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
<PAGE>
CALVERT
VARIABLE
SERIES, INC.
AMERITAS
PORTFOLIOS
ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS PORTFOLIOS
ANNUAL REPORT, DECEMBER 31, 1999
TABLE OF CONTENTS
1 PRESIDENT'S LETTER
2 PORTFOLIO MANAGER REMARKS
17 REPORT OF INDEPENDENT ACCOUNTANTS
18 PORTFOLIOS OF INVESTMENTS
67 NOTES TO PORTFOLIOS OF INVESTMENTS
68 STATEMENTS OF ASSETS AND LIABILITIES
71 STATEMENTS OF OPERATIONS
75 STATEMENTS OF CHANGES IN NET ASSETS
84 NOTES TO FINANCIAL STATEMENTS
89 FINANCIAL HIGHLIGHTS
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS PORTFOLIOS
ANNUAL REPORT, DECEMBER 31, 1999
DEAR INVESTOR:
WELCOME TO THE AMERITAS PORTFOLIOS! AS OF NOVEMBER 1, 1999, NINE OF AMERITAS
VARIABLE LIFE INSURANCE COMPANY'S (AVLIC'S) EXISTING PORTFOLIOS BECAME PART OF
THE AMERITAS PORTFOLIOS WITHIN CALVERT VARIABLE SERIES, INC., A VARIABLE
INSURANCE TRUST (VIT). ALL NINE HAVE THE SAME FUND OBJECTIVES AND INVESTMENT
POLICIES AS BEFORE. FOR SEVEN OF THE NINE SUBSTITUTED PORTFOLIOS, THE
DAY-TO-DAY PORTFOLIO DECISIONS ARE MADE BY THE SAME ENTITY. THE MONEY MARKET
PORTFOLIO (FORMERLY MANAGED BY FIDELITY INVESTMENTS) IS MANAGED BY THE CALVERT
ASSET MANAGEMENT COMPANY, INC. (CAMCO), A FAST-EMERGING NAME IN FUND MANAGEMENT
WITH A WELL-DESERVED CONSERVATIVE REPUTATION IN CAPITAL PROTECTION. THE INDEX
500 PORTFOLIO (FORMERLY MANAGED BY FIDELITY INVESTMENTS) IS MANAGED BY STATE
STREET GLOBAL ADVISORS (SSGA). STATE STREET HAS BEEN A LEADER IN INDEXED FUNDS
(DOMESTIC AND INTERNATIONAL) SINCE 1978 AND CURRENTLY MANAGES MORE THAN $250
BILLION IN INDEXED ASSETS.
THE TRANSFER INTO THE VIT HAS GONE WELL. AVLIC IS NOW ALLOWED TO "MANAGE THE
MANAGERS" OF THE PARTICULAR PORTFOLIOS. UNDER THE VIT STRUCTURE, AVLIC HAS THE
AUTHORITY TO SELECT MONEY MANAGERS AND HOLD THEM ACCOUNTABLE TO AMERITAS
POLICYHOLDERS FOR PERFORMANCE AND EXPLANATION OF PERFORMANCE SPECIFIC TO THE
CLIENTS' ASSETS.
FROM A MARKET PERSPECTIVE, 1999 WAS A VOLATILE, BUT ULTIMATELY STRONG YEAR FOR
THE U.S. EQUITY INDEXES. THE NASDAQ'S 85.6% RETURN ECLIPSED THE REST OF THE
EQUITY MARKET AND MADE TECHNOLOGY (NOT Y2K) THE FOCUS OF THE YEAR. PERFORMANCE
WAS FOUND ACROSS COMPANIES OF ALL SIZE, BUT SIMILAR TO 1998, LARGE CAP. STOCKS
OUTPERFORMED MID AND SMALL CAP. STOCKS. THE S&P 500 INDEX WAS UP 21.0%, WHILE
THE S&P MIDCAP AND SMALLCAP INDEXES WERE UP 13.4% AND 11.5%, RESPECTIVELY. THE
TOTAL RETURNS GENERATED BY BONDS, AS MEASURED BY THE LEHMAN U.S. TREASURY INDEX,
EXPERIENCED A DIFFICULT YEAR RECORDING A LOSS OF 2.6% FOR THE YEAR. THE CURVE
FLATTENED AS THE 2-YEAR NOTE WAS UP 170 BASIS POINTS TO 6.24% AND THE 30-YEAR
BOND WAS UP 138 BASIS POINTS TO 6.48%.
PERFORMANCE IN THE AMERITAS PORTFOLIOS FOR 1999 GENERALLY REFLECTED THE POSITIVE
RETURNS IN DOMESTIC AND INTERNATIONAL EQUITIES. MOST OF THE AVLIC EQUITY
PORTFOLIOS PERFORMED IN THE FIRST OR SECOND QUARTILE OF THEIR RESPECTIVE
VARIABLE PRODUCT CLASSES. THE AMERITAS PORTFOLIOS GREW 59% DURING 1999 FROM
BOTH SALES AND FUND PERFORMANCE.
WE APPRECIATE YOUR INVESTMENT IN THE AMERITAS PORTFOLIOS AND LOOK FORWARD TO
HELPING YOU MEET YOUR FINANCIAL GOALS.
SINCERELY,
WILLIAM J. ATHERTON
PRESIDENT, CALVERT VARIABLE SERIES, INC.
JANUARY 20, 2000
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS INCOME & GROWTH PORTFOLIO
AMERITAS GROWTH PORTFOLIO
AMERITAS SMALL CAPITALIZATION PORTFOLIO
AMERITAS MIDCAP GROWTH PORTFOLIO
MANAGED BY FRED ALGER MANAGEMENT, INC.
DEAR INVESTOR:
THE INVESTMENT CLIMATE
THE MARKET EXPERIENCED WIDESPREAD WEAKNESS DURING THE THIRD QUARTER. AFTER
PEAKING IN MID-JULY, THE S&P 500 BEGAN A DOWNWARD TREND THAT RESULTED IN A
- -6.25% RETURN FOR THE QUARTER. ONLY GAINS POSTED IN THE TECHNOLOGY SECTOR
HELPED BUOY THE DOUBLE-DIGIT LOSSES SUFFERED BY CONSUMER STAPLES, FINANCIALS,
AND TRANSPORTATION STOCKS, AND PREVENTED THE S&P 500 FROM SLIPPING EVEN FURTHER.
HEAVY LOSSES WERE EVIDENT IN OTHER INDICES AS WELL.
A VARIETY OF BEARISH INDICATORS ALSO APPEARED. ON AUGUST 24TH, THE FEDERAL
RESERVE RAISED BOTH THE FED FUNDS RATE AND THE DISCOUNT RATE BY 25 BASIS POINTS.
DURING SEPTEMBER, THE DOW BROKE BELOW THE KEY 10,400 SUPPORT LEVEL, THE S&P 500
BROKE BELOW ITS 200-DAY MOVING AVERAGE LINE AND THE ADVANCE-DECLINE LINE
CONTINUED TO BE VERY WEAK. TECHNOLOGY STOCKS ALSO FINALLY BROKE DOWN DURING THE
LAST MONTH OF THE THIRD QUARTER, LEADING THE MARKET DOWNWARD.
AFTER AN ANEMIC THIRD QUARTER, HOWEVER, DOMESTIC EQUITY MARKETS BOUNCED BACK IN
VIGOROUS FASHION. THE FOURTH QUARTER DID NOT BEGIN AS STRONGLY AS IT FINISHED,
HOWEVER. MOST STOCK INDICES WERE REELING DURING THE FIRST FEW WEEKS OF OCTOBER.
MOUNTING FEARS OF RISING INTEREST RATES, AN UPWARD SPIKE IN THE PRICE OF GOLD,
AND A SERIES OF DUBIOUS ECONOMIC REPORTS FORCED THE YIELD ON THE LONG BOND TO
6.40%. MOST SIGNIFICANT OF ALL WAS NEWS OF A VERY LARGE .5% INCREASE IN THE PPI
REPORTED ON OCTOBER 15TH. AS STOCKS DROPPED IN RESPONSE TO FEARS OF HIGHER
INFLATION AND HIGHER INTEREST RATES, TECHNICAL PRESSURE ON THE MARKET PERSISTED.
WIDESPREAD AWARENESS OF THE DISASTEROUS HISTORY OF THE MONTH OF OCTOBER AND THE
APPROACH OF FISCAL YEAR-END FOR MOST MUTUAL FUNDS FURTHER CONTRIBUTED TO THE
SELLING PRESSURE. ALL OF THESE FACTORS CAME TOGETHER WITH A BANG, AND THE DOW
JONES DROPPED MORE THAN 1,000 POINTS IN LESS THAN A MONTH.
AS IS SO OFTEN THE CASE, HOWEVER, THE MARKET RECOVERED WHEN IT APPEARED TO BE AT
ITS WEAKEST. THE FINAL TWO WEEKS OF OCTOBER SAW DRAMATIC GAINS THROUGHOUT BOTH
THE BOND AND EQUITY MARKETS, AND THE MARKET'S STRENGTH CONTINUED THROUGHOUT
NOVEMBER AND DECEMBER. WHILE CERTAIN SEGMENTS OF THE MARKET STRUGGLED - MOST
NOTABLY, VALUE STOCKS - MOST EQUITY INDICES CLIMBED STEADILY HIGHER. SMALL CAP
GROWTH STOCKS WERE PARTICULARLY STRONG, REVERSING AN ONGOING TREND OF SMALL CAP
UNDERPERFORMANCE. HOWEVER, GROWTH STOCKS AND TECHNOLOGY STOCKS OF ALL MARKET
CAPITALIZATIONS APPRECIATED STRONGLY DURING NOVEMBER AND DECEMBER. NEARLY ALL
MAJOR MARKET INDICES REACHED ALL-TIME HIGHS DURING THE FINAL WEEK OF THE YEAR.
<PAGE>
AMERITAS INCOME & GROWTH PORTFOLIO
PERFORMANCE AND STRATEGY
THE PORTFOLIO'S INCEPTION DATE WAS NOVEMBER 1. DURING THE FINAL TWO MONTHS OF
THE YEAR, THE MANAGEMENT OF THE PORTFOLIO REMAINED UNCHANGED: A RESEARCH
INTENSIVE, BOTTOM-UP APPROACH FOCUSING ON RAPIDLY GROWING STOCKS. MANAGEMENT'S
GROWTH STOCK PHILOSOPHY WAS OF GREAT BENEFIT DURING A PERIOD IN WHICH VALUE
SEVERELY UNDERPERFORMED GROWTH.
THE PORTFOLIO RETURNED 29.14% DURING THE TWO MONTHS ENDED DECEMBER 31, 1999,
EASILY OUTPERFORMING BOTH THE LIPPER GROWTH & INCOME FUND INDEX AT 4.49% AND THE
S&P 500 INDEX AT 8.04%. FORTUNATELY, THE PORTFOLIO WAS WELL-POSITIONED TO
BENEFIT FROM THE STRONG PERFORMANCE OF CERTAIN SEGMENTS OF THE MARKET WITH AN
OVERWEIGHTING IN STRONG TECHNOLOGY HOLDINGS AND AN UNDERWEIGHTING IN WEAKER
CAPITAL GOODS STOCKS. TECHNOLOGY STOCKS CONTINUED TO BE THE CLEAR MARKET
LEADERS DURING THIS PERIOD, THUS MAKING THE PORTFOLIO EXTREMELY WELL-POSITIONED
FOR THE STRONG BULL MARKET.
AMERITAS INCOME & GROWTH PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 29.14%
*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.
AMERITAS GROWTH PORTFOLIO
PERFORMANCE AND STRATEGY
THE PORTFOLIO'S INCEPTION DATE WAS NOVEMBER 1. DURING THE FINAL TWO MONTHS OF
THE YEAR, THE MANAGEMENT OF THE PORTFOLIO REMAINED UNCHANGED: A RESEARCH
INTENSIVE, BOTTOM-UP APPROACH FOCUSING ON RAPIDLY GROWING STOCKS. MANAGEMENT'S
GROWTH STOCK PHILOSOPHY WAS OF GREAT BENEFIT DURING A PERIOD IN WHICH VALUE
SEVERELY UNDERPERFORMED GROWTH.
THE PORTFOLIO RETURNED 15.70% DURING THE TWO MONTHS ENDED DECEMBER 31, 1999,
OUTPERFORMING BOTH THE LIPPER GROWTH FUND INDEX AT 13.61% AND THE S&P 500 INDEX
AT 8.04%. FORTUNATELY, THE PORTFOLIO WAS WELL-POSITIONED TO BENEFIT FROM THE
STRONG PERFORMANCE OF CERTAIN SEGMENTS OF THE MARKET WITH AN OVERWEIGHTING IN
TECHNOLOGY STOCKS AND AN UNDERWEIGHTING IN ENERGY STOCKS. TECHNOLOGY STOCKS
CONTINUED TO BE THE CLEAR MARKET LEADERS DURING THIS PERIOD, THUS MAKING THE
PORTFOLIO EXTREMELY WELL-POSITIONED FOR THE STRONG BULL MARKET.
AMERITAS GROWTH PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 15.70%
*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>
AMERITAS SMALL CAPITALIZATION PORTFOLIO
PERFORMANCE AND STRATEGY
THE PORTFOLIO'S INCEPTION DATE WAS NOVEMBER 1. DURING THE FINAL TWO MONTHS OF
THE YEAR, THE MANAGEMENT OF THE PORTFOLIO REMAINED UNCHANGED: A RESEARCH
INTENSIVE, BOTTOM-UP APPROACH FOCUSING ON RAPIDLY GROWING STOCKS. MANAGEMENT'S
GROWTH STOCK PHILOSOPHY WAS OF GREAT BENEFIT DURING A PERIOD IN WHICH VALUE
SEVERELY UNDERPERFORMED GROWTH.
THE PORTFOLIO RETURNED 29.10% DURING THE TWO MONTHS ENDED DECEMBER 31, 1999,
OUTPERFORMING THE LIPPER SMALL CAP FUND INDEX AT 27.62% AND SLIGHTLY
UNDERPERFORMING THE RUSSELL 2000 GROWTH INDEX AT 29.97%. FORTUNATELY, THE
PORTFOLIO WAS WELL-POSITIONED TO BENEFIT FROM THE STRONG PERFORMANCE OF CERTAIN
SEGMENTS OF THE MARKET, ESPECIALLY THE TECHNOLOGY SECTOR. TECHNOLOGY STOCKS
CONTINUED TO BE THE CLEAR MARKET LEADERS DURING THIS PERIOD, THUS MAKING THE
PORTFOLIO EXTREMELY WELL POSITIONED FOR THE STRONG BULL MARKET. WHILE AVOIDANCE
OF THE RELATIVELY WEAK ENERGY SECTOR BUOYED RETURNS, THIS WAS NEGATIVELY OFFSET
BY AN UNDERWEIGHTING IN COMMUNICATIONS SERVICES.
SMALL CAPITALIZATION PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 29.10%
*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.
AMERITAS MIDCAP GROWTH PORTFOLIO
PERFORMANCE AND STRATEGY
THE PORTFOLIO'S INCEPTION DATE WAS NOVEMBER 1. DURING THE FINAL TWO MONTHS OF
THE YEAR, THE MANAGEMENT OF THE PORTFOLIO REMAINED UNCHANGED: A RESEARCH
INTENSIVE, BOTTOM-UP APPROACH FOCUSING ON RAPIDLY GROWING STOCKS. MANAGEMENT'S
GROWTH STOCK PHILOSOPHY WAS OF GREAT BENEFIT DURING A PERIOD IN WHICH VALUE
SEVERELY UNDERPERFORMED GROWTH.
THE PORTFOLIO RETURNED 22.09% DURING THE TWO MONTHS ENDED DECEMBER 31, 1999,
SLIGHTLY UNDERPERFORMING THE LIPPER MID CAP FUND INDEX AT 25.01% AND
OUTPERFORMING THE S&P MIDCAP 400 INDEX AT 11.27%. FORTUNATELY, THE PORTFOLIO
WAS WELL-POSITIONED TO BENEFIT FROM THE STRONG PERFORMANCE OF CERTAIN SEGMENTS
OF THE MARKET WITH AN OVERWEIGHTING IN THE STRONG TECHNOLOGY SECTOR AND AN
UNDERWEIGHTING IN CONSUMER STAPLES. TECHNOLOGY STOCKS CONTINUED TO BE THE CLEAR
MARKET LEADERS DURING THIS PERIOD, THUS MAKING THE PORTFOLIO EXTREMELY
WELL-POSITIONED FOR THE STRONG BULL MARKET.
MIDCAP GROWTH PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 22.09%
*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>
OUTLOOK
THE ECONOMY OF 2000 IS LIKELY TO RESEMBLE THE ECONOMY OF 1999, BUT IT WILL
PROBABLY NOT GROW AS RAPIDLY - AN INEVITABLE BY-PRODUCT OF HIGHER INTEREST
RATES. DESPITE THIS, LOW UNEMPLOYMENT, GOOD WAGE GAINS AND POSITIVE PSYCHOLOGY,
SHOULD KEEP THE ECONOMY MOVING ALONG AT A DECENT RATE. INFLATION SHOULD REMAIN
SUBDUED AS A RESULT OF CONTINUALLY INCREASING PRODUCTIVITY AND THE SLOWING OF
ECONOMIC GROWTH. FLATTENING OIL PRICES AND THE IMPACT OF THE INTERNET ON
PRICING SHOULD ALSO HELP SUBDUE INFLATION.
INTEREST RATES SHOULD EVENTUALLY FALL. AT SOME POINT, INTEREST RATES SHOULD
RESPOND TO THE SLOWING ECONOMY AND THE DROPPING INFLATION. PRESENTLY, INTEREST
RATES ARE BEING HELD UP ARTIFICIALLY BY CONCERNS ABOUT THE ACTIONS OF THE FED.
WITH OR WITHOUT FED CHAIRMAN GREENSPAN, THE FED IS UNLIKELY TO DEVIATE FROM ITS
CURRENT APPROACH.
CORPORATE EARNINGS WILL PROBABLY NOT BE AS STRONG IN 2000 AS THEY WERE IN 1999.
THE TOP-DOWN FORECAST FOR S&P EARNINGS IS AN INCREASE OF 10%, LOWER THAN THE 14%
ESTIMATED FOR THIS YEAR. IT WOULD BE LOGICAL TO ASSUME THAT THE MARKET WILL
RISE LESS VIGOROUSLY AS WELL. AS SUCH, A TARGET OF 12,500-13,000 ON THE DOW
MIGHT BE APPROPRIATE.
- - FRED ALGER MANAGEMENT, INC.
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS EMERGING GROWTH PORTFOLIO
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
EMERGING GROWTH PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 46.63%
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT.
PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
DEAR INVESTOR:
FOR THE 2 MONTHS ENDED DECEMBER 31, 1999, THE EMERGING GROWTH PORTFOLIO PROVIDED
A TOTAL RETURN OF 46.63% (INCLUDING THE REINVESTMENT OF ANY DISTRIBUTIONS). THIS
COMPARES TO A 8.04% RETURN OVER THE SAME PERIOD FOR THE STANDARD & POOR'S 500
COMPOSITE INDEX (THE S&P 500), A POPULAR, UNMANAGED INDEX OF COMMON STOCK TOTAL
RETURN PERFORMANCE, AND TO A 17.97% RETURN FOR THE RUSSELL 2000 TOTAL RETURN
INDEX (THE RUSSELL 2000), AN UNMANAGED INDEX COMPRISED OF 2,000 OF THE SMALLEST
U.S.-DOMICILED COMPANY COMMON STOCKS THAT ARE TRADED ON THE NEW YORK STOCK
EXCHANGE, THE AMERICAN STOCK EXCHANGE, AND NASDAQ.
LOOKING BACK WE BELIEVED IT WAS ESSENTIAL FOR THE PORTFOLIO TO INVEST IN HIGH
GROWTH COMPANIES THAT WE FELT HAD POTENTIAL TO GENERATE POSITIVE EARNINGS
SURPRISES, RELATIVE TO WHAT WALL STREET ANALYSTS EXPECTED, BECAUSE THE MARKET
WAS DEALING VERY CRUELLY WITH FIRMS WHO WERE MISSING OR EVEN JUST MEETING
EARNINGS ESTIMATES. THIS LED US TO OVERWEIGHT THREE AREAS, WHICH IN FACT DROVE
THE PORTFOLIO'S OUTPERFORMANCE RELATIVE TO THE INDEXES: TELECOMMUNICATIONS,
TECHNOLOGY WITH A TELECOMMUNICATIONS FOCUS, AND, TO A LESSER EXTENT,
BIOTECHNOLOGY.
IN THE TELECOMMUNICATIONS AREA, PERFORMANCE WAS HELPED BY INVESTMENTS IN
COMPANIES IN THE UNITED STATES, JAPAN, AND EUROPE THAT ARE BENEFITING FROM A
GLOBAL SHIFT TOWARD WIRELESS COMMUNICATION OF BOTH VOICE AND DATA. CELLULAR
COMPANIES WE HOLD INCLUDE NTT MOBILE, THE NUMBER ONE CELLULAR CARRIER IN JAPAN;
BOUYGUES, ONE OF THE LARGEST FRENCH CELLULAR OPERATORS; SONERA, OWNER OF THE
LARGEST CELLULAR BUSINESS IN FINLAND; AND VOICESTREAM (WHICH RECENTLY ACQUIRED
OMNIPOINT), ONE OF THE FEW REMAINING U.S. WIRELESS ENTITIES NOT YET OWNED BY A
LARGE TELECOMMUNICATIONS COMPANY. ALTHOUGH WE BELIEVE EACH OF THESE COMPANIES
CAN CONTINUE TO DO WELL ON ITS OWN, WE EXPECT THAT SOME OF THEM WILL EVENTUALLY
BE TAKEN OVER BY LARGER COMPANIES TRYING TO ACHIEVE GLOBAL CELLULAR COVERAGE.
SHOULD THAT OCCUR, WE BELIEVE THE PORTFOLIO WILL BENEFIT FROM TAKEOVER-RELATED
RUNUPS IN STOCK PRICES.
IN THE AREA OF TECHNOLOGY WITH A TELECOMMUNICATIONS FOCUS, A HOLDING THAT
CONTRIBUTED STRONGLY TO PERFORMANCE WAS QUALCOMM. THIS COMPANY OWNS THE PATENTS
FOR THE CDMA TECHNOLOGY STANDARD USED FOR WIRELESS COMMUNICATIONS IN A LARGE
PART OF THE WORLD: NORTH
<PAGE>
AND SOUTH AMERICA, MUCH OF ASIA, AND POTENTIALLY ALL OF CHINA (THAT DEAL IS
STILL PENDING). QUALCOMM GETS A ROYALTY ON THE INFRASTRUCTURE CHIPS AND EVERY
HANDSET SOLD IN THOSE MARKETS. THIS IS A COMPANY WE HAD BEEN FOLLOWING FOR
SEVERAL YEARS, AND THE STOCK PRICE HAD BEEN FLAT, PARTLY BECAUSE QUALCOMM HAD A
LONG-STANDING LAWSUIT WITH ERICSSON, AN EQUIPMENT MANUFACTURER, OVER TECHNOLOGY
STANDARDS.
OUR ESTIMATES PUT WIRELESS PENETRATION IN THE UNITED STATES AT ABOUT 30% OF
PHONE USERS, WITH THE POTENTIAL TO RISE TO 50% - 60% AS IT IS IN EUROPE. ANOTHER
DRIVER OF INCREASED WIRELESS BUSINESS WILL BE, WE BELIEVE, THE USE OF WIRELESS
DEVICES TO ACCESS DATA OVER THE INTERNET. IT APPEARS TO US THAT THESE FACTORS
POINT TO STRONG DEMAND FOR QUALCOMM'S PRODUCTS OVER THE NEXT SEVERAL YEARS. THE
WONDERFUL THING ABOUT THIS COMPANY IS THAT A LARGE PART OF ITS REVENUE COMES
FROM LICENSING AN INTELLECTUAL PROPERTY; THAT PART OF THE BUSINESS HAS FEW
COSTS, HIGH PROFITS, AND HIGH BARRIERS TO ENTRY FOR POTENTIAL COMPETITION.
IN THE BIOTECHNOLOGY AREA, A COMPANY THAT CONTRIBUTED TO THE PORTFOLIO'
PERFORMANCE WAS MEDIMMUME. THIS PHARMACEUTICAL COMPANY DEVELOPED AND SELLS
SYNAGIS AND RESPIGAM, TWO DRUGS WHICH APPEAR TO BE THE GOLD STANDARD OF CARE FOR
BABIES AND PREMATURE INFANTS WHO GET PNEUMONIA. ACCORDING TO OUR RESEARCH,
THESE DRUGS WILL HAVE NO COMPETITION IN THE FORESEEABLE FUTURE AND THEIR
WORLDWIDE MARKET IS PROJECTED TO BE AROUND $2.5 BILLION. MEDIMMUNE SALES IN
1999 WERE UNDER $200 MILLION, SO WE SEE THE POTENTIAL FOR STRONG EARNINGS GROWTH
OVER THE NEXT COUPLE OF YEARS. IN ADDITION, THERE APPEARS TO BE THE POTENTIAL
FOR MEDIMMUNE TO APPLY THESE DRUGS TO TREATING THE LUNG-IMPAIRED ELDERLY.
ANOTHER FACTOR IN THE PORTFOLIO'S PERFORMANCE WAS OUR BELIEF THAT SOME OF THE
SECTORS WITH STEADY BUT PERHAPS UNSPECTACULAR EARNINGS GROWTH WERE MOVING OUT OF
FAVOR - PARTICULARLY SUPERMARKETS, DRUGSTORES, AND OFFICE SUPPLY SUPERSTORES.
