SEC Registration Nos.
811-3591 and 2-80154
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 40 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
Amendment No. 40 XX
Calvert Variable Series, Inc.
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
__ Immediately upon filing __ on (date)
pursuant to paragraph (b) pursuant to paragraph (b)
XX 75 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
of Rule 485.
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CALVERT VARIABLE SERIES, INC.
AMERITAS PORTFOLIOS
PROSPECTUS
January 1, 2001
About the Portfolios
2 Investment Objectives and Strategies
5 Principal Investment Practices and Risks
About Your Investment
9 The Fund and Its Management
10 Purchase, Exchange and Redemption of Shares
11 Dividends and Distributions
11 Taxes
Portfolios In This Prospectus
Ameritas Select Portfolio
Ameritas Micro Cap Portfolio
These securities have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any State Securities Commission, nor has the SEC or
any State Securities Commission passed on the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
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AMERITAS SELECT PORTFOLIO
Objective
The Ameritas Select Portfolio seeks long-term capital appreciation. This
objective may be changed by the Fund's Board of Directors without shareholder
approval.
Principal Investment Strategies
The Ameritas Select Portfolio invests primarily in common stocks of U.S.
companies. The Portfolio is non-diversified, which means that it is not limited
under the Investment Company Act of 1940 to a percentage of assets that it may
invest in any one issuer. The Portfolio could own as few as 12 securities, but
generally will have 15 to 20 securities in its portfolio.
Principal Risks
You could lose money on your investment in the Portfolio, or the Portfolio could
underperform for any of the following reasons:
- The stock market goes down
- The individual stocks in the Portfolio do not perform as well as expected
- Investing in "value" stocks presents the risk that value stocks may fall
out of favor with investors and underperform growth stocks during given
periods.
- The Portfolio is non-diversified. Compared to other funds the Portfolio
may invest more of its assets in a smaller number of companies. Gains
or losses on a single stock may have a greater impact on the Portfolio.
An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
(No performance results are shown for the Portfolio since it was recently
organized.)
Advisor:
Ameritas Investment Corp.
Subadvisor:
Harris Associates L.P.
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AMERITAS MICRO CAP PORTFOLIO
Objective
The Ameritas Micro Cap Portfolio seeks long-term capital appreciation through
investment primarily in common stocks of smaller, faster-growing companies whose
securities at the time of purchase are considered to be realistically valued.
This objective may be changed by the Fund's Board of Directors without
shareholder approval.
Principal Investment Strategies
Under normal circumstances, the Portfolio will invest substantially all (but no
less than 65%) of its total assets in common stocks of smaller companies. The
Portfolio will invest primarily in equity securities of micro capitalization
companies. Micro capitalization companies are those with capitalizations at the
time of purchase of no more than 50% of the weighted average market
capitalization of the Russell 2000 Index, measured as of the last time the Index
was rebalanced, which is generally June 30 of each year. (This 50% figure was
approximately $465 million as of June 30, 2000). The Portfolio may also invest
to a lesser extent in companies with market capitalizations in excess of 50% of
the weighted average market capitalization of the Russell 2000 Index. The
Subadvisor will select investments for the Portfolio based on its assessment of
whether the securities are likely to provide favorable capital appreciation over
the long term.
The Portfolio may purchase stocks in initial public offerings ("IPOs") and may
sell such securities without regard to how long the Portfolio has held the
securities. The market capitalizations of the companies whose securities the
Portfolio purchases in IPOs may be outside the Portfolio's market capitalization
range stated above.
Principal Risks
You could lose money on your investment in the Portfolio, or the Portfolio could
underperform for any of the following reasons:
- The stock market goes down
- The individual stocks in the Portfolio do not perform as well as expected
- The prices of micro-cap stocks may respond to market activity differently
than larger more established companies so there is the possibility of
greater risk by investing in smaller capitalized companies rather than
larger, more established companies
- Investments in emerging growth companies may be subject to more abrupt
or erratic market movements and may involve greater risks than
investments in other companies.
- The Portfolio will allocate its investments among various industry
sectors. The Portfolio could miss attractive investment opportunities
by underweighting industry sectors where there are significant returns,
or could lose value over- weighting industry sectors where there are
significant declines.
Advisor:
Ameritas Investment Corp.
Subadvisor:
David L. Babson & Company Inc.
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An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
(No performance results are shown for the Portfolio since it was recently
organized.)
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Principal Investment Practices and Risks
The most concise description of each Portfolio's principal investment strategies
and associated risks is under the earlier summaries for each Portfolio. The
Portfolios are also permitted to invest in certain other investments and to use
certain investment techniques that have higher risks associated with them. On
the following pages are brief descriptions of the investments and techniques,
summarized earlier, along with certain additional investment techniques and
their risks.
For each of the investment practices listed, the table below shows each
Portfolio's limitations as a percentage of its assets and the principal types of
risk involved. (See the pages following the table for a description of the types
of risks). Numbers in this table show maximum allowable amount only; for actual
usage, consult the Portfolio's annual/semi-annual reports.
Key to the Table
J Portfolio currently uses
Q Permitted, but not typically used
(% of assets allowable, if restricted)
8 Not permitted
xN Allowed up to x% of Portfolio's net assets
xT Allowed up to x% of Portfolio's total assets
N/A Not applicable to this type of portfolio
Investment Practices
Active trading strategy/turnover. Involves selling a security soon after
Purchase. An active trading strategy causes a fund to have higher portfolio
Turnover compared to other funds and higher transaction costs, such as
Commissions and custodian and settlement fees, and may increase a portfolio's
Tax liability. Risks: opportunity, market and transaction.
Select Micro Cap
J J
Temporary defensive positions.
During adverse market, economic or political conditions, the portfolio may
Depart from its principal investment strategies by increasing its investment in
U.s. government securities and other short-term interest-bearing securities.
During times of any temporary defensive positions, a portfolio may not be able
To achieve its investment objective.
Risks: opportunity.
Select Micro Cap
Q Q
Conventional securities
Foreign securities. Securities issued by companies located outside the u.s.
And/or traded primarily on a foreign exchange. Risks: market, currency,
Transaction, liquidity, information and political.
Select Micro Cap
25T Q
Emerging market. Securities issued by companies located in those countries whose
Economies and capital markets are not as developed as those of more
Industrialized nations. Risks: market, currency, transaction, liquidity,
Information and political.
Select Micro Cap
8 Q
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Select
Micro cap
Investment practices (cont'd)
Conventional securities (cont'd)
Small cap stocks. Investing in small companies involves greater risk than with
More established companies. Small cap stock prices are more volatile and the
Companies often have limited product lines, markets, financial resources, and
Management experience. Risks: market, liquidity and information.
Select Micro Cap
Q J
Investment grade bonds. Bonds rated bbb/baa or higher or comparable unrated
Bonds. Risks: interest rate, market and credit.
Select Micro Cap
25T Q
Below-investment grade bonds. Bonds rated below bbb/baa or comparable unrated
Bonds are considered junk bonds. They are subject to greater credit risk than
Investment grade bonds.
Risks: credit, market, interest rate, liquidity and information.
Select Micro Cap
Q 8
Unrated debt securities. Bonds that have not been rated by a recognized rating
Agency; the advisor has determined the credit quality based on its own research.
Risks: credit, market, interest rate, liquidity and information.
Select Micro Cap
J 8
Illiquid securities. Securities which cannot be readily sold because there is no
Active market. Risks: liquidity, market and transaction.
Select Micro Cap
15N 15N
Unleveraged derivative securities
Asset-backed securities. Securities are backed by unsecured debt, such as credit
Card debt. These securities are often guaranteed or over-collateralized to
Enhance their credit quality. Risks: credit, interest rate and liquidity.
Select Micro Cap
8 8
Mortgage-backed securities. Securities are backed by pools of mortgages,
Including passthrough certificates, and other senior classes of collateralized
Mortgage obligations (cmos). Risks: credit, extension, prepayment, liquidity and
Interest rate.
Select Micro Cap
8 8
Participation interests. Securities representing an interest in another security
Or in bank loans. Risks: credit, interest rate and liquidity.
Select Micro Cap
8 8
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Investment Practices (cont'd)
Leveraged derivative instruments
Currency contracts. Contracts involving the right or obligation to buy or sell a
Given amount of foreign currency at a specified price and future date. Risks:
Currency, leverage, correlation, liquidity and opportunity.
Select Micro Cap
8 8
Options on securities and indices. Contracts giving the holder the right but not
The obligation to purchase or sell a security (or the cash value, in the case of
An option on an index) at a specified price within a specified time. In the case
Of selling (writing) options, the portfolios will write call options only if
They already own the security (if it is "covered"). Risks: interest rate,
Currency, market, leverage, correlation, liquidity, credit and opportunity.
Select Micro Cap
8 Q
Futures contract. Agreement to buy or sell a specific amount of a commodity or
Financial instrument at a particular price on a specific future date. Risks:
Interest rate, currency, market, leverage, correlation, liquidity and
Opportunity.
