
"HOTTEST" TECHNOLOGY CONFERENCES IN THE COUNTRY. IT WAS OVERSUBSCRIBED. THERE
WAS AN INVERSE RELATIONSHIP BETWEEN THE CROWD IN THE ROOMS FOR COMPANIES WITH
PROFITS AND THOSE WITHOUT PROFITS. BARTON BIGGS OF MORGAN STANLEY DEAN WITTER,
SUMS UP THE CURRENT CLIMATE VERY WELL:
CVS CALVERT SOCIAL
MID CAP GROWTH PORTFOLIO1
COMPARISON OF CHANGE IN
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.2
[INSERT LINE GRAPH HERE]
AVERAGE ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
ONE YEAR 6.97%
FIVE YEAR 20.80%
SINCE INCEPTION (7.16.91) 14.06%
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.
<PAGE>
"THE TECHNOLOGY, INTERNET AND TELECOMMUNICATIONS CRAZE HAS GONE PARABOLIC IN
WHAT IS ONE OF THE GREAT, IF NOT THE GREATEST, MANIAS OF ALL TIME WITHOUT FAIL,
THE BUBBLE STAGE OF THESE CRAZES ENDS IN TEARS AND MASSIVE WEALTH DESTRUCTION .
MANY PROFESSIONAL INVESTORS INVOLVED IN THESE AREAS KNOW THAT WHAT IS GOING ON
TODAY IS MADNESS. HOWEVER, THEY ARGUE THAT THE RIGHT TACTIC IS TO STAY INVESTED
AS LONG AS THE PRICE MOMENTUM IS UP."
CLEARLY, SOMETHING HAS CHANGED DRAMATICALLY IN THE MARKET. WITH RESPECT TO THE
LARGE CAP ARENA, A VERY NARROW GROUP OF STOCKS HAVE ACCOUNTED FOR MOST OF THE
PERFORMANCE, AND THIS GROUP IS VERY RICHLY PRICED. WITH RESPECT TO THE SMALL CAP
AND MIDCAP ARENAS, STOCKS ACCOUNTING FOR A GOOD PORTION OF THE PERFORMANCE WERE
OUTLANDISHLY PRICED OR HAD NO EARNINGS.
OUTLOOK
AT BROWN CAPITAL MANAGEMENT, WE ARE WELL AWARE THAT THINGS HAVE CHANGED. FOR
EXAMPLE, ONE OF THE GREATEST PEACETIME EXPANSIONS IN HISTORY SHOWS NO SIGNS OF
ABATING. THE BOND MARKET WAS VERY WEAK LAST YEAR. WE BELIEVE THAT THE
MARKETPLACE EXPECTS AT LEAST ONE MORE RATE INCREASE BY THE FEDERAL RESERVE.
INFLATION WILL LIKELY REMAIN MODERATE. AND, COMPANIES WITH HIGH QUALITY AND
PREDICTABLE EARNINGS SHOULD BE ACCORDED A PREMIUM VALUATION. RISK PREMIUMS ON
EQUITIES GENERALLY HAVE JUSTIFIABLY SHRUNK, AND ON THE MOST LIQUID AND HIGHEST
QUALITY EQUITIES, BY A LOT. BUT IS A NEGATIVE RISK PREMIUM JUSTIFIED? THIS IS
EXACTLY WHAT HAS HAPPENED WITH SOME OF THE LARGE CAP GROWTH STOCKS, WHICH
IMPLIES THAT THEY ARE LESS RISKY THAN A GOVERNMENT BOND.
OUR INVESTMENT PROCESS IDENTIFIES COMPANIES THAT, WE BELIEVE, HAVE SUSTAINABLE
GROWTH. OUR VALUATION METHODOLOGY TAKES INTO ACCOUNT THE INTEREST RATE
ENVIRONMENT AND COMPANY-SPECIFIC RISK PREMIUMS. OUR INVESTMENT STYLE, GROWTH AT
REASONABLE PRICE ("GARP") IS DESIGNED TO WORK IN ALL MARKET ENVIRONMENTS -- BUT
IT IS HARD PRESSED TO DO SO WHEN THE MARKET IS BEING DRIVEN BY MANIAS AND BY
COMPANIES THAT IN OUR OPINION ARE EXCESSIVELY VALUED. WE FIRMLY BELIEVE HOWEVER
THAT THESE PHENOMENA WILL PASS.
SINCERELY,
ED BROWN
BROWN CAPITAL MANAGEMENT
JANUARY 24, 2000
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>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF CALVERT VARIABLE SERIES, INC. AND SHAREHOLDERS OF
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO:
IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING
THE SCHEDULE INVESTMENTS, AND THE RELATED STATEMENT OF OPERATIONS, STATEMENT OF
CHANGES IN NET ASSETS AND FINANCIAL HIGHLIGHTS PRESENT FAIRLY, IN ALL MATERIAL
RESPECTS, THE FINANCIAL POSITION OF CALVERT SOCIAL MID CAP GROWTH PORTFOLIO,
(ONE OF THE PORTFOLIOS COMPRISING CALVERT VARIABLE SERIES, INC., HEREINAFTER
REFERRED TO AS THE "FUND"), AT DECEMBER 31, 1999, THE RESULTS OF ITS OPERATIONS,
THE CHANGES IN ITS NET ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE
PERIODS INDICATED THEREIN, IN CONFORMITY WITH ACCOUNTING PRINCIPLES GENERALLY
ACCEPTED IN THE UNITED STATES. THESE FINANCIAL STATEMENTS AND FINANCIAL
HIGHLIGHTS (HEREINAFTER REFERRED TO AS "FINANCIAL STATEMENTS") ARE THE
RESPONSIBILITY OF THE FUND'S MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN
OPINION ON THESE FINANCIAL STATEMENTS BASED ON OUR AUDITS. WE CONDUCTED OUR
AUDITS OF THESE FINANCIAL STATEMENTS IN ACCORDANCE WITH AUDITING STANDARDS
GENERALLY ACCEPTED IN THE UNITED STATES, WHICH REQUIRE THAT WE PLAN AND PERFORM
THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS
ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS,
EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS,
ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY
MANAGEMENT, AND EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE
BELIEVE THAT OUR AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT DECEMBER
31, 1999 BY CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE
BASIS FOR THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
BALTIMORE, MARYLAND
FEBRUARY 4, 2000
<PAGE>
MID CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 97.6% SHARES VALUE
COMMUNICATIONS EQUIPMENT - 3.3%
ADC TELECOMMUNICATIONS INC. * 20,300 $1,473,019
COMPUTER - SOFTWARE & SERVICES - 21.6%
ADVENT SOFTWARE INC. * 21,550 1,388,628
AMDOCS LTD * 17,900 617,550
BMC SOFTWARE INC. * 19,300 1,542,793
COMPUWARE CORP. * 37,800 1,408,050
NETWORK ASSOCIATES INC. * 45,400 1,211,612
PARAMETRIC TECHNOLOGY CORP. * 29,600 801,050
STERLING COMMERCE INC. * 27,100 923,094
STERLING SOFTWARE INC. * 37,400 1,178,100
TRANSACTION SYSTEMS ARCHITECTS INC * 4,800 414,400
9,485,278
DISTRIBUTORS - FOOD AND HEALTH - 2.6%
CARDINAL HEALTH INC. 23,800 1,139,425
ELECTRICAL EQUIPMENT - 3.2%
SANMINA CORP. * 8,500 848,937
SOLECTRON CORP. * 6,100 580,263
1,429,200
ELECTRONICS-SEMICONDUCTORS - 1.7%
ALTERA CORP. * 14,900 738,481
FINANCIAL - DIVERSIFIED - 2.4%
SLM HOLDING CORP. 25,400 1,073,150
HEALTHCARE-HOSPITAL MANAGEMENT - 2.5%
HEALTH MANAGEMENT ASSOCIATES INC. * 83,500 1,116,812
HEALTHCARE-MEDICAL PRODUCT AND SUPPLIES - 3.4%
BIOMET INC. 26,700 1,068,000
GUIDANT CORP. * 9,444 443,868
1,511,868
HEALTHCARE-SPECIAL SERVICES - 3.9%
COVANCE INC. * 53,500 578,469
OMNICARE INC. 44,500 534,000
QUINTILES TRANSNATIONAL CORP. * 31,100 581,181
1,693,650
HOUSEHOLD PRODUCT - NON-DURABLE - 2.0%
DIAL CORP 35,900 872,819
HOUSEWARES - 1.8%
NEWELL RUBBERMAID INC. 27,400 794,600
<PAGE>
EQUITY SECURITIES - (CONT'D) SHARES VALUE
INSURANCE - LIFE AND HEALTH - 2.5%
AFLAC INC. 23,200 $1,094,750
INVESTMENT BANKING AND BROKERAGE - 2.4%
LEGG MASON INC. 28,800 1,044,000
INVESTMENT MANAGEMENT - 4.3%
FRANKLIN RESOURCES INC 20,086 644,007
PRICE (T. ROWE) ASSOCIATES 33,700 1,244,794
1,888,801
LEISURE TIME - PRODUCTS - 2.6%
HARLEY-DAVIDSON INC. 17,800 1,140,313
MANUFACTURING-SPECIALIZED - 2.1%
JABIL CIRCUIT INC. * 12,400 905,200
OIL AND GAS - DRILLING AND EQUIPMENT - 2.0%
SMITH INTERNATIONAL INC. * 17,100 849,656
RETAIL-BUILDING SUPPLIES - 2.7%
FASTENAL CO. 26,700 1,199,831
RETAIL-DISCOUNTERS - 7.0%
DOLLAR GENERAL 51,991 1,182,795
DOLLAR TREE STORES INC. * 29,800 1,443,438
KOHL'S CORP. * 6,300 454,781
3,081,014
RETAIL-SPECIALTY - 1.0%
STAPLES INC. * 20,200 419,150
SERVICES - EMPLOYMENT - 3.5%
INTERIM SERVICES INC. * 35,400 876,150
ROBERT HALF INTERNATIONAL INC. * 22,900 654,081
1,530,231
SERVICES - ADVERTISING AND MARKETING - 4.5%
ACXIOM CORP. * 36,000 864,000
CATALINA MARKETING CORP. * 9,700 1,122,775
1,986,775
SERVICES - COMMERCIAL AND CONSUMER - 5.8%
CINTAS CORP. 16,500 876,562
G & K SERVICES INC. 21,300 689,588
KEANE INC. * 31,600 1,003,300
2,569,450
<PAGE>
EQUITY SECURITIES - (CONT'D) SHARES VALUE
SERVICES - DATA PROCESSING - 8.8%
BISYS GROUP INC. * 15,900 $1,037,475
EQUIFAX INC. 20,700 487,744
FISERV INC. * 32,850 1,258,565
PAYCHEX INC. 27,650 1,106,000
3,889,785
TOTAL EQUITY SECURITIES (COST $35,056,622) 42,927,258
REPURCHASE AGREEMENTS - 2.3%
STATE STREET BANK, 3.00%, DATED 12/31/99, DUE 1/3/00
$1,000,000 1,000,000