THIS LED US TO CUT BACK OR ELIMINATE OUR POSITIONS IN COMPANIES THAT TURNED OUT
TO BE POOR PERFORMERS FOR THE YEAR, INCLUDING DRUGSTORE CHAINS CVS AND RITE AID,
SUPERMARKETS KROGER AND SAFEWAY, AND OFFICE SUPERSTORES STAPLES AND OFFICE
DEPOT.
ALTHOUGH MANY OF THESE COMPANIES STILL HAVE GOOD FUNDAMENTALS, WE BELIEVE THE
MARKET PERCEIVED THAT THEY WERE VULNERABLE TO COMPETITION FROM INTERNET VENDORS
AND MEGA-COMPANIES LIKE WAL-MART. IN ADDITION, RITE AID DEVELOPED PROBLEMS WITH
ACCOUNTING IRREGULARITIES. SO OVERALL WE FEEL OUR PERFORMANCE WAS HELPED BY MANY
OF OUR SELLING DECISIONS; THESE ENABLED US TO REDEPLOY RESOURCES FROM AREAS OF
SLOWING EARNINGS GROWTH INTO WHAT WE BELIEVED WOULD BE HIGH-EARNINGS-GROWTH
COMPANIES IN THE AREAS WE'RE CURRENTLY EXCITED ABOUT: TELECOMMUNICATIONS,
TECHNOLOGY, AND BIOTECH.
LOOKING AHEAD TO 2000, WE BELIEVE THE CHALLENGE WILL BE TO CONTINUE TO PICK
WINNING STOCKS IN A DIFFICULT ENVIRONMENT OF RISING INTEREST RATES AND HIGH
STOCK VALUATIONS. OUR RESPONSE IS TO TRY TO INVEST IN STOCKS OF COMPANIES WHICH
CAN GENERATE POSITIVE EARNINGS SURPRISES BECAUSE, AS WE MENTIONED EARLIER, IN
TODAY'S MARKET IT APPEARS TO US THAT STOCK PRICES CAN BE DRAMATICALLY IMPACTED
BY EVEN A SMALL EARNINGS SHORTFALL.
OUR STRATEGY IS TO CONTINUE TO EMPHASIZE THE SECTORS WE FEEL OFFER THE GREATEST
OPPORTUNITY: TELECOMMUNICATIONS, TECHNOLOGY, AND, TO A LESSER EXTENT,
BIOTECHNOLOGY. WE DO SEE THE
<PAGE>
POTENTIAL FOR A CORRECTIVE PERIOD, PARTICULARLY IF THE FED CONTINUES TO RAISE
INTEREST RATES, BECAUSE SOME STOCKS HAVE BECOME OVERVALUED. BUT WE BELIEVE THAT
THE TYPE OF COMPANIES WE SEEK OUT, THOSE WITH A UNIQUE PRODUCT OR SERVICE AND
HIGH GROWTH RATES, CAN CONTINUE TO DO WELL IN TODAY'S ENVIRONMENT.
- - MASSACHUSETTS FINANCIAL SERVICES COMPANY
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS RESEARCH PORTFOLIO
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
RESEARCH PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 14.90%
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT.
PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
DEAR INVESTOR:
FOR THE TWO MONTHS ENDED DECEMBER 31, 1999, THE RESEARCH PORTFOLIO PROVIDED A
TOTAL RETURN OF 14.90%. THIS COMPARES TO A 8.04% RETURN FOR THE STANDARD &
POOR'S 500 COMPOSITE INDEX (THE S&P 500), A POPULAR, UNMANAGED INDEX OF COMMON
STOCK TOTAL RETURN PERFORMANCE, FOR THE SAME PERIOD.
THE PORTFOLIO MAINTAINED SIGNIFICANT EXPOSURE TO LARGE-CAP TELECOMMUNICATIONS
AND TECHNOLOGY STOCKS, WHICH ADDED CONSIDERABLY TO TOTAL RETURN. DESPITE OUR
OVERWEIGHTING IN TECHNOLOGY STOCKS WE AVOIDED INTERNET COMPANIES WITH EXPENSIVE
VALUATIONS, WEAK BUSINESS MODELS OR UNPROVEN TRACK RECORDS. AT THE SAME TIME, WE
RECOGNIZED EARLY ON THAT THE GROWTH IN INTERNET SERVICES AND DATA TRAFFIC IS
LIKELY TO CONTINUE FOR SOME TIME. CONSEQUENTLY, WE INVESTED IN A NUMBER OF
TECHNOLOGY AND COMMUNICATIONS STOCKS IN THE NETWORKING AND TELECOMMUNICATIONS
EQUIPMENT INDUSTRIES. SOME EXAMPLES THAT MET OUR STRICT INVESTMENT CRITERIA
INCLUDE, CISCO, NORTEL, ERICSSON AND MOTOROLA. THESE COMPANIES REPRESENT THE
NUTS AND BOLTS OF INTERNET AND TELECOMMUNICATIONS INFRASTRUCTURE AND HELPED THE
PORTFOLIO OUTPACE ITS BENCHMARK.
THE PORTFOLIO ALSO MAINTAINED CONSIDERABLE EXPOSURE TO SOFTWARE STOCKS, SUCH AS
MICROSOFT, ORACLE AND VERITAS. OUR SOFTWARE HOLDINGS HURT PERFORMANCE IN THE
FIRST QUARTER OF THIS PAST YEAR, BUT WE STUCK TO OUR GUNS AND HELD ON TO THESE
POSITIONS. OVER THE PAST SIX MONTHS THEY'VE COME ROARING BACK TO PROVIDE A
SIGNIFICANT BOOST TO PERFORMANCE DUE TO INCREASED DEMAND FOR DATA STORAGE AND
SOFTWARE PRODUCTS.
OTHER LEADING CONTRIBUTORS WERE SEMICONDUCTOR COMPANIES, SUCH AS LSI LOGIC AND
ANALOG DEVICES. THE SEMICONDUCTOR INDUSTRY WAS HURT IN 1998 BY THE ASIAN
ECONOMIC SLOWDOWN AND BY A BUILD UP IN SUPPLY IN SOME MARKET SEGMENTS, WHICH
LOWERED PRICES. NOW, DEMAND IS BEGINNING TO CATCH UP WITH SUPPLY AS A RESULT OF
ECONOMIC STRENGTH IN THE U.S. AND THE ASIAN RECOVERY. IF THIS SCENARIO
PERSISTS, WE BELIEVE SEMICONDUCTOR STOCKS SHOULD CONTINUE TO BENEFIT.
OUTSIDE THE TECHNOLOGY AND TELECOMMUNICATIONS SECTORS, THE PORTFOLIO BENEFITED
FROM A NUMBER OF STOCKS IN THE FINANCIAL SERVICES, MEDIA AND ENERGY SECTORS.
GAINS IN FINANCIAL SERVICES CAME PRIMARILY FROM BROKERAGE AND INVESTMENT BANKING
STOCKS, SUCH AS CITIGROUP AND MORGAN STANLEY DEAN WITTER, BOTH OF WHICH ARE WELL
MANAGED INDUSTRY LEADERS. MEDIA HOLDINGS SUCH AS INFINITY BROADCASTING,
ECHOSTAR COMMUNICATIONS AND CBS BENEFITED FROM THE TREMENDOUS GROWTH IN
ADVERTISING SPENDING DUE TO THE HIGHLY COMPETITIVE BUSINESS ENVIRONMENT,
ESPECIALLY AMONG INTERNET COMPANIES.
WHILE THE PORTFOLIO MAINTAINED A SLIGHTLY UNDERWEIGHTED POSITION IN HEALTH CARE
STOCKS VERSUS THE INDEX, IN GENERAL THIS GROUP HURT PERFORMANCE. NURSING HOMES,
HOSPITALS,
<PAGE>
HMOS, AND PHARMACEUTICAL COMPANIES ALL WERE HURT BY FEARS OF MEDICARE REFORM AND
POTENTIAL GOVERNMENT PRICE CONTROLS. DESPITE THIS GENERALLY NEGATIVE
ENVIRONMENT, WE FOUND GOOD OPPORTUNITIES IN THE MEDICAL DEVICE AREA. WHILE OUR
MEDICAL DEVICE HOLDINGS PRODUCED MIXED RESULTS, IN OUR VIEW, COMPANIES SUCH AS
GUIDANT AND MEDTRONIC HAVE A NUMBER OF NEW PRODUCTS IN THEIR PIPELINES THAT
COULD DRIVE REVENUES AND EARNINGS GROWTH HIGHER.
OTHER DETRACTORS TO PERFORMANCE INCLUDED NABISCO, SAFEWAY, AND CVS. DESPITE
SOLID FUNDAMENTAL BUSINESS AND GROWTH PROSPECTS, THESE COMPANIES SUFFERED FROM
GENERALLY DOWNBEAT INDUSTRY OUTLOOKS AND WEAK INVESTOR SENTIMENT. IN THE
CONSUMER GOODS AND SERVICES SECTOR, ELECTRONICS EQUIPMENT CONGLOMERATE TYCO
INTERNATIONAL WAS A MAJOR DISAPPOINTMENT FOR THE PORTFOLIO. DESPITE NO EVIDENCE
OF IRREGULAR ACCOUNTING METHODS, ITS SHARES PLUNGED DURING THE PERIOD AFTER AN
ANALYST RAISED SUSPICIONS REGARDING THE COMPANY'S ACCOUNTING OF RECENT
ACQUISITIONS. WE'VE MET WITH MANAGEMENT A NUMBER OF TIMES AND WE CONTINUE TO
BELIEVE THAT ITS BUSINESS FUNDAMENTALS ARE STRONG. AS A RESULT, WE DECIDED TO
MAINTAIN OUR HOLDING IN THE PORTFOLIO.
DURING THE YEAR, THE EQUITY MARKET HAS BEEN EXTREMELY NARROW WITH 25
LARGE-GROWTH STOCKS OUTPERFORMING THE REST OF THE STOCKS IN THE S&P 500. WHILE
MARKET LEADERSHIP HAS STARTED TO SHOW SIGNS OF BROADENING, WHICH HAS HELPED
PERFORMANCE, WE BELIEVE THE LONG-TERM OPPORTUNITIES FOR SMALL- AND MID-CAP
STOCKS ARE ATTRACTIVE PRIMARILY BECAUSE THEY ARE SELLING AT MUCH CHEAPER PRICES
RELATIVE TO EARNINGS AND EXPECTED GROWTH RATES COMPARED TO LARGE-CAP GROWTH
STOCKS. IN ADDITION, WE BELIEVE OUR EXPOSURE TO STOCKS WITH LOWER PRICES
RELATIVE TO EARNINGS SHOULD MAKE THE PORTFOLIO LESS VULNERABLE TO NEGATIVE
EVENTS SUCH AS EARNINGS DISAPPOINTMENTS OR A BROAD MARKET DOWNTURN.
THE CURRENT BULL MARKET IS ONE OF THE MOST UNUSUAL IN RECENT MEMORY. THERE ARE
WIDESPREAD INDICATIONS OF IMMENSE SPECULATION AND ENTRENCHED OPTIMISM TOWARD
EQUITIES. YET, IF WE EXCLUDE TECHNOLOGY AND COMMUNICATIONS, THE EQUITY MARKET
HAS BEEN IN A DOWNTREND SINCE APRIL OF 1999. AS A RESULT, WE EXPECT MARKET
STRENGTH TO BROADEN INTO OTHER SECTORS OF THE MARKET, WHICH COULD CREATE
OPPORTUNITIES FOR THE PORTFOLIO. OF COURSE, MUCH OF THE BULL MARKET'S FATE
RESTS ON CORPORATE EARNINGS AND THE PERFORMANCE OF THE ECONOMY. WHILE OPINIONS
RANGE FROM TOTAL CONVICTION IN A NEW ERA OF TROUBLE FREE PROSPERITY, TO A VIEW
THAT INFLATION IS JUST AROUND THE CORNER AND THE MARKET IS IN A CLASSIC ASSET
BUBBLE WAITING TO BURST, THE TRUTH MOST LIKELY LIES SOMEWHERE IN THE MIDDLE.
GIVEN THIS UNCERTAIN ENVIRONMENT, HOWEVER, WE CONTINUE TO FOCUS OUR ENERGY ON
FINDING WHAT WE BELIEVE ARE TOP-QUALITY COMPANIES THAT SHOULD PROVIDE FAVORABLE
LONG-TERM PERFORMANCE REGARDLESS OF SHORT-TERM MARKET VOLATILITY.
- - MASSACHUSETTS FINANCIAL SERVICES COMPANY
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS GROWTH WITH INCOME PORTFOLIO
MANAGED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
GROWTH WITH INCOME PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 4.65%
*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.
DEAR INVESTOR:
FOR THE TWO MONTHS ENDED DECEMBER 31, 1999, THE GROWTH WITH INCOME PORTFOLIO
PROVIDED A TOTAL RETURN OF 4.65%. THIS COMPARES TO A 8.04% RETURN FOR THE
STANDARD & POOR'S 500 COMPOSITE INDEX (THE S&P 500), A POPULAR, UNMANAGED INDEX
OF COMMON STOCK TOTAL RETURN PERFORMANCE.
THE PORTFOLIO LAGGED THE INDEX PRIMARILY DUE TO ITS UNDERWEIGHTING IN TECHNOLOGY
STOCKS, WHICH DROVE THE NARROW STRENGTH OF THE MARKET. IF WE LOOK AT THE
PERFORMANCE OF THE S&P 500, THE TOP-25 PERFORMERS ACCOUNTED FOR MOST OF THE
TOTAL RETURN OF THE INDEX OVER THE PAST YEAR. IN AN EXTREMELY NARROW MARKET
LIKE WE'VE EXPERIENCED DURING THE PERIOD, IT IS VERY DIFFICULT FOR A DIVERSIFIED
GROWTH AND INCOME PORTFOLIO WITH A LOWER RISK PROFILE THAN ITS INDEX TO
OUTPERFORM ITS BENCHMARK OVER THE SHORT TERM.
WHILE WE INCREASED THE PORTFOLIO'S EXPOSURE TO TECHNOLOGY STOCKS DURING THE
PERIOD, WE DID NOT ABANDON MY FOCUS ON BLUE-CHIP COMPANIES WITH STRONG,
LONG-TERM FUNDAMENTALS AND REASONABLE VALUATIONS. AS A RESULT, THE PORTFOLIO
REMAINED UNDERWEIGHTED IN TECHNOLOGY STOCKS VERSUS THE S&P 500 BECAUSE THEY
LOOKED VERY EXPENSIVE AND RISKY RELATIVE TO THEIR LONG-TERM EARNINGS PROSPECTS.
ON THE OTHER HAND, AS THE INDEX'S WEIGHTING IN TECHNOLOGY INCREASED WITH THE
APPRECIATION OF THESE STOCKS, I MADE THE DECISION TO LOOK MORE CLOSELY AT THE
PORTFOLIO'S RELATIVE RISK VERSUS ITS ABSOLUTE RISK COMPARED TO THE MARKET. AS A
RESULT, WE DECIDED IT WAS PRUDENT TO GRADUALLY INCREASE THE PORTFOLIO' WEIGHTING
IN TECHNOLOGY AND TELECOMMUNICATIONS, WHILE AT THE SAME TIME KEEPING A CLOSE EYE
ON RELATIVE VALUATIONS AND THE FUNDAMENTAL BUSINESS OUTLOOKS FOR THESE
COMPANIES.
SOME OF THE TECHNOLOGY NAMES THAT MET OUR INVESTMENT CRITERIA AND PROVIDED A
STRONG BOOST TO PERFORMANCE WERE COMPANIES SUCH AS INTEL, ORACLE, CISCO AND
MOTOROLA. IN TELECOMMUNICATIONS, THE PORTFOLIO BENEFITED FROM A MAJOR POSITION
IN MANNESMANN THE GERMAN WIRELESS TELECOMMUNICATION PROVIDER. SPRINT, BELL
ATLANTIC AND NIPPON TELEPHONE & TELEGRAPH ALSO PRODUCED STRONG RESULTS DUE TO
THE HUGE GROWTH IN INTERNET USAGE AND DEMAND FOR DATA AND VOICE SERVICES. OTHER
STOCKS THAT WORKED WELL FOR THE PORTFOLIO AND BENEFITED FROM THE RAPID
ACCELERATION OF ADVERTISING SPENDING BY INTERNET COMPANIES WERE MEDIA HOLDINGS
SUCH AS TRIBUNE, THE NEW YORK TIMES AND GENERAL ELECTRIC, WHICH OWNS NBC.
WHILE INVESTORS REMAINED FOCUSED ON TECHNOLOGY AND TELECOMMUNICATIONS STOCKS,
THE PORTFOLIO MANAGED TO LOCATE STRONG PERFORMERS FROM A WIDE RANGE OF
INDUSTRIES, INCLUDING
<PAGE>
ENERGY, INDUSTRIAL GOODS & SERVICES, CONSUMER STAPLES, RETAILING AND FINANCIAL
SERVICES. STOCKS SUCH AS BP AMOCO, UNITED TECHNOLOGIES, PROCTER & GAMBLE,
WAL-MART AND AMERICAN INTERNATIONAL GROUP PRODUCED SOLID GAINS FOR THE
PORTFOLIO. THE SUCCESS OF THESE STOCKS AND THE BROADLY DIVERSIFIED STRUCTURE OF
THE PORTFOLIO HIGHLIGHTS PRECISELY WHAT THE GROWTH WITH INCOME PORTFOLIO IS
TRYING TO ACCOMPLISH - TO PROVIDE GROWTH OF CAPITAL, WITH LESS RISK OR PRICE
VOLATILITY THAN THE S&P 500 INDEX.
ON THE NEGATIVE SIDE, THERE WERE A FEW HOLDINGS THAT HURT THE PORTFOLIO'
RELATIVE PERFORMANCE. SOME DETRACTORS THAT STAND OUT ARE SERVICE CORP., XEROX,
KROGER AND SAFEWAY. WE MAINTAINED OUR POSITIONS IN SUPERMARKET OPERATORS KROGER
AND SAFEWAY BECAUSE WE BELIEVE THEY POSSESS STRONG BUSINESS PROSPECTS AND
FAVORABLE GROWTH AND EARNINGS OUTLOOKS.
ON A MORE POSITIVE NOTE, WE CONTINUE TO BELIEVE THE PORTFOLIO IS WELL POSITIONED
TO TAKE ADVANTAGE OF A NUMBER OF OPPORTUNITIES IN THE MARKET. OUR WELL-BALANCED
EXPOSURE TO MARKET LEADERS IN TECHNOLOGY, TELECOMMUNICATIONS, FINANCIAL
SERVICES, RETAILING AND INDUSTRIAL GOODS PROVIDES DIVERSIFICATION IN THE
PORTFOLIO AND COULD HELP THE PORTFOLIO OUTPERFORM IF MARKET STRENGTH CONTINUES
TO BROADEN.
AT THE SAME TIME, WE'LL CONTINUE TO LOOK FOR OPPORTUNITIES IN AREAS SUCH AS
PHARMACEUTICAL COMPANIES, AND DRUGSTORE OPERATORS SUCH AS CVS, WHICH HAVE BEEN
BEATEN DOWN DUE TO CONCERNS OVER MEDICARE REFORM AND POTENTIAL GOVERNMENT PRICE
CONTROLS. WHILE THE RISKS REMAIN HIGH IN THIS AREA DURING AN ELECTION YEAR, AT
SOME POINT STOCK VALUATIONS MAY BECOME VERY COMPELLING. MANY PHARMACEUTICAL
COMPANIES AND DRUGSTORE CHAINS DEMONSTRATE PROMISING LONG-TERM GROWTH PROSPECTS
AND RELIABLE CASH FLOW.
- - MASSACHUSETTS FINANCIAL SERVICES COMPANY
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS INDEX 500 PORTFOLIO
MANAGED BY STATE STREET GLOBAL ADVISORS
INDEX 500 PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (11.1.99) 8.09%
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT.
PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
DEAR INVESTOR:
THE S&P 500 INDEX CONTINUED TO AMAZE IN 1999, AS IT CLOSED THE YEAR AT AN
ALL-TIME HIGH OF 1469.25. THE INDEX RETURNED 21.04% FOR THE YEAR, MARKING THE
FIFTH CONSECUTIVE YEAR THAT THE INDEX POSTED A GREATER THAN 20% RETURN. THIS IS
QUITE AN IMPRESSIVE FEAT WHEN ONE CONSIDERS THAT PRIOR TO THIS THE INDEX HAD
NEVER ACHIEVED MORE THAN TWO CONSECUTIVE YEARS OF RETURNS AT THIS LEVEL.
AFTER EXPERIENCING A DISAPPOINTING THIRD QUARTER, WHICH WITNESSED THE S&P 500
DOWN 6.24%, THE INDEX FINISHED THE YEAR STRONG WITH A FOURTH QUARTER RETURN OF
14.88%. LARGE-CAP GROWTH STOCKS DOMINATED THE FOURTH QUARTER AS THE S&P/BARRA
GROWTH INDEX OUTPERFORMED THE S&P/BARRA VALUE INDEX BY 10.77% (19.74% VS.
8.97%). GROWTH DOMINATED PRIMARILY DUE TO THE STRENGTH OF THE TECHNOLOGY SECTOR.
OF THE TOP FIFTEEN PERFORMERS, ALL BUT FOUR WERE TECHNOLOGY STOCKS.
IF THERE IS A THEME THAT WILL BE REMEMBERED ABOUT 1999 IT WILL BE THE DOMINANCE
OF LARGE-CAP TECHNOLOGY STOCKS. THE S&P TECHNOLOGY SECTOR WAS UP 75% IN 1999,
EVEN AFTER EXPERIENCING A 72% RISE THE YEAR BEFORE, AND NOW REPRESENTS NEARLY
30% OF THE MARKET CAPITALIZATION OF THE INDEX. TECHNOLOGY ACCOUNTED FOR ROUGHLY
70% OF THE PERFORMANCE OF THE S&P 500 INDEX. IN FACT, WITHOUT THE TECHNOLOGY
SECTOR THE S&P 500 WOULD HAVE ONLY POSTED A RETURN OF 7.5%.
THE YEAR WILL ALSO BE REMEMBERED AS BEING ONE OF THE NARROWEST MARKETS IN
RECENT HISTORY AS ONLY SEVEN STOCKS CONTRIBUTED 50% OF THE TOTAL RETURN OF THE
INDEX. IN ORDER OF CONTRIBUTION THOSE STOCKS WERE MICROSOFT, CISCO, GENERAL
ELECTRIC, WAL-MART, ORACLE, NORTEL AND QUALCOMM. WITHIN THE S&P 500, THE
LARGE-CAP STOCKS CONTINUED TO DOMINATE PERFORMANCE AS IS EVIDENCED BY THE FACT
THAT THE S&P 500 EQUAL WEIGHTED INDEX RETURNED ONLY 11.88%.
<PAGE>
THE S&P 500 INDEX FINISHED THE YEAR WITH A TOTAL OF 42 INDEX CHANGES; JUST SIX
SHY OF THE TOTAL EXPERIENCED LAST YEAR. THE FOURTH QUARTER TURNED OUT TO BE THE
BUSIEST OF THE YEAR AS THE INDEX EXPERIENCED SIXTEEN CHANGES INCLUDING THE
ADDITION OF YAHOO! INC.
- - STATE STREET GLOBAL ADVISORS
<PAGE>
CALVERT VARIABLE SERIES, INC.
AMERITAS MONEY MARKET PORTFOLIO
MANAGED BY CALVERT ASSET MANAGEMENT COMPANY, INC.
MONEY MARKET PORTFOLIO
ANNUAL TOTAL RETURN
(PERIOD ENDED 12.31.99)
SINCE INCEPTION (10.29.99) 0.99%
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT.
PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
DEAR INVESTOR:
1999 MARKED A YEAR OF TURN AROUND FOR BOND MARKET PARTICIPANTS. AT THE START OF
THE YEAR, INTEREST RATES WERE NEAR LOWS, 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 THEREFORE 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
COULD 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.
<PAGE>
PERFORMANCE AND STRATEGY:
CALVERT ASSET MANAGEMENT COMPANY TOOK OVER MANAGEMENT OF THE PORTFOLIO IN LATE
OCTOBER. AT THAT TIME, INVESTORS WERE BEING ENCOURAGED TO PLACE INVESTMENTS INTO
JANUARY AND FURTHER. THE FUND PURCHASED VARIOUS INSTRUMENTS WITH MATURITIES FROM
OVERNIGHT TO SIX MONTHS. ALTHOUGH LARGE CASH FLOWS CAN DISTORT DAILY LEVELS,
THE WEIGHTED AVERAGE DAYS TO MATURITY HAS HELD REASONABLY STEADY AT ABOUT 35
DAYS. IN ANTICIPATION OF FURTHER RATE INCREASES THE AVERAGE DAYS TO MATURITY
WILL REMAIN SHORT AT THIS TIME KEEPING FUNDS AVAILABLE FOR HIGHER YIELDING
SECURITIES, AS THEY BECOME AVAILABLE.
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, THE CONSUMER CONTINUES TO PURCHASE, CREDIT CARD DEBT IS RISING AND
LABOR MARKETS ARE VERY TIGHT. WITH THE STOCK MARKET AT HIGH LEVELS, A PLENTITUDE
OF JOBS AVAILABLE 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. IF NO SIGNIFICANT SLOWDOWN IS SEEN ANOTHER RATE HIKE 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.