Select Micro Cap
8 Q
Structured securities. Indexed and/or leveraged mortgage-backed and other debt
Securities, including principal-only and interest-only securities, leveraged
Floating rate securities, and others. These securities tend to be highly
Sensitive to interest rate movements and their performance may not correlate to
These movements in a conventional fashion. Risks: credit, interest rate,
Extension, prepayment, market, leverage, liquidity and correlation.
Select Micro Cap
8 8
The Portfolios have additional investment policies and restrictions (for
example, repurchase agreements, real estate investment trusts, borrowing,
pledging, reverse repurchase agreements, securities lending, when-issued
securities and short sales.) These policies and restrictions are discussed in
the Statement of Additional Information ("SAI").
<PAGE>
Types of Investment Risk
Correlation risk
This occurs when a Portfolio "hedges"- uses one investment to offset the
Portfolio's position in another. If the two investments do not behave in
relation to one another the way Portfolio managers expect them to, then
unexpected or undesired results may occur. For example, a hedge may eliminate or
reduce gains as well as offset losses.
Credit risk
The risk that the issuer of a security or the counterparty to an investment
contract may default or become unable to pay its obligations when due.
Currency risk
Currency risk occurs when a Portfolio buys, sells or holds a security
denominated in foreign currency. Foreign currencies "float" in value against the
U.S. dollar. Adverse changes in foreign currency values can cause investment
losses when a Portfolio's investments are converted to U.S. dollars.
Extension risk
The risk that an unexpected rise in interest rates will extend the life of a
mortgage-backed security beyond the expected prepayment time, typically reducing
the security's value.
Information risk
The risk that information about a security or issuer or the market might not be
available, complete, accurate or comparable.
Interest rate risk
The risk that changes in interest rates will adversely affect the value of an
investor's securities. When interest rates rise, the value of fixed-income
securities will generally fall. Conversely, a drop in interest rates will
generally cause an increase in the value of fixed-income securities. Longer-term
securities and zero coupon/"stripped" coupon securities ("strips") are subject
to greater interest rate risk.
Leverage risk
The risk that occurs in some securities or techniques which tend to magnify the
effect of small changes in an index or a market. This can result in a
loss that exceeds the amount actually invested.
Liquidity risk
The risk that occurs when investments cannot be readily sold. A Portfolio may
have to accept a less-than-desirable price to complete the sale of an illiquid
security or may not be able to sell it at all.
Management risk
The risk that a Portfolio's portfolio management practices might not work to
achieve their desired result.
Market risk
The risk that securities prices in a market, a sector or an industry will
fluctuate, and that such movements might reduce an investment's value.
Opportunity risk
The risk of missing out on an investment opportunity because the assets needed
to take advantage of it are committed to less advantageous investments or
strategies.
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Political risk
The risk that may occur with foreign investments, and means that the value of an
investment may be adversely affected by nationalization, taxation, war,
government instability or other economic or political actions or factors.
Prepayment risk
The risk that unanticipated prepayments may occur, reducing the value of a
mortgage-backed security. The Portfolio must then reinvest those assets at the
current, market rate which may be lower.
Transaction risk
The risk that a Portfolio may be delayed or unable to settle a transaction or
that commissions and settlement expenses may be higher than usual.
The Fund and Its Management
About Ameritas Investment Corp.
Ameritas Investment Corp. ("AIC") (5900 "O" Street, 4th Floor, Lincoln, Nebraska
68510-1889) serves as the investment advisor of the Portfolios pursuant to an
Investment Advisory Agreement with the Fund. AIC is registered as an investment
advisor under the Investment Advisors Act of 1940 and also is registered as a
broker dealer under the Securities Exchange Act of 1934. AIC serves as the
underwriter of variable products issued by its affiliates, Ameritas Variable
Life Insurance Company and Ameritas Life Insurance Corp.
AIC serves as the overall investment manager of the Ameritas Portfolios,
authorized to exercise full investment discretion and make all determinations
with respect to the investment of the assets of the respective Portfolios, but
has, at its own cost and expense, retained subadvisors to provide day-to-day
portfolio management for each of the Portfolios.
Subadvisors and Portfolio Managers
Harris Associates L.P. ("Harris") (Two North LaSalle Street, Chicago, Illinois
60602) serves as the investment subadvisor to the Select Portfolio. The
investment management firm of Harris Associates L.P. manages equity and balanced
portfolios for individuals and institutions. Headquartered in Chicago, Harris
Associates also serves as the adviser to The Oakmark Family of Funds, a family
of no-load mutual funds. Harris Partners L.L.C., a subsidiary of Harris
Associates, is the general partner to several alternative investment
partnerships.
Select Portfolio is managed by Floyd J. Bellman, C.F.A., William C. Nygren,
C.F.A., and Henry R. Berghoef, C.F.A. Mr. Bellman is Vice President in charge of
the Investment Advisory Department. He received a Bachelor of Business
Administration degree from the University of Wisconsin, Whitewater in 1980. He
has twenty years of investment experience. Before joining Harris Associates in
1995, Mr. Bellman was Vice President and Chairman of the Personal Trust and
Asset Management Committee at Harris Trust and Savings Bank. Mr. Nygren joined
Harris as an analyst in 1983, and was the Director of Research from September,
1990 to April, 1998. Previously, he had been an analyst with Northwestern Mutual
Life Insurance Company. He holds an M.S. in Finance from the University of
Wisconsin (1981) and a B.S. in Accounting from the University of Minnesota
(1980). Mr. Berghoef joined Harris as an analyst in 1994 and has been a senior
investment analyst since 1994. He holds an M.B.A. from George Washington
University (1985), an M.A. in International Studies from Johns Hopkins
University (1974), and a B.A. in History from Calvin College (1971).
David L. Babson & Company Inc. ("Babson") (One Memorial Drive, Cambridge,
Massachusetts 02142) serves as the investment subadvisor to the Micro Cap
Portfolio. Founded in 1940, Babson provides investment advisory services to a
substantial number of institutional and other investors, including other
registered investment companies. As of June 30, 2000 Babson had over $60 billion
in assets under management.
Paul S. Szcygiel and Robert K. Baumbach are primarily responsible for the
day-to-day management of the Micro Cap Portfolio. Mr. Szcygiel is a Senior Vice
President of Babson and a Chartered Financial Analyst. He has over 16 years of
investment experience. Mr. Szcygiel has been employed by Babson (and a company
which merged into Babson) in portfolio management since 1994, prior to which he
was an Associate Director at Bear Stearns. Mr. Baumbach, also a Senior Vice
President of Babson and a Chartered Financial Analyst, has 15 years of
investment experience. He has been employed by Babson since November 1999, prior
to which he was a Senior Vice President and Senior Analyst at Putnam
Investments. Mr. Szcygiel and Mr. Baumbach are supported by a team of investment
professionals.
<PAGE>
Advisory Fees
The following table shows the aggregate annual advisory fee for each Portfolio
as a percentage of that Portfolio's average daily net assets.
Portfolio Advisory Fee
Ameritas Select Portfolio 0.65%
Ameritas Micro Cap Portfolio 0.85%
Purchase, Exchange and Redemption of Shares
The Fund offers its shares, without sales charge, only for purchase by insurance
companies for allocation to their Variable Accounts. Shares are purchased by the
Variable Accounts at the net asset value of the Portfolio next determined after
the Insurance Company receives the premium payment. The Fund continuously offers
its shares in the Portfolio at a price equal to the net asset value per share.
Initial and subsequent payments allocated to the Fund are subject to the limits
applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous for both annuity
Variable Accounts and life insurance Variable Accounts, or for Variable Accounts
of different Insurance Companies, to invest simultaneously in the Fund, although
currently neither the Insurance Companies nor the Fund foresee any such
disadvantages to either variable annuity or variable life insurance policy
owners of any Insurance Company. The Fund's Board of Directors intends to
monitor events in order to identify any material conflicts between such policy
owners and to determine what action, if any, should be taken in response
thereto.
The Insurance Companies redeem shares of the Portfolio to make benefit and
surrender payments under the terms of Policies. Redemptions are processed on any
day on which the Fund is open for business (each day the New York Stock Exchange
is open), and are effected at the Portfolio's net asset value next determined
after the appropriate Insurance Company receives a surrender request in
acceptable form.
Payment for redeemed shares will be made promptly, but in no event later than
seven days. However, the right of redemption may be suspended or the date of
payment postponed in accordance with the Rules under the Investment Company Act
of 1940. The amount received upon redemption of the shares of the Fund may be
more or less than the amount paid for the shares, depending upon the
fluctuations in the market value of the assets owned by the Fund. The Fund
redeems all full and fractional shares of the Portfolio for cash. The redemption
price is the net asset value per share.
The net asset value of the shares of the Portfolio is determined once daily as
of the close of business of the New York Stock Exchange, on days when the
Exchange is open for business. The net asset value is determined by adding the
values of all securities and other assets of the Portfolio, subtracting
liabilities and expenses, and dividing by the number of outstanding shares of
the Portfolio.