(COLLATERAL: $5,256,363, FHLB, 3.00%, 4/7/00)
TOTAL REPURCHASE AGREEMENTS (COST $1,000,000) 1,000,000
TOTAL INVESTMENTS (COST $36,056,622) - 99.9% 43,927,258
OTHER ASSETS AND LIABILITIES, NET - 0.1% 48,809
NET ASSETS - 100% $43,976,067
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MID CAP GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE - SEE ACCOMPANYING PORTFOLIO
$43,927,258
CASH 78,465
INTEREST AND DIVIDENDS RECEIVABLE 11,825
OTHER ASSETS 909
TOTAL ASSETS 44,018,457
LIABILITIES
PAYABLE TO CALVERT ASSET MANAGEMENT COMPANY, INC. 27,910
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES COMPANY 9,098
PAYABLE TO CALVERT SHAREHOLDER SERVICES, INC. 452
ACCRUED EXPENSES AND OTHER LIABILITIES 4,930
TOTAL LIABILITIES 42,390
NET ASSETS $43,976,067
NET ASSETS CONSIST OF:
PAR VALUE AND PAID-IN CAPITAL APPLICABLE TO 1,464,306 SHARES OF COMMON
STOCK OUTSTANDING; $0.01 PAR VALUE, 1,000,000,000 SHARES AUTHORIZED
$35,592,210
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS 513,221
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 7,870,636
NET ASSETS $43,976,067
NET ASSET VALUE PER SHARE $30.03
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MID CAP GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME
INTEREST INCOME $83
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD OF $306) 118,505
TOTAL INVESTMENT INCOME 118,588
EXPENSES
INVESTMENT ADVISORY FEE 275,694
TRANSFER AGENCY FEES AND EXPENSES 41,326
ACCOUNTING FEES 12,847
DIRECTORS' FEES AND EXPENSES 8,548
ADMINISTRATIVE FEES 93,247
CUSTODIAN FEES 15,118
REPORTS TO SHAREHOLDERS 2,594
PROFESSIONAL FEES 4,066
MISCELLANEOUS 1,591
TOTAL EXPENSES 455,031
FEES PAID INDIRECTLY (35,357)
NET EXPENSES 419,674
NET INVESTMENT INCOME (LOSS) (301,086)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) 3,421,480
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) (234,549)
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS 3,186,931
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,885,845
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MID CAP GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
OPERATIONS
NET INVESTMENT INCOME (LOSS) ($301,086) ($188,017)
NET REALIZED GAIN (LOSS) 3,421,480 5,089,060
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION)
(234,549) 3,487,530
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2,885,845 8,388,573
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET REALIZED GAIN ON INVESTMENTS (3,398,247) (4,698,137)
TOTAL DISTRIBUTIONS (3,398,247) (4,698,137)
CAPITAL SHARE TRANSACTIONS
SHARES SOLD 15,126,008 17,443,253
REINVESTMENT OF DISTRIBUTIONS 3,398,258 4,698,137
SHARES REDEEMED (13,573,536) (12,410,597)
TOTAL CAPITAL SHARE TRANSACTIONS 4,950,730 9,730,793
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,438,328 13,421,229
NET ASSETS
BEGINNING OF YEAR 39,537,739 26,116,510
END OF YEAR $43,976,067 $39,537,739
CAPITAL SHARE ACTIVITY
SHARES SOLD 503,241 573,133
REINVESTMENT OF DISTRIBUTIONS 113,576 157,974
SHARES REDEEMED (451,747) (412,755)
TOTAL CAPITAL SHARE ACTIVITY 165,070 318,352
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: CALVERT SOCIAL MID CAP GROWTH PORTFOLIO (THE "PORTFOLIO"), A SERIES OF
CALVERT VARIABLE SERIES, INC. (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.
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. 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.
<PAGE>
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 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 $5,126 FOR THE YEAR ENDED DECEMBER 31, 1999. NATIONAL
FINANCIAL DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
FOR THE PERIOD ENDED JUNE 30, 1999, 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. EFFECTIVE
JULY 1, 1999, EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A
FEE OF $1,500 FOR EACH BOARD MEETING ATTENDED PLUS AN ANNUAL FEE OF $15,000 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 YEAR, PURCHASES AND SALES OF INVESTMENTS, OTHER THAN SHORT-TERM
SECURITIES, WERE $41,303,010 AND $39,995,946, RESPECTIVELY.
THE COST OF INVESTMENTS OWNED AT DECEMBER 31, 1999, WAS SUBSTANTIALLY THE SAME
FOR FEDERAL INCOME TAX AND FINANCIAL REPORTING PURPOSES. NET UNREALIZED
APPRECIATION AGGREGATED $7,870,636, OF WHICH $9,176,201 RELATED TO APPRECIATED
SECURITIES AND $1,305,565 RELATED TO DEPRECIATED SECURITIES.
<PAGE>
NOTE D -- LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR THE
CALVERT SOCIAL INVESTMENT FUND MANAGED INDEX AND CVS AMERITAS INDEX 500
PORTFOLIOS) 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 DECEMBER 31, 1999.
TAX INFORMATION (UNAUDITED)
THE PORTFOLIO DESIGNATES $3,340,000 AS CAPITAL GAIN DIVIDENDS PAID DURING THE
TAXABLE YEAR ENDED DECEMBER 31, 1999.
<PAGE>
MID CAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $30.43 $26.63 $24.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (.21) (.14) (.04)
NET REALIZED AND UNREALIZED GAIN (LOSS)
2.31 8.00 5.70
TOTAL FROM INVESTMENT OPERATIONS
2.11 7.86 5.66
DISTRIBUTIONS FROM
NET INVESTMENT INCOME -- -- --
NET REALIZED GAINS (2.51) (4.06) (3.08)
TOTAL DISTRIBUTIONS (2.51) (4.06) (3.08)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE
(.40) 3.80 2.58
NET ASSET VALUE, ENDING $30.03 $30.43 $26.63
TOTAL RETURN 6.97% 29.88% 23.53%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.73%) (.60%) (.17%)
TOTAL EXPENSES 1.11% 1.05% 1.04%
EXPENSES BEFORE OFFSETS 1.11% 1.05% 1.04%
NET EXPENSES 1.02% 1.00% .96%
PORTFOLIO TURNOVER 101% 65% 96%
NET ASSETS, ENDING (IN THOUSANDS)$43,976 $39,538 $26,117
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $22.42 $16.97
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (.12) (.15)
NET REALIZED AND UNREALIZED GAIN (LOSS) 1.79 6.85
TOTAL FROM INVESTMENT OPERATIONS 1.67 6.70
DISTRIBUTIONS FROM
NET INVESTMENT INCOME -- (.01)
NET REALIZED GAINS (.04) (1.24)
TOTAL DISTRIBUTIONS (.04) (1.25)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 1.63 5.45
NET ASSET VALUE, ENDING $24.05 $22.42
TOTAL RETURN 7.44% 39.46%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.60%) (.84%)
TOTAL EXPENSES 1.33% 1.66%
EXPENSES BEFORE OFFSETS 1.33% 1.56%
NET EXPENSES 1.00% 1.25%
PORTFOLIO TURNOVER 124% 135%
NET ASSETS, ENDING (IN THOUSANDS) $19,904 $8,935
<PAGE>
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL INTERNATIONAL EQUITY PORTFOLIO
MANAGED BY MURRAY JOHNSTONE INTERNATIONAL, LTD.
DEAR INVESTOR:
THE EASING BY THE FEDERAL RESERVE BOARD IN THE US, AND THE SUBSEQUENT INTEREST
RATE CUTS IN EUROPE AND THE FAR EAST BEGINNING IN 1998, RELIQUIFIED THE
FINANCIAL SYSTEM AND SPURRED AN ECONOMIC RECOVERY IN 1999 THAT EXCEEDED MOST
FORECASTS. THIS PROLONGED THE EXPANSION IN THE US. WITH DEMAND SPILLING OVER
INTO THE INTERNATIONAL MARKETS,THE JAPANESE ECONOMY RECOVERED AND EUROPE ALSO
REAPED THE BENEFITS OF RISING GLOBAL DEMAND FOR GOODS AND SERVICES.
INVESTMENT CLIMATE
A KEY FEATURE OF THE RECOVERY IN 1999 WAS THE SPECTACULAR GROWTH OF TECHNOLOGY
AND INTERNET-BASED BUSINESSES. A RASH OF "DOT.COM" COMPANIES CAME TO THE MARKET
WITH MOST BID TO IMMEDIATE PREMIUMS BY INVESTORS ANXIOUS TO BE EARLY BUYERS INTO
BUSINESSES WHOSE PROSPECTS WERE BRIGHT BUT UNTESTED. TELECOM GROUPS WORLD-WIDE
WERE SEEN AS THE PRINCIPAL BENEFICIARIES OF THE GROWTH OF "E-BUSINESSES" AND THE
AGGRESSIVE MERGER ACTIVITY IN THE GLOBAL TELECOM SECTOR, CONTINUING THROUGHOUT
THIS PERIOD, WAS A FURTHER CAUSE OF BUOYANT STOCK PRICES.
ANOTHER FEATURE OF THE RECOVERY WAS THE NEAR-ABSENCE OF INFLATIONARY PRESSURES.