- - CALVERT ASSET MANAGEMENT COMPANY, INC.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CALVERT VARIABLE SERIES, INC.
AMERITAS PORTFOLIOS:
IN OUR OPINION, THE ACCOMPANYING STATEMENTS OF ASSETS AND LIABILITIES, INCLUDING
THE PORTFOLIOS OF INVESTMENTS AND THE RELATED STATEMENTS OF OPERATIONS,
STATEMENTS OF CHANGES IN NET ASSETS AND THE FINANCIAL HIGHLIGHTS PRESENT FAIRLY,
IN ALL MATERIAL RESPECTS, THE FINANCIAL POSITION OF CALVERT VARIABLE SERIES,
INC. AMERITAS PORTFOLIOS (COMPRISED OF INCOME & GROWTH, GROWTH, SMALL
CAPITALIZATION, MIDCAP GROWTH, EMERGING GROWTH, RESEARCH, GROWTH WITH INCOME,
INDEX 500, AND MONEY MARKET PORTFOLIOS, HEREINAFTER REFERRED TO AS THE "FUNDS"),
AT DECEMBER 31, 1999, THE RESULTS OF EACH OF THEIR OPERATIONS, THE CHANGES IN
EACH OF THEIR NET ASSETS AND THE FINANCIAL HIGHLIGHTS FOR EACH OF THE FISCAL
PERIODS PRESENTED, 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 FUNDS' 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 11, 2000
<PAGE>
INCOME & GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 94.4% SHARES VALUE
BANKS - MONEY CENTER - 1.0%
BANK OF AMERICA CORP. 16,189 $812,485
BIOTECHNOLOGY - 4.0%
AMGEN INC. * 53,700 3,225,356
BROADCAST - TV, RADIO, CABLE - 7.6%
AT&T - LIBERTY MEDIA GROUP * 14,500 822,875
CABLEVISION SYSTEMS CORP. * 12,100 913,550
CLEAR CHANNEL COMMUNICATIONS * 22,300 1,990,275
COMCAST CORP. 46,600 2,356,212
6,082,912
COMMUNICATIONS EQUIPMENT - 5.9%
MOTOROLA INC. 18,900 2,783,025
QUALCOMM INC. * 11,200 1,972,600
4,755,625
COMPUTERS - HARDWARE - 1.0%
DELL COMPUTER CORP. * 16,500 841,500
COMPUTERS - NETWORKING - 3.5%
CISCO SYSTEMS INC. * 26,600 2,849,525
COMPUTERS - SOFTWARES AND SERVICES - 23.6%
AMERICA ONLINE INC. * 48,400 3,651,175
ARIBA INC. * 4,000 709,500
AT HOME CORP. * 26,300 1,127,612
CNET, INC. * 12,100 686,675
EBAY INC. * 19,400 2,428,637
EXODUS COMMUNICATIONS INC. * 29,000 2,575,562
MICROSOFT CORP. * 29,600 3,455,800
YAHOO INC. * 10,000 4,326,875
18,961,836
ELECTRICAL EQUIPMENT - 2.4%
GENERAL ELECTRIC COMPANY 12,600 1,949,850
ELECTRONICS - SEMICONDUCTS - 10.6%
BROADCOM CORP. * 7,700 2,097,287
CONEXANT SYSTEMS INC. * 26,200 1,739,025
LINEAR TECHNOLOGY CORP. 21,800 1,560,062
TEXAS INSTRUMENTS INC. 24,200 2,344,375
VITESSE SEMICONDUCTOR CORP. * 14,500 760,344
8,501,093
ENTERTAINMENT - 2.0%
TIME WARNER INC. 21,800 1,579,138
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
EQUIPMENT - SEMICONDUCTORS - 2.3%
APPLIED MATERIALS INC. * 9,700 $1,228,869
TERADYNE INC. * 9,700 640,200
1,869,069
FINANCIAL - DIVERSIFIED - 7.5%
AMERICAN EXPRESS COMPANY 16,500 2,743,125
CITIGROUP INC. 43,400 2,411,413
MORGAN STANLEY DEAN WITTER & COMPANY 5,300 756,575
5,911,113
HEALTHCARE - DIVERSIFIED - 2.9%
BRISTOL-MYERS SQUIBB CO. 23,800 1,527,663
WARNER-LAMBERT CO. 10,000 819,375
2,347,038
INSURANCE - MULTI-LINE - 0.7%
AMERICAN INTERNATIONAL GROUP 5,500 594,688
MANUFACTURING - DIVERSIFIED - 1.5%
HONEYWELL INTERNATIONAL INC. 21,500 1,240,281
OIL AND GAS - DRILL AND EQUIPMENT - 2.5%
HALLIBURTON COMPANY 50,400 2,028,600
RETAIL - BUILDING SUPPLIES - 3.4%
HOME DEPOT INC. 40,050 2,745,928
RETAIL - GENERAL MERCHANDISE - 2.2%
COSTCO WHOLESALE CORP. * 6,700 611,375
WAL-MART STORES INC. 16,900 1,168,213
1,779,588
RETAIL - SPECIALTY - 0.5%
BED BATH & BEYOND INC. * 12,600 437,850
SERVICES - ADVERTISING AND MARKETING - 4.4%
OMNICOM GROUP 20,400 2,040,000
YOUNG & RUBICAM INC. 20,600 1,457,450
3,497,450
SERVICES - COMMERCIAL AND CONSUMERS - 2.5%
CENDANT CORPORATION * 75,000 1,992,188
TELECOMM - CELLULAR AND WIRELESS - 2.4%
NEXTEL COMMUNICATIONS INC. * 18,500 1,907,813
TOTAL EQUITY SECURITIES (COST $60,460,599) 75,910,926
<PAGE>
PRINCIPAL
COMMERCIAL PAPER - 2.1% AMOUNT VALUE
CORPORATE RECIEVABLES CORPORATION, 6.60%, 1/14/00
$100,000 $99,762
INDIANAPOLIS POWER AND LIGHT, 6.45%, 1/12/00
200,000 199,606
MERRILL LYNCH AND COMPANY, 6.55%, 1/19/0 700,000 697,707
TORONTO DOMINION HOLDINGS, 5.94%, 1/27/00 700,000 696,997
TOTAL COMMERCIAL PAPER (COST $1,694,072) 1,694,072
TOTAL INVESTMENTS (COST $62,154,671) - 96.5% 77,604,998
OTHER ASSETS AND LIABILITIES, NET - 3.5% 2,779,723
NET ASSETS - 100% $80,384,721
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 95.1% SHARES VALUE
BANKS - 2.3%
FIRSTAR CORP. 25,900 $547,137
BANK OF AMERICA CORP. 81,400 4,085,262
4,632,399
COMPUTER SOFTWARE AND SERVICES - 15.9%
AMERICA ONLINE, INC. * 92,400 6,970,425
EBAY, INC. * 42,000 5,257,875
INTUIT, INC. * 34,900 2,091,819
MICROSOFT CORP. * 84,700 9,888,725
YAHOO, INC. * 16,600 7,182,612
31,391,456
COMPUTER TECHNOLOGY - 3.6%
DELL COMPUTER CORP. * 112,900 5,757,900
SUN MICROSYSTEMS, INC. * 16,800 1,300,950
7,058,850
COMMUNICATIONS SERVICES - 2.1%
MCI WORLDCOM, INC. * 33,000 1,751,063
SPRINT CORP. 36,000 2,423,250
4,174,313
COMMUNICATIONS TECHNOLOGY - 8.6%
AT HOME CORP. * 42,100 1,805,038
CISCO SYSTEM, INC. * 69,200 7,413,050
MOTOROLA, INC. 33,800 4,977,050
NOKIA CORP. 6,100 1,159,000
QUALCOMM, INC. * 9,600 1,690,800
17,044,938
CONSUMER CYCLICALS - 1.9%
MASCO CORP. 25,700 652,138
HARLEY DAVIDSON, INC. 35,600 2,280,625
CARNIVAL CORP. 19,500 932,344
3,865,107
CONSUMER STAPLES - 6.4%
AT&TCORP. * 55,300 3,138,275
CLEAR CHANNEL COMMUNICATIONS * 12,300 1,097,775
COMCAST CORP. 58,500 2,957,906
COX COMMUNICATIONS, INC. * 22,600 1,163,900
ECHOSTAR COMMUNICATION * 13,700 1,335,750
MEDIAONE GROUP, INC. * 37,400 2,872,787
12,566,393
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
ENERGY - 2.6%
HALLIBURTON CO. 127,450 $5,129,863
FINANCIAL - DIVERSIFIED - 9.2%
AMERICAN EXPRESS CO. 8,900 1,479,625
CITIGROUP, INC. 108,100 6,006,306
HOUSEHOLD INTERNATIONAL, INC. 51,700 1,925,825
MERRILL LYNCH & CO, INC. 12,100 1,010,350
MORGAN STANLEY DEAN WITTER 54,800 7,822,700
18,244,806
ELECTRONICS - SEMICONDUCTS - 9.8%
ALTERA CORP. * 51,500 2,552,469
APPLIED MATERIAL, INC. * 53,400 6,765,112
INTEL CORP. 46,900 3,860,456
LINEAR TECHNOLOGY CORP. 40,300 2,883,969
TERADYNE, INC. * 37,600 2,481,600
TEXAS INSTRUMENTS, INC. 9,600 930,000
19,473,606
HEALTH CARE - BIOTECHNOLOGY 3.9%
AMGEN, INC. * 113,800 6,835,112
BIOGEN, INC. * 10,400 878,800
7,713,912
HEALTH CARE, DRUGS AND PHARMACEUTICALS - 6.3%
BRISTAL MYERS SQUIBB CO. 59,400 3,812,737
PFIZER, INC. 80,200 2,601,488
WARNER LAMBERT CO. 74,000 6,063,375
12,477,600
INSURANCE - 2.7%
AMERICAN INTERNATIONAL GROUP, INC. 48,600 5,254,875
MANUFACTURING - DIVERSIFIED - 7.0%
CORNING, INC. 49,100 6,330,831
HONEYWELL INTERNATIONAL, INC. 59,700 3,443,944
UNITED TECHNOLOGIES CORP. 62,400 4,056,000
13,830,775
RETAIL - 7.4%
AMAZON COM, INC. * 24,600 1,872,675
BEST BUY, INC. * 40,000 2,007,500
COSTCO WHOLESALE CORP. * 13,200 1,204,500
HOME DEPOT, INC. 92,775 6,360,886
WAL MART STORES, INC. 46,600 3,221,225
14,666,786
SERVICE COMMERCIAL AND CONSUMERS - 1.1%
IMS HEALTH, INC. 80,500 2,188,594
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
SERVICES - ADVERTISING - 0.5%
OMNICOM GROUP, INC. 10,200 $1,020,000
TRANSPORTATION - 3.8%
KANSAS CITY SOUTHERN INDUSTRIES, INC. 31,000 2,313,375
UNITED PARCEL SERVICE 74,000 5,106,000
7,419,375
TOTAL EQUITY SECURITIES (COST $160,809,847) 188,153,648
PRINCIPAL
COMMERCIAL PAPER - 5.6% AMOUNT
CONSTELLATION ENERGY, 6.50%, 1/21/00 $1,100,000 1,096,028
COSMAIR, INC., 6.75%, 1/14/00 2,000,000 1,995,125
FORRESTAL FUNDING MASTER, 5.50%, 1/24/00 300,000 298,946
INDIANAPOLIS POWER & LIGHT CO., 5.50%, 1/25/00
1,700,000 1,696,649
MADISON GAS & ELECTRIC CO., 5.50%, 1/25/00 500,000 498,167
MERRILL LYNCH & CO., 5.60%, 1/19/00 300,000 299,160
OYSTER CREEK FUEL CORP., 6.40%, 1/7/00 1,200,000 1,198,720
TEXTRON FINANCIAL CORP., 6.90%, 1/14/00 2,100,000 2,094,767
TORONTO DOMINION HOLDINGS, 5.94%, 1/27/00 2,000,000 1,991,421
TOTAL COMMERCIAL PAPER (COST $11,168,982) 11,168,983
TOTAL INVESTMENTS (COST $171,978,829) - 100.7% 199,322,631
OTHER ASSETS AND LIABILITIES, NET - (0.7%) (1,369,759)
NET ASSETS - 100% $197,952,872
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SMALL CAPITALIZATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 94.0% SHARES VALUE
BIOTECHNOLOGY - 5.4%
ENZON, INC. * 32,000 $1,388,000
IDEC PHARMACEUTICALS CORP. * 8,600 844,950
MEDIMMUNE, INC. * 21,600 3,582,900
PROTEIN DESIGN LABS, INC. * 13,000 910,000
6,725,850
BROADCAST - 4.8%
ACME COMMUNICATIONS, INC. * 9,600 319,200
CITADEL COMMUNICATIONS CORP. * 35,100 2,277,112
COX RADIO, INC. * 4,000 399,000
EMMIS COMMUNICATIONS CORP. * 18,900 2,355,708
SALEM COMMUNICATIONS CORP. * 25,300 572,413
SPANISH BROADCASTING SYSTEM * 4,000 161,000
6,084,433
CHEMICALS - SPECIALTY - 1.0%
ATMI, INC. * 38,700 1,279,519
COMMUNICATIONS EQUIPMENT - 7.0%
ANTEC CORP. * 41,400 1,511,100
COMMSCOPE, INC. * 28,300 1,140,844
NEXT LEVEL COMMUNICATIONS, INC. * 29,000 2,171,375
PITTWAY CORP. 52,500 2,352,656
SAWTEK, INC. * 24,100 1,604,156
8,780,131
COMPUTERS - 22.6%
ADVENT SOFTWARE, INC. * 24,300 1,565,831
AWARE, INC. * 18,900 687,488
BSQUARE CORP. * 18,300 767,456
BUSINESS OBJECTS SA * (ADR) 10,700 1,429,788
CNET, INC. * 32,000 1,816,000
CRITICAL PATH, INC. * 24,300 2,293,313
EBAY, INC. * 18,800 2,353,525
EMULEX CORP. * 7,400 832,500
ESPEED, INC. * 42,000 1,493,625
EXODUS COMMUNICATIONS, INC. * 25,600 2,273,600
INTUIT, INC. * 68,600 4,111,711
METASOLV SOFTWARE, INC. * 15,000 1,226,250
MICROMUSE, INC. * 8,700 1,479,000
QRS CORP. * 20,000 2,100,000
RADIANT SYSTEMS, INC. * 15,900 638,981
VIGNETTE CORP. * 20,000 3,260,000
28,329,068
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
CONSUMABLES - 2.2%
BERINGER WINE ESTATES HOLDINGS, INC. * 37,700 $1,503,288
OUTBACK STEAKHOUSE, INC. * 50,700 1,315,031
2,818,319
ELECTRONICS - 16.7%
APPLIED MICRO CIRCUITS CORP. * 8,000 1,018,000
ASM LITHOGRAPHY HOLDING NV * 25,300 2,877,875
CONEXANT SYSTEMS, INC. * 28,800 1,911,600
CYTYC CORP. * 26,800 1,636,475
DALLAS SEMICONDUCTOR CORP. 19,200 1,237,200
LATTICE SEMICONDUCTOR CORP. * 39,100 1,842,588
LINEAR TECHNOLOGY CORP. 5,200 372,125
MICROCHIP TECHNOLOGY, INC. * 29,800 2,039,437
PMC - SIERRA, INC. * 10,000 1,603,125
PRI AUTOMATION, INC. * 43,700 2,933,362
VARIAN, INC. * 39,900 897,750
VITESSE SEMICONDUCTOR CORP. * 22,200 1,164,112
WATERS CORP. * 26,700 1,415,100
20,948,749
HEALTHCARE - 5.5%
ALPHARMA, INC. 32,700 1,005,525
CELGENE CORP. * 14,400 1,008,000
CONMED CORP. * 28,500 737,438
CYGNUS, INC. * 60,000 1,095,000
HOOPER HOLMES, INC. 55,500 1,429,125
MINIMED, INC. * 7,900 578,675
SEPRACOR, INC. * 10,400 1,031,550
6,885,313
HOUSEHOLD FURNITURE & APPIANCES - 1.5%
ETHAN ALLEN INTERIORS, INC. 53,900 1,728,169
FURNITURE BRANDS INTERNATIONAL, INC. * 6,300 138,600
1,866,769
MACHINERY - DIVERSIFIED - 1.0%
METTLER TOLEDO INTERNATIONAL, INC. * 33,300 1,271,644
OFFICE EQUIPMENT & SUPPLIES - 0.6%
COINSTAR, INC. * 52,900 740,600
OIL & GAS - 1.7%
BJ SERVICES CO. * 30,900 1,292,006
VARCO INTERNATIONAL, INC. * 87,400 890,388
2,182,394
RETAIL - 10.0%
ABERCROMBIE & FITCH CO. * 40,100 1,070,169
BED BATH & BEYOND, INC. * 17,800 618,550
BJ'S WHOLESALE CLUB, INC. * 79,700 2,909,050
COST PLUS, INC. * 19,100 680,437
LINENS 'N THINGS, INC. * 58,400 1,730,100
MICHAELS STORES, INC. * 19,900 567,150
PACIFIC SUNWEAR OF CALIFORNIA, INC. * 17,100 545,062
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
RETAIL - CONT'D
SHARPER IMAGE CORP. * 28,700 $364,131
TOO, INC. * 15,900 274,275
TUESDAY MORNING CORP. * 9,900 182,531
TWEETER HOME ENTERTAINMENT GROUP, INC. * 50,400 1,789,200
VALUEVISION INTERNATIONAL, INC. * 15,900 911,269
WILLIAMS-SONOMA, INC. * 18,850 867,100
12,509,024
SERVICE - 3.8%
F.Y.I., INC. * 19,400 659,600
GETTY IMAGES, INC. * 26,300 1,285,413
SOURCE INFORMATION MANAGEMENT CO. * 31,900 534,325
YOUNG & RUBICAM, INC. 31,700 2,242,775
4,722,113
SERVICES - 4.5%
BISYS GROUP, INC. * 46,100 3,008,025
FACTSET RESEARCH SYSTEMS, INC. * 33,400 2,659,475
5,667,500
TELECOMM-LONG DISTANCE - 1.8%
ADELPHIA BUSINESS SOLUTIONS, INC. * 8,000 384,000
ITC DELTACOM, INC. * 40,500 1,118,813
TELECORP PCS, INC. * 20,000 760,000
2,262,813
TRANSPORTATION - 0.7%
FORWARD AIR CORP. * 8,000 347,000
SKYWEST, INC. * 21,100 590,800
937,800
UTILITIES - 3.2%
CALPINE CORP. * 62,050 3,971,200
TOTAL EQUITY SECURITIES (COST $91,033,717) 117,983,239
PRINCIPAL
CORPORATE OBLIGATIONS - 4.8% AMOUNT
BELL ATLANTIC CORP., 6.28%, 1/5/00 $ 800,000 799,442
CITIF PASIFIC FINANCIAL CORP., 6.50%, 1/24/00
1,300,000 1,294,601
FORRESTAL FDN MASTER, 5.50%, 1/24/00 1,000,000 996,486
MADISON GAS AND ELECTRIC CO., 5.50%, 1/25/00 300,000 298,900
MERRILL LYNCH & CO., INC., 6.55%, 1/19/00 500,000 498,362
OYSTER CREEK FUEL CORP., 6.40%, 1/7/00 600,000 599,360
TEXTRON FINANCIAL CORP., 6.90%, 1/14/00 300,000 299,253
TORONTO DOMINION HOLDINGS CORP., 5.94%, 1/27/00
1,300,000 1,294,423
TOTAL CORPORATE OBLIGATIONS (COST $6,080,827) 6,080,827
TOTAL INVESTMENTS (COST $97,114,544) - 98.8% 124,064,066
OTHER ASSETS AND LIABILITIES, NET - 1.2% 1,512,654
NET ASSETS - 100% $125,576,720
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MIDCAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 95.0% SHARES VALUE
BIOTECHNOLOGY - 5.3%
BIOGEN, INC. * 27,800 $2,349,100
GILEAD SCIENCES, INC. * 7,500 405,938
MEDIMMUNE, INC. * 7,800 1,293,825
4,048,863
BROADCAST - TV, RADIO, CABLE - 1.4%
ECHOSTAR COMMUNICATIONS CORP. * 10,600 1,033,500
CHEMICALS - SPECIALTY - 0.4%
ATMI, INC. * 8,300 274,419
COMPUTERS - HARDWARE - 1.7%
EMULEX CORP. * 11,200 1,260,000
COMPUTERS - PERIPHERALS - 0.5%
ESPEED, INC. * 10,000 355,625
COMPUTERS - SOFTWARE & SERVICES - 14.3%
AMDOCS, LTD. * 13,500 465,750
ARIBA, INC. * 3,800 674,025
AT HOME CORP. * 32,100 1,376,288
CNET, INC. * 36,200 2,054,350
EBAY, INC. * 8,900 1,114,169
EXODUS COMMUNICATIONS, INC. * 6,200 550,637
INTUIT, INC. * 47,700 2,859,019
LEGATO SYSTEMS, INC. * 5,600 385,350
VERISIGN, INC. * 3,800 725,562
VIGNETTE CORP. * 3,800 619,400
10,824,550
ELECTRICAL EQUIPMENT - 1.9%
BROCADE COMMUNICATIONS SYSTEMS * 5,100 902,700
SPX CORP. * 6,800 549,525
1,452,225
ELECTRONICS - INSTRUMENTS - 1.6%
WATERS CORP. * 22,900 1,213,700
ELECTRONICS - SEMICONDUCTORS - 10.7%
ALTERA CORP. * 40,500 2,007,281
CONEXANT SYSTEMS, INC. * 5,500 365,063
LINEAR TECHNOLOGY CORP. 31,400 2,247,062
MAXIM INTEGRATED PRODUCTS * 21,000 990,938
MICROCHIP TECHNOLOGY, INC. * 23,700 1,621,969
QLOGIC CORP. * 2,800 447,650
VITESSE SEMICONDUCTOR CORP. * 7,600 398,525
8,078,488
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
EQUIPMENT - SEMICONDUCTORS - 3.5%
ASM LITHOGRAPHY HOLDING NV * 6,600 $750,750
TERADYNE, INC. * 28,800 1,900,800
2,651,550
GAMING, LOTTERY, PARIMUTUAL - 2.2%
MANDALAY RESORT GROUP * 83,500 1,680,438
HEALTHCARE - DRUGS - MAJOR PHARMACEUTICALS - 3.5%
FOREST LABORATORIES - CLASS A * 42,800 2,629,525
HEALTHCARE - MANAGED CARE - 2.5%
EXPRESS SCRIPTS, INC. * 29,500 1,888,000