Except for money market instruments maturing in 60 days or less, securities held
by the Portfolio are valued at their market value if market quotations are
readily available. Otherwise, such securities are valued at fair value as
determined in good faith by the Board of Directors, although the actual
calculations may be made by persons acting pursuant to the direction of the
Board. All money market instruments with a remaining maturity of 60 days or less
are valued on an amortized cost basis.
Exchange requests will not be accepted on any day when Calvert is open but the
Fund's custodian bank is closed (e.g., Columbus Day and Veteran's Day); these
exchange requests will be processed the next day the Fund's custodian bank is
open.
The Fund and the distributor reserve the right at any time to reject or cancel
any part of any purchase or exchange order; modify any terms or conditions of
purchase of shares of the Fund; or withdraw all or any part of the offering made
by this prospectus. To protect the interests of investors, the Fund and the
distributor may reject any order considered market-timing activity.
The Fund reserves the right to terminate or modify the exchange privilege with
60 days' written notice.
<PAGE>
Dividends and Distributions
It is the Fund's intention to distribute substantially all of the net investment
income, if any, of the Portfolios. For dividend purposes, net investment income
of the Portfolios consists of all payments of dividends or interest received by
such Portfolio, less estimated expenses. All net realized capital gains, if any,
of each Portfolio are declared and distributed periodically, no less frequently
than annually. All dividends and distributions are reinvested in additional
shares of the Portfolio at net asset value.
Taxes
As a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code, as amended, the Fund is not subject to federal income
tax, nor to the federal excise tax imposed by the Tax Reform Act of 1986, to the
extent that it distributes its net investment income and realized capital gains.
Since the only shareholders of the Portfolios are the Insurance Companies, no
discussion is included herein as to the federal income tax consequences at the
shareholder level. For information concerning the federal tax consequences
to purchasers of the annuity or life insurance policies, see the prospectuses
for the Policies.
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For investors who want more information about the Fund, the following documents
are available free upon request:
Annual/Semi-Annual Reports: Additional information about the Portfolios'
investments is available in the Portfolios' respective Annual and Semi-Annual
reports to shareholders. In the annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
respective Portfolios' performance during the last fiscal year.
Statement of Additional Information (SAI): The SAI for the Fund provides more
detailed information about the Portfolios and is incorporated into this
prospectus by reference.
You can get free copies of reports and the SAI, request other information and
discuss your questions about the Ameritas Portfolios by contacting your broker,
or the Fund at:
Ameritas Investment Corp.
5900 "O" Street
Lincoln, Nebraska 68510-1889
Telephone: 1-800-335-9858
Ameritas Web-Site Address: http://www.ameritas.com
You can review the Fund's reports and SAI at the Public Reference Room of the
Securities and Exchange Commission. You can get text-only copies:
For a fee, by writing to or calling the Public Reference Room of the Commission,
Washington, D.C. 20549-6009, Telephone: 1-800-SEC-0330.
Free from the Commission's Internet website at http://www.sec.gov
Investment Company Act File No.: 811-3591
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CALVERT VARIABLE SERIES, INC.
AMERITAS INCOME & GROWTH PORTFOLIO
AMERITAS GROWTH PORTFOLIO
AMERITAS SMALL CAPITALIZATION PORTFOLIO
AMERITAS MIDCAP GROWTH PORTFOLIO
AMERITAS EMERGING GROWTH PORTFOLIO
AMERITAS RESEARCH PORTFOLIO
AMERITAS GROWTH WITH INCOME PORTFOLIO
AMERITAS INDEX 500 PORTFOLIO
AMERITAS MONEY MARKET PORTFOLIO
AMERITAS SELECT PORTFOLIO
AMERITAS MICRO CAP PORTFOLIO
Statement of additional information
April 30, 2000,
Revised January 1, 2001
This Statement of Additional Information ("SAI") is not a prospectus.
Investors should read the Statement of Additional Information in conjunction
With the fund's prospectus, dated April 30, 2000 and January 1, 2001
pertaining to the Ameritas Select Portfolio and the Ameritas Micro Cap
Portfolio. The Fund's audited financial statements included in its most
recent annual report to shareholders, are expressly incorporated by reference,
and made a part of this SAI. The prospectus and the most recent shareholder
report may be obtained free of charge by calling 1-800-335-9858 or by writing
the fund at 5900 "o" street, Lincoln, Nebraska 68510-1889.
TABLE OF CONTENTS
-----------------
Investment Policies and risks 1
Investment Restrictions 9
Purchase and Redemption of Shares 14
Net Asset Value 15
Taxes 15
Calculation of Yield and Total Return 16
Directors and Officers 17
Investment Advisor and Subadvisors 20
Administrative Services Agent 21
Transfer and Shareholder Servicing Agent 21
Independent Accountants and Custodians 22
Method of Distribution 22
Portfolio Transactions 22
Personal Securities Transactions 23
General Information 24
Appendix 24
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INVESTMENT POLICIES AND RISKS
-----------------------------
The Ameritas Portfolios of Calvert Variable Series, Inc. ("the Fund") offer
investors the opportunity to invest in several professionally managed securities
portfolios which offer the opportunity for growth of capital or current income.
The Ameritas Portfolios offer investors a choice of eleven separate
portfolios: Income & Growth, Growth, Small Capitalization, Midcap Growth,
Emerging Growth, Research, Growth with Income, Index 500, Money Market,
Select and Micro Cap Portfolios.
Foreign Securities (not applicable to the index 500 and money market portfolios)
The portfolios may invest a portion of their assets in foreign securities.
The emerging growth, select and micro cap portfolios may invest up to 25%, and
the other portfolios may
Each invest up to 20% of their respective assets in the securities of foreign
Issuers. The money market portfolio may purchase only high quality, u.s.
Dollar-denominated instruments.
Investments in foreign securities may present risks not typically involved
In domestic investments. The fund may purchase foreign securities directly, on
Foreign markets, or those represented by american depositary receipts ("adrs"),
Or other receipts evidencing ownership of foreign securities, such as
International depository receipts and global depositary receipts. Adrs are u.s.
Dollar-denominated and traded in the u.s. on exchanges or over the counter. By
Investing in adrs rather than directly in foreign issuers' stock, the fund may
Possibly avoid some currency and some liquidity risks. The information available
For adrs is subject to the more uniform and more exacting accounting, auditing
And financial reporting standards of the domestic market or exchange on which
They are traded.
Additional costs may be incurred in connection with international
Investment since foreign brokerage commissions and the custodial costs
Associated with maintaining foreign portfolio securities are generally higher
Than in the united states. Fee expense may also be incurred on currency
Exchanges when the fund changes investments from one country to another or
Converts foreign securities holdings into u.s. dollars.
United states government policies have at times, in the past, through
Imposition of interest equalization taxes and other restrictions, discouraged
Certain investments abroad by united states investors.
Investing in emerging markets in particular, those countries whose
Economies and capital markets are not as developed as those of more
Industrialized nations, carries its own special risks. Among other risks, the
Economies of such countries may be affected to a greater extent than in other
Countries by price fluctuations of a single commodity, by severe cyclical
Climactic conditions, lack of significant history in operating under a
Market-oriented economy, or by political instability, including risk of
Expropriation.
in determining the appropriate distribution of investments among various
Countries and geographic regions, the subadvisor ordinarily will consider the
Following factors: prospects for relative economic growth among foreign
Countries; expected levels of inflation; relative price levels of the various
Capital markets; government policies influencing business conditions; the
Outlook for currency relationships and the range of individual investment
Opportunities available to the global investor.
since investments in securities of issuers domiciled in foreign countries
Usually involve currencies of the foreign countries, and since the fund may
Temporarily hold funds in foreign currencies during the completion of investment
Programs, the value of the assets of the fund as measured in united states
Dollars may be affected favorably or unfavorably by changes in foreign currency
Exchange rates and exchange control regulations. For example, if the value of
The foreign currency in which a security is denominated increases or declines in
Relation to the value of the u.s. dollar, the value of the security in u.s.
Dollars will increase or decline correspondingly. The fund will conduct its
Foreign currency exchange transactions either on a spot (i.e., cash) basis at
The spot rate prevailing in the foreign exchange market, or through entering
Into forward contracts to purchase or sell foreign currencies. A forward foreign
Currency contract involves an obligation to purchase or sell a specific currency
At a future date which may be any fixed number of days from the date of the
Contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are traded in the interbank market conducted directly between
Currency traders (usually large, commercial banks) and their customers. A
Forward foreign currency contract generally has no deposit requirement, and no
Commissions are charged at any stage for trades.
a portfolio may enter into forward foreign currency contracts for two
Reasons. First, the portfolio may desire to preserve the united states dollar
Price of a security when it enters into a contract for the purchase or sale of a
Security denominated in a foreign currency. A portfolio may be able to protect
Itself against possible losses resulting from changes in the relationship
Between the united states dollar and foreign currencies during the period
Between the date the security is purchased or sold and the date on which payment
Is made or received by entering into a forward contract for the purchase or
Sale, for a fixed amount of dollars, of the amount of the foreign currency
Involved in the underlying security transactions.
second, when the advisor or subadvisor believes that the currency of a
Particular foreign country may suffer a substantial decline against the united
States dollar, a portfolio may enter into a forward foreign currency contract to
Sell, for a fixed amount of dollars, the amount of foreign currency
Approximating the value of some or all of the portfolio securities denominated
In such foreign currency. The precise matching of the forward foreign currency
Contract amounts and the value of the portfolio securities involved will not
Generally be possible since the future value of the securities will change as a
Consequence of market movements between the date the forward contract is entered
Into and the date it matures. The projection of short-term currency market
Movement is difficult, and the successful execution of this short-term hedging
Strategy is uncertain. Although forward foreign currency contracts tend to
Minimize the risk of loss due to a decline in the value of the hedged currency,
At the same time they tend to limit any potential gain which might result should
The value of such currency increase. The portfolios do not intend to enter into
Such forward contracts under this circumstance on a regular or continuous basis.