BY YEAR-END SIGNS OF PRICING PRESSURE WERE BEGINNING TO APPEAR AT THE RETAIL
LEVEL BUT FOR MOST OF THE YEAR, A DREAM SCENARIO OF GROWTH WITHOUT INFLATION
SPURRED AN ENTHUSIASM AMONG INVESTORS.
EARLY IN 1999 THE BELIEF THAT ECONOMIES WERE BACK ON A GROWTH PATH LED TO THE
HEAVY BUYING OF CYCLICAL OR ECONOMIC-SENSITIVE STOCKS: OILS, CHEMICALS AND HEAVY
INDUSTRIALS, ACROSS THE INTERNATIONAL MARKETS. HOWEVER, AS THE GAP BETWEEN THE
RATE OF GROWTH IN ECONOMIES
CVS CALVERT SOCIAL
INTERNATIONAL EQUITY PORTFOLIO
COMPARISON OF CHANGE IN
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
[INSERT LINE GRAPH HERE]
AVERAGE ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
ONE YEAR 32.78%
FIVE YEAR 18.06%
SINCE INCEPTION (6.30.92) 14.72%
*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.
<PAGE>
SUCH AS THE US AND THE UK AND THE LAGGARDS, EUROPE, CHINA AND JAPAN, BECAME
APPARENT, INVESTORS SWITCHED FROM THESE SO-CALLED "VALUE" STOCKS BACK INTO
"GROWTH" COMPANIES CENTERED ON TECHNOLOGY, TELECOMS AND FINANCIALS.
IN TERMS OF STOCK MARKET PERFORMANCE, 1999 SAW STARK CONTRASTS TO 1998. IN 1998
THE EUROPEAN MARKETS LED THE WAY AS THE "SAFE HAVEN" FOR INVESTORS WHILE THE FAR
EAST AND THE EMERGING MARKETS EXPERIENCED FINANCIAL MELTDOWN. IN 1999 GROWTH IN
EUROPE WAS MODEST AND PARTICIPANTS IN THE NEW EURO DEBATED THE MERITS OF
NATIONAL VERSUS REGIONAL POLICY AIMS, UNDERMINING THE CURRENCY FROM ITS OUTSET.
BY CONTRAST, THE RECOVERY IN THE FAR EAST WAS DRAMATIC AND STOCK PRICES WERE
AGGRESSIVELY BID UP IN MARKETS FROM HONG KONG TO SINGAPORE. IN JAPAN, TOO, AFTER
A DECADE OF OFFICIAL PROCRASTINATION AND OBFUSCATION, THE GOVERNMENT'S ATTEMPTS
TO RELIQUIFY AND STABILIZE THE FINANCIAL SYSTEM BORE FRUIT. THE LATTER
DEVELOPMENT MARKED A WATERSHED IN JAPANESE CORPORATE THINKING AND PROVED TO BE
THE SIGNAL WHICH ATTRACTED FOREIGN BUYERS BACK INTO THE MARKET.
PERFORMANCE AND INVESTMENT STRATEGY
DURING THE YEAR THE PORTFOLIO RETURNED 32.78%, OUTPERFORMING ITS BENCHMARK, THE
EAFE INDEX WHICH RETURNED 27.3%.
THE DIFFICULT PERIOD FOR INVESTMENTS WAS THE FIRST QUARTER WHEN CYCLICAL STOCKS
LED THE MARKET UP. THE PORTFOLIO WAS UNDERWEIGHT IN CYCLICALS AND GROWTH STOCKS
WERE LEFT BEHIND DURING THIS PERIOD. ON THE OTHER HAND, THE INVESTMENTS IN JAPAN
WERE KEY TO THE STRENGTH OF RETURNS. THE PORTFOLIO HAD CLOSE TO A FULL WEIGHT
COMPARED TO THE BENCHMARK EARLY IN THE YEAR AND WITH THE STOCK SELECTION FOCUS
ON TECHNOLOGY AND TELECOM STOCKS, RETURNS WERE STRONG THROUGHOUT THE YEAR.
AGAINST A BENCHMARK RETURN OF 61.8%(THE JAPANESE COMPONENT OF THE EAFE INDEX),
THE PORTFOLIO INVESTMENTS IN JAPAN RETURNED 112%. IN SPITE OF THE GENERALLY DULL
PERFORMANCE OF EUROPEAN STOCKS, THE TELECOM SECTOR WAS WELL REPRESENTED IN THE
PORTFOLIO INCLUDING MANNESMANN, THE GERMAN TELECOMS GROUP WHICH WAS SUBJECT TO A
HOSTILE BID FROM THE UK--BASED VODAFONE AIRTOUCH MOBILE PHONE GROUP.
INVESTMENT PERFORMANCE THROUGH 1999 WAS DRIVEN BY TWO FACTORS: GLOBAL ECONOMIC
RECOVERY AND TECHNOLOGY. WITH THE US AND UK LEADING IN GROWTH AND INVESTMENT
RETURNS, THE MANAGERS INVESTED THE FUND'S ASSETS IN THE INTERNATIONAL MARKETS
WHICH WOULD BENEFIT FROM THE STRENGTH OF THOSE ECONOMIES. THE MARKETS OF THE FAR
EAST AND JAPAN WERE THE FIRST CANDIDATES BUT WITH IMPRESSIVE GAINS THERE FROM
EARLY IN THE YEAR, WE DECIDED TO SHIFT PART OF THE ASSETS TO EUROPE WHICH HAD
LAGGED. WE TRIMMED INVESTMENTS IN MATSUSHITA COMMUNICATIONS WHICH MAKES
EQUIPMENT FOR THE MOBILE PHONE MARKET AND FUJITSU, THE COMPUTER AND PC
MANUFACTURER, BOTH BENEFICIARIES OF THE INTERNET BOOM WHOSE STOCK PRICES HAD
SURGED DURING THE YEAR. ASSETS WERE ALSO SHIFTED FROM THE UK WITH SALES OF
STOCKS INCLUDING RAILTRACK. RAILTRACK WAS FACING AN INCREASINGLY COMPLEX TASK IN
UPGRADING THE RAIL NETWORK IN THE UK, THE COST OF WHICH WAS UNRESOLVED, PUTTING
PRESSURE ON FUTURE PROFITS.
<PAGE>
OUTLOOK
Y2K PROBLEMS APPEAR TO HAVE BEEN MINIMAL IN JANUARY 2000 BUT AS THE YEAR
PROGRESSES, GLOBAL RECOVERY AND A TREND TO HIGHER INTEREST RATES COULD DAMPEN
OPTIMISM. IT IS CLEAR THAT THE US ECONOMY HAS BEEN GROWING AT A RATE IN EXCESS
OF THE LONG-TERM SUSTAINABLE RATE OF 4% AND THE FEDERAL RESERVE BOARD WILL
PROBABLY MOVE TO SLOW THIS PACE BY RAISING INTEREST RATES IN JANUARY OR
FEBRUARY. AT THE SAME TIME, THE ADDITIONAL LIQUIDITY IN THE SYSTEM TO TIDE
MARKETS OVER THE MILLENNIUM IS LIKELY TO BE DRAINED, PUTTING A FURTHER BRAKE ON
THE BUOYANT CONDITIONS OF THE PREVIOUS THREE MONTHS. THESE DEVELOPMENTS MAY MARK
THE END OF THE RALLY IN TECH STOCKS, OR AT LEAST GIVE INVESTORS CAUSE TO PAUSE
AND REASSESS WHICH COMPANIES WILL BE WINNERS AND WHICH WILL FALL BY THE WAYSIDE.
ON THE POSITIVE SIDE, IT IS APPARENT THAT GROWTH GLOBALLY IS NOT CLOSELY
SYNCHRONIZED, AND THAT WHILE ATTEMPTS WILL BE MADE TO SLOW THE PACE IN THE US
AND POSSIBLY THE UK, RECOVERY IS LESS ADVANCED IN EUROPE AND JAPAN. GROWTH IN
CHINA HAS ALSO BEEN SUBDUED IN THE CURRENT CYCLE. THESE AREAS WILL SEE A
CONTINUATION OF LOW INTEREST RATES AND EASY MONETARY POLICY, CONDITIONS THAT
SHOULD FAVOR GROWTH, CORPORATE PROFITS, AND EQUITY MARKET RETURNS. IT IS ALSO
APPARENT THAT WHILE MANY COMPANIES HAVE SEEN THEIR STOCK PRICE ROCKET DURING
1999, MANY OTHERS HAVE SEEN IT PLUMB NEW LOWS. SO THERE IS STILL VALUE OUT
THERE. OUR MOST RECENT MOVES IN THE PORTFOLIO HAVE BEEN TO TRIM BACK SOME OF THE
HIGHLY PRICED GROWTH STOCKS AND INCREASE EXPOSURE TO CHEAPER CYCLICALS IN THE
ENGINEERING AND MANUFACTURING SECTORS, LOOKING TO CAPTURE SOME OF THAT VALUE IN
THE YEAR 2000.