HEALTHCARE - MEDICAL PRODUCTS & SUPPLIES - 0.8%
AFFYMETRIX, INC. * 3,400 576,937
INVESTMENT BANKING / BROKERAGE - 2.5%
PAINE WEBBER GROUP, INC. 48,500 1,882,406
LEISURE TIME - PRODUCTS - 2.7%
HARLEY-DAVIDSON, INC. 31,900 2,043,594
MANUFACTURING - DIVERSIFIED - 2.6%
CORNING, INC. 15,500 1,998,531
OIL & GAS - DRILLING & EQUIPMENT - 6.4%
BJ SERVICES CO. * 58,000 2,425,125
NABORS INDUSTRIES, INC. * 77,900 2,410,031
4,835,156
OIL & GAS - EXPLORATION & PRODUCTION - 1.5%
DEVON ENERGY CORP. 15,700 516,138
EOG RESOURCES, INC. 18,600 326,662
UNION PACIFIC RESOURCES GROUP 23,600 300,900
1,143,700
POWER PRODUCERS - INDEPENDENT - 3.2%
CALPINE CORP. * 37,669 2,410,816
RAILROADS - 3.4%
KANSAS CITY SOUTHERN INDUSTRIES, INC. 34,200 2,552,175
RESTAURANTS - 2.8%
OUTBACK STEAKHOUSE, INC. * 81,400 2,111,312
RETAIL - COMPUTERS & ELECTRONICS - 1.5%
BEST BUY CO., INC. * 23,300 1,169,369
RETAIL - GENERAL MERCHANDISE - 0.5%
BJ'S WHOLESALE CLUB, INC. * 11,000 401,500
RETAIL - HOME SHOPPING - 1.4%
AMAZON.COM, INC. * 14,000 1,065,750
<PAGE>
EQUITY SECURITIES - 95.0% SHARES VALUE
RETAIL - SPECIALTY - 3.9%
BED BATH & BEYOND, INC. * 59,300 $2,060,675
WILLIAMS-SONOMA, INC. * 18,800 864,800
2,925,475
RETAIL - APPAREL - 1.2%
ABERCROMBIE & FITCH CO. * 32,900 878,019
SERVICES - ADVERTISING / MARKETING - 1.6%
LAMAR ADVERTISING CO. * 6,400 387,600
YOUNG & RUBICAM, INC. 12,200 863,150
1,250,750
SERVICES - COMMERCIAL & CONSUMER - 2.6%
DIGITAL ISLAND * 3,100 294,888
IMS HEALTH, INC. 61,200 1,663,875
1,958,763
SERVICES - COMPUTER SYSTEMS - 0.6%
CSG SYSTEMS INTERNATIONAL * 10,900 434,637
SERVICES - DATA PROCESSING - 3.5%
FISERV, INC. * 57,300 2,195,306
MEDQUIST, INC. * 18,500 477,531
2,672,837
TEXTILES - SPECIALTY - 2.8%
GUCCI GROUP NV 18,650 2,135,425
TOTAL EQUITY SECURITIES (COST $60,078,375) 71,838,035
PRINCIPAL
COMMERCIAL PAPER - 5.5% AMOUNT
COUNTRYWIDE FUNDING CORP., 6.16%, 1/7/00 $400,000 399,589
GENERAL MOTORS ACCEPTANCE CORP. 6.33%, 1/7/00 100,000 99,894
INDIANAPOLIS POWER & LIGHT CO., 6.45%, 1/12/00
1,400,000 1,397,241
NATIONAL FUEL & GAS CO., 6.15%, 1/27/00 100,000 99,556
OYSTER CREEK FUEL CORP., 6.40%, 1/7/00 500,000 499,467
STANDARD LIFE, 6.45%, 1/12/00 1,000,000 998,029
TEXTRON FINANCIAL CORP., 6.90%, 1/14/00 700,000 698,256
TOTAL COMMERCIAL PAPER (COST $4,192,032) 4,192,032
TOTAL INVESTMENTS (COST $64,270,407) - 100.5% 76,030,067
OTHER ASSETS AND LIABILITIES, NET - (0.5)% (386,754)
NET ASSETS - 100% $75,643,313
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
EMERGING GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 97.1% SHARES VALUE
AIR FREIGHT - 0.0%
ATLAS AIR, INC. * 100 $2,744
BANKS - REGIONAL - 0.0%
FIRST TENNESSEE NATIONAL CORP. 100 2,850
BIOTECHNOLOGY - 2.9%
CHIRON CORP. * 8,300 351,713
ENZON, INC. * 300 13,012
HUMAN GENOME SCIENCES, INC. * 900 137,363
IDEC PHARMACEUTICALS CORP. * 1,200 117,900
IMCLONE SYSTEMS * 200 7,925
IMMUNEX CORP. * 12,200 1,335,900
MEDIMMUNE, INC. * 10,600 1,758,275
TRANSKARYOTIC THERAPIES, INC. * 100 3,850
3,725,938
BROADCAST-TV, RADIO AND CABLE - 5.6%
AT&T - LIBERTY MEDIA GROUP * 27,000 1,532,250
ACME COMMUNICATIONS, INC. * 100 3,325
BOUYGUES SA (EUR) 2,400 1,525,530
CBS CORP. * 16,600 1,061,363
CLEAR CHANNEL COMMUNICATIONS * 15,300 1,365,525
COMCAST CORP. 9,900 500,569
COX COMMUNICATIONS, INC. * 600 30,900
COX RADIO, INC. * 3,000 299,250
ECHOSTAR COMMUNICATIONS CORP. * 4,200 409,500
EMMIS COMMUNICATIONS CORP. * 1,100 137,105
HEARST-ARGYLE TELEVISION, INC. * 100 2,663
INFINITY BROADCASTING CORP. * 1,650 59,709
RADIO ONE, INC. * 500 46,000
RADIO UNICA * 200 5,775
SERVICOS DE TELECOMUNICACOES E MULTIMEDIA SGPS SA (EUR)
310 17,634
SPANISH BROADCASTING SYSTEM * 1,900 76,475
TV GUIDE, INC. * 200 8,600
USA NETWORKS, INC. * 200 11,050
UNIVISION COMMUNICATIONS, INC. * 1,100 112,406
WESTWOOD ONE, INC. * 100 7,600
7,213,229
CHEMICALS-SPECIALTY - 0.0%
ATMI, INC. * 100 3,306
COMMUNICATIONS EQUIPMENT - 17.2%
AIRNET COMMUNICATIONS CORP * 190 6,910
AMERICAN TOWER CORP. * 200 6,113
CIENA CORP. * 9,600 552,000
CLASSIC COMMUNICATIONS, INC. * 200 7,312
COMMSCOPE, INC. * 700 28,219
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COMMUNICATIONS EQUIPMENT - CONT'D
DIGITAL IMPACT, INC * 110 $5,514
GRIC COMMUNICATIONS * 50 1,269
L-3 COMMUNICATIONS HOLDINGS, INC. * 100 4,162
LUCENT TECHNOLOGIES, INC. 700 52,369
METRICOM, INC. * 2,000 157,250
METROMEDIA FIBER NETWORK, INC. * 7,010 336,042
MOTOROLA, INC. 12,200 1,796,450
NEXT LEVEL COMMUNICATIONS, INC. * 580 43,428
NOKIA OYJ (ADR) 11,800 2,242,000
NORTEL NETWORKS CORP. 29,900 3,019,900
PAIRGAIN TECHNOLOGIES, INC. * 2,200 31,213
QUALCOMM, INC. * 71,600 12,610,550
SYCAMORE NETWORKS, INC. * 100 30,800
TEKELEC * 700 15,750
TELEFONAKTIEBOLAGET LM ERICSSON (ADR) 17,100 1,123,256
22,070,507
COMPUTERS - HARDWARE - 1.7%
ALTEON WEBSYSTEMS, INC. * 100 8,775
COMPUTER NETWORK TECHNOLOGY CORP. * 500 11,469
ELECTRONICS FOR IMAGING * 100 5,812
SUN MICROSYSTEMS, INC. * 28,700 2,222,456
2,248,512
COMPUTERS - NETWORKING - 5.4%
CISCO SYSTEMS, INC. * 64,900 6,952,413
COMPUTERS - PERIPHERALS - 0.4%
CACHEFLOW, INC. * 140 18,296
EMC CORP-MASS * 1,200 131,100
ESPEED, INC. * 200 7,113
IMANAGE, INC. * 20 643
IMMERSION * 60 2,303
MAXTOR CORP. * 200 1,450
METASOLV SOFTWARE, INC. * 90 7,357
ONDISPLAY, INC. * 30 2,726
QUINTUS CORP. * 130 5,964
SEAGATE TECHNOLOGY, INC. * 200 9,312
SONICWALL, INC. * 70 2,818
SOFTBANK CORPORATION (JPY) 400 382,891
571,973
COMPUTERS - SOFTWARE & SERVICES - 26.6%
ADOBE SYSTEMS, INC. 2,600 174,850
AMDOCS LTD. * 385 13,282
AFFILIATED COMPUTER SVCS, INC. * 100 4,600
AGILE SOFTWARE CORP. * 500 108,617
AKAMAI TECHNOLOGIES, INC. * 200 65,525
AMERICA ONLINE, INC. * 3,800 286,663
ASPEN TECHNOLOGY, INC. * 100 2,644
AWARE, INC. * 100 3,638
BMC SOFTWARE, INC. * 45,700 3,653,144
BEA SYSTEMS, INC. * 400 27,975
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COMPUTERS - SOFTWARE & SERVICES - CONT'D
BREAKAWAY SOLUTIONS, INC * 100 $7,300
BRIO TECHNOLOGY, INC. * 500 21,000
BUSINESS OBJECTS SA (ADR)* 900 120,263
CADENCE DESIGN SYSTEMS, INC. * 17,200 412,800
CLARIFY, INC. * 100 12,600
COBALT NETWORKS, INC. * 70 7,586
COMPUTER ASSOCIATES INTERNATIONAL, INC. 29,500 2,063,156
COMPUWARE CORP. * 39,500 1,471,375
DATA RETURN CORP. * 200 10,700
DELTATHREE.COM, INC. * 80 2,060
DIGITAL INSIGHT CORP. * 100 3,637
EXPEDIA, INC. * 120 4,200
FOGDOG, INC * 80 760
FOUNDRY NETWORKS, INC. * 100 30,169
HARBINGER CORP. * 300 9,544
IBASIS, INC * 40 1,150
IMRGLOBAL CORPORATION * 800 10,050
INKTOMI CORP. * 2,600 230,750
INTERNAP NETWORK SERVICES * 300 51,900
INTERNET COMMERCE CORP. * 800 24,900
I2 TECHNOLOGIES, INC. * 7,200 1,404,000
J.D. EDWARDS & CO. * 1,800 53,775
KEYNOTE SYSTEMS, INC. * 100 7,375
KOREA THRUNET COMPANY LTD. * 640 43,440
LIFEMINDERS.COM,. INC * 70 4,043
LYCOS, INC. * 1,200 95,475
MACROMEDIA, INC. * 2,600 190,125
MANUGISTICS GROUP, INC. * 1,100 35,544
MCAFEE.COM, INC * 210 9,450
MEDIAPLEX, INC. * 90 5,647
MEDICALOGIC, INC * 130 2,730
MERCURY INTERACTIVE CORP. * 600 64,762
MICROSOFT CORP. * 50,300 5,872,525
MICROSTRATEGY, INC. * 400 84,000
NETWORK ASSOCIATES, INC. * 700 18,681
NETIQ CORP. * 100 5,206
OPEN MARKET, INC. * 4,600 207,575
ORACLE CORP. * 103,300 11,576,056
PEGASUS SYSTEMS, INC. * 100 6,031
PEOPLESOFT, INC. * 495 10,550
REALNETWORKS, INC. * 700 84,219
SAP AG (ADR) 600 31,237
SIEBEL SYSTEMS, INC. * 4,900 411,600
SYMANTEC CORP. * 2,900 170,013
SYNOPSYS, INC. * 100 6,675
TANNING TECHNOLOGY CORP. * 200 11,788
TECNOMATIX TECHNOLOGIES LTD. * 500 14,375
UNISYS CORP. * 300 9,580
USWEB CORP. * 100 4,444
VA LINUX, INC * 100 20,662
VERITAS SOFTWARE CORP. * 12,100 1,731,813
VERISIGN, INC. * 9,500 1,813,906
32,844,140
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
DISTRIBUTORS-FOOD & HEALTH - 0.0%
ALLSCRIPTS PHARMACEUTICALS, INC * 200 $8,800
ANDRX CORP. * 100 4,231
13,031
ELECTRICAL EQUIPMENT - 0.8%
ELECTRO SCIENTIFIC INDS, INC. * 100 7,300
FLEXTRONICS INTERNATIONAL LTD. * 200 9,200
SANMINA CORP. * 100 9,987
SOLECTRON CORP. * 500 47,563
SONY CORP. (ADR) 3,300 939,675
1,013,725
ELECTRONICS-COMPONENT DISTRIBUTER - 0.8%
KYOCERA CORP. (JPY) 4,200 1,089,361
SAGE, INC. * 60 1,163
VIRATA CORP. * 70 2,091
1,092,615
ELECTRONICS-INSTRUMENT - 0.3%
AGILENT TECHNOLOGIES, INC * 1,190 92,001
CALIPER TECHNOLOGIES CORP, NMS * 70 4,673
CREDENCE SYSTEMS CORP. * 100 8,650
LTX CORP. * 400 8,950
OPTICAL COATING LABORATORY 100 29,600
PE CORP-PE BIOSYSTEMS GROUP 1,700 204,531
THOMSON MULTIMEDIA (EUR) 425 22,905
371,310
ELECTRONICS-SEMICONDUCTORS - 8.9%
ALTERA CORP. * 31,900 1,581,044
ANALOG DEVICES * 6,600 613,800
APPLIED MICRO CIRCUITS CORP. * 200 25,450
ARM HOLDINGS PLC (ADR)* 9,500 1,819,250
ATMEL CORP. * 2,400 70,950
BURR-BROWN CORP. * 150 5,419
CONEXANT SYSTEMS, INC. * 16,700 1,108,462
E-TEK DYNAMICS, INC. * 700 94,238
JDS UNIPHASE CORP. * 27,200 4,387,700
MAXIM INTEGRATED PRODUCTS * 200 9,437
MICREL, INC. * 100 5,694
MICROCHIP TECHNOLOGY, INC. * 100 6,844
NATIONAL SEMICONDUCTOR CORP. * 2,200 94,187
QLOGIC CORP. * 100 15,988
SDL, INC. * 1,700 370,600
SIPEX CORP. * 800 19,650
TEXAS INSTRUMENTS, INC. 3,700 358,437
XILINX, INC. * 19,400 882,094
11,469,244
ENGINEERING & CONSTRUCTION - 0.0%
QUANTA SERVICES, INC. * 200 5,650
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
ENTERTAINMENT - 0.1%
TIME WARNER, INC. 2,100 $152,119
EQUIPMENT-SEMICONDUCTORS - 1.7%
APPLIED MATERIALS, INC. * 9,700 1,228,869
ASM LITHOGRAPHY HOLDING NV * 2,000 227,500
LAM RESEARCH CORP. * 2,400 267,750
NOVELLUS SYSTEMS, INC. * 1,100 134,783
PHOTRONICS, INC. * 100 2,863
TERADYNE, INC. * 5,900 389,400
2,251,165
FINANCIAL - DIVERSIFIED - 0.7%
AMERICAN EXPRESS COMPANY 3,100 515,375
MORGAN STANLEY DEAN WITTER & COMPANY 2,800 399,700
915,075
GAMING,LOTTERY & PARIMUTUAL - 0.0%
HARRAH'S ENTERTAINMENT, INC. * 200 5,288
TICKETS.COM, INC. * 225 3,220
8,508
HEALTHCARE-DIVERSIFIED - 1.4%
EBENX, INC * 50 2,262
GENENTECH, INC * 7,600 1,022,200
GUIDANT CORP. * 800 37,600
JOHNSON & JOHNSON 400 37,250
KING PHARMACEUTICALS, INC. * 450 25,228
ORTHODONTIC CENTERS OF AMERICA * 200 2,388
SEPRACOR, INC. * 4,600 456,262
TEVA PHARMACEUTICAL (ADR) 2,700 193,556
UNITED HEALTHCARE CORP. 2,100 111,563
1,888,309
INVESTMENT BANKING AND BROKERAGE - 0.2%
LEHMAN BROTHERS HOLDINGS, INC. 3,000 254,062
WADDELL & REED FINANCIAL, INC. 100 2,713
256,775
LEISURE TIME - PRODUCTS - 0.0%
CALLAWAY GOLF COMPANY 300 5,306
INTERNATIONAL SPEEDWAY CORP. 200 10,075
15,381
LODGING-HOTELS - 0.0%
FOUR SEASONS HOTELS, INC. 100 5,325
HILTON HOTELS CORP. 225 2,166
STARWOOD HOTELS & RESORTS WORLDWIDE, INC. 100 2,350
9,841
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
MACHINERY-DIVERSIFIED - 1.1%
SI HANDLING SYSTEMS, INC. 1,400 $13,344
MANNESMANN AG (EUR) 6,000 1,447,561
1,460,905
MANUFACTURING-DIVERSIFIED - 2.9%
BIOTECH HOLDERS TRUST * 5,200 746,200
CORNING, INC. 2,800 361,025
FUTURELINK CORP. * 900 23,400
HUTCHISON WHAMPOA (HKD) 10,000 145,366
JABIL CIRCUIT, INC. * 100 7,300
PARTNER COMMUNICATIONS (ADR) * 2,100 54,337
TYCO INTERNATIONAL LTD. 63,200 2,456,900
3,794,528
METALS MINING - 0.2%
LEVEL 3 COMMUNICATIONS, INC. * 3,000 245,625
OFFICE EQUIPMENT & SUPPLIES - 0.0%
UNITED STATIONERS, INC. * 200 5,713
OIL & GAS-DRILL & EQUIPMENT'S - 0.1%
ATWOOD OCEANICS * 100 3,863
NOBLE DRILLING CORP. * 3,800 124,450
128,313
PAPER & FOREST PRODUCTS - 0.0%
SMURFIT-STONE CONTAINER CORP. * 200 4,900
PERSONAL CARE - 0.0%
CARSON, INC. * 4,000 13,000
PHOTOGRAPHY & IMAGING - 0.0%
POLAROID CORP. 300 5,644
POWER PRODUCERS - INDEPENDENT - 0.6%
CALPINE CORP. * 12,600 806,400
RESTAURANTS - 0.0%
BRINKER INTERNATIONAL, INC. * 100 2,400
CEC ENTERTAINMENT, INC. * 100 2,838
PAPA JOHN'S INTERNATIONAL, INC. * 100 2,606
7,844
RETAIL-BUILDING SUPPLIES - 1.8%
AUTONATION, INC. * 400 3,700
COST PLUS, INC. * 200 7,125
FAST RETAILING CO. (JPY) 500 203,582
HOME DEPOT, INC. 11,550 791,896
INSIGHT ENTERPRISES, INC. * 100 4,063
OFFICE DEPOT, INC. * 8,200 89,687
WAL-MART STORES, INC. 17,700 1,223,513
WEBVAN GROUP, INC * 140 2,310
2,325,876
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
SERVICES-ADVERTISING & MARKETING - 0.5%
CMGI, INC. * 600 $166,125
LAMAR ADVERTISING CO. * 100 6,056
OMNICOM GROUP 4,500 450,000
WOMEN.COM NETWORKS, INC. * 300 4,275
626,456
SERVICES-COMMERCIAL & CONSUMER - 0.7%
CENDANT CORP. * 19,900 528,594
FREEMARKETS, INC. * 40 13,652
LEARNING TREE INTERNATIONAL * 5,700 159,600
MIPS TECHNOLOGIES, INC. * 100 5,200
PROFESSIONAL DETAILING, INC. * 100 2,994
TELETECH HOLDINGS, INC. * 7,600 256,144
966,184
SERVICES-COMPUTER SYSTEMS - 0.2%
CSG SYSTEMS INTERNATIONAL * 3,100 123,613
COMPUTER SCIENCES CORP. * 1,900 179,787
F SECURE OYJ (EUR) 75 2,191
KEANE, INC. * 200 6,350
311,941
SERVICES-DATA PROCESS - 0.1%
AGENCY.COM, INC. * 100 5,100
CHECKFREE HOLDINGS CORP. * 100 10,450
CONCORD EFS, INC. * 200 5,150
DIGIMARC CORP * 500 25,000
FIRST DATA CORP. 1,400 69,037
HARRIS INTERACTIVE, INC. * 80 1,045
THUS (GBP) 5,340 33,726
WIRELESS FACILITIES, INC. * 70 3,055
152,563
TELECOMMUNICATION-CELL & WIRELESS - 9.4%
AIRGATE PCS, INC * 200 10,550
CENTENNIAL CELLULAR CORP. * 100 8,287
CHINA TELECOM (HKD) 93,600 583,984
COMMNET CELLULAR, INC. * 200 6,425
MICROCELL TELECOMMUNICATIONS * 700 23,013
NEXTEL COMMUNICATIONS, INC. * 14,900 1,536,562
NTT MOBILE COMMUNICATIONS (JPY) 32 1,230,890
OMNIPOINT CORP. * 13,400 1,616,375
POWERWAVE TECHNOLOGIES, INC. * 100 5,838
POWERTEL, INC. * 2,300 230,862
PRICE COMMUNICATIONS CORP. * 200 5,563
SONERA OYJ (EUR) 29,300 2,008,519
SPRINT CORP. * 17,700 1,814,250
US CELLULAR CORP. * 100 10,094
VOICESTREAM WIRELESS CORP. * 15,300 2,177,381
WESTERN WIRELESS * 12,700 847,725
12,116,318
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
TELECOMMUNICATION-LONG DISTANCE - 3.8%
ADELPHIA BUSINESS SOLUTIONS, INC. * 300 $14,400
BCE INC. 2,100 189,394
DDI CORP. (JPY) 55 753,646
GLOBAL CROSSING LTD. * 5,500 275,000
GLOBAL TELESYSTEMS GROUP, INC. * 3,000 103,875
ITC DELTACOM, INC. * 200 5,525
MCI WORLDCOM, INC. * 48,000 2,547,000
PRIMUS TELECOMMUNICATIONS GP * 7,600 290,700
QWEST COMMUNICATIONS INTERNATIONAL * 11,700 503,100
TALK.COM, INC. * 2,500 44,375
TELECORP PCS, INC. * 190 7,220
TELEFONOS DE MEXICO (ADR) 1,500 168,750
TIME WARNER TELECOM, INC. * 200 9,987
TRITEL, INC * 140 4,436
4,917,408
TELEPHONE - 1.0%
COLT TELECOM GROUP (GBP) 6,900 356,212
HIKARI TSUSHIN, INC. (JPY) 200 401,292
NTT CORP. (JPY) 19 325,437
TELEPHONE & DATA SYSTEMS INC. 1,600 201,600
TELEFONICA PUBLICIDAD INFORMACIA (EUR) 500 21,658
1,306,199
TOTAL EQUITY SECURITIES (COST $84,219,818) 124,294,177
U. S. GOVERNMENT AGENCIES PRINCIPAL
AND INSTRUMENTALITIES - 3.7% AMOUNT
FEDERAL HOME LOAN MORTGAGE DISCOUNT NOTES, 1.50%, 1/3/00.