Eurocurrency conversion risk
european countries that are members of the european monetary union have
Agreed to use a common currency unit, the "euro". Currently, each of these
Countries has its own currency unit. Although the advisor does not anticipate
Any problems in conversion from the old currencies to the euro, there may be
Issues involved in settlement, valuation, and numerous other areas that could
Impact the fund. The advisor and subadvisors have been reviewing all of their
Computer systems for eurocurrency conversion compliance. There can be no
Assurance that there will be no negative impact on the fund, however, the
Advisor, subadvisors and custodian have advised the fund that they have been
Actively working on any necessary changes to their computer systems to prepare
For the conversion, and expect that their systems, and those of their outside
Service providers, will be adapted in time for that event.
Foreign money market instruments
the money market portfolio may invest without limitation in money market
Instruments of banks, whether foreign or domestic, including obligations of u.s.
Branches of foreign banks ("yankee" instruments) and obligations of foreign
Branches of u.s. banks ("eurodollar" instruments). All such instruments must be
High-quality, u.s. dollar-denominated obligations. It is an operating (i.e.,
Nonfundamental) policy of the money market portfolio that it may invest only in
Foreign money market instruments if they are of comparable quality to the
Obligations of domestic banks. Although these instruments are not subject to
Foreign currency risk since they are u.s. dollar-denominated, investments in
Foreign money market instruments may involve risks that are different than
Investments in securities of u.s. issuers. See "foreign securities" above.
Small cap issuers
the securities of small cap issuers may be less actively traded than the
Securities of larger issuers, may trade in a more limited volume, and may change
In value more abruptly than securities of larger companies. Information
Concerning these securities may not be readily available so that the companies
May be less actively followed by stock analysts. Small-cap issuers do not
Usually participate in market rallies to the same extent as more widely-known
Securities, and they tend to have a relatively higher percentage of insider
Ownership.
Investing in smaller, new issuers generally involves greater risk than investing
In larger, established issuers. Companies in which the portfolio is likely to
Invest may have limited product lines, markets or financial resources and may
Lack management depth. The securities in such companies may also have limited
Marketability and may be subject to more abrupt or erratic market movements than
Securities of larger, more established companies or the market averages in
General.
Temporary defensive positions
for temporary defensive purposes - which may include a lack of adequate
Purchase candidates or an unfavorable market environment - the fund may invest
In cash or cash equivalents. Cash equivalents include instruments such as, but
Not limited to, u.s. government and agency obligations, certificates of deposit,
Banker's acceptances, time deposits commercial paper, short-term corporate debt
Securities, and repurchase agreements.
Repurchase agreements
repurchase agreements are arrangements under which a portfolio buys a
Security and the seller simultaneously agrees to repurchase the security at a
Specified time and price. A portfolio may engage in repurchase agreements in
Order to earn a higher rate of return than it could earn simply by investing in
The obligation which is the subject of the repurchase agreement. Repurchase
Agreements are not, however, without risk. In the event of the bankruptcy of a
Seller during the term of a repurchase agreement, a legal question exists as to
Whether the portfolio would be deemed the owner of the underlying security or
Would be deemed only to have a security interest in and lien upon such security.
A portfolio will only engage in repurchase agreements with recognized securities
Dealers and banks determined to present minimal credit risk by the advisor. In
Addition, a portfolio will only engage in repurchase agreements reasonably
Designed to secure fully during the term of the agreement the seller's
Obligation to repurchase the underlying security and will monitor the market
Value of the underlying security during the term of the agreement. If the value
Of the underlying security declines and is not at least equal to the repurchase
Price due the portfolio pursuant to the agreement, the portfolio will require
The seller to pledge additional securities or cash to secure the seller's
Obligations pursuant to the agreement. If the seller defaults on its obligation
To repurchase and the value of the underlying security declines, the portfolio
May incur a loss and may incur expenses in selling the underlying security.
Repurchase agreements are always for periods of less than one year. Repurchase
Agreements not terminable within seven days are considered illiquid.
Reverse repurchase agreements
under a reverse repurchase agreement, a portfolio sells securities to a
Bank or securities dealer and agrees to repurchase those securities from such
Party at an agreed upon date and price reflecting a market rate of interest. The
Portfolio invests the proceeds from each reverse repurchase agreement in
Obligations in which it is authorized to invest. The portfolios intend to enter
Into a reverse repurchase agreement only when the interest income provided for
In the obligation in which the portfolio invests the proceeds is expected to
Exceed the amount the portfolio will pay in interest to the other party to the
Agreement plus all costs associated with the transactions. The portfolios do not
Intend to borrow for leverage purposes. A portfolio will only be permitted to
Pledge assets to the extent necessary to secure borrowings and reverse
Repurchase agreements.
during the time a reverse repurchase agreement is outstanding, the
Portfolio will maintain in a segregated custodial account an amount of cash,
U.s. government securities or other liquid, high-quality debt securities equal
In value to the repurchase price. The portfolio will mark to market the value of
Assets held in the segregated account, and will place additional assets in the
Account whenever the total value of the account falls below the amount required
Under applicable regulations.
the use of reverse repurchase agreements involves the risk that the other
Party to the agreements could become subject to bankruptcy or liquidation
Proceedings during the period the agreements are outstanding. In such event, the
Portfolio may not be able to repurchase the securities it has sold to that other
Party. Under those circumstances, if at the expiration of the agreement such
Securities are of greater value than the proceeds obtained by the portfolio
Under the agreements, the portfolio may have been better off had it not entered
Into the agreement. However, the portfolio will enter into reverse repurchase
Agreements only with banks and dealers which the advisor believes present
Minimal credit risks under guidelines adopted by the fund's board of directors.
In addition, the portfolio bears the risk that the market value of the
Securities sold by the portfolio may decline below the agreed-upon repurchase
Price, in which case the dealer may request the portfolio to post additional
Collateral.
U.s. government-backed obligations
Ginnie maes, issued by the government national mortgage association, are
Typically interests in pools of mortgage loans insured by the federal housing
Administration or guaranteed by the veterans administration. A "pool" or group
Of such mortgages is assembled and, after approval from gnma, is offered to
Investors through various securities dealers. Gnma is a u.s. government
Corporation within the department of housing and urban development. Ginnie maes
Are backed by the full faith and credit of the united states, which means that
The u.s. government guarantees that interest and principal will be paid when
Due.
The advisor will attempt, through careful evaluation of available gnma
Issues and prevailing market conditions, to invest in gnma certificates which
Provide a high income return but are not subject to substantial risk of loss of
Principal. Accordingly, the advisor may forego the opportunity to invest in
Certain issues of gnma certificates which would provide a high current income
Yield if the advisor determines that such issues would be subject to a risk of
Prepayment and loss of principal over the long term that would outweigh the
Short-term increment in yield.
Non-Investment Grade Debt Securities
The Emerging Growth, Research and Select Portfolios may invest in lower
quality debt securities (generally those rated BB or lower by S&P or Ba or
lower by Moody's, known as "junk bonds"). Emerging Growth's investment
policy provides that it may not invest more than 5%, no more than 10% for
Research, and no more than 25% for select, of their respective net assets in
securities rated below B by either rating service, or in unrated securities
determined by the advisor to be comparable to securities rated below b by
either rating service. There is no minimum rating standard required by
either portfolio, which includes non-investment grade debt securities.
Lower quality debt securities, these securities have moderate to poor
protection of principal and interest payments and have speculative
characteristics. (see appendix for a description of the ratings.) These
securities involve greater risk of default or price declines due to changes in
the issuer's creditworthiness than investment-grade debt securities.
Because the market for lower-rated securities may be thinner and less active
than for higher-rated securities, there may be market price volatility
for these securities and limited liquidity in the resale market.
Market prices for these securities may decline significantly in periods of
General economic difficulty or rising interest rates. Unrated debt securities
May fall into the lower quality category.
The quality limitation set forth in the portfolios' investment policy is
determined immediately after a portfolio's acquisition of a given security.
Accordingly, any later change in ratings will not be considered when determining
Whether an investment complies with the portfolio's investment policy.
When purchasing high-yielding securities, rated or unrated, the advisor
Prepares its own careful credit analysis to attempt to identify those issuers
Whose financial condition is adequate to meet future obligations or is expected
To be adequate in the future. Through portfolio diversification and credit
Analysis, investment risk can be reduced, although there can be no assurance
That losses will not occur.