SINCERELY,
ANDREW PRESTON
MURRAY JOHNSTONE INTERNATIONAL
JANUARY 24, 2000
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>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF CALVERT VARIABLE SERIES, INC. AND SHAREHOLDERS OF
CALVERT SOCIAL INTERNATIONAL EQUITY PORTFOLIO:
IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING
THE SCHEDULE OF INVESTMENTS, AND THE RELATED STATEMENT OF OPERATIONS, STATEMENT
OF CHANGES IN NET ASSETS AND FINANCIAL HIGHLIGHTS PRESENT FAIRLY, IN ALL
MATERIAL RESPECTS, THE FINANCIAL POSITION OF CALVERT SOCIAL INTERNATIONAL EQUITY
PORTFOLIO (ONE OF THE PORTFOLIOS COMPRISING CALVERT VARIABLE SERIES, INC.,
HEREINAFTER REFERRED TO AS THE "FUND"), AT DECEMBER 31, 1999, THE RESULTS OF ITS
OPERATIONS, THE CHANGES IN ITS NET ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH
OF THE PERIODS INDICATED THEREIN, IN CONFORMITY WITH ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED IN THE UNITED STATES. THESE FINANCIAL STATEMENTS AND
FINANCIAL HIGHLIGHTS (HEREINAFTER REFERRED TO AS "FINANCIAL STATEMENTS") ARE THE
RESPONSIBILITY OF THE FUND'S MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN
OPINION ON THESE FINANCIAL STATEMENTS BASED ON OUR AUDITS. WE CONDUCTED OUR
AUDITS OF THESE FINANCIAL STATEMENTS IN ACCORDANCE WITH AUDITING STANDARDS
GENERALLY ACCEPTED IN THE UNITED STATES, WHICH REQUIRE THAT WE PLAN AND PERFORM
THE AUDIT TO OBTAIN REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS
ARE FREE OF MATERIAL MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS,
EVIDENCE SUPPORTING THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS,
ASSESSING THE ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY
MANAGEMENT, AND EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE
BELIEVE THAT OUR AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT DECEMBER
31, 1999 BY CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE
BASIS FOR THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
BALTIMORE, MARYLAND
FEBRUARY 4, 2000
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 97.2% SHARES VALUE
ARGENTINA - 2.7%
BANCO FRANCES DEL RIO LA PLATA (ADR) 15,000 $355,313
TELECOM ARGENTINA STET-FRANCE (ADR) 7,000 239,750
595,063
AUSTRALIA - 1.5%
NATIONAL AUSTRALIA BANK 21,000 321,226
BRAZIL - 1.7%
TELE NORTE LESTE PARTICIPACOES (ADR) 15,000 382,500
DENMARK - 1.2%
NOVO-NORDISK 1,962 260,223
FRANCE - 12.6%
AXA UAP 2,389 333,068
BANQUE NATIONAL DE PARIS 4,437 409,416
CAP GEMINI 2,232 566,598
CIE DE ST GOBAIN 1,903 357,901
EQUANT *(ADR) 2,532 283,584
LEGRAND 1,479 352,056
PINAULT PRINTEMPS 1,155 304,834
VIVENDI 1,800 162,556
2,770,013
GERMANY - 7.2%
ALLIANZ 957 321,505
DOUGLAS HOLDINGS 3,590 154,600
LINDE 5,850 319,990
MANNESMANN 1,681 405,558
SAP 409 201,471
VOLKSWAGEN 3,310 186,556
1,589,680
HONG KONG - 1.5%
CHEUNG KONG HOLDINGS 25,000 316,781
IRELAND - 1.9%
ALLIED IRISH BANKS 16,685 189,926
GLOBAL TELESYSTEMS GROUP * 6,428 222,570
412,496
ITALY - 6.3%
BANCA POPOLARE DI MILANO 27,718 215,835
TELECOM ITALIA MOBILE 51,707 577,645
TELECOM ITALIA SPA 62,749 382,422
UNICREDITO ITALIAN 44,034 216,465
1,392,367
<PAGE>
EQUITY SECURITIES - (CONT'D) SHARES VALUE
JAPAN - 28.6%
FUJI MACHINE MANUFACTURING 5,200 $419,379
FUJITSU 10,000 456,103
MATSUSHITA COMMUNICATIONS 2,000 528,531
MEITEC CORPORATION 4,400 139,963
NIPPON COMSYS 14,000 290,496
NIPPON EXPRESS COMPANY 45,000 248,850
NSK LIMITED 23,000 157,355
NTT MOBILE COMMUNICATIONS 14 538,514
OLYMPUS OPTICAL 18,000 254,576
OMRON CORPORATION 15,000 345,747
SECOM COMPANY 3,000 330,332
SHARP CORPORATION 17,000 435,108
SNOW BRAND MILK 22,000 88,715
SONY CORPORATION 2,000 593,129
SUMITOMO BANK 24,000 328,629
TAKEFUJI CORPORATION * 2,400 300,440
TDK CORPORATION 3,000 414,309
YAMANOUCHI PHARMACEUTICAL 9,000 314,476
YORK BENIMARU 4,300 111,951
6,296,603
MEXICO - 2.9%
GRUPO INDUSTRIAL DURANGO (ADR) * 11,000 130,625
TELEFONOS DE MEXICO (ADR) 4,500 506,250
636,875
NETHERLANDS - 8.3%
ELSEVIER 24,842 296,791
FORTIS 8,742 315,440
ING GROEP 5,318 321,104
PHILIPS ELECTRONICS 2,544 345,964
VNU 10,550 554,545
1,833,844
NEW ZEALAND - 1.5%
TELECOM CORPORATION OF NEW ZEALAND 70,000 329,175
NORWAY - 2.6%
CHRISTIANIA BANK 33,652 166,001
TOMRA SYSTEMS ASA 23,526 399,567
565,568
SINGAPORE - 1.1%
CITY DEVELOPMENTS 42,000 245,872
SOUTH AFRICA - 0.6% 2,000
LIBERTY LIFE ASSOCIATION 2,000 23,071
STANDARD BANK INVESTMENT 28,000 116,231
139,302
<PAGE>
EQUITY SECURITIES - (CONT'D) SHARES VALUE
SPAIN - 1.7%
ARGENTARIA 13,815 $324,673
SUPERDIPLO * 2,905 55,893
380,566
SWEDEN - 2.2%
SKF SERIES B 19,727 479,902
SWITZERLAND - 1.6%
ZURICH ALLIED * 619 352,981
UNITED KINGDOM - 9.5%
ABBEY NATIONAL 7,400 118,636
BARCLAYS 12,500 359,202
BEAZER GROUP 8,584 19,967
BELLWAY 3,760 18,889
BRITISH TELECOM 7,700 186,567
CADBURY SCHWEPPES 22,000 132,552
FIRSTGROUP PLC 6,250 24,230
JOHNSON MATTHEY 12,000 118,046
KINGFISHER 3,335 37,009
MAYFLOWER CORPORATION 21,600 76,061
NORWICH UNION 26,000 199,280
PEARSON 10,900 354,776
SMITHKLINE BEECHAM 19,000 240,922
VODAFONE AIRTOUCH 42,600 212,346
2,098,483
TOTAL EQUITY SECURITIES (COST $15,006,762) 21,399,520
TOTAL INVESTMENTS (COST $15,006,762) - 97.2% 21,399,520
OTHER ASSETS AND LIABILITIES, NET - 2.8% 613,432
NET ASSETS - 100% $22,012,952
* NON-INCOME PRODUCING.
ABBREVIATIONS:
ADR: AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE - SEE ACCOMPANYING PORTFOLIO
$21,399,520
CASH 630,153
INTEREST AND DIVIDENDS RECEIVABLE 4,343
OTHER ASSETS 11,714
TOTAL ASSETS 22,045,730
LIABILITIES
PAYABLE TO CALVERT ASSET MANAGEMENT COMPANY, INC. 20,536
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES COMPANY 5,007
PAYABLE TO CALVERT SHAREHOLDER SERVICES, INC. 226
ACCRUED EXPENSES AND OTHER LIABILITIES 7,009
TOTAL LIABILITIES 32,778
NET ASSETS $22,012,952
NET ASSETS CONSIST OF:
PAR VALUE AND PAID-IN CAPITAL APPLICABLE TO 857,992 SHARES OF COMMON
STOCK OUTSTANDING; $0.01 PAR VALUE, 1,000,000,000 SHARES AUTHORIZED
$15,372,032
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 248,260
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS AND FOREIGN
CURRENCIES AND ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
6,392,660
NET ASSETS $22,012,952
NET ASSET VALUE PER SHARE $25.66
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME
INTEREST INCOME $17,960
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD OF $30,768) 265,390
TOTAL INVESTMENT INCOME 283,350
EXPENSES
INVESTMENT ADVISORY FEE 142,875
TRANSFER AGENCY FEES AND EXPENSES 6,648
DIRECTORS' FEES AND EXPENSES 3,957
ADMINISTRATIVE FEES 48,020
ACCOUNTING FEES 16,189
CUSTODIAN FEES 72,967
REGISTRATION FEES 508
REPORTS TO SHAREHOLDERS 1,029
PROFESSIONAL FEES 1,771
MISCELLANEOUS 558
TOTAL EXPENSES 294,522
REIMBURSEMENT FROM ADVISOR (3,707)
FEES PAID INDIRECTLY (18,149)
NET EXPENSES 272,666
NET INVESTMENT INCOME (LOSS) 10,684
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENTS 1,704,382
FOREIGN CURRENCY TRANSACTIONS (34,450)
1,669,932
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION):
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 3,757,006
ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES (1,488)
3,755,518
NET REALIZED AND UNREALIZED GAIN (LOSS) 5,425,450
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $5,436,134
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
OPERATIONS
NET INVESTMENT INCOME $10,684 $78,743
NET REALIZED GAIN (LOSS) 1,669,932 1,168,855
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION)
3,755,518 1,335,513
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 5,436,134 2,583,111
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (11,209) (53,185)
NET REALIZED GAIN ON INVESTMENTS (1,552,510) (1,265,356)
TOTAL DISTRIBUTIONS (1,563,719) (1,318,541)
CAPITAL SHARE TRANSACTIONS
SHARES SOLD 2,860,507 3,075,675
REINVESTMENT OF DISTRIBUTIONS 1,563,721 1,318,544
SHARES REDEEMED (3,392,566) (2,999,999)
TOTAL CAPITAL SHARE TRANSACTIO 1,031,662 1,394,220
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,904,077 2,658,790
NET ASSETS
BEGINNING OF YEAR 17,108,875 14,450,085
END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $0 AND $11,207, RESPECTIVELY) $22,012,952 $17,108,875
CAPITAL SHARE ACTIVITY
SHARES SOLD 127,897 142,752
REINVESTMENT OF DISTRIBUTIONS 61,202 63,667
SHARES REDEEMED (153,114) (141,023)
TOTAL CAPITAL SHARE ACTIVITY 35,985 65,396
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: CALVERT SOCIAL INTERNATIONAL EQUITY PORTFOLIO (THE "PORTFOLIO"),A
SERIES OF CALVERT VARIABLE SERIES, INC. (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 $3,707 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
RECEIVED A FEE OF $2,083 FOR THE YEAR ENDED DECEMBER 31, 1999. NATIONAL
FINANCIAL DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
FOR THE PERIOD ENDED JUNE 30, 1999, 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. EFFECTIVE
JULY 1, 1999, EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A
FEE OF $1,500 FOR EACH BOARD MEETING ATTENDED PLUS AN ANNUAL FEE OF $15,000 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 YEAR, PURCHASES AND SALES OF INVESTMENTS, OTHER THAN SHORT-TERM
SECURITIES, WERE $10,245,266 AND $10,379,513, RESPECTIVELY.