$4,800,000 4,799,600
TOTAL U. S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES
(COST $4,799,400) 4,799,600
TOTAL INVESTMENTS (COST $89,019,218) - 100.8% 129,093,777
OTHER ASSETS AND LIABILITIES, NET - (0.8%) (1,053,500)
NET ASSETS - 100% $128,040,277
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
RESEARCH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 97.0% SHARES VALUE
AEROSPACE/DEFENSE - 0.8%
GENERAL DYNAMICS CORP. 3,800 $200,450
AUTO PARTS & EQUIPMENT - 0.3%
FEDERAL-MOGUL CORP. 3,800 76,475
BANKS - MAJOR REGIONAL - 2.6%
BANK OF AMERICA CORP. 2,600 130,488
BANK OF IRELAND (EUR) * 20,300 161,549
BANK ONE CORP. 3,100 99,393
CHASE MANHATTAN CORP. 1,600 124,300
U.S. BANCORP INVESTMENTS, INC. 4,400 104,775
WELLS FARGO CO. 1,600 64,700
685,205
BROADCAST - 2.4%
CBS CORP. * 2,600 166,236
COMCAST CORP. 2,800 141,575
ECHOSTAR COMMUNICATIONS CORP. * 900 87,750
INFINITY BROADCASTING CORP. * 6,025 218,030
613,591
CHEMICALS - SPECIALTY - 0.2%
CAMBREX CORP. 1,900 65,431
COMMUNICATIONS EQUIPMENT - 3.6%
GENERAL INSTRUMENT CORP. * 300 25,500
MOTOROLA, INC. 3,900 574,275
NORTEL NETWORKS CORP. 3,300 333,300
933,075
COMPUTERS - HARDWARE - 5.6%
ANCOR COMMUNICATIONS, INC. * 175 11,878
EMC CORP. * 4,000 437,000
HEWLETT-PACKARD CO. 1,100 125,331
INTERNATIONAL BUSINESS MACHINES CORP. 400 43,200
SEAGATE TECHNOLOGY, INC. * 3,000 139,688
SUN MICROSYSTEMS, INC. * 9,000 696,937
1,454,034
COMPUTERS - SOFTWARE & SERVICES - 18.2%
AMERICA ONLINE, INC. * 2,100 158,419
ARIBA, INC. * 400 70,950
BEA SYSTEMS, INC. * 400 27,975
BMC SOFTWARE, INC. * 4,000 319,750
CISCO SYSTEMS, INC. * 7,600 814,150
CITRIX SYSTEMS, INC. * 900 110,700
COMPUTER ASSOCIATES INTERNATIONAL, INC. 2,300 160,856
COMPUWARE CORP. * 5,300 197,425
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COMPUTERS - SOFTWARE & SERVICES - CONT'D
LIBERATE TECHNOLOGIES * 500 $128,500
MACROMEDIA, INC. * 700 51,187
MICROSOFT CORP. * 10,400 1,214,201
ORACLE CORP. * 6,000 672,375
PHONE.COM, INC. * 200 23,188
SYNOPSYS, INC. * 300 20,025
VERISIGN, INC. * 1,300 248,219
VERITAS SOFTWARE CORP. * 3,600 515,250
4,733,170
CONSUMABLES - 2.8%
ANHEUSER-BUSCH COS., INC. 4,100 290,588
MCDONALD'S CORP. 5,400 217,688
NABISCO HOLDINGS CORP. 3,400 107,525
QUAKER OATS CO. 1,000 65,625
RALSTON PURINA GROUP 1,500 41,812
723,238
CONTAINERS - 0.4%
OWENS-ILLINOIS, INC. * 4,300 107,769
ELECTRIC COMPANIES - 0.6%
CMS ENERGY CORP. 2,500 77,969
TEXAS UTILITIES CO. 2,400 85,350
163,319
ELECTRICAL EQUIPMENT - 2.8%
DII GROUP, INC. * 1,000 70,969
GENERAL ELECTRIC CO. 1,500 232,125
HITACHI, LTD. (JPY) 11,400 182,989
OAK INDUSTRIES, INC. * 1,400 148,575
SCI SYSTEMS, INC. * 800 65,750
SPX CORP. * 300 24,244
724,652
ELECTRONICS - 6.5%
ANALOG DEVICES, INC. * 8,200 762,600
FLEXTRONICS INTERNATIONAL LTD. * 2,200 101,200
INTEL CORP. 1,400 115,238
LSI LOGIC CORP. * 8,600 580,500
MICRON TECHNOLOGY, INC. * 1,500 116,625
1,676,163
ENTERTAINMENT - 1.4%
TIME WARNER, INC. 5,000 362,188
FINANCIAL - DIVERSIFIED - 3.7%
ASSOCIATES FIRST CAPITAL CORP. 4,100 112,494
CAPITAL ONE FINANCIAL CORP. 2,500 120,469
CITIGROUP, INC. 5,000 277,811
FEDERAL HOME LOAN MORTGAGE CORP. 1,900 89,419
MORGAN STANLEY DEAN WITTER & CO. 700 99,925
ORIX CORP. (JPY) * 500 $112,655
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
FINANCIAL - DIVERSIFIED - CONT'D
PROVIDIAN FINANCIAL CORP. 1,700 $154,806
967,579
HEALTHCARE - 7.2%
AMERICAN HOME PRODUCTS CORP. 9,500 374,656
ASTRAZENECA GROUP, PLC (GBP) 4,100 170,337
BOSTON SCIENTIFIC CORP. * 3,900 85,313
BRISTOL-MYERS SQUIBB CO. 4,000 256,750
GUIDANT CORP. * 4,400 206,800
MEDTRONIC, INC. 6,400 233,200
PHARMACIA & UPJOHN, INC. 6,200 279,000
UNITED HEALTHCARE CORP. 2,800 148,750
VISX, INC. * 1,900 98,325
1,853,131
HOUSEHOLD PRODUCTS - 3.1%
CLOROX CO. 3,800 191,425
COLGATE-PALMOLIVE CO. 4,100 266,500
DIAL CORP. 5,700 138,581
PROCTER & GAMBLE CO. 2,000 219,125
815,631
INSURANCE - 4.1%
AMERICAN INTERNATIONAL GROUP, INC. 2,600 281,125
AON CORP. 1,000 40,000
CIGNA CORP. 2,900 233,631
HARTFORD FINANCIAL SERVICES GROUP, INC. 2,700 127,913
LINCOLN NATIONAL CORP. 4,100 164,000
MARSH & MCLENNAN COS., INC. 1,000 95,688
RELIASTAR FINANCIAL CORP. 3,000 117,562
1,059,919
INVESTMENT BANKING - 0.9%
AXA FINANCIAL, INC. 5,700 193,088
MERRILL LYNCH & CO. 600 50,100
243,188
LODGING - 0.5%
CARNIVAL CORP. 2,700 129,094
MACHINERY - DIVERSIFIED - 1.1%
DEERE & CO. 1,200 52,050
INGERSOLL-RAND CO. 600 33,038
MANNESMANN AG (EUR) * 800 193,008
278,096
MANUFACTURING - DIVERSIFIED - 4.5%
CORNING, INC. 1,500 193,406
DANAHER CORP. 4,200 202,650
HONEYWELL INTERNATIONAL, INC. 262 15,114
TYCO INTERNATIONAL LTD. 13,000 505,375
UNITED TECHNOLOGIES CORP. 3,700 240,500
1,157,045
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
MEDICAL - DRUGS - 0.2%
SANOFI-SYNTHELABO (EUR) * 1,000 $41,644
NATURAL GAS - 0.3%
COLUMBIA ENERGY GROUP 1,300 82,225
OFFICE EQUIPMENT & SUPPLIES - 0.1%
TRINTECH GROUP, PLC (ADR) * 700 34,650
OIL - 4.6%
ATLANTIC RICHFIELD CO. 800 69,200
BP AMOCO, PLC (ADR) 3,300 195,731
CONOCO, INC. 12,400 308,450
EXXON MOBIL CORP. 4,764 383,800
TOTAL FINA SA (ADR) 400 27,700
TOTAL FINA (EUR) * 1,500 200,211
1,185,092
OIL & GAS - 1.4%
COOPER CAMERON CORP. * 1,400 68,513
DEVON ENERGY CORP. 1,000 32,875
EOG RESOURCES, INC. 3,800 66,736
NOBLE DRILLING CORP. * 2,600 85,150
TRANSOCEAN SEDCO FOREX, INC. 3,300 111,169
364,443
PAPER & FOREST PRODUCTS - 0.6%
ABITIBI-CONSOLIDATED, INC. 2,000 23,750
BOWATER, INC. 2,400 130,350
154,100
PHOTOGRAPHY/IMAGING - 0.2%
POLAROID CORP. 2,600 48,913
POWER - PRODUCERS - 0.3%
AES CORP. * 1,200 89,700
PUBLISHING - 0.9%
TRIBUNE CO. 4,100 225,756
RETAIL - 6.1%
COSTCO WHOLESALE CORP. * 1,600 146,000
CVS CORP. 6,400 255,600
GAP, INC. 1,700 78,200
KROGER CO. * 6,100 115,137
OFFICE DEPOT, INC. * 7,900 86,406
RITE AID CORP. 600 6,713
SAFEWAY, INC. * 9,200 327,175
TANDY CORP. 1,100 54,106
TJX COMPANIES, INC. 4,000 81,750
WAL-MART STORES, INC. 6,300 435,487
1,586,574
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
SERVICE - 0.1%
CENDANT CORP. * 1,000 $26,563
FREEMARKETS, INC. * 10 3,413
29,976
SERVICES - DATA PROCESS - 0.5%
DIGIMARC CORP. * 70 3,500
FIRST DATA CORP. 2,300 113,419
116,919
TELECOMMUNICATIONS - 4.9%
MCI WORLDCOM, INC. * 7,650 405,928
SPRINT CORP. (FON GROUP) 3,500 235,594
SPRINT CORP. (PCS GROUP) * 6,200 635,500
1,277,022
TELECOMMUNICATIONS - EQUIPMENT - 0.2%
ERICSSON LM (SEK) * 900 57,856
TELECOMMUNICATIONS - LONG DISTANCE - 0.9%
NIPPON TELEGRAPH & TELEPHONE CORP. (JPY) 13 222,668
TELEPHONE - 2.4%
BELL ATLANTIC CORP. 6,300 387,844
GTE CORP. 1,000 70,562
SBC COMMUNICATIONS, INC. 3,300 160,875
619,281
TOTAL EQUITY SECURITIES (COST $22,074,728) 25,159,262
U.S. GOVERNMENT AGENCIES PRINCIPAL
AND INSTRUMENTALITIES - 3.2% AMOUNT
FEDERAL HOME LOAN MORTGAGE CORP., 1.50%, 1/3/00
$835,000 834,930
TOTAL U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES
(COST $834,930) 834,930
TOTAL INVESTMENTS (COST $22,909,658) - 100.2% 25,994,192
OTHER ASSETS AND LIABILITIES, NET - (0.2%) (65,314)
NET ASSETS - 100% $25,928,878
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
GROWTH WITH INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 98.8% SHARES VALUE
AEROSPACE / DEFENSE - 0.8%
BOEING CO. 1,200 $49,875
GENERAL DYNAMICS CORP. 4,000 211,000
260,875
AUTO PARTS & EQUIPMENT - 0.4%
FEDERAL-MOGUL CORP. 1,600 32,200
TRW, INC. 2,200 114,263
146,463
AUTOMOBILES - 0.2%
FORD MOTOR COMPANY 1,600 85,500
BANKS - MAJOR REGIONAL - 5.4%
BANK OF IRELAND (EUR) * 13,800 109,821
BANK ONE CORP. 4,300 137,869
COMERICA, INC. 1,300 60,694
NATIONAL CITY CORP. 2,400 56,850
NORTHERN TRUST CORP. 6,600 349,800
STATE STREET CORP. 5,400 394,537
U.S. BANCORP 11,000 261,938
WELLS FARGO COMPANY 12,300 497,381
1,868,890
BANKS - MONEY CENTER - 0.7%
BANK OF AMERICA CORP. 5,100 255,956
BEVERAGES - ALCOHOLIC - 0.9%
ANHEUSER-BUSCH COMPANIES, INC. 4,300 304,762
BEVERAGES - NON-ALCOHOLIC - 0.2%
COCA-COLA CO. 500 29,125
PEPSICO, INC. 1,100 38,775
67,900
CHEMICALS - 0.5%
DU PONT (E.I.) DE NEMOURS 500 32,938
AKZO NOBEL NV (EUR) 2,600 130,432
163,370
COMMUNICATIONS EQUIPMENT - 4.4%
GENERAL INSTRUMENT CORP. * 1,400 119,000
LUCENT TECHNOLOGIES, INC. 3,400 254,363
MOTOROLA, INC. 3,800 559,550
NOKIA OYJ (ADR) 900 171,000
NORTEL NETWORKS CORP. 4,100 414,100
1,518,013
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COMPUTERS - HARDWARE - 3.5%
HEWLETT-PACKARD CO. 3,700 $421,569
INTERNATIONAL BUSINESS MACHINES CORP. 3,700 399,600
SUN MICROSYSTEMS, INC. * 5,000 387,188
1,208,357
COMPUTERS - NETWORKING - 1.3%
CISCO SYSTEMS, INC. * 4,100 439,212
COMPUTERS - SOFTWARE & SERVICES - 7.3%
BMC SOFTWARE, INC. * 1,500 119,906
COMPUTER ASSOCIATES INTERNATIONAL, INC. 6,300 440,606
MICROSOFT CORP. * 13,100 1,529,425
ORACLE CORP. * 3,900 437,044
2,526,981
CONSUMER FINANCE - 0.3%
PROVIDIAN FINANCIAL CORP. 1,100 100,169
ELECTRIC COMPANIES - 3.8%
CMS ENERGY CORP. 4,000 124,750
DUKE ENERGY CORP. 3,300 165,413
FIRSTENERGY CORP. 3,400 77,138
GPU, INC. 2,600 77,837
NISOURCE, INC. 4,200 75,075
PECO ENERGY CO. 7,600 264,100
PINNACLE WEST CAPITAL CORP. 3,800 116,137
TEXAS UTILITIES CO.:
COMMON STOCK 7,900 280,944
PREFERRED STOCK 500 19,125
UNICOM CORP. 3,400 113,900
1,314,419
ELECTRICAL EQUIPMENT - 4.8%
EMERSON ELECTRIC CO. 4,000 229,500
GENERAL ELECTRIC CO. 8,400 1,299,900
HITACHI, LTD. (JPY) 8,200 131,624
1,661,024
ELECTRONICS - COMPONENT DISTRIBUTION - 0.2%
GRAINGER (W.W.), INC. 1,200 57,375
ELECTRONICS - INSTRUMENTS - 0.0%
AGILENT TECHNOLOGIES, INC * 200 15,463
ELECTRONICS - SEMICONDUCTORS - 3.1%
INTEL CORP. 9,900 814,894
NATIONAL SEMICONDUCTOR CORP. * 3,300 141,281
STMICROELECTRONICS N.V. 700 106,006
1,062,181
ENTERTAINMENT - 1.4%
TIME WARNER, INC. 6,800 492,575
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
FINANCIAL - DIVERSIFIED - 2.2%
AMERICAN EXPRESS COMPANY 1,200 $199,500
ASSOCIATES FIRST CAPITAL CORP. 1,800 49,387
CITIGROUP, INC. 4,600 255,588
FEDERAL HOME LOAN MORTGAGE CORP. 5,900 277,669
782,144
FOODS - 2.3%
BESTFOODS 2,700 141,919
NABISCO HOLDINGS CORP. 2,800 88,550
NESTLE SA (CHF) 94 172,202
QUAKER OATS CO. 4,000 262,500
RALSTON PURINA GROUP 4,700 131,013
796,184
HEALTHCARE - DIVERSIFIED - 3.4%
AMERICAN HOME PRODUCTS CORP. 7,000 276,062
BRISTOL-MYERS SQUIBB CO. 7,700 494,244
JOHNSON & JOHNSON 2,500 232,812
WARNER-LAMBERT CO. 2,300 188,456
1,191,574
HEALTHCARE - DRUG-MAJOR PHARMACEUTICAL - 2.7%
ASTRAZENECA GROUP, PLC (GBP) 3,100 128,791
PHARMACIA & UPJOHN, INC. 6,700 301,500
PFIZER, INC. 9,600 311,400
SCHERING-PLOUGH CORP. 4,400 185,625
927,316
HEALTHCARE - MANAGED CARE - 0.5%
UNITED HEALTHCARE CORP. 3,400 180,625
HEALTHCARE - MEDICAL PRODUCTS & SUPPLIES - 2.4%
BAUSCH & LOMB, INC. 1,900 130,031
GUIDANT CORP. * 3,600 169,200
MEDTRONIC, INC. 14,800 539,275
838,506
HOUSEHOLD PRODUCTS - NON-DURABLE - 3.4%
CLOROX CO. 3,300 166,237
COLGATE-PALMOLIVE CO. 5,700 370,500
PROCTER & GAMBLE CO. 6,000 657,375
1,194,112
INSURANCE - LIFE & HEALTH - 1.4%
AXA (EUR) * 1,100 153,359
LINCOLN NATIONAL CORP. 6,000 240,000
TORCHMARK CORP. 3,700 107,531
500,890
INSURANCE - MULTI-LINE - 2.5%
AMERICAN INTERNATIONAL GROUP 3,400 367,625
HARTFORD FINANCIAL SERVICES 10,800 511,650
879,275
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
INSURANCE - PROPERTY & CASUALTY - 0.4%
ALLSTATE CORP. 2,000 $48,000
MBIA, INC. 1,900 100,344
148,344
INSURANCE BROKERS - 0.5%
MARSH & MCLENNAN COS. 1,800 172,237
INVESTMENT BANKING / BROKERAGE - 0.4%
AXA FINANCIAL, INC. 3,600 121,950
LODGING - HOTELS - 0.2%
CARNIVAL CORP. 1,400 66,937
MACHINERY - DIVERSIFIED - 1.7%
DEERE & CO. 3,000 130,125
MANNESMANN AG (EUR) 1,900 458,394
588,519
MANUFACTURING - DIVERSIFIED - 4.7%
CORNING INC. 2,900 373,919
HONEYWELL INTERNATIONAL, INC. 3,900 224,981
TYCO INTERNATIONAL, LTD. 6,500 252,687
UNITED TECHNOLOGIES CORP. 12,000 780,000
1,631,587
NATURAL GAS - 0.4%
COASTAL CORP. 4,300 152,381
OIL & GAS - EXPLORATION & PRODUCTION - 0.3%
UNOCAL CORP. 3,600 120,825
OIL - DOMESTIC INTEGRATED - 0.8%
CONOCO, INC. 9,300 231,338
USX-MARATHON GROUP, INC. 2,000 49,375
280,713
OIL - INTERNATIONAL INTEGRATED - 5.1%
BP AMOCO PLC (ADR) 11,500 682,094
CHEVRON CORP. 1,700 147,262
EXXON MOBIL CORP. 11,812 951,604
1,780,960
PERSONAL CARE - 0.4%
GILLETTE COMPANY 3,300 135,919
PUBLISHING - NEWSPAPERS - 3.3%
GANNETT, CO., INC. 4,000 326,250
NEW YORK TIMES CO. 6,600 324,225
TRIBUNE CO. 8,700 479,044
1,129,519
RAILROADS - 0.4%
CANADIAN NATIONAL RAILWAY CO. 5,519 145,219
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
RESTAURANTS - 0.6%
MCDONALD'S CORP. 4,800 $193,500
RETAIL - BUILDING SUPPLIES - 0.8%
HOME DEPOT, INC. 4,050 277,678
RETAIL - DRUG STORES - 0.9%
CVS CORP. 8,100 323,494
RETAIL - FOOD CHAINS - 2.5%
KROGER CO. * 19,900 375,613
SAFEWAY, INC. * 13,400 476,537
852,150
RETAIL - GENERAL MERCHANDISE - 3.0%
DAYTON-HUDSON CORP. 3,900 286,406
WAL-MART STORES, INC. 10,700 739,638
1,026,044
RETAIL - SPECIALTY APPAREL - 0.7%
FAST RETAILING CO., LTD. (JPY) 200 81,433
TJX COMPANIES, INC. 8,700 177,806
259,239
SERVICES - COMMERCIAL & CONSUMER - 0.7%
CINTAS CORP. 2,300 122,188
REUTERS GROUP PLC (ADR) 1,500 121,219
243,407
SERVICES - COMPUTER SYSTEMS - 0.8%
COMPUTER SCIENCES CORP. * 3,000 283,875
SERVICES - DATA PROCESSING - 1.7%
DST SYSTEMS, INC. * 2,900 221,306
FIRST DATA CORP. 7,200 355,050
576,356
TELECOMMUNICATIONS - CELL / WIRELESS - 0.4%
SPRINT CORP. (PCS GROUP) * 1,300 133,250
TELECOMMUNICATIONS - LONG DISTANCE - 3.2%
AT&T CORP. 4,000 203,000
MCI WORLDCOM, INC. * 9,150 485,522
SPRINT CORP. (FON GROUP) 5,200 350,025
NIPPON TELEGRAPH & TELEPHONE CORP. (JPY) 5 85,641
1,124,188
TELEPHONE - 4.4%
ALLTEL CORP. 2,100 173,644
BELL ATLANTIC CORP. 11,000 677,187
BELLSOUTH CORP. 1,900 88,944
BROADWING, INC. 3,800 140,125
SBC COMMUNICATIONS, INC. 8,900 433,875
1,513,775
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
TRUCKERS - 0.5%
KONINKLIJKE KPN NV (EUR) 1,400 $136,657
UNITED PARCEL SERVICE, INC. 770 53,130
189,787
TOTAL EQUITY SECURITIES (COST $32,805,128) 34,311,964
PRINCIPAL
CORPORATE SECURITIES - 0.5% AMOUNT
BELL ATLANTIC FINANCIAL SERVICES, INC., 4.25%, 9/15/05
$44,800 55,686
NTL, INC., 5.75%, 12/15/09 100,000 109,942
TOTAL CORPORATE SECURITIES (COST $146,889) 165,628
DISCOUNT NOTES - 0.7%
FEDERAL HOME LOAN MORTGAGE, 1.5%, 1/3/00 260,000 259,978
TOTAL DISCOUNT NOTES (COST $259,978) 259,978
TOTAL INVESTMENTS (COST $33,211,995) - 100.0% 34,737,570
OTHER ASSETS AND LIABILITIES, NET - 0.0% 4,541
NET ASSETS - 100% $34,742,111
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INDEX 500 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
EQUITY SECURITIES - 97.3% SHARES VALUE
AEROSPACE / DEFENSE - 0.5%
BOEING CO. 15,300 $635,906
GENERAL DYNAMICS CORP. 3,300 174,075
GOODRICH (B.F.) CO. 1,700 46,750
LOCKHEED MARTIN CORP. 6,400 140,000
NORTHROP GRUMMAN CORP. 1,100 59,469
1,056,200
AGRICULTURAL PRODUCTS - 0.1%
ARCHER-DANIELS-MIDLAND CO. 9,600 117,000
AIRLINES - 0.2%
AMR CORP. * 2,400 160,800
DELTA AIR LINES, INC. 2,200 109,588
SOUTHWEST AIRLINES 8,300 134,356
US AIRWAYS GROUP, INC. * 1,200 38,475
443,219
ALUMINUM - 0.3%
ALCAN ALUMINIUM, LTD. 3,600 148,275
ALCOA, INC. 6,000 498,000
REYNOLDS METALS CO. 1,000 76,625
722,900
AUTO PARTS & EQUIPMENT - 0.2%
COOPER TIRE & RUBBER 1,300 20,231
DANA CORP. 2,700 80,831
DELPHI AUTOMOTIVE SYSTEMS CORP. 9,100 143,325
GENUINE PARTS CO. 2,800 69,475
GOODYEAR TIRE & RUBBER CO. 2,500 70,469
SNAP-ON, INC. 1,000 26,563
TRW, INC 2,000 103,875
514,769
AUTOMOBILES - 0.9%
FORD MOTOR CO. 20,100 1,074,094
GENERAL MOTORS CORP. 10,500 763,219
1,837,313
BANKS - MAJOR REGIONAL - 3.2%
AMSOUTH BANCORP. 6,400 123,600
BANK OF NEW YORK CO., INC. 12,100 484,000
BANK ONE CORP. 18,800 602,775
BB&T CORP. 5,400 147,825
COMERICA, INC. 2,500 116,719
FIFTH THIRD BANCORP 5,200 381,550
FIRSTAR CORP. 16,000 338,000
FLEET BOSTON FINANCIAL CORP. 15,400 536,112
HUNTINGTON BANCSHARES 3,600 85,950
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
BANKS - MAJOR REGIONAL - CONT'D
KEYCORP 7,300 $161,513
MELLON FINANCIAL CORP. 8,300 282,719
NATIONAL CITY CORP. 10,000 236,875
NORTHERN TRUST CORP. 3,600 190,800
OLD KENT FINANCIAL CORP. 1,900 67,212
PNC BANK CORP. 4,800 213,600
REGIONS FINANCIAL CORP. 3,400 85,425
REPUBLIC NEW YORK CORP. 1,700 122,400
SOUTHTRUST CORP. 2,700 102,094
STATE STREET CORP. 2,600 189,962
SUMMIT BANCORP 2,900 88,813
SUNTRUST BANKS, INC. 5,200 357,825
SYNOVUS FINANCIAL CORP. 4,400 87,450
U.S. BANCORP 11,900 283,369
UNION PLANTERS CORP. 2,300 90,706
WACHOVIA CORP. 3,300 224,400
WELLS FARGO CO. 27,400 1,107,987
6,709,681
BANKS - MONEY CENTER - 1.6%
BANK OF AMERICA CORP. 28,400 1,425,325
CHASE MANHATTAN CORP. 13,700 1,064,319
FIRST UNION CORP. 16,200 531,562
J.P. MORGAN & CO. 2,900 367,213
3,388,419
BEVERAGES - ALCOHOLIC - 0.3%
ANHEUSER-BUSCH COMPANIES, INC. 7,600 538,650
BROWN-FORMAN CORP. 1,100 62,975
COORS (ADOLPH) 600 31,500
633,125
BEVERAGES - NON-ALCOHOLIC - 1.6%
COCA-COLA CO. 40,500 2,359,125
COCA-COLA ENTERPRISES 7,000 140,875
PEPSICO, INC. 24,300 856,575
3,356,575
BIOTECHNOLOGY - 0.5%
AMGEN, INC. * 17,000 1,021,063
BROADCAST - TELEVISION, RADIO, CABLE - 1.3%
CBS CORP. * 12,772 816,610
CLEAR CHANNEL COMMUNICATIONS * 5,700 508,725
COMCAST CORP. 12,600 637,088
MEDIAONE GROUP, INC. * 10,200 783,487
2,745,910
BUILDING MATERIALS - 0.1%
ARMSTRONG WORLD INDUSTRIALS, INC. 600 20,025
MASCO CORP. 7,300 185,238
OWENS CORNING 900 17,381
222,644
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
CHEMICALS - 1.5%
AIR PRODUCTS & CHEMICALS, INC. 3,600 $120,825
DOW CHEMICAL CO. 3,600 481,050
DU PONT (E.I.) DE NEMOURS 17,400 1,146,225
EASTMAN CHEMICAL CO. 1,300 61,994
ECOLAB, INC. 2,100 82,163
ENGELHARD CORP. 2,000 37,750
FMC CORP. * 500 28,656
GREAT LAKES CHEMICAL CORP. 900 34,369
HERCULES, INC. 1,700 47,387
INTERNATIONAL FLAVORS & FRAGRANCES 1,600 60,400
MONSANTO CO 10,700 381,188
PPG INDUSTRIES, INC. 2,800 175,175
PRAXAIR, INC. 2,500 125,781
ROHM & HAAS CO. 3,600 146,475
SIGMA-ALDRICH 1,600 48,100
UNION CARBIDE CORP. 2,400 160,200
W.R. GRACE & CO. * 1,100 15,262
3,153,000
COMPUTERS - HARDWARE - 5.1%
APPLE COMPUTER, INC. * 2,600 267,313
COMPAQ COMPUTER CORP. 28,400 768,575
DELL COMPUTER CORP. * 41,700 2,126,700
GATEWAY, INC. * 5,400 389,137
HEWLETT-PACKARD CO. 16,900 1,925,544
INTERNATIONAL BUSINESS MACHINES CORP. 29,600 3,196,800
SILICON GRAPHICS, INC. * 2,900 28,456
SUN MICROSYSTEMS, INC. * 25,600 1,982,400
10,684,925
COMPUTERS - NETWORKING - 3.0%
CABLETRON SYSTEMS * 3,000 78,000
CISCO SYSTEMS, INC. * 53,700 5,752,613
NETWORK APPLIANCE, INC. * 2,400 199,350
3COM CORP. * 5,600 263,200
6,293,163
COMPUTERS - PERIPHERALS - 1.0%
EMC CORP. * 16,700 1,824,475
LEXMARK INTERNATIONAL GROUP, INC. * 2,100 190,050
SEAGATE TECHNOLOGY, INC. * 3,600 167,625
2,182,150
COMPUTERS - SOFTWARE & SERVICES - 9.3%
ADOBE SYSTEMS, INC. 1,900 127,775
AMERICA ONLINE, INC. * 36,700 2,768,556
AUTODESK, INC. 900 30,375
BMC SOFTWARE, INC. * 4,100 327,744
CITRIX SYSTEMS, INC. * 1,500 184,500
COMPUTER ASSOCIATES INTERNATIONAL, INC. 9,000 629,438
COMPUWARE CORP. * 5,800 216,050
MICROSOFT CORP. * 84,800 9,900,400
NOVELL, INC. * 5,500 219,656
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
COMPUTERS - SOFTWARE & SERVICES - CONT'D
ORACLE CORP. * 23,400 $2,622,262
PARAMETRIC TECHNOLOGY CORP. * 4,400 119,075
PEOPLESOFT, INC. * 4,000 85,250
UNISYS CORP. * 5,400 172,463
YAHOO, INC. * 4,300 1,860,556
19,264,100
CONSTRUCTION - 0.0%
VULCAN MATERIALS CO. 1,600 63,900
CONSUMER FINANCE - 0.5%
CAPITAL ONE FINANCIAL CORP. 3,200 154,200
COUNTRYWIDE CREDIT, INC. 1,800 45,450
HOUSEHOLD INTERNATIONAL, INC. 7,600 283,100
MBNA CORP. 13,100 356,975
PROVIDIAN FINANCIAL CORP. 2,300 209,444
1,049,169
CONSUMER JEWELRY, NOVELTY, GIFTS - 0.0%
AMERICAN GREETINGS 900 21,262
JOSTENS, INC. 400 9,725
30,987
CONTAINERS - METAL & GLASS - 0.1%
BALL CORP. 500 19,687
CROWN CORK & SEAL CO., INC. 2,000 44,750
OWENS-ILLINOIS, INC. * 2,300 57,644
122,081
CONTAINERS & PACKAGING - 0.1%
BEMIS CO. 700 24,412
PACTIV CORP. * 2,900 30,813
TEMPLE-INLAND, INC. 900 59,344
114,569
DISTRIBUTION / WHOLESALE - 0.2%
COSTCO WHOLESALE CORP. * 3,600 328,501
DISTRIBUTORS - FOOD & HEALTH - 0.3%
CARDINAL HEALTH, INC. 4,500 215,438
MCKESSON HBOC, INC. 4,400 99,275
SUPERVALU, INC. 2,300 46,000
SYSCO CORP. 5,300 209,681
570,394
ELECTONICS - SEMICONDUCTORS - 3.3%
ADAPTEC, INC. * 1,600 79,800
ADVANCED MICRO DEVICES * 2,800 81,025
INTEL CORP. 54,900 4,518,956