Derivatives
A portfolio can use various techniques to increase or decrease its exposure
To changing security prices, interest rates, or other factors that affect
Security values. These techniques may involve derivative transactions such as
Buying and selling options and futures contracts and leveraged notes, entering
Into swap agreements, and purchasing indexed securities. The portfolios can use
These practices either as substitution or as protection against an adverse move
In the portfolio to adjust the risk and return characteristics of the portfolio.
If the advisor and/or subadvisor judges market conditions incorrectly or employs
A strategy that does not correlate well with a portfolio's investments, or if
The counterparty to the transaction does not perform as promised, these
Techniques could result in a loss. These techniques may increase the volatility
Of a portfolio and may involve a small investment of cash relative to the
Magnitude of the risk assumed. Derivatives are often illiquid.
Options and Futures Contracts
The emerging growth, growth with income, index 500 and select portfolios
may, in
Pursuit of their investment objectives, purchase put and call options and engage
In the writing of covered call options and secured put options on securities,
And employ a variety of other investment techniques. Specifically, these
Portfolios may also engage in the purchase and sale of stock index future
Contracts, foreign currency futures contracts, interest rate futures contracts,
And options on such futures, as described more fully below.
These portfolios will engage in such transactions only to hedge the
Existing positions in the respective portfolios. They will not engage in such
Transactions for the purposes of speculation or leverage. Such investment
Policies and techniques may involve a greater degree of risk than those inherent
In more conservative investment approaches.
These portfolios will not engage in such options or futures transactions
Unless they receive appropriate regulatory approvals permitting them to engage
In such transactions. These portfolios may write "covered options" on securities
In standard contracts traded on national securities exchanges. These portfolios
Will write such options in order to receive the premiums from options that
Expire and to seek net gains from closing purchase transactions with respect to
Such options.
Put and call options. These portfolios may purchase put and call options,
In standard contracts traded on national securities exchanges, on securities of
Issuers which meet the portfolios' criteria. These portfolios will purchase such
Options only to hedge against changes in the value of securities the portfolios
Hold and not for the purposes of speculation or leverage. In buying a put, a
Portfolio has the right to sell the security at the exercise price, thus
Limiting its risk of loss through a decline in the market value of the security
Until the put expires. The amount of any appreciation in the value of the
Underlying security will be partially offset by the amount of the premium paid
For the put option and any related transaction costs. Prior to its expiration, a
Put option may be sold in a closing sale transaction and any profit or loss from
The sale will depend on whether the amount received is more or less than the
Premium paid for the put option plus the related transaction costs.
These portfolios may purchase call options on securities that they may
Intend to purchase and that meet the portfolios' criteria. Such transactions may
Be entered into in order to limit the risk of a substantial increase in the
Market price of the security which the portfolio intends to purchase. Prior to
Its expiration, a call option may be sold in a closing sale transaction. Any
Profit or loss from such a sale will depend on whether the amount received is
More or less than the premium paid for the call option plus the related
Transaction costs.
Covered options. These portfolios may write only covered options on equity
And debt securities in standard contracts traded on national securities
Exchanges. For call options, this means that so long as a portfolio is obligated
As the writer of a call option, that portfolio will own the underlying security
Subject to the option and, in the case of put options, that portfolio will,
Through its custodian, deposit and maintain either cash or securities with a
Market value equal to or greater than the exercise price of the option.
When a portfolio writes a covered call option, the portfolio gives the
Purchaser the right to purchase the security at the call option price at any
Time during the life of the option. As the writer of the option, the portfolio
Receives a premium, less a commission, and in exchange foregoes the opportunity
To profit from any increase in the market value of the security exceeding the
Call option price. The premium serves to mitigate the effect of any depreciation
In the market value of the security. Writing covered call options can increase
The income of the portfolio and thus reduce declines in the net asset value per
Share of the portfolio if securities covered by such options decline in value.
Exercise of a call option by the purchaser, however, will cause the portfolio to
Forego future appreciation of the securities covered by the option.
When a portfolio writes a secured put option, it will gain a profit in the
Amount of the premium, less a commission, so long as the price of the underlying
Security remains above the exercise price. However, the portfolio remains
Obligated to purchase the underlying security from the buyer of the put option
(usually in the event the price of the security funds below the exercise price)
At any time during the option period. If the price of the underlying security
Falls below the exercise price, the portfolio may realize a loss in the amount
Of the difference between the exercise price and the sale price of the security,
Less the premium received.
These portfolios may purchase securities that may be covered by call
Options solely on the basis of considerations consistent with the investment
Objectives and policies of the portfolios. The portfolio turnover rate may
Increase through the exercise of a call option; this will generally occur if the
Market value of a "covered" security increases and the portfolio has not entered
Into a closing purchase transaction.
Risks related to options transactions. The portfolios can close out their
Respective positions in exchange-traded options only on an exchange which
Provides a secondary market in such options. Although these portfolios intend to
Acquire and write only such exchange-traded options for which an active
Secondary market appears to exist, there can be no assurance that such a market
Will exist for any particular option contract at any particular time. This might
Prevent the portfolios from closing an options position, which could impair the
Portfolios' ability to hedge effectively. The inability to close out a call
Position may have an adverse effect on liquidity because the portfolio may be
Required to hold the securities underlying the option until the option expires
Or is exercised.
Futures transactions. These portfolios may purchase and sell futures
Contracts ("futures contracts") but only when, in the judgment of the advisor,
Such a position acts as a hedge against market changes which would adversely
Affect the securities held by the portfolios. These futures contracts may
Include, but are not limited to, market index futures contracts and futures
Contracts based on u.s. government obligations.
A futures contract is an agreement between two parties to buy and sell a
Security on a future date which has the effect of establishing the current price
For the security. Although futures contracts by their terms require actual
Delivery and acceptance of securities, in most cases the contracts are closed
Out before the settlement date without the making or taking of delivery of
Securities. Upon buying or selling a futures contract, the portfolio deposits
Initial margin with its custodian, and thereafter daily payments of maintenance
Margin are made to and from the executing broker. Payments of maintenance margin
Reflect changes in the value of the futures contract, with the portfolio being
Obligated to make such payments if its futures position becomes less valuable
And entitled to receive such payments if its positions become more valuable.
These portfolios may only invest in futures contracts to hedge their
Respective existing investment positions and not for income enhancement,
Speculation or leverage purposes. Although some of the securities underlying the
Futures contract may not necessarily meet the portfolios' criteria, any such
Hedge position taken by these portfolios will not constitute a direct ownership
Interest in the underlying securities.
Futures contracts have been designed by boards of trade which have been
Designated "contracts markets" by the commodity futures trading commission
("cftc"). As series of a registered investment company, the portfolios are
Eligible for exclusion from the cftc's definition of "commodity pool operator,"
Meaning that the portfolios may invest in futures contracts under specified
Conditions without registering with the cftc. Among these conditions are
Requirements that each portfolio invest in futures only for hedging purposes.
Futures contracts trade on contracts markets in a manner that is similar to the
Way a stock trades on a stock exchange and the boards of trade, through their
Clearing corporations, guarantee performance of the contracts.
Options on futures contracts. These portfolios may purchase and write put
Or call options and sell call options on futures contracts in which a portfolio
Could otherwise invest and which are traded on a u.s. exchange or board of
Trade. The portfolios may also enter into closing transactions with respect to
Such options to terminate an existing position; that is, to sell a put option
Already owned and to buy a call option to close a position where the portfolio
Has already sold a corresponding call option.
The portfolios may only invest in options on futures contracts to hedge
Their respective existing investment positions and not for income enhancement,
Speculation or leverage purposes. Although some of the securities underlying the
Futures contract underlying the option may not necessarily meet the portfolios'
Criteria, any such hedge position taken by these portfolios will not constitute
A direct ownership interest in the underlying securities.
An option on a futures contract gives the purchaser the right, in return
For the premium paid, to assume a position in a futures contract - a long
Position if the option is a call and a short position if the option is a put -
At a specified exercise price at any time during the period of the option. The
Portfolios will pay a premium for such options purchased or sold. In connection
With such options bought or sold, the portfolios will make initial margin
Deposits and make or receive maintenance margin payments which reflect changes
In the market value of such options. This arrangement is similar to the margin
Arrangements applicable to futures contracts described above.
Put options on futures contracts. The purchase of put options on futures
Contracts is analogous to the sale of futures contracts and is used to protect
The portfolio against the risk of declining prices. These portfolios may
Purchase put options and sell put options on futures contracts that are already
Owned by that portfolio. The portfolios will only engage in the purchase of put
Options and the sale of covered put options on market index futures for hedging
Purposes.
Call options on futures contracts. The sale of call options on futures
Contracts is analogous to the sale of futures contracts and is used to protect
The portfolio against the risk of declining prices. The purchase of call options
On futures contracts is analogous to the purchase of a futures contract. These
Portfolios may only buy call options to close an existing position where the
Portfolio has already sold a corresponding call option, or for a cash hedge. The
Portfolios will only engage in the sale of call options and the purchase of call
Options to cover for hedging purposes.