THE COST OF INVESTMENTS OWNED AT DECEMBER 31, 1999, WAS SUBSTANTIALLY THE SAME
FOR FEDERAL INCOME TAX AND FINANCIAL REPORTING PURPOSES. NET UNREALIZED
APPRECIATION AGGREGATED
$6,392,758, OF WHICH $7,036,462 RELATED TO APPRECIATED INVESTMENTS AND $643,668
RELATED TO DEPRECIATED INVESTMENTS.
<PAGE>
NOTE D -- LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR THE
CALVERT SOCIAL INVESTMENT FUND MANAGED INDEX AND CVS AMERITAS INDEX 500
PORTFOLIOS) 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 DECEMBER 31, 1999.
TAX INFORMATION (UNAUDITED)
THE PORTFOLIO DESIGNATES $415,000 AS CAPITAL GAIN DIVIDENDS PAID DURING THE
TAXABLE YEAR ENDED DECEMBER 31, 1999.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $20.81 $19.10 $18.74
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .01 .10 .19
NET REALIZED AND UNREALIZED GAIN (LOSS)
6.80 3.35 2.28
TOTAL FROM INVESTMENT OPERATIONS
6.81 3.45 2.47
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.01) (.07) (.20)
NET REALIZED GAINS (1.95) (1.67) (1.91)
TOTAL DISTRIBUTIONS (1.96) (1.74) (2.11)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE
4.85 1.71 .36
NET ASSET VALUE, ENDING $25.66 $20.81 $19.10
TOTAL RETURN 32.78% 18.09% 13.23%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME .06% .49% .85%
TOTAL EXPENSES 1.62% 1.80% 1.73%
EXPENSES BEFORE OFFSETS 1.60% 1.65% 1.56%
NET EXPENSES 1.50% 1.56% 1.17%
PORTFOLIO TURNOVER 59% 92% 35%
NET ASSETS, ENDING (IN THOUSANDS)
$22,013 $17,109 $14,450
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $17.15 $15.89
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .17 .27
NET REALIZED AND UNREALIZED GAIN (LOSS) 2.40 1.69
TOTAL FROM INVESTMENT OPERATIONS 2.57 1.96
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.14) (.25)
NET REALIZED GAINS (.84) (.45)
TOTAL DISTRIBUTIONS (.98) (.70)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 1.59 1.26
NET ASSET VALUE, ENDING $18.74 $17.15
TOTAL RETURN 14.99% 12.35%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 1.02% 1.48%
TOTAL EXPENSES 1.82% 1.90%
EXPENSES BEFORE OFFSETS 1.59% 1.51%
NET EXPENSES 1.18% 1.12%
PORTFOLIO TURNOVER 85% 90%
NET ASSETS, ENDING (IN THOUSANDS) $14,027 $9,831
<PAGE>
CALVERT VARIABLE SERIES, INC.
CALVERT SOCIAL BALANCED PORTFOLIO
DEAR INVESTOR:
1999'S STRONG STOCK MARKET PERFORMANCE WAS DRIVEN BY A FEW DOMINANT THEMES
RESULTING IN VERY NARROW MARKET PARTICIPATION. THE LARGE MAJORITY OF STOCKS
WITHIN THE S&P 500 PERFORMED VERY MODESTLY. THE S&P RETURNED 21% FOR THE YEAR
WITH PERFORMANCE CONCENTRATED IN FOUR ECONOMIC SECTORS; TECHNOLOGY (+75%),
CAPITAL GOODS (+28%), BASIC MATERIALS (+26%) AND CONSUMER CYCLICALS (+22%). FOUR
OF THE ELEVEN SECTORS WERE ACTUALLY NEGATIVE. TRANSPORTS AND UTILITIES WERE DOWN
NEARLY 10% AND HEALTH CARE FELL 9%. FINALLY, CONSUMER STAPLES DECLINED ABOUT 7%.
THE THEMES THAT DROVE THE MARKET'S ADVANCE WERE THE CONTINUED ROLLOUT AND
DOMINANCE OF THE INTERNET, GLOBAL ECONOMIC RECOVERY, AND A WEALTHIER CONSUMER.
THEMES THAT WORKED AGAINST THE MARKET WERE RISING INTEREST RATES AND RISING
COMMODITY PRICES.
THE LATTER TWO THEMES HAVE TYPICALLY SIGNALED A SLOWDOWN IN THE ECONOMY AND THE
POTENTIAL FOR A CORRECTION IN THE STOCK MARKET. AS EVIDENCED BY THE NEGATIVE
PERFORMANCE IN A THIRD OF THE MARKET'S SECTORS, A PARTIAL CORRECTION HAS BEEN
UNDERWAY. YET, WE ARE STILL PUZZLED BY HOW THE MARKET HAS CONTINUED TO RISE IN
DEFIANCE OF RISING INTEREST RATES.
FUND PERFORMANCE
WE'RE PLEASED TO REPORT THE CALVERT VARIABLE SERIES BALANCED PORTFOLIO
OUTPERFORMED ITS PEER GROUP AVERAGE. FOR THE 12 MONTHS, THE PORTFOLIO POSTED A
GAIN OF 12.12%, AHEAD OF THE 5.64% RETURN FOR THE AVERAGE VARIABLE ANNUITY
BALANCED FUND TRACKED BY LIPPER.
CVS CALVERT SOCIAL BALANCED PORTFOLIO
COMPARISON OF CHANGE IN
VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
[INSERT LINE GRAPH HERE]
AVERAGE ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
ONE YEAR 12.12%
FIVE YEAR 18.02%
TEN YEAR 12.05%
SINCE INCEPTION (9.02.86) 11.65%
*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.
<PAGE>
STRATEGY
THE PORTFOLIO'S ASSET ALLOCATION WAS MAINTAINED AT 60% STOCKS AND 40% BONDS
THROUGHOUT THE YEAR, A RATIO TO WHICH WE INTEND TO ADHERE FOR THE LONG TERM. ON
THE STOCK SIDE, OUR PORTFOLIO IS A LARGE CAP GROWTH ORIENTED PORTFOLIO WHICH IS
POSITIONED TO TAKE ADVANTAGE OF MANY OF THE IMPORTANT CHANGES TAKING PLACE IN
OUR WORLD TODAY. MOST OBVIOUSLY THIS INCLUDES THE NEW TECHNOLOGIES IN COMPUTERS,
COMMUNICATIONS, AND THE INTERNET. WE ARE ALSO POSITIONED TO TAKE ADVANTAGE OF
THE CHANGING DEMOGRAPHICS WHICH CONTINUE TO CREATE EXCELLENT OPPORTUNITIES IN
HEALTHCARE, FINANCIALS AND RETAIL SECTORS. ON THE BOND SIDE, WE CONTINUE TO
PURSUE OUR PRACTICE OF TARGETING OUR EXPOSURE TO THE MARKET BASED ON OUR VIEW OF
CRITICAL ECONOMIC, FISCAL AND MONETARY FACTORS. WE ADD VALUE BY TAKING ADVANTAGE
OF THE MANY OPPORTUNITIES THAT EXIST IN THE BOND MARKET FOR THE QUICK AND
ATTENTIVE TRADER.
FIXED INCOME INVESTMENTS - MANAGED BY CALVERT ASSET MANAGEMENT COMPANY, INC.
THIS PAST YEAR WILL BE REMEMBERED AS ONE OF THE WORST YEARS FOR TREASURY BOND
PRICES AS YIELDS INCREASED 125 TO 225 BASIS POINTS FROM 1998 LOWS ACROSS VARIOUS
TREASURY MATURITIES. FACED WITH A BOOMING ECONOMY, THE FEDERAL RESERVE INCREASED
RATES 3 TIMES TO PREEMPT A RISE IN INFLATION. FORTUNATELY, CREDIT SPREADS FOR
NON-TREASURY BONDS (CORPORATES, MORTGAGES, MUNICIPALS, ETC.) TIGHTENED AND THUS
PARTIALLY OFFSET THE OVERALL BEAR MARKET DROP IN PRICES.
THE FIRST 3 QUARTERS OF THE YEAR WERE CHARACTERIZED BY MASSIVE ISSUANCE OF ALL
KINDS OF BONDS EXCEPT TREASURIES. MOST BORROWING NEEDS FOR THE YEAR WERE
SATISFIED BY OCTOBER AS BORROWERS PREFERRED TO AVOID THE 4TH QUARTER BECAUSE OF
Y2K FEARS. THE PORTFOLIO WAS AN ACTIVE AND PROFITABLE PARTICIPANT IN THE NEW
ISSUE BOND MARKET.
THE FIXED-INCOME PORTION OF THE PORTFOLIO HAD STRONG PERFORMANCE FOR 1999. THIS
WAS ACCOMPLISHED BY AVOIDING THE JUNK BOND MARKET WHICH DETERIORATED AND BY
AVOIDING CALLABLE BONDS WHICH EXTENDED UNFAVORABLY IN A VOLATILE AND DOWNWARD
MOVING BOND MARKET.
EQUITY INVESTMENTS - MANAGED BY NCM CAPITAL MANAGEMENT INC.
LOOKING BACK ON 1999, IT IS ONCE AGAIN AMAZING HOW NARROW THE EQUITY MARKET
ACTUALLY WAS. ACCORDING TO DATA PROVIDED BY SALOMON SMITH BARNEY RESEARCH, THE
TOP TEN PERFORMERS WITHIN THE S&P 500 ACCOUNTED FOR ROUGHLY 65% OF THE INDEX'S
ADVANCE LAST YEAR. THE TOP 25 COMPANIES ATTRIBUTED 100% OF THE S&P'S GAIN.
MICROSOFT ALONE, WHICH STOOD AT OVER $600 BILLION IN MARKET CAPITALIZATION AND
NEARLY 5% OF THE INDEX AT YEAR-END, CONTRIBUTED ALMOST 13% OF THE INDEX'S
RETURN.