LSI LOGIC CORP. * 2,400 162,000
MICRON TECHNOLOGY, INC. * 4,400 342,100
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
ELECTONICS - SEMICONDUCTORS - CONT'D
NATIONAL SEMICONDUCTOR CORP. * 2,700 $115,594
TEXAS INSTRUMENTS, INC. 13,300 1,288,438
XILINX, INC. * 5,200 236,437
6,824,350
ELECTRIC COMPANIES - 1.4%
AMEREN CORP. 2,200 72,050
AMERICAN ELECTRIC POWER 3,200 102,800
CAROLINA POWER & LIGHT 2,600 79,138
CENTRAL & SOUTH WEST CORP. 3,300 66,000
CINERGY CORP. 2,600 62,725
CMS ENERGY CORP. 1,800 56,138
CONSOLIDATED EDISON, INC. 3,600 124,200
CONSTELLATION ENERGY GROUP, INC. 2,500 72,500
DOMINION RESOURCES, INC. 3,100 121,675
DTE ENERGY CO. 2,400 75,300
DUKE ENERGY CORP. 6,200 310,775
EDISON INTERNATIONAL 5,500 144,031
ENTERGY CORP. 3,900 100,425
FIRSTENERGY CORP. 3,800 86,212
FLORIDA PROGRESS CORP. 1,600 67,700
FPL GROUP, INC. 2,900 124,156
GPU, INC. 2,000 59,875
NEW CENTURY ENERGIES, INC. 1,900 57,712
NIAGARA MOHAWK HOLDINGS, INC. * 2,700 37,631
NORTHERN STATES POWER 2,500 48,750
PECO ENERGY CO. 2,900 100,775
PG&E CORP. 6,100 125,050
PINNACLE WEST CAPITAL CORP. 1,400 42,788
PP&L RESOURCES, INC. 2,300 52,612
PUBLIC SERVICE ENTERPRISE GROUP 3,500 121,844
RELIANT ENERGY, INC. 4,800 109,800
SOUTHERN CO. 11,100 260,850
TEXAS UTILITIES CO. 4,400 156,475
UNICOM CORP. 3,600 120,600
2,960,587
ELECTRICAL EQUIPMENT - 4.6%
COOPER INDUSTRIES, INC. 1,500 60,656
EMERSON ELECTRIC CO. 7,100 407,363
GENERAL ELECTRIC CO. 53,900 8,341,025
MOLEX, INC. 2,600 147,387
ROCKWELL INTERNATIONAL CORP. 3,100 148,413
SOLECTRON CORP. * 4,800 456,600
THOMAS & BETTS CORP. 900 28,687
9,590,131
ELECTRONICS - COMPONENT DISTRIBUTOR - 0.0%
GRAINGER (W.W.), INC. 1,500 71,719
ELECTRONICS - DEFENSE - 0.1%
RAYTHEON CO. 5,400 143,437
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
ELECTRONICS - INSTRUMENTS - 0.1%
PE BIOSYSTEMS GROUP 1,700 $204,531
PERKINELMER, INC. 700 29,181
TEKTRONIX, INC. 700 27,213
260,925
ELECTRONICS - SEMICONDUCTORS - 0.1%
ANALOG DEVICES * 3,000 279,000
ENGINEERING & CONSTRUCTION - 0.0%
FLUOR CORP. 1,200 55,050
FOSTER WHEELER CORP. 700 6,213
MCDERMOTT INTERNATIONAL, INC. 900 8,156
69,419
ENTERTAINMENT - 1.7%
SEAGRAM CO., LTD. 7,100 319,056
TIME WARNER, INC. 21,100 1,528,431
VIACOM, INC. * 11,700 707,119
WALT DISNEY (HOLDINGS) CO. 34,400 1,006,200
3,560,806
EQUIPMENT - SEMICONDUCTORS - 0.5%
APPLIED MATERIALS, INC. * 6,200 785,463
KLA-TENCOR CORP. * 1,500 167,062
TERADYNE, INC. * 2,800 184,800
1,137,325
FINANCIAL - DIVERSIFIED - 3.7%
AMERICAN EXPRESS CO. 7,300 1,213,625
ASSOCIATES FIRST CAPITAL CORP. 11,900 326,506
CITIGROUP, INC. 55,300 3,072,606
FEDERAL HOME LOAN MORTGAGE CORP. 11,400 536,513
FEDERAL NATIONAL MORTGAGE ASSN. 17,100 1,067,681
MORGAN STANLEY DEAN WITTER & CO. 9,100 1,299,025
SLM HOLDING CORP. 2,600 109,850
7,625,806
FOODS - 1.3%
BESTFOODS 4,500 236,531
CAMPBELL SOUP CO. 7,000 270,813
CONAGRA, INC. 7,900 178,244
GENERAL MILLS, INC. 4,900 175,175
HEINZ (H.J.) CO. 5,800 230,913
HERSHEY FOODS CORP. 2,200 104,500
KELLOGG CO. 6,600 203,362
NABISCO GROUP HOLDINGS CORP. 5,200 55,250
QUAKER OATS CO. 2,400 157,500
RALSTON PURINA GROUP 5,200 144,950
SARA LEE CORP. 15,400 339,762
UNILEVER NV (ADR) 9,600 522,600
WRIGLEY (WM.) JR. CO. 1,900 157,581
2,777,181
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
FOOTWEAR - 0.1%
NIKE, INC. 4,800 $237,900
REEBOK INTERNATIONAL, LTD. * 900 7,369
245,269
GAMING, LOTTERY, PARIMUTUAL - 0.0%
HARRAH'S ENTERTAINMENT, INC. * 2,100 55,519
MIRAGE RESORTS, INC. * 2,900 44,406
99,925
GOLD AND PRECIOUS METALS MINING - 0.1%
BARRICK GOLD CORP. 6,300 111,431
HOMESTAKE MINING CO. 3,700 28,906
NEWMONT MINING CORP. 2,800 68,600
PLACER DOME, INC. 5,200 55,900
264,837
HARDWARE & TOOLS - 0.1%
BLACK & DECKER CORP. 1,400 73,150
STANLEY WORKS 1,400 42,175
115,325
HEALTHCARE - DIVERSIFIED - 3.5%
ABBOTT LABORATORIES 25,600 929,600
ALLERGAN, INC. 2,100 104,475
AMERICAN HOME PRODUCTS CORP. 21,800 859,737
BRISTOL-MYERS SQUIBB CO. 32,500 2,086,094
JOHNSON & JOHNSON 22,800 2,123,250
MALLINCKRODT, INC. 1,100 34,994
WARNER-LAMBERT CO. 14,300 1,171,706
7,309,856
HEALTHCARE - DRUGS - GENERAL, OTHER - 0.1%
ALZA CORP. * 1,500 51,938
WATSON PHARMACEUTICAL, INC. * 1,800 64,462
116,400
HEALTHCARE - DRUGS - MAJOR PHARMACEUTICALS - 3.5%
ELI LILLY & CO. 17,900 1,190,350
MERCK & CO., INC. 38,400 2,575,200
PFIZER, INC. 63,500 2,059,781
PHARMACIA & UPJOHN, INC. 8,500 382,500
SCHERING-PLOUGH CORP. 24,500 1,033,594
7,241,425
HEALTHCARE - HOSPITAL MANAGEMENT - 0.2%
COLUMBIA HCA HEALTHCARE CORP. 9,100 266,744
TENET HEALTHCARE CORP. * 5,100 119,850
386,594
HEALTHCARE - LONGTERM CARE - 0.0%
MANOR CARE, INC. * 1,700 27,200
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
HEALTHCARE - MANAGED CARE - 0.2%
AETNA, INC. 2,400 $133,950
HUMANA, INC. * 2,600 21,288
UNITED HEALTHCARE CORP. 2,700 143,438
WELLPOINT HEALTH NETWORKS * 1,000 65,937
364,613
HEALTHCARE - MEDICAL PRODUCTS & SUPPORT - 0.9%
BARD (C.R.), INC. 800 42,400
BAUSCH & LOMB, INC. 900 61,594
BAXTER INTERNATIONAL, INC. 5,000 314,062
BECTON DICKINSON & CO. 3,900 104,325
BIOMET, INC. 1,700 68,000
BOSTON SCIENTIFIC CORP. * 6,700 146,563
GUIDANT CORP. * 5,000 235,000
HEALTHSOUTH CORP. * 5,800 31,175
MEDTRONIC, INC. 19,600 714,175
QUINTILES TRANSNATIONAL CORP. * 1,900 35,506
ST. JUDE MEDICAL, INC. * 1,300 39,894
1,792,694
HOMEBUILDING - 0.0%
CENTEX CORP. 1,000 24,688
FLEETWOOD ENTERPRISES 500 10,312
KAUFMAN & BROAD HOME CORP. 800 19,350
PULTE CORP. 600 13,500
67,850
HOUSEHOLD FURNITURE & APPLIANCES - 0.1%
LEGGETT & PLATT, INC. 3,200 68,600
MAYTAG CORP. 1,400 67,200
WHIRLPOOL CORP. 1,200 78,075
213,875
HOUSEHOLD PRODUCTS - NON-DURABLE - 1.9%
CLOROX CO. 3,800 191,425
COLGATE-PALMOLIVE CO. 9,800 637,000
FORT JAMES CORP. 3,400 93,075
KIMBERLY-CLARK CORP. 8,900 580,725
PROCTER & GAMBLE CO. 21,600 2,366,550
3,868,775
HOUSEWARES - 0.1%
FORTUNE BRANDS, INC. 2,600 85,962
NEWELL RUBBERMAID, INC. 4,600 133,400
TUPPERWARE CORP. 900 15,244
234,606
INSURANCE - LIFE / HEALTH - 0.5%
AFLAC, INC. 4,300 202,906
AMERICAN GENERAL CORP. 4,000 303,500
CONSECO, INC. 5,200 92,950
JEFFERSON-PILOT CORP. 1,700 116,025
LINCOLN NATIONAL CORP. 3,200 128,000
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
INSURANCE - LIFE / HEALTH - CONT'D
TORCHMARK CORP. 2,100 $61,031
UNUMPROVIDENT CORP. 4,300 137,869
1,042,281
INSURANCE - MULTI-LINE - 1.6%
AMERICAN INTERNATIONAL GROUP 25,400 2,746,375
CIGNA CORP. 3,000 241,687
HARTFORD FINANCIAL SERVICES 3,600 170,550
LOEWS CORP. 1,700 103,169
3,261,781
INSURANCE - PROPERTY / AUTOMOBILE - 0.5%
ALLSTATE CORP. 13,700 328,800
CHUBB CORP. 2,800 157,675
CINCINNATI FINANCIAL CORP. 3,000 93,562
MBIA, INC. 1,800 95,063
MGIC INVESTMENT CORP. 1,700 102,319
PROGRESSIVE CORP. 1,200 87,750
SAFECO CORP. 2,000 49,750
ST. PAUL CO.'S 3,600 121,275
1,036,194
INSURANCE BROKERS - 0.3%
AON CORP. 4,200 168,000
MARSH & MCLENNAN CO.'S. 4,500 430,594
598,594
INVESTMENT BANKING / BROKERAGE - 0.7%
BEAR STEARNS CO.'S, INC. 1,985 84,859
LEHMAN BROTHERS HOLDINGS, INC. 2,100 177,843
MERRILL LYNCH & CO. 6,200 517,700
PAINE WEBBER GROUP, INC. 2,300 89,269
SCHWAB (CHARLES) CORP. 13,400 514,225
1,383,896
INVESTMENT MANAGEMENT - 0.1%
FRANKLIN RESOURCES, INC 4,100 131,456
PRICE (T. ROWE) ASSOCIATES 1,900 70,181
201,637
IRON / STEEL - 0.1%
ALLEGHENY TECHNOLOGIES, INC. 1,450 32,534
BETHLEHEM STEEL CORP. * 1,900 15,913
NUCOR CORP. 1,400 76,737
USX-U.S. STEEL GROUP, INC. 1,500 49,500
WORTHINGTON INDUSTRIES 1,400 23,188
197,872
LEISURE TIME - PRODUCTS - 0.1%
BRUNSWICK CORP. 1,500 33,375
HASBRO, INC. 3,100 59,094
MATTEL, INC. 6,700 87,937
180,406
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
LODGING - HOTELS - 0.3%
CARNIVAL CORP. 10,100 $482,906
HILTON HOTELS CORP. 6,000 57,750
MARRIOTT INTERNATIONAL, INC. 4,000 126,250
666,906
MACHINERY-DIVERSIFIED - 0.4%
CATERPILLAR, INC. 5,800 272,963
DEERE & CO. 3,700 160,488
DOVER CORP. 3,300 149,737
INGERSOLL-RAND CO. 2,700 148,669
MILACRON, INC. 500 7,687
NACCO INDUSTRIES 100 5,556
TIMKEN CO. 900 18,394
763,494
MANUFACTURING - DIVERSIFIED - 2.2%
CORNING, INC. 4,000 515,750
CRANE CO. 1,000 19,875
DANAHER CORP. 2,300 110,975
EATON CORP. 1,200 87,150
HONEYWELL INTERNATIONAL, INC. 13,237 763,609
ILLINOIS TOOL WORKS, INC. 4,900 331,056
ITT INDUSTRIES, INC. 1,400 46,813
JOHNSON CONTROLS, INC. 1,300 73,938
MINNESOTA MINING & MANUFACTURING CO. 6,600 645,975
NATIONAL SERVICE INDUSTRIES, INC 700 20,650
PARKER HANNIFIN CORP. 2,000 102,625
TEXTRON, INC. 2,400 184,050
THERMO ELECTRON CORP. * 2,300 34,500
TYCO INTERNATIONAL, LTD. 28,200 1,096,275
UNITED TECHNOLOGIES CORP. 8,100 526,500
4,559,741
MANUFACTURING - SPECIALIZED - 0.1%
AVERY DENNISON CORP. 1,800 131,175
BRIGGS & STRATTON 400 21,450
MILLIPORE CORP. 700 27,038
PALL CORP. 2,000 43,125
SEALED AIR CORP. * 1,300 67,356
290,144
METALS-DIVERSIFIED - 0.1%
FREEPORT-MCMORAN COPPER & GOLD, INC. * 2,400 50,700
INCO, LTD. 3,000 70,500
PHELPS DODGE CORP. 1,300 87,262
208,462
NATURAL GAS - 0.7%
COASTAL CORP. 3,400 120,488
COLUMBIA ENERGY GROUP 1,600 101,200
CONSOLIDATED NATURAL GAS CO. 1,500 97,406
EASTERN ENTERPRISES 400 22,975
EL PASO ENERGY CORP. 3,700 143,606
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
NATURAL GAS - CONT'D
ENRON CORP. 12,100 $536,937
NICOR, INC. 700 22,750
ONEOK, INC. 500 12,562
PEOPLES ENERGY CORP. 600 20,100
SEMPRA ENERGY 3,700 64,288
WILLIAMS CO.'S, INC. 7,100 216,994
1,359,306
OFFICE EQUIPMENT & SUPPLIES - 0.1%
PITNEY BOWES, INC. 4,300 207,744
OIL - DOMESTIC INTEGRATED - 0.6%
AMERADA HESS CORP. 1,500 85,125
ATLANTIC RICHFIELD CO. 5,300 458,450
CONOCO, INC. 10,200 253,725
OCCIDENTAL PETROLEUM CORP. 6,000 129,750
PHILLIPS PETROLEUM CO. 4,100 192,700
USX-MARATHON GROUP, INC. 5,100 125,906
1,245,656
OIL - INTERNATIONAL INTEGRATED - 3.9%
CHEVRON CORP. 10,900 944,213
EXXON MOBIL CORP. 56,725 4,569,908
ROYAL DUTCH PETROLEUM CO. (ADR) 35,200 2,127,400
TEXACO, INC. 9,300 505,106
8,146,627
OIL & GAS - DRILLING & EQUIPMENT - 0.5%
BAKER HUGHES, INC. 5,200 109,525
HALLIBURTON CO. 7,200 289,800
ROWAN CO.'S, INC. * 1,300 28,194
SCHLUMBERGER, LTD. 9,200 517,500
TRANSOCEAN SEDCO FOREX, INC. 3,381 113,901
1,058,920
OIL & GAS - EXPLORATION & PRODUCTION - 0.3%
ANADARKO PETROLEUM CORP. 2,000 68,250
APACHE CORP. 2,100 77,569
BURLINGTON RESOURCES, INC. 3,500 115,719
KERR-MCGEE CORP. 1,400 86,800
UNION PACIFIC RESOURCES GROUP 3,900 49,725
UNOCAL CORP. 4,300 144,318
542,381
OIL & GAS - REFINERY & MARKETING - 0.1%
ASHLAND, INC. 1,200 39,525
SUNOCO, INC. 1,500 35,250
TOSCO CORP. 2,300 62,531
137,306
PAPER & FOREST PRODUCTS - 0.6%
BOISE CASCADE CORP. 900 36,450
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
PAPER & FOREST PRODUCTS - CONT'D
CHAMPION INTERNATIONAL CORP. 1,600 $99,100
GEORGIA-PACIFIC GROUP 2,700 137,025
INTERNATIONAL PAPER CO. 6,800 383,775
LOUISIANA-PACIFIC CORP. 1,600 22,800
MEAD CORP. 1,600 69,500
POTLATCH CORP. 400 17,850
WESTVACO CORP. 1,600 52,200
WEYERHAEUSER CO. 3,800 272,887
WILLAMETTE INDUSTRIES, INC. 1,700 78,944
1,170,531
PERSONAL CARE - 0.4%
ALBERTO-CULVER CO. 900 23,231
AVON PRODUCTS, INC. 3,900 128,700
GILLETTE CO. 17,600 724,900
876,831
PHOTOGRAPHY / IMAGING - 0.3%
EASTMAN KODAK CO. 5,200 344,500
IKON OFFICE SOLUTIONS, INC. 2,100 14,306
POLAROID CORP. 800 15,050
XEROX CORP. 10,800 245,025
618,881
POWER PRODUCERS - INDEPENDENT - 0.1%
AES CORP. * 3,400 254,150
PUBLISHING - 0.1%
HARCOURT GENERAL, INC. 1,400 56,350
MCGRAW-HILL COMPANIES, INC. 3,200 197,200
MEREDITH CORP. 800 33,350
286,900
PUBLISHING - NEWSPAPERS - 0.5%
DOW JONES & CO., INC. 1,400 95,200
GANNETT CO., INC. 4,700 383,344
KNIGHT RIDDER, INC. 1,400 83,300
NEW YORK TIMES CO. 2,800 137,550
TIMES MIRROR CO. 900 60,300
TRIBUNE CO. 4,100 225,756
985,450
RAILROADS - 0.3%
BURLINGTON NORTHERN SANTA FE CORP. 7,500 181,875
CSX CORP. 3,500 109,812
KANSAS CITY SOUTHERN INDS 1,800 134,325
NORFOLK SOUTHERN CORP. 6,200 127,100
UNION PACIFIC CORP. 4,000 174,500
727,612
RESTARAURANTS - 0.5%
DARDEN RESTAURANTS, INC. 2,100 38,063
MCDONALD'S CORP. 22,600 911,063
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
RESTARAURANTS - CONT'D
TRICON GLOBAL RESTAURANTS, INC. * 2,400 $92,700
WENDY'S INTERNATIONAL, INC. 1,900 39,187
1,081,013
RETAIL - BUILDING SUPPLIES - 1.5%
HOME DEPOT, INC. 37,800 2,591,663
LOWE'S COMPANIES, INC. 6,500 388,375
SHERWIN-WILLIAMS CO. 2,600 54,600
3,034,638
RETAIL - COMPUTERS & ELECTRONICS - 0.2%
BEST BUY CO., INC. * 3,400 170,638
CIRCUIT CITY STORES, INC. 3,600 162,225
TANDY CORP. 3,100 152,481
485,344
RETAIL - DEPARTMENT STORES - 0.3%
DILLARDS, INC. 1,600 32,300
FEDERATED DEPARTMENT STORES, INC.* 3,400 171,912
KOHLS CORP. * 2,600 187,687
MAY DEPARTMENT STORES CO. 5,800 187,050
NORDSTROM, INC. 2,200 57,613
PENNEY (J.C.) CO. 4,100 81,744
718,306
RETAIL - DISCOUNTERS - 0.1%
CONSOLIDATED STORES CORP. * 1,700 27,625
DOLLAR GENERAL CORP. 4,400 100,100
127,725
RETAIL - DRUG STORES - 0.4%
CVS CORP. 6,300 251,606
LONGS DRUG STORES, INC. 600 15,488
RITE AID CORP. 4,100 45,869
WALGREEN CO. 16,900 494,325
807,288
RETAIL - FOOD CHAINS - 0.4%
ALBERTSON'S, INC. 6,900 222,525
GREAT ATLANTIC & PACIFIC TEA CO. 600 16,725
KROGER CO. * 13,500 254,812
SAFEWAY, INC. * 8,300 295,169
WINN-DIXIE STORES, INC. 2,200 52,663
841,894
RETAIL - GENERAL MERCHANDISERS - 2.8%
DAYTON-HUDSON CORP. 7,200 528,750
KMART CORP. * 7,600 76,475
SEARS, ROEBUCK & CO. 6,100 185,669
WAL-MART STORES, INC. 73,100 5,053,037
5,843,931
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
RETAIL - SPECIALTY - 0.2%
AUTOZONE, INC. * 2,200 $71,087
BED BATH & BEYOND, INC. * 2,200 76,450
OFFICE DEPOT, INC. * 5,200 56,875
PEP BOYS 800 7,300
STAPLES, INC. * 7,500 155,625
TOYS R US, INC. * 3,900 55,819
423,156
RETAIL - SPECIALTY, APPAREL - 0.4%
GAP, INC. 14,000 644,000
LIMITED, INC. 3,500 151,594
TJX COMPANIES, INC. 5,000 102,187
897,781
SAVINGS & LOAN COMPANIES - 0.2%
GOLDEN WEST FINANCIAL CORP. 2,700 90,450
WASHINGTON MUTUAL, INC. 9,300 241,800
332,250
SERVICES - ADVERTISING / MARKETING - 0.3%
INTERPUBLIC GROUP OF COMPANIES, INC. 4,600 265,363
OMNICOM GROUP 2,900 290,000
555,363
SERVICES - COMMERCIAL & CONSUMER - 0.3%
BLOCK H & R, INC. 1,600 70,000
CENDANT CORP. * 11,700 310,781
DUN & BRADSTREET CORP. 2,600 76,700
IMS HEALTH, INC. 5,000 135,938
SERVICE CORP. INTERNATIONAL 4,200 29,137
622,556
SERVICES - COMPUTER SYSTEMS - 0.4%
COMPUTER SCIENCES CORP. * 2,700 255,487
ELECTRONIC DATA SYSTEMS CORP. 7,700 515,419
SHARED MEDICAL SYSTEMS CORP. 400 20,375
791,281
SERVICES - DATA PROCESSING - 0.6%
AUTOMATIC DATA PROCESSING, INC. 10,500 565,688
CERIDIAN CORP. * 2,100 45,281
EQUIFAX, INC. 2,200 51,838
FIRST DATA CORP. 6,900 340,256
PAYCHEX, INC. 4,300 172,000
1,175,063
SPECIALTY PRINTING - 0.0%
DELUXE CORP. 1,100 30,181
DONNELLEY (R.R.) & SONS CO. 2,100 52,106
82,287
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
TELECOMMUNICATION EQUIPMENT - 5.1%
ADC TELECOMMUNICATIONS, INC. * 2,400 $174,150
ANDREW CORP * 1,200 22,725
COMVERSE TECHNOLOGY, INC. * 1,200 173,700
GENERAL INSTRUMENT CORP. * 2,800 238,000
LUCENT TECHNOLOGIES, INC. 51,400 3,845,363
MOTOROLA, INC. 10,100 1,487,225
NORTEL NETWORKS CORP. 21,900 2,211,900
QUALCOMM, INC. * 10,800 1,902,150
SCIENTIFIC-ATLANTA, INC. 1,300 72,312
TELLABS, INC. * 6,600 423,638
10,551,163
TELECOMMUNICATIONS - CELL / WIRELESS - 0.7%
NEXTEL COMMUNICATIONS, INC. * 6,100 629,063
SPRINT CORP. (PCS GROUP) * 7,200 738,000
1,367,063
TELECOMMUNICATIONS - LONG DISTANCE - 3.2%
AT&T CORP. 52,400 2,659,300
GLOBAL CROSSING, LTD. * 12,700 635,000
MCI WORLDCOM, INC. * 46,500 2,467,406
SPRINT CORP. (FON GROUP) 14,500 976,031
6,737,737
TELEPHONE - 3.9%
ALLTEL CORP. 5,300 438,244
BELL ATLANTIC CORP. 25,800 1,588,313
BELLSOUTH CORP. 31,300 1,465,231
CENTURYTEL, INC. 2,200 104,225
GTE CORP. 16,200 1,143,112
SBC COMMUNICATIONS, INC. 56,000 2,730,000
US WEST, INC. * 8,500 612,000
8,081,125
TEXTILES - APPAREL - 0.0%
LIZ CLAIBORNE, INC. 1,000 37,625
RUSSELL CORP. 600 10,050
VF CORP. 1,900 57,000
104,675
TEXTILES - HOME FURNISH - 0.0%
SPRINGS INDUSTRIES, INC. 300 11,981
TOBACCO - 0.5%
PHILIP MORRIS COMPANIES, INC. 39,500 915,906
UST, INC. 2,700 68,006
983,912
TRANSPORTATION - 0.1%
FDX CORP. * 4,800 196,500
<PAGE>
EQUITY SECURITIES - CONT'D SHARES VALUE
TRUCKERS - 0.0%
RYDER SYSTEM, INC. 1,000 $24,438
TRUCKS & PARTS - 0.1%
CUMMINS ENGINE CO., INC. 600 28,988
NAVISTAR INTERNATIONAL CORP. * 1,000 47,375
PACCAR, INC. 1,300 57,606
133,969
WASTE MANAGEMENT - 0.1%
ALLIED WASTE INDUSTRIES, INC. * 2,800 24,675
WASTE MANAGEMENT, INC. 10,000 171,875
196,550
TOTAL EQUITY SECURITIES (COST $188,224,205) 202,494,379
PRINCIPAL
CORPORATE SECURITIES - 2.0% AMOUNT
AIM STIC PRIME FUND, 4.36%, 12/1/09 $2,528,230 2,528,230
PRIME OBLIGATIONS FUND, 5.40%, 12/01/09 1,097,395 1,097,395
U.S. TREASURY BILL, 3/16/00 645,000 638,099
TOTAL CORPORATE SECURITIES (COST $4,263,724) 4,263,724
TOTAL INVESTMENTS (COST $192,487,929) - 99.9% 206,758,103
OTHER ASSETS IN AND LIABILITIES, NET - 0.1% 113,776
NET ASSETS - 100% $206,871,879
UNDERLYING UNREALIZED
# OF EXPIRATION FACE AMOUNT APPRECIATION INITIAL
FUTURES CONTRACTS DATE AT VALUE (DEPRECIATION) MARGIN
PURCHASED:
S&P 500 20 3/00 $7,421,000 $131,070 $375,000^
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
PRINCIPAL
CORPORATE OBLIGATIONS - 23.4% AMOUNT VALUE
BARTON HEALTHCARE LLC VRDN, 6.60%, 2/15/25,
LOC: AMERICAN NATIONAL BANK & TRUST $1,940,000 $1,940,000
CAPITAL ONE FUNDING CORPORATION VRDN, 6.60%, 8/3/15,
LOC: BANK ONE OHIO 5,200,000 5,200,000
COMMUNITY HEALTH SYSTEMS, INC., VRDN, 6.05%, 10/1/03
4,100,000 4,100,000
LEHMAN BROTHERS HOLDINGS, 6.50%, 7/18/2000 5,000,000 5,005,662
MERITER HOSPITAL VRDN, 6.45%, 12/1/16,
LOC: FIRSTAR BANK, MILWAUKEE 200,000 200,000
MEYER COOKWARE INDUSTRIES VRDN, 6.50%, 5/1/27,
LOC: BANQUE NATIONAL DE PARIS 4,600,000 4,600,000
MONTGOMERY CANCER CENTER, 6.00%, 10/1/12,
LOC: SOUTHTRUST BANK 3,865,000 3,865,000
NATIONAL ROOFING CONTRACTORS ASSOCIATION VRDN,
6.55%, 10/1/24, LOC: AMERICAN NATIONAL BANK & TRUST
3,100,000 3,100,000
6.55%, 10/1/25, LOC: AMERICAN NATIONAL BANK & TRUST
900,000 900,000
POINTE CHASE APARTMENTS LLC VRDN, 6.50%, 12/1/29
LOC: COLUMBUS BANK & TRUST 8,175,000 8,175,000
SOUTH CENTRAL COMMUNICATIONS CORPORATION VRDN, 6.60%,
6/1/13, CONF: SUNTRUST BANK, LOC: CITIZEN NATIONAL BANK
4,800,000 4,800,000
YUENGLING BEER COMPANY, INC. VRDN, 6.45%, 11/1/19,
LOC: PNC BANK NA 5,000,000 5,000,000
TOTAL CORPORATE OBLIGATIONS (COST $46,885,662) 46,885,662
COMMERCIAL PAPER - 40.3%
BARTON CAPITAL CORP., 6.20%, 1/18/00,
BPA: SOCIETE GENERALE 5,000,000 4,985,361
BEAR STEARNS COMPANY, INC., 5.10%, 1/7/00 5,000,000 4,998,932
BLOCK FINANCIAL CORP., 6.80%, 1/28/00 5,000,000 4,974,500
DUKE UNIVERSITY, 6.05%, 2/23/00 5,000,000 4,955,465
GENERAL ELECTRIC CAPITAL CORP.,
5.96%, 3/9/00 5,500,000 5,438,082
6.03%, 3/10/00 5,000,000 4,942,213
GOLDMAN SACHS GROUP LP, 6.18%, 2/29/00 5,000,000 4,949,359
GOVCO INCORPORATED, 6.00%, 2/18/00 5,000,000 4,960,000
LOWER COLORADO RIVER AUTHORITY, 6.22%, 4/5/00
3,000,000 3,000,000
MARKET STREET FUNDING CORP., 6.26%, 1/14/00
5,000,000 4,988,697
MERRILL LYNCH & CO., 6.27%, 2/4/00 5,000,000 4,970,392
MITSUBISHI INTERNATIONAL CORP., 6.15%, 1/28/00
4,819,000 4,796,772
MORGAN STANLEY DEAN WITTER, 6.05%, 1/26/00 7,000,000 6,970,590
PNC FUNDING CORP., 6.17%, 1/31/00, GA: PNC BANK NA
5,000,000 4,974,292
SOUTHERN ELECTRIC GENERATING CO., 6.30%, 1/12/00
5,000,000 4,990,375
TRANSMISSION AGENCY OF NORTHERN CALIFORNIA, 6.18%, 2/9/00,
LOC: WESTDEUTSCHE LANDES 5,682,000 5,682,000
TOTAL COMMERCIAL PAPER (COST $80,577,030) 80,577,030
<PAGE>
PRINCIPAL
MUNICIPAL OBLIGATIONS - 35.8% AMOUNT VALUE
ALAMO HEIGHTS TEXAS HIGHER EDUCATION REVENUE
VRDN, 5.88%, 4/1/07, LOC: BANK ONE OHIO $5,475,000 $5,475,000
ARKANSAS STATE IDA REVENUE VRDN, 6.60%, 8/1/30,
LOC: FNB CHICAGO 6,000,000 6,000,000
BOTSFORD MICHIGAN GENERAL HOSPITAL REVENUE
VRDN, 5.95%, 2/15/27, LOC: MICHIGAN NATIONAL BANK
300,000 300,000
CALIFORNIA STATE HOUSING FINANCE AGENCY REVENUE
VRDN, 6.4725%, 8/1/12, BPA: CALSTRS, AMBAC INSURED
5,000,000 5,000,000
CATHOLIC HEALTH INITIATIVES REVENUE VRDN, 7.00%, 12/1/27,
BPA: MORGAN GUARANTY TRUST 1,500,000 1,500,000
COLUMBUS GEORGIA DEVELOPMENT AUTHORITY REVENUE
VRDN, 6.75%, 12/1/19, LOC: BANK OF NOVA SCOTIA
7,000,000 7,000,000
FAIRVIEW MINNESOTA HOSPITAL AND HEALTHCARE SERVICES REVENUE
VRDN, 6.50%, 11/1/15, BPA: US BANK, MBIA INSURED
3,700,000 3,700,000