Writing call options on futures contracts. The writing of call options on
Futures contracts constitutes a partial hedge against declining prices of the
Securities deliverable upon exercise of the futures contract. If the futures
Contract price at expiration is below the exercise price, the portfolio will
Retain the full amount of the option premium which provides a partial hedge
Against any decline that may have occurred in the portfolio's securities
Holdings.
Risks of options and futures contracts. If one of these portfolios has sold
Futures or takes options positions to hedge its portfolio against decline in the
Market and the market later advances, the portfolio may suffer a loss on the
Futures contracts or options which it would not have experienced if it had not
Hedged. Correlation is also imperfect between movements in the prices of futures
Contracts and movements in prices of the securities which are the subject of the
Hedge. Thus the price of the futures contract or option may move more than or
Less than the price of the securities being hedged. Where a portfolio has sold
Futures or taken options positions to hedge against decline in the market, the
Market may advance and the value of the securities held in the portfolio may
Decline. If this were to occur, the portfolio might lose money on the futures
Contracts or options and also experience a decline in the value of its portfolio
Securities. However, although this might occur for a brief period or to a slight
Degree, the value of a diversified portfolio will tend to move in the direction
Of the market generally.
The portfolios can close out futures positions only on an exchange or board
Of trade which provides a secondary market in such futures. Although the
Portfolios intend to purchase or sell only such futures for which an active
Secondary market appears to exist, there can be no assurance that such a market
Will exist for any particular futures contract at any particular time. This
Might prevent the portfolios from closing a futures position, which could
Require a portfolio to make daily cash payments with respect to its position in
The event of adverse price movements.
Options on futures transactions bear several risks apart from those
Inherent in options transactions generally. The portfolios' ability to close out
Their options positions in futures contracts will depend upon whether an active
Secondary market for such options develops and is in existence at the time the
Portfolios seek to close their positions. There can be no assurance that such a
Market will develop or exist. Therefore, the portfolios might be required to
Exercise the options to realize any profit.
Foreign Currency Transactions
Forward foreign currency exchange contracts. A forward foreign currency
Exchange contract involves an obligation to purchase or sell a specific currency
At a future date, which may be any fixed number of days ("term") from the date
Of the contract agreed upon by the parties, at a price set at the time of the
Contract. These contracts are traded directly between currency traders (usually
Large commercial banks) and their customers.
A portfolio will not enter into such forward contracts or maintain a net
Exposure in such contracts where it would be obligated to deliver an amount of
Foreign currency in excess of the value of its portfolio securities and other
Assets denominated in that currency. The advisor believes that it is important
To have the flexibility to enter into such forward contract when it determines
That to do so is in a portfolio's best interests.
Foreign currency options. A foreign currency option provides the option
Buyer with the right to buy or sell a stated amount of foreign currency at the
Exercise price on or before a specified date. A call option gives its owner the
Right, but not the obligation, to buy the currency, while a put option gives its
Owner the right, but not the obligation, to sell the currency. The option seller
Buyer may close its position any time prior to expiration of the option period.
A call rises in value if the underlying currency appreciates. Conversely, a put
Rises in value if the underlying currency depreciates. Purchasing a foreign
Currency option can protect a portfolio against adverse movement in the value of
A foreign currency.
Foreign currency futures transactions. A portfolio may use foreign currency
Futures contracts and options on such futures contracts. Through the purchase or
Sale of such contracts, it may be able to achieve many of the same objectives
Attainable through the use of foreign currency forward contracts, but more
Effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency
Futures contracts and options on foreign currency futures contracts are
Standardized as to amount and delivery period and are traded on boards of trade
And commodities exchanges. It is anticipated that such contracts may provide
Greater liquidity and lower cost than forward foreign currency exchange
Contracts.
Lending Portfolio Securities
The fund may lend its portfolio securities to member firms of the new york
Stock exchange and commercial banks with assets of one billion dollars or more.
Any such loans must be secured continuously in the form of cash or cash
Equivalents such as u.s. treasury bills. The amount of the collateral must on a
Current basis equal or exceed the market value of the loaned securities, and the
Fund must be able to terminate such loans upon notice at any time. The fund will
Exercise its right to terminate a securities loan in order to preserve its right
To vote upon matters of importance affecting holders of the securities.
The advantage of such loans is that the fund continues to receive the
Equivalent of the interest earned or dividends paid by the issuers on the loaned
Securities while at the same time earning interest on the cash or equivalent
Collateral which may be invested in accordance with the fund's investment
Objective, policies and restrictions.
Securities loans are usually made to broker-dealers and other financial
Institutions to facilitate their delivery of such securities. As with any
Extension of credit, there may be risks of delay in recovery and possibly loss
Of rights in the loaned securities should the borrower of the loaned securities
Fail financially. However, the fund will make loans of its portfolio securities
Only to those firms the advisor deems creditworthy and only on terms the advisor
Believes should compensate for such risk. On termination of the loan, the
Borrower is obligated to return the securities to the fund. The fund will
Recognize any gain or loss in the market value of the securities during the loan
Period. The fund may pay reasonable custodial fees in connection with the loan.
When-Issued and Delayed delivery Securities
From time to time, in the ordinary course of business, each portfolio may
Purchase securities on a when-issued or delayed delivery basis -- that is,
Delivery and payment can take place a month or more after the date of the
Transactions. The securities purchased in this manner are subject to market
Fluctuation and no interest accrues to the purchaser during this period. At the
Time a portfolio makes a commitment to purchase securities on a when-issued or
Delayed delivery basis, the price is fixed and the portfolio will record the
Transaction and thereafter reflect the value, each day, of the security in
Determining the net asset value of the portfolio. At the time of delivery of the
Securities, the value may be more or less than the purchase price.
The portfolio will enter commitments for when-issued or delayed delivery
Securities only when it intends to acquire the securities. Accordingly, when a
Portfolio purchases a when-issued security, it will maintain an amount of cash,
Cash equivalents (for example, commercial paper and daily tender adjustable
Notes) or short-term high-grade fixed income securities in a segregated account
With the portfolio's custodian, so that the amount so segregated plus the amount
Of initial and variation margin held in the account of its broker equals the
Market value of the when-issued purchase, thereby ensuring the transaction is
Unleveraged.
INVESTMENT RESTRICTIONS
-----------------------
INCOME & GROWTH, GROWTH, SMALL CAPITALIZATION AND MIDCAP GROWTH PORTFOLIOS
The portfolios have adopted the following fundamental investment
Restrictions. These restrictions cannot be changed without the approval of the
Holders of a majority of the outstanding shares of each of the portfolios. The
Portfolios may not:
1. Purchase the securities of any issuer, other than u.s. government
Securities, if as a result more than 5% of the value of a portfolio's total
Assets would be invested in the securities of the issuer, except that up to 25%
Of the value of the portfolio's total assets may be invested without regard to
This limitation.
2. Purchase more than 10% of the voting securities of any one issuer or more
Than 10% of the securities of any class of any one issuer. This limitation shall
Not apply to investments in u.s. government securities.
3. Sell securities short or purchase securities on margin, except that the
Portfolio may obtain any short-term credit necessary for the clearance of
Purchases and sales of securities. These restrictions shall not apply to
Transactions involving selling securities "short against the box."
4. Borrow money, except that the portfolio may borrow for temporary or
Emergency (but not leveraging) purposes, including the meeting of redemption
Requests that might otherwise require the untimely disposition of securities, in
An amount not exceeding 10% of the value of the portfolio's total assets
(including the amount borrowed) valued at the lesser of cost or market, less
Liabilities (not including the amount borrowed) at the time the borrowing is
Made. Whenever borrowings exceed 5% of the value of the portfolio's total
Assets, the portfolio will not make any additional investments. Immediately
After any borrowing, including reverse repurchase agreements and mortgage-backed
Rolls, the portfolio will maintain asset coverage of not less than 300% with
Respect to all borrowings.
5. Pledge, hypothecate, mortgage or otherwise encumber more than 10% of the
Value of the portfolio's total assets. These restrictions shall not apply to
Transactions involving reverse repurchase agreements or the purchase of
Securities subject to firm commitment agreements or on a when-issued basis.
6. Underwrite the securities of other issuers, except insofar as the
Portfolio may be deemed to be an underwriter under the securities act of 1933,
As amended, by virtue of disposing of portfolio securities.
7. Make loans to others, except through purchasing qualified debt
Obligations, lending portfolio securities or entering into repurchase
Agreements.
8. Invest in securities of other investment companies, except as they may be
Acquired as part of a merger, consolidation, reorganization, acquisition of
Assets or offer of exchange.
9. Purchase any securities that would cause more than 25% of the value of
The portfolio's total assets to be invested in the securities of issuers
Conducting their principal business activities in the same industry; provided
That there shall be no limit on the purchase of u.s. government securities.
10. Invest in commodities.
11. Invest more than 10% of its net assets in securities which are illiquid
By virtue of legal or contractual restrictions on resale or the absence of a
Readily available market. However, securities with legal and contractual
Restrictions on resale may be purchased if they are determined to be liquid, and
Such purchases would not be subject to the limit stated above.