THE PORTFOLIO'S PERFORMANCE WAS CONSISTENT WITH THAT WHICH WE HAVE SEEN ALL
YEAR. OVERALL, SECTOR SELECTION DROVE PERFORMANCE, NOT STOCK SELECTION. FEW OF
THE ELEVEN ECONOMIC SECTORS OUTPERFORMED THE INDEX AND PICKING THE RIGHT SECTORS
WAS CRUCIAL IN OBTAINING GOOD RELATIVE PERFORMANCE.
LOOKING OUT TO 2000, WE WOULD EXPECT SOME LEADERSHIP CHANGES, BUT ANY
SIGNIFICANT ROTATION COULD BE SHORT LIVED. THE YEAR 2000 COULD BE SIMILAR TO
1999 IN THAT WE MAY HAVE
<PAGE>
POCKETS OF STRONG PERFORMANCE IN SOME OF THE TRADITIONAL VALUE-ORIENTED SECTORS.
THESE GROUPS INCLUDE CAPITAL GOODS, BASIC MATERIALS AND ENERGY. HOWEVER, OTHER
GROWTH-ORIENTED GROUPS LIKE CONSUMER STAPLES AND HEALTHCARE ARE POISED TO SHOW
GOOD PERFORMANCE. WHILE HEALTHCARE SHOWED POOR PERFORMANCE LAST YEAR DUE TO A
VARIETY OF FACTORS, THESE STOCKS SHOULD PERFORM WELL BEGINNING AFTER THE SECOND
QUARTER.
LOGIC AND REASON DO NOT ALWAYS APPLY TO THE STOCK MARKET. OVER THE SHORT-TERM,
TWO PREDOMINANT MARKET-MOVING VARIABLES CONTINUE TO REIGN, FEAR AND GREED. MANY
INVESTORS HAVE PILED INTO TECHNOLOGY FOR FEAR OF MISSING OUT. GREED KEEPS THEM
THERE. WE HAVE PARTICIPATED IN THE TECHNOLOGY BOOM TO SOME EXTENT AS WELL FOR
FEAR OF ENDING THE YEAR AT HALF THE S&P'S RETURN. WITH THE MARKET AS NARROW AS
IT IS HAD WE NOT FULLY PARTICIPATED IN THE INDUSTRIES THAT HAVE LED THE MARKET'S
ADVANCE, PERFORMANCE WOULD HAVE BEEN DISMAL. WILL VALUATION EVER MATTER AGAIN?
WE THINK SO BUT IT MAY NOT BE FOR SEVERAL QUARTERS OR EVEN YEARS. MEANWHILE, IT
IS APPARENT THE MARKET IS WILLING TO PAY ALMOST ANY PRICE FOR GROWTH.
MANY NEGLECTED SECTORS HAVE SOLID FUNDAMENTALS THAT HAVE GONE OVERLOOKED DURING
THIS PERIOD OF HYPER-GROWTH FROM TECHNOLOGY AND THE POTENTIAL FOR REBOUND IN THE
ECONOMICALLY SENSITIVE AREAS. AS THE GROWTH OF THE CURRENT FAVORITES MODERATES
OR EVEN DISAPPOINTS, THE LAGGARDS OF TODAY COULD BECOME TOMORROW'S MAJOR
BENEFICIARIES TOMORROW.
IN THE EVENT THAT WE DO HAVE A CORRECTION, NCM'S EMPHASIS ON QUALITY COMPANIES
SHOULD SERVE OUR CLIENTS WELL. HISTORICALLY, ESTABLISHED COMPANIES WITH SOLID
FUNDAMENTALS HAVE BOTTOMED FIRST AND REACHED NEW HIGHS OVER MARKET CYCLES WHILE
MORE FADDISH FIRMS HAVE TENDED TO LAG OR CEASE TO EXIST. JUST AS WE HAVE
TYPICALLY FORSAKEN SUCH RISK WHILE MANAGING TO OFFER COMPETITIVE RETURNS, WE
INTEND TO FOLLOW THE SAME SUCCESSFUL STRATEGY IN THE YEAR 2000.
OUTLOOK
LOOKING FORWARD WE EXPECT STOCK AND BOND MARKETS TO REMAIN CHOPPY, AS INVESTORS
ASSESS THE STRENGTH OF ECONOMIES BOTH HERE AND ABROAD, WATCH FOR FURTHER SIGNS
OF FED INTERVENTION, AND LOOK WITH A KEEN EYE TO THE RELATIVE STRENGTHS OF
COMPANY EARNINGS. THIS PORTFOLIO'S BALANCED APPROACH IS A GOOD WAY TO
PARTICIPATE IN MARKET OPPORTUNITIES AND POSES CONSIDERABLY LESS RISK THAN AN
ALL-STOCK PORTFOLIO.
SINCERELY,
JOHN NICHOLS
VICE PRESIDENT OF EQUITIES
CALVERT ASSET MANAGEMENT COMPANY
JANUARY 24, 2000
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>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF CALVERT VARIABLE SERIES, INC. AND SHAREHOLDERS OF
CALVERT SOCIAL BALANCED PORTFOLIO:
IN OUR OPINION, THE ACCOMPANYING STATEMENT OF ASSETS AND LIABILITIES, INCLUDING
THE SCHEDULE INVESTMENTS, AND THE RELATED STATEMENT OF OPERATIONS, STATEMENT OF
CHANGES IN NET ASSETS AND FINANCIAL HIGHLIGHTS PRESENT FAIRLY, IN ALL MATERIAL
RESPECTS, THE FINANCIAL POSITION OF CALVERT SOCIAL BALANCED PORTFOLIO, (ONE OF
THE PORTFOLIOS COMPRISING CALVERT VARIABLE SERIES, INC., HEREINAFTER REFERRED TO
AS THE "FUND"), AT DECEMBER 31, 1999, THE RESULTS OF ITS OPERATIONS, THE CHANGES
IN ITS NET ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE PERIODS INDICATED
THEREIN, IN CONFORMITY WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES. THESE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS (HEREINAFTER
REFERRED TO AS "FINANCIAL STATEMENTS") ARE THE RESPONSIBILITY OF THE FUND'S
MANAGEMENT; OUR RESPONSIBILITY IS TO EXPRESS AN OPINION ON THESE FINANCIAL
STATEMENTS BASED ON OUR AUDITS. WE CONDUCTED OUR AUDITS OF THESE FINANCIAL
STATEMENTS IN ACCORDANCE WITH AUDITING STANDARDS GENERALLY ACCEPTED IN THE
UNITED STATES, WHICH REQUIRE THAT WE PLAN AND PERFORM THE AUDIT TO OBTAIN
REASONABLE ASSURANCE ABOUT WHETHER THE FINANCIAL STATEMENTS ARE FREE OF MATERIAL
MISSTATEMENT. AN AUDIT INCLUDES EXAMINING, ON A TEST BASIS, EVIDENCE SUPPORTING
THE AMOUNTS AND DISCLOSURES IN THE FINANCIAL STATEMENTS, ASSESSING THE
ACCOUNTING PRINCIPLES USED AND SIGNIFICANT ESTIMATES MADE BY MANAGEMENT, AND
EVALUATING THE OVERALL FINANCIAL STATEMENT PRESENTATION. WE BELIEVE THAT OUR
AUDITS, WHICH INCLUDED CONFIRMATION OF SECURITIES AT DECEMBER 31, 1999 BY
CORRESPONDENCE WITH THE CUSTODIAN AND BROKERS, PROVIDE A REASONABLE BASIS FOR
THE OPINION EXPRESSED ABOVE.