ILLINOIS HOUSING DEVELOPMENT AUTHORITY, 6.325%, 6/1/22,
TOA: CITIBANK, AMBAC INSURED 5,000,000 5,000,000
MAIN FINANCE AUTHORITY REVENUE VRDN, 6.45%, 6/1/08,
BPA: FLEET BANK, AMBAC INSURED 3,740,000 3,740,000
MARYLAND STATE HEALTH AND HIGHER EDUCATION'S FACILITIES AUTHORITY
REVENUE VRDN, 7.85%, 1/1/28, LOC: FIRST UNION BANK
2,000,000 2,000,000
MISSISSIPPI STATE IDA REVENUE VRDN, 6.00%, 6/1/10,
LOC: NATIONAL BANK OF DETROIT 3,700,000 3,700,000
MONTGOMERY COUNTY NEW YORK IDA REVENUE VRDN,
6.20%, 5/1/25, LOC: FHLB NEW YORK 3,610,000 3,610,000
NORTH GREENBUSH NEW YORK IDA REVENUE VRDN,
6.35%, 11/1/08, LOC: ABN AMRO BANK 2,800,000 2,800,000
OHIO SATE VRDN, 6.5325%, 10/1/21, TOA: CITIBANK,
AMBAC INSURED 2,000,000 2,000,000
PASADENA CALIFORNIA COPS REVENUE VRDN, 7.375%, 11/1/12,
LOC: CANADIAN IMPERIAL 4,900,000 4,900,000
ROMAN CATHOLIC DIOCESE NORTH CAROLINA REVENUE VRDN,
6.25%, 4/1/15, LOC: BANK OF AMERICA 5,200,000 5,200,000
ST PAUL MINNESOTA HOUSING REDEVELOPMENT AUTHORITY REVENUE
VRDN, 6.5%, 6/1/15, LOC: CREDIT LOCAL DE FRANCE
670,000 670,000
SHAWNEE KANSAS PRIVATE ACTIVITY REVENUE VRDN, 5.58%, 12/1/12,
LOC: CHASE MANHATTAN 6,400,000 6,400,000
WAUKESHA WISCONSIN HEALTH SYSTEMS REVENUE VRDN,
6.45%, 8/15/26, LOC: BANK OF AMERICA 2,500,000 2,500,000
TOTAL MUNICIPAL OBLIGATIONS (COST $71,495,000) 71,495,000
TOTAL INVESTMENTS (COST $198,957,692) - 99.5% 198,957,692
OTHER ASSETS AND LIABILITIES, NET - 0.5% 980,256
NET ASSETS - 100% $199,937,948
SEE NOTES TO PORTFOLIOS OF INVESTMENTS AND NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS
* NON-INCOME PRODUCING.
^ FUTURES COLLATERALIZED BY 645,000 UNITS OF U.S. TREASURY BILLS.
FOR THE MONEY MARKET PORTFOLIO, OPTIONAL TENDER FEATURES GIVE THESE SECURITIES
A SHORTER EFFECTIVE MATURITY DATE.
EXPLANATION OF GUARANTEES:
BPA: BOND-PURCHASE AGREEMENT
GA: GUARANTY AGREEMENT
LOC: LETTER OF CREDIT
TOA: TENDER OPTION AGREEMENT
ABBREVIATIONS:
ADR AMERICAN DEPOSITORY RECEIPT
COPS: CERTIFICATES OF PARTICIPATION
IDA: INDUSTRIAL DEVELOPMENT AUTHORITY
VRDN: VARIABLE RATE DEMAND NOTES
(CHF) SECURITY IS VALUED IN SWISS FRANCS.
(EUR) SECURITY IS VALUED IN EUROPEAN EUROS.
(GBP) SECURITY IS VALUED IN GREAT BRITISH POUNDS.
(HKD) SECURITY IS VALUED IN HONG KONG DOLLARS.
(JPY) SECURITY IS VALUED IN JAPANESE YEN.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
INCOME & SMALL
GROWTH GROWTH CAPITALIZATION
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENTS IN SECURITIES, AT VALUE - SEE
ACCOMPANYING PORTFOLIOS $77,604,998 $199,322,631 $124,064,066
CASH 51,456 84,636 60,256
RECEIVABLE FOR SECURITIES SOLD 2,765,218 - 1,546,099
RECEIVABLE FOR SHARES SOLD - - 6,928
INTEREST & DIVIDENDS RECEIVABLE 12,819 26,879 4,068
TOTAL ASSETS 80,434,491 199,434,146 125,681,417
LIABILITIES
PAYABLE FOR SECURITIES PURCHASED - 1,337,270 -
PAYABLE FOR SHARES REDEEMED - - 6,928
PAYABLE TO AMERITAS INVESTMENT CORP.
35,256 109,507 77,003
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES, INC.
4,246 8,266 4,995
ACCRUED EXPENSES AND OTHER LIABILITIES
10,268 26,231 15,771
TOTAL LIABILITIES 49,770 1,481,274 104,697
NET ASSETS $80,384,721 $197,952,872 $125,576,720
NET ASSETS CONSIST OF:
PAID-IN CAPITAL APPLICABLE TO 4,633,041,
3,053,488, AND 2,225,782 SHARES OF COMMON
STOCK OUTSTANDING FOR THE INCOME AND GROWTH,
GROWTH, AND SMALL CAPITALIZATION PORTFOLIOS,
RESPECTIVELY, $0.01 PAR VALUE WITH 1,000,000,000
SHARES AUTHORIZED FOR EACH PORTFOLIO
$64,355,708 $170,822,653 $98,437,332
UNDISTRIBUTED NET INVESTMENT INCOME
- 14,765 -
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS
578,686 (228,348) 189,866
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS 15,450,327 27,343,802 26,949,522
NET ASSETS $80,384,721 $197,952,872 $125,576,720
NET ASSET VALUE PER SHARE $17.35 $64.83 $56.42
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
MIDCAP EMERGING
GROWTH GROWTH RESEARCH
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENTS IN SECURITIES, AT VALUE -
SEE ACCOMPANYING PORTFOLIOS $76,030,067 $129,093,777 $25,994,192
CASH 50,170 75,366 -
RECEIVABLE FOR SECURITIES SOLD - 129,299 125,655
RECEIVABLE FOR SHARES SOLD - - 6,948
INTEREST & DIVIDENDS RECEIVABLE 6,244 6,303 11,178
TOTAL ASSETS 76,086,481 129,304,745 26,137,973
LIABILITIES
PAYABLE TO BANK - - 60,128
PAYABLE FOR SECURITIES PURCHASED
385,830 1,176,620 121,416
PAYABLE FOR SHARES REDEEMED - - 6,948
PAYABLE TO AMERITAS INVESTMENT CORP.
43,171 62,294 5,251
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES, INC.
4,246 4,599 4,246
ACCRUED EXPENSES AND OTHER LIABILITIES
9,921 20,955 11,106
TOTAL LIABILITIES 443,168 1,264,468 209,095
NET ASSETS $75,643,313 $128,040,277 $25,928,878
NET ASSETS CONSIST OF:
PAID-IN CAPITAL APPLICABLE TO 2,401,181,
3,381,661, AND 1,127,659 SHARES OF COMMON
STOCK OUTSTANDING FOR THE MIDCAP GROWTH,
EMERGING GROWTH, AND RESEARCH PORTFOLIOS,
RESPECTIVELY, $0.01 PAR VALUE WITH 1,000,000,000
SHARES AUTHORIZED FOR EACH PORTFOLIO
$63,580,239 $87,704,900 $22,784,319
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS
303,414 266,980 59,970
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS 11,759,660 40,068,397 3,084,589
NET ASSETS $75,643,313 $128,040,277 $25,928,878
NET ASSET VALUE PER SHARE $31.50 $37.86 $22.99
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
GROWTH WITH INDEX MONEY
INCOME 500 MARKET
ASSETS PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENTS IN SECURITIES, AT VALUE -
SEE ACCOMPANYING PORTFOLIOS $34,737,570 206,758,103 $198,957,692
CASH 5,257 29,133 143,046
RECEIVABLE FOR SECURITIES SOLD 29,968 17,015 -
RECEIVABLE FOR SHARES SOLD 2,243 - -
RECEIVABLE FOR VARIATION MARGIN - 15,300 -
INTEREST & DIVIDENDS RECEIVABLE 27,841 198,085 920,413
TOTAL ASSETS 34,802,879 207,017,636 200,021,151
LIABILITIES
PAYABLE TO BANK 11,163 - -
PAYABLE FOR SECURITIES PURCHASED
18,742 83,874 -
PAYABLE FOR SHARES REDEEMED 2,244 - -
PAYABLE TO AMERITAS INVESTMENT CORP.
11,641 25,104 22,173
PAYABLE TO CALVERT ADMINISTRATIVE SERVICES, INC.
4,246 8,535 7,201
ACCRUED EXPENSES AND OTHER LIABILITIES
12,732 28,244 53,829
TOTAL LIABILITIES 60,768 145,757 83,203
NET ASSETS $34,742,111 $206,871,879 $199,937,948
NET ASSETS CONSIST OF:
PAID-IN CAPITAL APPLICABLE TO 1,641,062,
1,236,535, AND 199,936,134 SHARES OF COMMON
STOCK OUTSTANDING FOR THE GROWTH WITH INCOME,
INDEX 500, AND MONEY MARKET PORTFOLIOS,
RESPECTIVELY, $0.01 PAR VALUE WITH 1,000,000,000
SHARES AUTHORIZED FOR THE GROWTH WITH INCOME,
AND INDEX 500 PORTFOLIOS, AND 2,000,000,000
FOR THE MONEY MARKET PORTFOLIO
$33,211,585 $191,758,579 $199,936,134
UNDISTRIBUTED NET INVESTMENT INCOME
6,869 80,589 1,814
ACCUMULATED NET REALIZED GAIN (LOSS) ON INVESTMENTS
(2,081) 631,467 -
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS 1,525,738 14,401,244 -
NET ASSETS $34,742,111 $206,871,879 $199,937,948
NET ASSET VALUE PER SHARE $21.17 $167.30 $1.00
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF OPERATIONS
FROM INCEPTION (NOVEMBER 1, 1999)
THROUGH DECEMBER 31, 1999
INCOME & SMALL
GROWTH GROWTH CAPITALIZATION
NET INVESTMENT INCOME PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT INCOME:
INTEREST INCOME $24,491 $127,666 $58,613
DIVIDEND INCOME 47,582 163,575 8,184
TOTAL INVESTMENT INCOME 72,073 291,241 66,797
EXPENSES:
INVESTMENT ADVISORY FEE 75,862 238,838 157,905
TRANSFER AGENCY FEES AND EXPENSES
1,600 1,600 1,600
ADMINISTRATIVE FEES 8,356 15,922 9,289
DIRECTORS' FEES AND EXPENSES 1,012 2,869 1,581
CUSTODIAN FEES 3,145 11,200 6,619
REPORTS TO SHAREHOLDERS 2,820 7,680 4,317
PROFESSIONAL FEES 3,340 8,760 5,110
TOTAL EXPENSES 96,135 286,869 186,421
REIMBURSEMENT FROM ADVISOR (13,526) (35,281) (19,219)
FEES PAID INDIRECTLY (68) - -
NET EXPENSES 82,541 251,588 167,202
NET INVESTMENT INCOME (LOSS) (10,468) 39,653 (100,405)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
NET REALIZED GAIN (LOSS) 2,895,907 (228,348) 1,266,853
CHANGE IN UNREALIZED APPRECIATION OR
(DEPRECIATION) ON INVESTMENTS
15,450,327 27,343,802 26,949,522
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
18,346,234 27,115,454 28,216,375
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
$18,335,766 $27,155,107 $28,115,970
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF OPERATIONS
FROM INCEPTION (NOVEMBER 1, 1999)
THROUGH DECEMBER 31, 1999
MIDCAP EMERGING
GROWTH GROWTH RESEARCH
NET INVESTMENT INCOME PORTFOLIO PORTFOLIO PORTFOLIO
INVESTMENT INCOME:
INTEREST INCOME $77,190 $57,653 $6,198
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD
OF $288 AND $248 FOR THE EMERGING GROWTH
AND RESEARCH PORTFOLIOS, RESPECTIVELY)
14,023 11,764 27,654
TOTAL INVESTMENT INCOME 91,213 69,417 33,852
EXPENSES:
INVESTMENT ADVISORY FEE 93,241 130,638 31,003
TRANSFER AGENCY FEES AND EXPENSES
1,600 1,600 1,600
ADMINISTRATIVE FEES 8,356 8,710 8,356
DIRECTORS' FEES AND EXPENSES 1,042 1,439 380
CUSTODIAN FEES 3,145 20,375 15,197
REPORTS TO SHAREHOLDERS 2,741 3,995 1,024
PROFESSIONAL FEES 3,200 4,790 1,140
TOTAL EXPENSES 113,325 171,547 58,700
REIMBURSEMENT FROM ADVISOR (15,191) (21,431) (21,930)
FEES PAID INDIRECTLY (226) (2,053) (1,219)
NET EXPENSES 97,908 148,063 35,551
NET INVESTMENT INCOME (LOSS) (6,695) (78,646) (1,699)
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENTS 2,012,868 367,141 356,398
FOREIGN CURRENCY TRANSACTIONS: - (21,515) (186)
2,012,868 345,626 356,212
CHANGE IN UNREALIZED APPRECIATION OR
(DEPRECIATION) ON:
INVESTMENTS AND FOREIGN CURRENCIES
11,759,660 40,073,387 3,084,516
ASSETS AND LIABILITIES DENOMINATED IN
FOREIGN CURRENCIES - (4,990) 73
11,759,660 40,068,397 3,084,589
NET REALIZED AND UNREALIZED
GAIN (LOSS) 13,772,528 40,414,023 3,440,801
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $13,765,833 $40,335,377 $3,439,102
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF OPERATIONS
FROM INCEPTION (NOVEMBER 1, 1999)
THROUGH DECEMBER 31, 1999
GROWTH WITH INDEX
INCOME 500
NET INVESTMENT INCOME PORTFOLIO PORTFOLIO
INVESTMENT INCOME:
INTEREST INCOME $3,288 $22,454
DIVIDEND INCOME (NET OF FOREIGN TAXES WITHHELD OF $491
AND $987 FOR THE GROWTH WITH INCOME AND INDEX 500
PORTFOLIOS, RESPECTIVELY) 71,501 457,004
TOTAL INVESTMENT INCOME 74,789 479,458
EXPENSES:
INVESTMENT ADVISORY FEE 42,591 79,768
TRANSFER AGENCY FEES AND EXPENSES 1,600 1,600
ADMINISTRATIVE FEES 8,356 16,618
DIRECTORS' FEES AND EXPENSES 621 2,942
CUSTODIAN FEES 15,487 15,097
REPORTS TO SHAREHOLDERS 1,405 8,112
PROFESSIONAL FEES 1,560 9,141
TOTAL EXPENSES 71,620 133,278
REIMBURSEMENT FROM ADVISOR (21,396) (38,459)
FEES PAID INDIRECTLY (248) (1,752)
NET EXPENSES 49,976 93,067
NET INVESTMENT INCOME (LOSS) 24,813 386,391
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
INVESTMENTS (2,081) 331,956
FOREIGN CURRENCY TRANSACTIONS (1,177) -
FUTURES - 299,511
(3,258) 631,467
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) ON:
INVESTMENTS AND FOREIGN CURRENCIES 1,525,388 14,270,174
ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
350 -
FUTURES - 131,070
1,525,738 14,401,244
NET REALIZED AND UNREALIZED GAIN (LOSS) 1,522,480 15,032,711
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,547,293 $15,419,102
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FROM INCEPTION (OCTOBER 29, 1999)
THROUGH DECEMBER 31, 1999
NET INVESTMENT INCOME
INVESTMENT INCOME:
INTEREST INCOME $1,717,330
EXPENSES:
INVESTMENT ADVISORY FEE 57,951
TRANSFER AGENT FEES AND EXPENSES 1,600
DIRECTORS' FEES AND EXPENSES 2,544
ADMINISTRATIVE SERVICES FEES 14,488
CUSTODIAN FEES 3,258
REPORTS TO SHAREHOLDERS 7,306
PROFESSIONAL FEES 7,970
TOTAL EXPENSES 95,117
REIMBURSEMENT FROM ADVISOR (19,277)
FEES PAID INDIRECTLY (500)
NET EXPENSES 75,340
NET INVESTMENT INCOME (LOSS) 1,641,990
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,641,990
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INCOME & GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ($10,468)
NET REALIZED GAIN (LOSS) ON INVESTMENTS 2,895,907
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 15,450,327
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 18,335,766
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAIN (2,306,753)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 62,811,849
SHARES SOLD 2,633,985
REINVESTMENT OF DISTRIBUTIONS 2,306,735
SHARES REDEEMED (3,396,861)
TOTAL CAPITAL SHARE TRANSACTIONS 64,355,708
TOTAL INCREASE (DECREASE) IN NET ASSETS 80,384,721
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $80,384,721
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 4,541,710
SHARES SOLD 165,610
REINVESTMENT OF DISTRIBUTIONS 133,414
SHARES REDEEMED (207,693)
TOTAL CAPITAL SHARE ACTIVITY 4,633,041
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) $39,653
NET REALIZED GAIN (LOSS) (228,348)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 27,343,802
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 27,155,107
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME (24,888)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 173,585,294
SHARES SOLD 39,823,698
REINVESTMENT OF DISTRIBUTIONS 24,877
SHARES REDEEMED (42,611,216)
TOTAL CAPITAL SHARE TRANSACTIONS 170,822,653
TOTAL INCREASE (DECREASE) IN NET ASSETS 197,952,872
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $14,765) $197,952,872
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 3,097,525
SHARES SOLD 661,287
REINVESTMENT OF DISTRIBUTIONS 385
SHARES REDEEMED (705,709)
TOTAL CAPITAL SHARE ACTIVITY 3,053,488
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
SMALL CAPITALIZATION PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ($100,405)
NET REALIZED GAIN (LOSS) ON INVESTMENTS 1,266,853
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 26,949,522
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 28,115,970
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAIN ON INVESTMENTS (976,582)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 99,408,414
SHARES SOLD 39,190,361
REINVESTMENT OF DISTRIBUTIONS 976,582
SHARES REDEEMED (41,138,025)
TOTAL CAPITAL SHARE TRANSACTIONS 98,437,332
TOTAL INCREASE (DECREASE) IN NET ASSETS 125,576,720
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $125,576,720
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 2,256,718
SHARES SOLD 788,324
REINVESTMENT OF DISTRIBUTIONS 17,603
SHARES REDEEMED (836,863)
TOTAL CAPITAL SHARE ACTIVITY 2,225,782
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MIDCAP GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ($6,695)
NET REALIZED GAIN (LOSS) ON INVESTMENTS 2,012,868
CHANGE IN UNREALIZED APPRECIATION OR (DEPRECIATION) 11,759,660
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 13,765,833
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAINS (1,702,759)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 61,836,665
SHARES SOLD 10,044,429
REINVESTMENT OF DISTRIBUTIONS 1,702,758
SHARES REDEEMED (10,003,613)
TOTAL CAPITAL SHARE TRANSACTIONS 63,580,239
TOTAL INCREASE (DECREASE) IN NET ASSETS 75,643,313
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $75,643,313
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 2,342,298
SHARES SOLD 344,824
REINVESTMENT OF DISTRIBUTIONS 54,751
SHARES REDEEMED (340,692)
TOTAL CAPITAL SHARE ACTIVITY 2,401,181
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
EMERGING GROWTH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ($78,646)
NET REALIZED GAIN (LOSS) 345,626
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 40,068,397
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 40,335,377
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 84,549,543
SHARES SOLD 7,719,494
SHARES REDEEMED (4,564,137)
TOTAL CAPITAL SHARE TRANSACTIONS 87,704,900
TOTAL INCREASE (DECREASE) IN NET ASSETS 128,040,277
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $128,040,277
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 3,274,576
SHARES SOLD 253,139
SHARES REDEEMED (146,054)
TOTAL CAPITAL SHARE ACTIVITY 3,381,661
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
RESEARCH PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) ($1,699)
NET REALIZED GAIN (LOSS) ON INVESTMENTS 356,212
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 3,084,589
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 3,439,102
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET REALIZED GAIN (294,543)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 22,806,495
SHARES SOLD 1,685,017
REINVESTMENT OF DISTRIBUTIONS 294,543
SHARES REDEEMED (2,001,736)
TOTAL CAPITAL SHARE TRANSACTIONS 22,784,319
TOTAL INCREASE (DECREASE) IN NET ASSETS 25,928,878
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD $25,928,878
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 1,126,803
SHARES SOLD 80,339
REINVESTMENT OF DISTRIBUTIONS 12,902
SHARES REDEEMED (92,385)
TOTAL CAPITAL SHARE ACTIVITY 1,127,659
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
GROWTH WITH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) $24,813
NET REALIZED GAIN (LOSS) ON INVESTMENTS (3,258)
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 1,525,738
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,547,293
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME (16,767)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 33,614,544
SHARES SOLD 650,473
REINVESTMENT OF DISTRIBUTIONS 16,767
SHARES REDEEMED (1,070,199)
TOTAL CAPITAL SHARE TRANSACTIONS 33,211,585
TOTAL INCREASE (DECREASE) IN NET ASSETS 34,742,111
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $6,869) $34,742,111
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 1,660,798
SHARES SOLD 31,786
REINVESTMENT OF DISTRIBUTIONS 795
SHARES REDEEMED (52,317)
TOTAL CAPITAL SHARE ACTIVITY 1,641,062
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
INDEX 500 PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
NOVEMBER 1, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME (LOSS) $386,391
NET REALIZED GAIN (LOSS) ON INVESTMENTS 631,467
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 14,401,244
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 15,419,102
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME (305,802)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 189,593,992
SHARES SOLD 17,091,074
REINVESTMENT OF DISTRIBUTIONS 305,798
SHARES REDEEMED (15,232,285)
TOTAL CAPITAL SHARE TRANSACTIONS 191,758,579
TOTAL INCREASE (DECREASE) IN NET ASSETS 206,871,879
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $80,589) $206,871,879
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 1,223,108
SHARES SOLD 105,970
REINVESTMENT OF DISTRIBUTIONS 1,834
SHARES REDEEMED (94,377)
TOTAL CAPITAL SHARE ACTIVITY 1,236,535
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION,
OCTOBER 29, 1999
THROUGH
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1999
OPERATIONS:
NET INVESTMENT INCOME $1,641,990
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,641,990
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME (1,640,176)
CAPITAL SHARE TRANSACTIONS:
CONTRIBUTION OF ASSETS (SEE NOTE A) 172,785,829
SHARES SOLD 263,478,740
REINVESTMENT OF DISTRIBUTIONS 1,606,827
SHARES REDEEMED (237,935,262)
TOTAL CAPITAL SHARE TRANSACTIONS 199,936,134
TOTAL INCREASE (DECREASE) IN NET ASSETS 199,937,948
NET ASSETS
BEGINNING OF PERIOD -
END OF PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME
OF $1,814) $199,937,948
CAPITAL SHARE ACTIVITY
CONTRIBUTION OF ASSETS (SEE NOTE A) 172,785,829
SHARES SOLD 263,478,740
REINVESTMENT OF DISTRIBUTIONS 1,606,827
SHARES REDEEMED (237,935,262)
TOTAL CAPITAL SHARE ACTIVITY 199,936,134
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
GENERAL: THE AMERITAS PORTFOLIOS (THE "PORTFOLIOS"), A SERIES OF CALVERT
VARIABLE SERIES, INC. ("CVS" OR THE "FUND"). THE FUND IS REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940 AS AN OPEN-END MANAGEMENT INVESTMENT COMPANY. THE
INCOME & GROWTH, GROWTH, SMALL CAPITALIZATION, MIDCAP GROWTH AND EMERGING GROWTH
PORTFOLIOS ARE REGISTERED AS DIVERSIFIED PORTFOLIOS. THE RESEARCH, GROWTH WITH
INCOME, INDEX 500 AND MONEY MARKET PORTFOLIOS ARE REGISTERED AS NON-DIVERSIFIED
PORTFOLIOS. THE OPERATIONS OF EACH SERIES OF THE FUND ARE ACCOUNTED FOR
SEPARATELY. THE FUND OFFERS ITS SHARES, WITHOUT SALES CHARGE, ONLY FOR PURCHASE
BY INSURANCE COMPANIES FOR ALLOCATION TO THEIR VARIABLE ACCOUNTS.