12. Issue senior securities.
the board of directors has adopted the following nonfundamental investment
Restrictions. A nonfundamental investment restriction can be changed by the
Board at any time without a shareholder vote. The portfolios may not:
1. Purchase or sell real estate, except that the portfolio may purchase and
Sell securities secured by real estate, mortgages or interests therein and
Securities that are issued by companies that invest or deal in real estate.
2. Write or sell puts, calls, straddles, spreads or combinations thereof.
3. Invest in oil, gas or other mineral exploration or development programs,
Except that the portfolio may invest in the securities of companies that invest
In or sponsor those programs.
4. Purchase any security if as a result the portfolio would then have more
Than 5% of its total assets invested in securities of issuers (including
Predecessors) that have been in continual operation for less than three years.
This limitation shall not apply to investments in u.s. government securities.
5. Make investments for the purpose of exercising control or management.
6. Invest in warrants, except that the portfolio may invest in warrants if,
As a result, the investments (valued at the lower of cost or market) would not
Exceed 5% of the value of the portfolio's net assets, of which not more than 2%
Of the portfolio's net assets may be invested in warrants not listed on a
Recognized domestic stock exchange. Warrants acquired by the portfolio as part
Of a unit or attached to securities at the time of acquisition are not subject
To this limitation.
7. Purchase or retain the securities of any issuer if, to the knowledge of
The fund, any of the officers, directors or trustees of the fund, advisor or
Subadvisor individually owns more than .5% of the outstanding securities of the
Issuer and together they own beneficially more than 5% of the securities.
except in the case of the 300% limitation set forth in fundamental
Investment restriction no. 4, and as may be otherwise stated, the percentage
Limitations contained in the foregoing restrictions and in the fund's other
Investment policies apply at the time of the purchase of the securities and a
Later increase or decrease in percentage resulting from a change in the values
Of the securities or in the amount of the portfolio's assets will not constitute
A violation of the restriction.
Emerging growth, research and growth with income portfolios
the portfolios have adopted the following fundamental investment
Restrictions. These restrictions cannot be changed without the approval of the
Holders of a majority of the outstanding shares of each of the portfolios. The
Portfolios may not:
1. Borrow amounts in excess of 33 1/3% of its assets including amounts
Borrowed and then only as a temporary measure for extraordinary or emergency
Purposes.
2. Underwrite securities issued by other persons except insofar as the
Portfolios may technically be deemed an underwriter under the securities act of
1933, as amended in selling a portfolio security.
3. Purchase or sell real estate (including limited partnership interests but
Excluding securities secured by real estate or interests therein and securities
Of companies, such as real estate investment trusts, which deal in real estate
Or interests therein), interests in oil, gas or mineral leases, commodities or
Commodity contracts (excluding currencies and any type of option, futures
Contracts and forward contracts) in the ordinary course of its business. The
Portfolios reserve the freedom of action to hold and to sell real estate,
Mineral leases, commodities or commodity contracts (including currencies and any
Type of option, futures contracts and forward contracts) acquired as a result of
The ownership of securities.
4. Issue any senior securities except as permitted by the investment company
Act of 1940. For purposes of this restriction, collateral arrangements with
Respect to any type of swap, option, forward contracts and futures contracts and
Collateral arrangements with respect to initial and variation margin are not
Deemed to be the issuance of a senior security.
5. Make loans to other persons. For these purposes, the purchase of
Commercial paper, the purchase of a portion or all of an issue of debt
Securities, the lending of portfolio securities, or the investment of the
Portfolios' assets in repurchase agreements, shall not be considered the making
Of a loan.
6. Purchase any securities of an issuer of a particular industry, if as a
Result, more than 25% of its gross assets would be invested in securities of
Issuers whose principal business activities are in the same industry, except
There is no limitation with respect to obligations issued or guaranteed by the
U.s. government or its agencies and instrumentalities and repurchase agreements
Collateralized by such obligations.
the board of directors has adopted the following nonfundamental investment
Restrictions. A nonfundamental investment restriction can be changed by the
Board at any time without a shareholder vote. The portfolios may not:
1. Invest in illiquid investments, including securities subject to legal or
Contractual restrictions on resale or for which there is no readily available
Market (i.e., trading in the security is suspended, or, in the case of unlisted
Securities, where no market exists) if more than 15% of the portfolios' assets
(taken at market value) would be invested in such securities. Repurchase
Agreements maturing in more than seven days will be deemed to be illiquid for
Purposes of the portfolios' limitation on investment in illiquid securities.
Securities that are not registered under the securities act of 1933 and sold in
Reliance on rule 144a thereunder, but are determined to be liquid by the fund's
Board of directors (or its delegee), will not subject to this 15% limitation.
2. Pledge, mortgage or hypothecate in excess of 33 1/3% of its gross assets.
For purposes of this restriction, collateral arrangements with respect to any
Type of swap, option, futures contracts and forward contracts and payments of
Initial and variation margin in connection therewith, are not considered a
Pledge of assets. Invest for the purpose of exercising control or management.
3. Hold obligations issued or guaranteed by any one u.s. governmental agency
Or instrumentality, at the end of any calendar quarter (or within 30 days
Thereafter), to the extent such holdings would cause the portfolios to fail to
Comply with the diversification requirements imposed by section 817(h) of the
Internal revenue code of 1986, as amended (the "code"), and the treasury
Regulations issued thereunder on segregated asset accounts that fund variable
Contracts.
4. Invest 25% or more of the market value of its total assets in securities
Of issuers in any one industry (provided that this restriction does not limit
The exceptions set forth in fundamental investment restriction no. 6).
except for fundamental investment restriction no. 1 and nonfundamental
Investment restriction no. 1, these investment restrictions and policies are
Adhered to at the time of purchase or utilization of assets; a subsequent change
In circumstances will not be considered to result in a violation of any of the
Restrictions.
Index 500 portfolio
the portfolio has adopted the following fundamental investment
Restrictions. These restrictions cannot be changed without the approval of the
Holders of a majority of the outstanding shares of the portfolio. The portfolio
May not:
1. With respect to 75% of the portfolio's total assets, purchase the
Securities of any issuer (other than securities issued or guaranteed by the u.s.
Government or any of its agencies or instrumentalities, or securities of other
Investment companies) if, as a result, (a) more than 5% of the portfolio's total
Assets would be invested in the securities of that issuer, or (b) the portfolio
Would hold more than 10% of the outstanding voting securities of that issuer.
2. Issue senior securities, except in connection with the insurance program
Established by the portfolio pursuant to an exemptive order issued by the
Securities and exchange commission or as otherwise permitted under the
Investment company act of 1940.
3. Borrow money, except that the portfolio may borrow money for temporary or
Emergency purposes (not for leveraging or investment) in an amount not exceeding
33 1/3% of its total assets (including the amount borrowed) less liabilities
(other than borrowings). Any borrowings that come to exceed this amount will be
Reduced within three days (not including sundays and holidays) to the extent
Necessary to comply with the 33 1/3% limitation.
4. Underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the securities
Act of 1933 in the disposition of restricted securities.
5. Purchase the securities of any issuer (other than securities issued or
Guaranteed by the u.s. government or any of its agencies or instrumentalities)
If, as a result, more than 25% of its total assets would be invested in the
Securities of companies whose principal business activities are in the same
Industry.
6. Purchase or sell real estate unless acquired as a result of ownership of
Securities or other instruments (but this shall not prevent the portfolio from
Investing in securities or other instruments backed by real estate or securities
Of companies engaged in the real estate business).
7. Purchase or sell physical commodities unless acquired as a result of
Ownership of securities or other instruments (but this shall not prevent the
Portfolio from purchasing or selling options and futures contracts or from
Investing in securities or other instruments backed by physical commodities).
8. Lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limitation
Does not apply to purchases of debt securities or to repurchase agreements.
the board of directors has adopted the following nonfundamental investment
Restrictions. A nonfundamental investment restriction can be changed by the
Board at any time without a shareholder vote.
1. The portfolio does not currently intend to sell securities short, unless
It owns or has the right to obtain securities equivalent in kind and amount to
The securities sold short, and provided that transactions in futures contracts
And options are not deemed to constitute selling securities short.
2. The portfolio does not currently intend to purchase securities on margin,
Except that the portfolio may obtain such short-term credits as are necessary
For the clearance of transactions, and provided that margin payments in
Connection with futures contracts and options on futures contracts shall not
Constitute purchasing securities on margin.
3. The portfolio may borrow money only (a) from a bank or from a registered
Investment company or portfolio for which the advisor, subadvisor or an
Affiliate serves as investment adviser or (b) by engaging in reverse repurchase
Agreements with any party (reverse repurchase agreements are treated as
Borrowings for purposes of fundamental investment restriction no. 3). The
Portfolio will not borrow from other funds advised by advisor, subadvisor or its
Affiliates if total outstanding borrowings immediately after such borrowing
Would exceed 15% of the portfolio's total assets.