PRICEWATERHOUSECOOPERS LLP
BALTIMORE, MARYLAND
FEBRUARY 4, 2000
<PAGE>
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 61.0% SHARES VALUE
BANKS - 3.8%
CHASE MANHATTAN CORP. 41,900 $3,255,106
FIFTH THIRD BANCORP, INC. 54,200 3,976,925
FIRSTAR CORP. 77,400 1,635,075
STATE STREET CORP. 19,900 1,453,944
WELLS FARGO CO. 69,100 2,794,231
13,115,281
BROADCASTING - 2.1%
CLEAR CHANNEL COMMUNICATIONS * 47,600 4,248,300
TIME WARNER, INC. 44,100 3,194,494
7,442,794
BUSINESS EQUIP & SERVICES - 2.7%
FIRST DATA CORP. 49,800 2,455,763
OMNICOM GROUP, INC. 51,400 5,140,000
PITNEY BOWES, INC. 40,600 1,961,487
9,557,250
CHEMICALS-SPECIALTY - 2.0%
AVERY DENNISON CORP. 64,300 4,685,863
PRAXAIR, INC. 47,300 2,379,781
7,065,644
COMMUNICATIONS EQUIPMENT - 9.1%
ADC TELECOMMUNICATIONS, INC. * 24,400 1,770,525
BMC SOFTWARE, INC. * 56,100 4,484,494
CISCO SYSTEMS, INC. * 88,300 9,459,136
LUCENT TECHNOLOGIES, INC. 40,400 3,022,425
NOKIA OYJ (ADR) 22,200 4,218,000
NORTEL NETWORKS CORP. 45,100 4,555,100
TELLABS, INC. * 67,700 4,345,493
31,855,173
COMPUTERS-MAIN & MINI - 1.1%
INTERNATIONAL BUSINESS MACHINES CORP. 34,400 3,715,200
COMPUTERS-MICRO - 3.0%
SUN MICROSYSTEMS, INC. * 136,100 10,539,244
COMPUTERS-PERIPHERALS - 8.1%
AMERICAN POWER CONVERSION CORP.* 65,200 1,719,650
COMPUWARE CORP. * 45,700 1,702,325
EMC CORP.-MASS * 87,800 9,592,149
MICROSOFT CORP. * 88,980 10,388,414
ORACLE CORP. * 45,200 5,065,225
28,467,763
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COSMETICS & TOILETRIES - 0.8%
ESTEE LAUDER COS., INC. 55,000 $2,774,063
ELECTRONIC COMPONENTS - 1.9%
INTEL CORP. 26,900 2,214,206
LINEAR TECHNOLOGY CORP. 19,300 1,381,156
SOLECTRON CORP. * 32,800 3,120,100
6,715,462
ELECTRONIC INSTRUMENTS - 0.5%
JDS UNIPHASE CORP. * 11,400 1,838,963
FINANCE COMPANIES - 0.3%
FUSION CAPITAL ^ 8,069,222 1,048,802
FOOD & RELATED - 0.4%
QUAKER OATS CO. 19,600 1,286,250
HEALTH CARE-DRUGS - 4.5%
AMGEN, INC. * 43,700 2,624,731
CARDINAL HEALTH, INC. 42,350 2,027,506
MERCK & CO., INC. 41,700 2,796,506
PFIZER, INC. 72,000 2,335,500
SCHERING-PLOUGH CORP. 110,900 4,678,594
WATSON PHARMACEUTICAL, INC. * 32,300 1,156,744
15,619,581
HEALTH CARE-GENERAL - 1.0%
JOHNSON & JOHNSON 36,300 3,380,438
HOSPITAL SUPPLY & MGMT - 0.7%
GUIDANT CORP. * 49,300 2,317,100
HOUSEHOLD-GENERAL PRODS - 1.4%
COLGATE-PALMOLIVE CO. 31,300 2,034,500
DIAL CORP. 113,200 2,752,175
4,786,675
INSURANCE-LIFE - 1.6%
AFLAC, INC. 29,700 1,401,469
AXA FINANCIAL, INC. 87,100 2,950,513
PROVIDIAN FINANCIAL CORP. 14,300 1,302,193
5,654,175
INSURANCE-PROP & CASUAL. - 1.6%
AMERICAN INTERNATIONAL GROUP, INC. 53,271 5,759,927
PETROLEUM-DOMESTIC - 0.5%
ANADARKO PETROLEUM CORP. 50,300 1,716,488
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
RETAIL-FOOD STORES - 1.6%
CVS CORP. 57,400 $2,292,412
KROGER CO. * 95,600 1,804,450
SAFEWAY, INC. * 42,300 1,504,294
5,601,156
RETAIL-GEN MERCHANDISE - 1.1%
DAYTON-HUDSON CORP. 33,300 2,445,469
DOLLAR GENERAL CORP. 58,100 1,321,775
3,767,244
RETAIL-SPECIALTY STORES - 2.6%
GAP, INC. 55,300 2,543,800
HOME DEPOT, INC. 71,010 4,868,623
LOWE'S COS. 29,100 1,738,725
9,151,148
SECURITY & COMM. BROKERS - 2.5%
FEDERAL NATIONAL MORTGAGE ASSN. 41,400 2,584,913
MARSH & MCLENNAN COS. 48,000 4,593,000
SCHWAB (CHARLES) CORP. 36,900 1,416,037
8,593,950
TIMESHARING & SOFTWARE - 0.8%
AMERICA ONLINE, INC. * 37,400 2,821,362
UTILITIES-TELEPHONE - 5.3%
ALLTEL CORP. 35,400 2,927,137
BELLSOUTH CORP. 54,900 2,570,006
GLOBAL TELESYSTEMS GROUP, INC. * 49,100 1,700,088
MCI WORLDCOM, INC. * 77,757 4,125,981
SBC COMMUNICATIONS, INC. 105,940 5,164,575
VODAFONE AIRTOUCH PLC (ADR) 39,000 1,930,500
18,418,287
TOTAL EQUITY SECURITIES (COST $155,962,217) 213,009,420
PREFERRED TRUST HOLDINGS - 0.7%
FIRST REPUBLIC, INC., 10.50%, 6/1/09 1,500 1,365,000
HIGHWOODS PROPERTIES, INC., 8.625%, 2/12/27 1,500 1,004,160
TOTAL PREFERRED TRUST HOLDINGS (COST $3,059,280)
2,369,160
PRINCIPAL
CORPORATE OBLIGATIONS - 33.0% AMOUNT
AGL CAPITAL TRUST, 8.17%, 6/1/37 $1,000,000 873,750
AMR CORP., 9.82%, 3/7/01 25,000 25,614
ATLANTIC MUTUAL INSURANCE CO., 8.15%, 2/15/28 4,000,000 2,923,600
BCI US FUNDING TRUST 1, 8.01%, 12/29/49 1,500,000 1,359,930
BAKER HUGHES INC., 6.25%, 1/15/09 4,000,000 3,626,400
BANK UNITED CORP., 8.00%, 3/15/09 2,000,000 1,796,400
BLYTH INDUSTRIES, INC., 7.90%, 10/1/09 1,500,000 1,431,900
CENTRAL LA ELECTRIC CO., 6.52%, 5/15/09 1,500,000 1,351,470
<PAGE>
PRINCIPAL
CORPORATE OBLIGATIONS - CONT'D AMOUNT VALUE
COLUMBIA UNIVERSITY, 6.83%, 12/15/20 $3,000,000 $2,777,715
COMPUTER ASSOCIATES INTERNATIONAL, INC., 6.375%, 4/15/05
4,750,000 4,423,105
CONSECO, INC., 6.80%, 6/15/05 3,000,000 2,798,880
CONSECO FINANCING TRUST II, 8.70%, 11/15/26 2,000,000 1,793,652
CONSECO, INC., 9.00%, 10/15/06 4,500,000 4,620,285
COX ENTERPRISES, INC., 6.50%, 11/15/02 1,000,000 980,930
COX ENTERPRISES, INC., 7.75%, 8/15/06 3,000,000 3,014,970
CREDIT SUISSE FIRST BOSTON, 7.90%, 5/1/07 1,000,000 951,458
DIME CAPITAL TRUST I, 9.33%, 5/6/27 2,000,000 1,875,840
ERAC USA FINANCIAL CO., 7.95%, 12/15/09 4,000,000 3,960,600
FIRST DATA CORP., 6.75%, 7/15/05 1,000,000 964,080
FIRST DATA CORP., 6.375%, 12/15/07 1,000,000 931,010
FLORIDA WINDSTORM UNDERWRITING, 7.125%, 2/25/19 3,655,000 3,506,242
FUSION CAPITAL, 10.00%, 1/16/02 364,919 305,575
GOLDEN STATE HOLDINGS CORP., 7.00%, 8/1/03 3,000,000 2,766,330
GOLDMAN SACHS GROUP, 6.34%, 3/1/06 2,000,000 1,880,696
GREENPOINT MANUFACTURED HOUSING, 7.59%, 11/15/28 2,500,000 2,441,625
HVB FUNDING TRUST III, 9.00%, 10/22/31 500,000 502,815
IMPERIAL BANK, 8.50%, 4/1/09 3,500,000 3,257,044
INTERPOOL CAPITAL TRUST, 9.875%, 2/15/27 3,250,000 2,475,785
LG G CAP CORP., 5.75%, 11/1/01 2,500,000 2,427,225
MCN INVESTMENT CORP., 6.35%, 4/2/12 1,000,000 965,150
MERITA BANK LTD., 7.15%, 12/29/49 3,000,000 2,923,041
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP.,
5.38%, 12/15/03 1,000,000 939,490
NORDBANKEN, 8.95%, 11/29/49 3,750,000 3,689,636
RAIL CONNECTIONS, INC., 8.00%, 7/1/15 750,000 705,915
RIGGS CAPITAL TRUST, 8.625%, 12/31/26 1,000,000 885,390
RUSSELL FRANK CO, 5.625%, 1/15/09 1,200,000 1,051,128
SKANDINAVISKA ENSKILDA BANKEN, 7.50%, 3/29/49 2,000,000 1,776,040
SKANDINAVISKA ENSKILDA BANKEN, 8.125%, 9/6/49 2,000,000 1,895,112
SKANDINAVISKA ENSKILDA BANKEN, 6.50%, 12/29/49 11,000,000 10,266,278
SOCIETE GENERALE, 7.85%, 4/29/49 2,500,000 2,412,175
SOVEREIGN BANCORP, INC., 6.75%, 9/1/00 2,750,000 2,697,228
SOVEREIGN BANCORP, INC., 10.50%, 11/15/06 1,500,000 1,525,680
SUNAMERICA INC., 7.34%, 8/30/05 1,000,000 990,210
SUPERVALUE, INC., 7.875%, 8/1/09 3,625,000 3,539,559
TELEGLOBE, 7.20%, 7/20/09 4,375,000 4,089,838
TELEGLOBE, 7.7%, 7/20/29 375,000 343,065
TYCO INTERNATIONAL GROUP, 6.375%, 6/15/05 2,500,000 2,334,150
TYCO INTERNATIONAL GROUP, 6.125%, 1/15/09 2,000,000 1,765,100
US WEST COMMUNICATIONS, INC., 7.20%, 11/1/04 3,000,000 2,981,850
XEROX CORP., 8.00%, 2/1/27 6,250,000 5,622,313
TOTAL CORPORATE OBLIGATIONS (COST $124,697,345 ) 115,443,274
U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES - 0.3%
FEDERAL HOME LOAN MORTGAGE CORP., 7.12%, 6/25/28 1,000,000 998,010
TOTAL U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES
(COST $1,037,138) 998,010
<PAGE>
PRINCIPAL
MUNICIPAL OBLIGATIONS - 1.2% AMOUNT VALUE
CHICKASAW NATION CERTIFICATES OF PARTICIPATION, 10.00%, 8/1/03#
$19,060 $18,107
MARYLAND STATE ECONOMIC DEVELOPMENT CORP., 8.00%, 10/1/05
805,000 792,370
MARYLAND STATE ECONOMIC DEVELOPMENT CORP., 8.625%, 10/1/19
750,000 823,830
SAN MATEO, CA REDEVELOPMENT AGENCY, 7.125%, 8/1/08
2,785,000 2,665,217
TOTAL MUNICIPAL OBLIGATIONS (COST $4,359,060) 4,299,524
U.S. TREASURY - 1.6%
U.S. TREASURY NOTES, 6.875%, 5/15/06 1,000,000 826,910
U.S. TREASURY NOTES, 5.50%, 5/15/09 4,900,000 4,745,356
TOTAL U.S. TREASURY (COST $5,617,216) 5,572,266
REPURCHASE AGREEMENTS - 1.5%
STATE STREET BANK: 3.00%, DATED 12/31/99, DUE 1/3/00
(COLLATERAL: $5,256,363, FHLB, 3.00%, 4/7/00) 5,100,000 5,100,000
TOTAL REPURCHASE AGREEMENTS (COST $5,100,000) 5,100,000
TOTAL INVESTMENTS (COST $294,066,139) - 99.3%
346,791,654
OTHER ASSETS AND LIABILITIES, NET - 0.7% 2,521,788
NET ASSETS - 100% $349,313,442
* NON-INCOME PRODUCING.