AS OF NOVEMBER 1, 1999, NINE INVESTMENT OFFERINGS OF AMERITAS VARIABLE LIFE
INSURANCE COMPANY'S ("EXISTING FUNDS") BECAME THE AMERITAS PORTFOLIOS WITHIN THE
FUND. EACH OF THE AMERITAS PORTFOLIOS HAVE INVESTMENT OBJECTIVES AND POLICIES
THAT ARE SUBSTANTIALLY THE SAME OR SUFFICIENTLY SIMILAR TO THE INVESTMENT
OBJECTIVES AND POLICIES OF ONE OF THE EXISTING FUNDS INVOLVED IN THE
SUBSTITUTIONS (EACH, A "REPLACED FUND"). THE SUBSTITUTIONS WERE EFFECTED BY
REDEEMING SHARES OF THE REPLACED FUNDS AT RELATIVE NET ASSET VALUE AND USING THE
PROCEEDS TO PURCHASE SHARES OF THE AMERITAS PORTFOLIOS AT NET ASSET VALUE ON THE
DATE THE SUBSTITUTIONS TOOK PLACE. THE PROCEEDS OF SUCH EXISTING FUNDS
REDEMPTIONS' WERE EFFECTED THROUGH A COMBINATION OF CASH AND IN-KIND
TRANSACTIONS. ALL REDEMPTIONS AND PURCHASES WERE EFFECTED IN ACCORDANCE WITH
RULE 22C-1 UNDER THE INVESTMENT COMPANY ACT OF 1940.
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. FOREIGN SECURITY PRICES, FURNISHED BY QUOTATION
SERVICES IN THE SECURITY'S LOCAL CURRENCY, ARE TRANSLATED USING THE CURRENT U.S.
DOLLAR EXCHANGE RATE. ALL SECURITIES HELD BY MONEY MARKET ARE VALUED AT
AMORTIZED COST, WHICH APPROXIMATES MARKET. RESTRICTED SECURITIES AND 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 PORTFOLIO COULD EXPERIENCE A DELAY IN RECOVERING ITS VALUE AND
POSSIBLE LOSS OF INCOME OR VALUE IF THE COUNTERPARTY FAILS TO PERFORM IN
ACCORDANCE WITH THE TERMS OF THE AGREEMENT.
<PAGE>
FUTURES CONTRACTS: THE PORTFOLIO MAY ENTER INTO FUTURES CONTRACTS AGREEING TO
BUY OR SELL A FINANCIAL INSTRUMENT FOR A SET PRICE AT A FUTURE DATE. THE
PORTFOLIO MAINTAINS SECURITIES WITH A VALUE EQUAL TO ITS OBLIGATION UNDER EACH
CONTRACT. INITIAL MARGIN DEPOSITS OF EITHER CASH OR SECURITIES ARE MADE UPON
ENTERING FUTURES CONTRACTS; THEREAFTER, VARIATION MARGIN PAYMENTS ARE MADE OR
RECEIVED DAILY REFLECTING THE CHANGE IN MARKET VALUE. UNREALIZED OR REALIZED
GAINS AND LOSSES ARE RECOGNIZED BASED ON THE CHANGE IN MARKET VALUE. RISKS OF
FUTURES CONTRACTS ARISE FROM THE POSSIBLE ILLIQUIDITY OF THE FUTURES MARKETS AND
THE MOVEMENT IN THE VALUE OF THE INVESTMENT OR IN INTEREST RATES.
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.
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 TAXABLE EARNINGS.
<PAGE>
NOTE B - RELATED PARTY TRANSACTIONS
AMERITAS INVESTMENT CORP. ("AIC") (THE "ADVISOR") IS A WHOLLY-OWNED SUBSIDIARY
OF AMAL CORPORATION, A NEBRASKA STOCK COMPANY, WHICH IN TURN IS A JOINT VENTURE
OF AMERITAS LIFE INSURANCE CORP. ("ALIC"), A STOCK LIFE INSURANCE COMPANY. ALIC
IS WHOLLY-OWNED BY AMERITAS HOLDING COMPANY, WHICH IN TURN, IS WHOLLY-OWNED BY
AMERITAS MUTUAL INSURANCE HOLDING COMPANY. PURSUANT TO A MERGER EFFECTIVE
JANUARY 1, 1999, AMERITAS MUTUAL INSURANCE HOLDING COMPANY MERGED WITH ACACIA
MUTUAL HOLDING CORPORATION TO FORM AMERITAS ACACIA MUTUAL HOLDING COMPANY. BOTH
AIC AND CALVERT GROUP, LTD. ("CALVERT"), ARE INDIRECTLY OWNED SUBSIDIARIES OF
THIS NEW ENTITY.
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 RECEIVES MONTHLY FEES BASED ON THE FOLLOWING ANNUAL RATES OF THE
PORTFOLIO'S AVERAGE DAILY NET ASSETS:
INCOME AND GROWTH .625%
GROWTH .75%
SMALL CAPITALIZATION .85%
MIDCAP GROWTH .80%
EMERGING GROWTH .75%
RESEARCH .75%
GROWTH WITH INCOME .75%
INDEX 500 .24%
MONEY MARKET .20%
THE PORTFOLIO'S AGGREGATE EXPENSES ARE LIMITED FOR A PERIOD OF ONE YEAR
FOLLOWING NOVEMBER 1, 1999 (OCTOBER 29, 1999 FOR MONEY MARKET) AS REFLECTED IN
THE TABLE BELOW.
INCOME AND GROWTH .68%
GROWTH .79%
SMALL CAPITALIZATION .90%
MIDCAP GROWTH .84%
EMERGING GROWTH .85%
RESEARCH .86%
GROWTH WITH INCOME .88%
INDEX 500 .28%
MONEY MARKET .26%
<PAGE>
AS A RESULT OF THE EXPENSE GUARANTEE, THE ADVISOR CONTRACTUALLY REIMBURSED
INCOME & GROWTH, GROWTH, SMALL CAPITALIZATION, MIDCAP GROWTH, EMERGING GROWTH,
RESEARCH, GROWTH WITH INCOME, INDEX 500 AND MONEY MARKET EXPENSES OF $13,526,
$35,281, $19,219, $15,191, $21,431, $21,930, $21,396, $38,459 AND $19,277,
RESPECTIVELY AT DECEMBER 31, 1999.
THE ADVISOR MAY RECAPTURE FEES WAIVED AND/OR EXPENSES REIMBURSED FOLLOWING THE
EXPIRATION OF THE INITIAL FEE CAP PERIOD. SUCH RECAPTURE WOULD ONLY BE
PERMITTED, AFTER TAKING INTO ACCOUNT THE FEE RECAPTURE, TO THE EXTENT THAT THE
EXPENSE RATIO OF THE RELEVANT PORTFOLIOS DOES NOT EXCEED THE PRIOR EXPENSE
RATIO. IN ADDITION, SUCH RECAPTURE WILL ONLY BE AVAILABLE UNTIL THE SECOND
ANNIVERSARY OF THE END OF THE INITIAL FEE CAP PERIOD.
CALVERT ADMINISTRATIVE SERVICES COMPANY ("CASC"), A SUBSIDIARY OF CALVERT AND
ACACIA MUTUAL, PROVIDES ADMINISTRATIVE SERVICES FOR THE PORTFOLIOS. FOR ITS
SERVICES, CASC RECEIVES AN ANNUAL FEE, PAYABLE MONTHLY, OF .05% OF THE
PORTFOLIO'S AVERAGE DAILY NET ASSETS, OR A MINIMUM OF $50,000 PER PORTFOLIO.
CALVERT SHAREHOLDER SERVICES, INC. ("CSSI"), A SUBSIDIARY OF CALVERT AND ACACIA
MUTUAL, ACTS AS SHAREHOLDER SERVICING AGENT FOR THE PORTFOLIOS. NATIONAL
FINANCIAL DATA SERVICES, INC. IS THE TRANSFER AND DIVIDEND DISBURSING AGENT.
EACH DIRECTOR WHO IS NOT AFFILIATED WITH THE ADVISOR RECEIVED A FEE OF $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:
INCOME & SMALL MIDCAP
GROWTH GROWTH CAPITALIZATION GROWTH
PURCHASES: $12,537,243 $33,403,020 $22,977,558 $15,834,738
SALES: 13,882,008 32,156,602 24,683,515 14,044,385
EMERGING GROWTH INDEX
GROWTH RESEARCH WITH INCOME 500
PURCHASES: $20,684,125 $4,163,745 $7,848,757 $13,129,445
SALES: 19,136,407 3,957,396 5,401,639 8,955,619
MONEY MARKET HELD ONLY SHORT-TERM INVESTMENTS.
<PAGE>
THE COST OF INVESTMENTS OWNED AT DECEMBER 31, 1999, WAS SUBSTANTIALLY THE SAME
FOR FEDERAL INCOME TAX PURPOSES AND FINANCIAL REPORTING PURPOSES. THE FOLLOWING
TABLE PRESENTS THE COMPONENTS OF NET UNREALIZED APPRECIATION (DEPRECIATION) AS
OF DECEMBER 31, 1999 AND THE NET REALIZED CAPITAL LOSS CARRYFORWARDS AS OF
DECEMBER 31, 1999 WITH EXPIRATION DATES:
UNREALIZED UNREALIZED CAPITAL LOSS EXPIRATION
APPRECIATION (DEPRECIATION) CARRYFORWARD DATES
INCOME AND GROWTH $16,226,568 $776,241 - -
GROWTH 31,543,723 4,199,921 $228,348 2007
SMALL CAPITALIZATION 29,142,126 2,192,604 - -
MIDCAP GROWTH 12,683,412 923,752 - -
EMERGING GROWTH 40,533,528 458,968 - -
RESEARCH 3,918,531 833,997 - -
GROWTH WITH INCOME 3,229,430 1,704,042 - -
INDEX 500 22,669,092 8,267,848 - -
CAPITAL LOSSES MAY BE UTILIZED TO OFFSET CURRENT AND FUTURE CAPITAL GAINS UNTIL
EXPIRATION.
THE PORTFOLIOS MAY ENGAGE IN INTERPORTFOLIO PURCHASE AND SALES TRANSACTIONS WITH
OTHER PORTFOLIOS. FOR THE MONEY MARKET PORTFOLIO, THESE TRANSACTIONS ARE
PRIMARILY USED FOR CASH MANAGEMENT NEEDS. FOR THE PERIOD ENDED DECEMBER 31,
1999, THE GROWTH WITH INCOME AND MONEY MARKET PORTFOLIOS ENGAGED IN
INTERPORTFOLIO TRANSACTIONS. THESE TRANSACTIONS WERE EXECUTED AT INDEPENDENTLY
DERIVED PRICES PURSUANT TO RULE 17A-7 UNDER THE INVESTMENT COMPANY ACT OF 1940.
NOTE D - LINE OF CREDIT
A FINANCING AGREEMENT IS IN PLACE WITH ALL CALVERT GROUP FUNDS (EXCEPT FOR
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 PORTFOLIOS HAD NO LOANS OUTSTANDING PURSUANT TO
THIS LINE OF CREDIT AT DECEMBER 31, 1999.
TAX INFORMATION (UNAUDITED)
FOR CORPORATE SHAREHOLDERS OF THE GROWTH, GROWTH WITH INCOME AND INDEX 500
PORTFOLIOS, A TOTAL OF 100% OF THE ORDINARY DIVIDENDS PAID DURING THE TAXABLE
YEAR ENDED DECEMBER 31, 1999 QUALIFY FOR THE DIVIDEND RECEIVED DEDUCTION.
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
DECEMBER 31,
INCOME AND GROWTH PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $13.83
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME -
NET REALIZED AND UNREALIZED GAIN (LOSS) 4.03
TOTAL FROM INVESTMENT OPERATIONS 4.03
DISTRIBUTIONS FROM
NET REALIZED GAINS (.51)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 3.52
NET ASSET VALUE, ENDING $17.35
TOTAL RETURN 29.14%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.09%) (A)
TOTAL EXPENSES .79% (A)
EXPENSES BEFORE OFFSETS .68% (A)
NET EXPENSES .68% (A)
PORTFOLIO TURNOVER 18%
NET ASSETS, ENDING (IN THOUSANDS) $80,385
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 4,633
PERIOD ENDED
DECEMBER 31,
GROWTH PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $56.04
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .01
NET REALIZED AND UNREALIZED GAIN (LOSS) 8.79
TOTAL FROM INVESTMENT OPERATIONS 8.80
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.01)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 8.79
NET ASSET VALUE, ENDING $64.83
TOTAL RETURN 15.70%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME .12% (A)
TOTAL EXPENSES .90% (A)
EXPENSES BEFORE OFFSETS .79% (A)
NET EXPENSES .79% (A)
PORTFOLIO TURNOVER 18%
NET ASSETS, ENDING (IN THOUSANDS) $197,953
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 3,053
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
DECEMBER 31,
SMALL CAPITALIZATION PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $44.05
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (0.05)
NET REALIZED AND UNREALIZED GAIN (LOSS) 12.86
TOTAL FROM INVESTMENT OPERATIONS 12.81
DISTRIBUTIONS FROM
NET REALIZED GAINS (0.44)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 12.37
NET ASSET VALUE, ENDING $56.42
TOTAL RETURN 29.10%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.54%) (A)
TOTAL EXPENSES 1.00% (A)
EXPENSES BEFORE OFFSETS .90% (A)
NET EXPENSES .90% (A)
PORTFOLIO TURNOVER 21%
NET ASSETS, ENDING (IN THOUSANDS) $125,577
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 2,226
PERIOD ENDED
DECEMBER 31,
MIDCAP GROWTH PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $26.40
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) -
NET REALIZED AND UNREALIZED GAIN (LOSS) 5.82
TOTAL FROM INVESTMENT OPERATIONS 5.82
DISTRIBUTIONS FROM
NET REALIZED GAINS (0.72)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 5.10
NET ASSET VALUE, ENDING $31.50
TOTAL RETURN 22.09%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.06%) (A)
TOTAL EXPENSES 0.97% (A)
EXPENSES BEFORE OFFSETS 0.84% (A)
NET EXPENSES 0.84% (A)
PORTFOLIO TURNOVER 21%
NET ASSETS, ENDING (IN THOUSANDS) $75,643
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 2,401
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
DECEMBER 31,
EMERGING GROWTH PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $25.82
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME (LOSS) (.02)
NET REALIZED AND UNREALIZED GAIN (LOSS) 12.06
TOTAL FROM INVESTMENT OPERATIONS 12.04
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 12.04
NET ASSET VALUE, ENDING $37.86
TOTAL RETURN 46.63%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.45%) (A)
TOTAL EXPENSES .98% (A)
EXPENSES BEFORE OFFSETS .86% (A)
NET EXPENSES .85% (A)
PORTFOLIO TURNOVER 18%
NET ASSETS, ENDING (IN THOUSANDS) $128,040
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 3,382
PERIOD ENDED
DECEMBER 31,
RESEARCH PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $20.24
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME -
NET REALIZED AND UNREALIZED GAIN (LOSS) 3.01
TOTAL FROM INVESTMENT OPERATIONS 3.01
DISTRIBUTIONS FROM
NET REALIZED GAINS (0.26)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 2.75
NET ASSET VALUE, ENDING $22.99
TOTAL RETURN 14.90%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME (.04%) (A)
TOTAL EXPENSES 1.42% (A)
EXPENSES BEFORE OFFSETS .89% (A)
NET EXPENSES .86% (A)
PORTFOLIO TURNOVER 16%
NET ASSETS, ENDING (IN THOUSANDS) $25,929
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 1,128
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
DECEMBER 31,
GROWTH WITH INCOME PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $20.24
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .02
NET REALIZED AND UNREALIZED GAIN (LOSS) .92
TOTAL FROM INVESTMENT OPERATIONS .94
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.01)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE .93
NET ASSET VALUE, ENDING $21.17
TOTAL RETURN 4.65%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME .44% (A)
TOTAL EXPENSES 1.26% (A)
EXPENSES BEFORE OFFSETS .88% (A)
NET EXPENSES .88% (A)
PORTFOLIO TURNOVER 16%
NET ASSETS, ENDING (IN THOUSANDS) $34,742
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 1,641
PERIOD ENDED
DECEMBER 31,
INDEX 500 PORTFOLIO 1999^
NET ASSET VALUE, BEGINNING $155.01
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .31
NET REALIZED AND UNREALIZED GAIN (LOSS) 12.23
TOTAL FROM INVESTMENT OPERATIONS 12.54
DISTRIBUTIONS FROM
NET INVESTMENT INCOME (.25)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE 12.29
NET ASSET VALUE, ENDING $167.30
TOTAL RETURN 8.09%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 1.16% (A)
TOTAL EXPENSES .40% (A)
EXPENSES BEFORE OFFSETS .29% (A)
NET EXPENSES .28% (A)
PORTFOLIO TURNOVER 5%
NET ASSETS, ENDING (IN THOUSANDS) $206,872
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 1,237
<PAGE>
FINANCIAL HIGHLIGHTS
PERIOD ENDED
DECEMBER 31,
MONEY MARKET PORTFOLIO 1999^^
NET ASSET VALUE, BEGINNING $1.00
INCOME FROM INVESTMENT OPERATIONS
NET INVESTMENT INCOME .01
TOTAL FROM INVESTMENT OPERATIONS .01
DISTRIBUTIONS FROM
NET INVESTMENT INCOME ( .01)
TOTAL INCREASE (DECREASE) IN NET ASSET VALUE -
NET ASSET VALUE, ENDING $1.00
TOTAL RETURN .99%
RATIOS TO AVERAGE NET ASSETS:
NET INVESTMENT INCOME 5.67% (A)
TOTAL EXPENSES .33% (A)
EXPENSES BEFORE OFFSETS .26% (A)
NET EXPENSES .26% (A)
NET ASSETS, ENDING (IN THOUSANDS) $199,938
NUMBER OF SHARES OUTSTANDING,
ENDING (IN THOUSANDS) 199,936
(A) ANNUALIZED
^ FROM NOVEMBER 1, 1999 INCEPTION.
^^ FROM OCTOBER 29, 1999 INCEPTION.