# THIS SECURITY WAS VALUED BY THE BOARD OF DIRECTORS. SEE NOTE A.
^ SEE NOTE B.
ABBREVIATIONS:
ADR: AMERICAN DEPOSITORY RECEIPTS
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
ASSETS
INVESTMENTS IN SECURITIES, AT VALUE - SEE ACCOMPANYING PORTFOLIO
$346,791,654
CASH 254,887
RECEIVABLE FOR SHARES SOLD 89,086
INTEREST AND DIVIDENDS RECEIVABLE 2,628,318
OTHER ASSETS 7,057
TOTAL ASSETS 349,771,002
LIABILITIES
PAYABLE TO CALVERT ASSET MANAGEMENT COMPANY, INC. 192,910
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES COMPANY 79,514
PAYABLE TO CALVERT SHAREHOLDER SERVICES, INC. 3,860
PAYABLE FOR SHARES REDEEMED 89,086
ACCRUED EXPENSES AND OTHER LIABILITIES 92,190
TOTAL LIABILITIES 457,560
NET ASSETS $349,313,442
NET ASSETS CONSIST OF:
PAR VALUE AND PAID-IN CAPITAL APPLICABLE TO 161,085,742 SHARES OF
COMMON STOCK OUTSTANDING; $0.01 PAR VALUE 1,000,000,000 SHARES
AUTHORIZED $291,655,029
UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) 751,281
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS 4,181,776
NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS AND
FOREIGN CURRENCIES AND ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES 52,725,356
NET ASSETS $349,313,442
NET ASSET VALUE PER SHARE $2.168
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME
INTEREST INCOME $9,058,954
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD OF $458) 1,303,897
TOTAL INVESTMENT INCOME 10,362,851
EXPENSES
INVESTMENT ADVISORY FEE 1,515,657
TRANSFER AGENCY FEES AND EXPENSES 298,405
DIRECTORS' FEES AND EXPENSES 68,695
ADMINISTRATIVE FEES 749,534
ACCOUNTING FEES 48,256
CUSTODIAN FEES 79,907
REGISTRATION FEES 616
REPORTS TO SHAREHOLDERS 58,494
PROFESSIONAL FEES 33,069
MISCELLANEOUS 18,227
TOTAL EXPENSES 2,870,860
FEES PAID INDIRECTLY (91,862)
NET EXPENSES 2,778,998
NET INVESTMENT INCOME 7,583,853
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENTS 28,499,105
FOREIGN CURRENCY TRANSACTIONS (3,475)
28,495,630
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION):
INVESTMENTS AND FOREIGN CURRENCIES 1,191,812
ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES 1,971)
1,189,841
NET REALIZED AND UNREALIZED GAIN (LOSS) 29,685,471
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $37,269,324
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
BALANCED PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999 1998
OPERATIONS
NET INVESTMENT INCOME $7,583,853 $6,989,471
NET REALIZED GAIN (LOSS) 28,495,630 15,581,784
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION)
1,189,841 17,878,260
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 37,269,324 40,449,515
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (7,540,884) (6,779,908)
NET REALIZED GAIN ON INVESTMENTS (25,833,343) (15,194,510)
TOTAL DISTRIBUTIONS (33,374,227) (21,974,418)
CAPITAL SHARE TRANSACTIONS
SHARES SOLD 50,859,381 54,108,882
REINVESTMENT OF DISTRIBUTIONS 33,374,227 21,974,418
SHARES REDEEMED (42,769,670) (18,437,965)
TOTAL CAPITAL SHARE TRANSACTIONS 41,463,938 57,645,335
TOTAL INCREASE (DECREASE) IN NET ASSETS 45,359,035 76,120,432
NET ASSETS
BEGINNING OF YEAR 303,954,407 227,833,975
END OF YEAR (INCLUDING UNDISTRIBUTED NET INVESTMENT
INCOME OF $751,281 AND $714,433, RESPECTIVELY)
$349,313,442 $303,954,407
CAPITAL SHARE ACTIVITY
SHARES SOLD 22,922,306 25,653,403
REINVESTMENT OF DISTRIBUTIONS 15,401,120 10,336,200
SHARES REDEEMED (19,438,553) (8,755,271)
TOTAL CAPITAL SHARE ACTIVITY 18,884,873 27,234,332
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: CALVERT SOCIAL BALANCED PORTFOLIO (THE "PORTFOLIO"), A SERIES OF
CALVERT VARIABLE SERIES, INC. (THE "FUND"), IS REGISTERED UNDER THE INVESTMENT
COMPANY ACT OF 1940 AS A NON-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 DECEMBER 31, 1999, $18,107 OR 0.01% 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 $42,395 FOR THE YEAR ENDED DECEMBER 31, 1999. NATIONAL
FINANCIAL DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
FOR THE PERIOD ENDED JUNE 30, 1999, 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. EFFECTIVE
JULY 1, 1999, EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A
FEE OF $1,500 FOR EACH BOARD MEETING ATTENDED PLUS AN ANNUAL FEE OF $15,000 FOR
DIRECTORS NOT SERVING ON OTHER CALVERT FUND BOARDS. DIRECTOR'S FEES ARE
ALLOCATED TO EACH OF THE PORTFOLIOS SERVED.
<PAGE>
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.
NOTE C -- INVESTMENT ACTIVITY
DURING THE YEAR, PURCHASES AND SALES OF INVESTMENTS, OTHER THAN SHORT-TERM
SECURITIES, WERE $1,935,193,891 AND $1,916,088,985, RESPECTIVELY. U.S.
GOVERNMENT SECURITY PURCHASES WERE $1,171,100,305 AND SALES WERE $1,165,450,434.
THE COST OF INVESTMENTS OWNED AT DECEMBER 31, 1999, WAS SUBSTANTIALLY THE SAME
FOR FEDERAL INCOME TAX PURPOSES AND FINANCIAL REPORTING PURPOSES. NET UNREALIZED
APPRECIATION AGGREGATED $52,725,515, OF WHICH $64,269,373 RELATED TO APPRECIATED
SECURITIES AND $11,543,858 RELATED TO DEPRECIATED SECURITIES.
AS A CASH MANAGEMENT PRACTICE PRIMARILY, THE PORTFOLIO MAY SELL OR PURCHASE
SECURITIES FROM OTHER PORTFOLIOS MANAGED BY THE ADVISOR. FOR THE YEAR ENDED
DECEMBER 31, 1999, THE PORTFOLIO EFFECTED TRANSACTIONS WITH OTHER CALVERT
PORTFOLIOS, WHICH RESULTED IN NET REALIZED LOSSES ON SALES OF SECURITIES OF
$291,087. THESE PURCHASES AND SALES TRANSACTIONS, EXECUTED AT INDEPENDENTLY
DERIVED PRICES PURSUANT TO RULE 17A-7 UNDER THE INVESTMENT COMPANY ACT OF 1940,
WERE $20,030,871 AND $15,684,153, RESPECTIVELY.
NOTE D -- LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR THE
CALVERT SOCIAL INVESTMENT FUND MANAGED INDEX AND CVS AMERITAS INDEX 500
PORTFOLIOS) 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 DECEMBER 31, 1999.
TAX INFORMATION (UNAUDITED)
THE PORTFOLIO DESIGNATES $25,635,000 AS CAPITAL GAIN DIVIDENDS PAID DURING THE
TAXABLE YEAR ENDED DECEMBER 31, 1999.
FOR CORPORATE SHAREHOLDERS OF THE PORTFOLIO, A TOTAL OF 17.21% OF THE ORDINARY
DIVIDENDS PAID DURING THE TAXABLE YEAR ENDED DECEMBER 31, 1999 QUALIFY FOR THE
DIVIDEND RECEIVED DEDUCTION.
<PAGE>
BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS
PERIODS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
NET ASSET VALUE, BEGINNING $2.138 $1.982 $1.774
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .051 .052 .047
NET REALIZED AND UNREALIZED GAIN (LOSS)
.208 .271 .309
TOTAL FROM INVESTMENT OPERATIONS .259 .323 .356
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.052) (0.52) (.047)
NET REALIZED GAINS (.177) (.115) (.101)
TOTAL DISTRIBUTIONS (.229) (.167) (.148)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE
.030 .156 .208
NET ASSET VALUE, ENDING $2.168 $2.138 $1.982
TOTAL RETURN 12.12% 16.33% 20.08%
RATIOS TO AVERAGE NET ASSETS
NET INVESTMENT INCOME 2.35% 2.66% 2.66%
TOTAL EXPENSES .89% .87% .80%
EXPENSES BEFORE OFFSETS .89% .87% .80%
NET EXPENSES .86% .85% .77%
PORTFOLIO TURNOVER 619% 539% 905%
NET ASSETS, ENDING(IN THOUSANDS) $349,313 $303,954 $227,834
YEARS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
NET ASSET VALUE, BEGINNING $1.703 $1.440
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .040 .050
NET REALIZED AND UNREALIZED GAIN (LOSS) .175 .380
TOTAL FROM INVESTMENT OPERATIONS .215 .430
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.042) (.040)
NET REALIZED GAINS (.102) (.127)
TOTAL DISTRIBUTIONS (.144) (.167)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE .071 .263
NET ASSET VALUE, ENDING $1.774 $1.703
TOTAL RETURN 12.62% 29.87%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 2.71% 3.08%
TOTAL EXPENSES .81% .83%
EXPENSES BEFORE OFFSETS .81% .83%
NET EXPENSES .78% .81%
PORTFOLIO TURNOVER 99% 163%
NET ASSETS, ENDING (IN THOUSANDS) $161,473 $110,237