4. The portfolio does not currently intend to purchase any security if, as a
Result, more than 10% of its net assets would be invested in securities that are
Deemed to be illiquid because they are subject to legal or contractual
Restrictions on resale or because they cannot be sold or disposed of in the
Ordinary course of business at approximately the prices at which they are
Valued.
5. The portfolio does not currently intend to lend assets other than
Securities to other parties, except by: (a) lending up to 5% of its net assets
To a registered investment company or portfolio for which the advisor,
Subadvisor or an affiliate serves as investment adviser or (b) acquiring loans,
Loan participations, or other forms of direct debt instruments and, in
Connection therewith, assuming any associated unfunded commitments of the
Sellers. (this limitation does not apply to purchases of debt securities or to
Repurchase agreements.)
6. The portfolio does not currently intend to invest in oil, gas, or other
Mineral exploration or development programs or leases; except to the extent
Incorporated within the s&p 500.
with respect to nonfundamental investment restriction no. 4, if through a
Change in values, net assets, or other circumstances, a fund were in a position
Where more than 10% of its net assets was invested in illiquid securities, it
Would consider appropriate steps to protect liquidity.
with respect to the portfolio's limitations on futures and options
Transactions, see the section entitled "options and futures contracts".
Money market portfolio
the portfolio has adopted the following fundamental investment
Restrictions. These restrictions cannot be changed without the approval of the
Holders of a majority of the outstanding shares of the portfolio. The portfolio
May not:
1. Purchase the securities of any issuer if, as a result, the portfolio
Would not comply with any applicable diversification requirements for a money
Market fund under the investment company act of 1940 and the rules thereunder,
As such may be amended from time to time.
2. Issue senior securities.
3. Borrow money, except that the portfolio may (i) borrow money for
Temporary or emergency purposes (not for leveraging or investment) and (ii)
Engage in reverse repurchase agreements for any purpose; provided that (i) and
(ii) in combination do not exceed 33 1/3% of the portfolio's total assets
(including the amount borrowed) less liabilities (other than borrowings). Any
Borrowings that come to exceed this amount will be reduced within three days
(not including sundays and holidays) to the extent necessary to comply with the
33 1/3% limitation.
4. Underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the securities
Act of 1933 in the disposition of restricted securities.
5. Purchase the securities of any issuer (other than securities issued or
Guaranteed by the u.s. government or any of its agencies or instrumentalities)
If, as a result, more than 25% of the portfolio's total assets would be invested
In the securities of companies whose principal business activities are in the
Same industry, except that the portfolio will invest more than 25% of its total
Assets in the financial services industry.
6. Purchase or sell real estate unless acquired as a result of ownership of
Securities or other instruments (but this shall not prevent the portfolio from
Investing in securities or other instruments backed by real estate or securities
Of companies engaged in the real estate business).
7. Purchase or sell physical commodities unless acquired as a result of
Ownership of securities or other instruments.
8. Lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this limitation
Does not apply to purchases of debt securities or to repurchase agreements.
9. Invest in companies for the purpose of exercising control or management.
the board of directors has adopted the following nonfundamental investment
Restrictions. A nonfundamental investment restriction can be changed by the
Board at any time without a shareholder vote.
1. The portfolio does not currently intend to purchase a security (other
Than securities issued or guaranteed by the u.s. government or any of its
Agencies or instrumentalities or securities of other money market funds) if, as
A result, more than 5% of its total assets would be invested in securities of a
Single issuer; provided that the portfolio may invest up to 25% of its total
Assets in the first tier securities of a single issuer for up to three business
Days.
2. The portfolio does not currently intend to sell securities short, unless
It owns or has the right to obtain securities equivalent in kind and amount to
The securities sold short, and provided that transactions in futures contracts
And options are not deemed to constitute selling securities short.
3. The portfolio does not currently intend to purchase securities on margin,
Except that the portfolio may obtain such short-term credits as are necessary
For the clearance of transactions, and provided that margin payments in
Connection with futures contracts and options on futures contracts shall not
Constitute purchasing securities on margin.
4. The portfolio may borrow money only (a) from a bank or from a registered
Investment company or portfolio for which the advisor, subadvisor or an
Affiliate serves as investment adviser or (b) by engaging in reverse repurchase
Agreements with any party. The portfolio will not borrow from other funds
Advised by the advisor, subadvisor or its affiliates if total outstanding
Borrowings immediately after such borrowing would exceed 33 1/3% of the
Portfolio's total assets.
5. The portfolio does not currently intend to purchase any security if, as a
Result, more than 10% of its net assets would be invested insecurities that are
Deemed to be illiquid because they are subject to legal or contractual
Restrictions on resale or because they cannot be sold or disposed of in the
Ordinary course of business at approximately the prices at which they are
Valued.
6. The portfolio does not currently intend to purchase or sell futures
Contracts or call options. This limitation does not apply to options attached
To, or acquired or traded together with, their underlying securities, and does
Not apply to securities that incorporate features similar to options or futures
Contracts.
7. The portfolio does not currently intend to lend assets other than
Securities to other parties, except by lending money (up to 10% of the
Portfolio's net assets) to a registered investment company or portfolio for
Which advisor, subadvisor or an affiliate serves as investment adviser. (this
Limitation does not apply to purchases of debt securities or to repurchase
Agreements.)
8. The portfolio does not currently intend to invest in oil, gas, or other
Mineral exploration or development programs or leases.
with respect to nonfundamental investment restriction no. 1, certain
Securities subject to guarantees (including insurance, letters of credit and
Demand features) are not considered securities of their issuer, but are subject
To separate diversification requirements, in accordance with industry standard
Requirements for money market funds.
With respect to nonfundamental investment restriction no. 5, if through a change
In values, net assets, or other circumstances, the portfolio were in a position
Where more than 10% of its net assets was invested in illiquid securities, it
Would consider appropriate steps to protect liquidity.
Select portfolio
the portfolio has adopted the following fundamental investment
restrictions. These restrictions cannot be changed without the approval of the
holders of a majority of the outstanding shares of the portfolio. The portfolio
may not:
1. Acquire securities of any one issuer which at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have a
value greater than 10% of the value of the outstanding securities of the issuer
2. Invest more than 25% of its assets (valued at the time of investment) in
securities of companies in any one industry, except that this restriction does
not apply to investments in u.s. government obligations;
3. Borrow money except from banks for temporary or emergency purposes in amounts
not exceeding 10% of the value of the portfolio's assets at the time of
borrowing. [related non-fundamental investment restriction: the portfolio will
not purchase additional securities when its borrowings, less receivables from
portfolio securities sold, exceed 5% of the value of the portfolio's total
assets].
4. Issue any senior security except in connection with permitted borrowings.
5. Underwrite the distribution of securities of other issuers; however the
portfolio may acquire "restricted" securities which, in the event of a resale,
might be required to be registered under the securities act of 1933 on the
ground that the portfolio could be regarded as an underwriter as defined by that
act with respect to such resale.
6. Make loans, but this restriction shall not prevent the portfolio from (a)
investing in debt obligations, (b) investing in repurchase agreements, or (c)
lending its portfolio securities. [related non-fundamental investment
restriction: the portfolio will not lend securities having a value in excess of
33% of its assets, including collateral received for loaned securities (valued
at the time of any loan).]
7. Purchase and sell real estate or interests in real estate, although it may
invest in marketable securities of enterprises which invest in real estate or
interests in real estate.
8. Purchase and sell commodities or commodity contracts, except that it may
enter into forward foreign currency contracts.
The board of directors has adopted the following nonfundamental investment
restrictions. A nonfundamental investment restriction can be changed by the
board at any time without a shareholder vote. The portfolio may not:
1. Make margin purchases or participate in a joint or on a joint or several
basis in any trading account in securities.
2. Invest more than 15% of its net assets (valued at the time of investment) in
illiquid securities, including repurchase agreements maturing in more than seven
days.
3. Invest more than 2% of its net assets (valued at the time of investment) in
warrants not listed on the new york or american stock exchanges, valued at cost,
nor more than 5% of its net assets in all warrants, provided that warrants
acquired in units or attached to other securities shall be deemed to be without
value for purposes of this restriction.
4. Invest more than 25% of its total assets (valued at the time of investment)
in securities of non-u.s. issuers (other than securities represented by american
depositary receipts).
5. Make short sales of securities unless the portfolio owns at least an equal
amount of such securities, or owns securities that are convertible or
exchangeable, or anticipated to be convertible or exchangeable, into at least an
equal amount of such securities with no restriction other than the payment of
additional consideration.
6. Purchase or write a call option or a put option if the aggregate premium paid
for all call and put options then held exceed 20% of its net assets (less the
amount by which any such positions are in-the-money).
7. Invest in futures or options on futures, except that it may invest in forward
foreign currency contracts.
Micro cap portfolio
the portfolio has adopted the following fundamental investment restrictions
These restrictions cannot be changed without the approval of the holders of a
majority of the outstanding shares of the portfolio. The portfolio may not:
1. Borrow money in excess of 33% of the value (taken at the lower of cost or
current value) of the portfolio's total assets (not including the amount
borrowed) at the time the borrowing is made, and then only from banks for
temporary, extraordinary or emergency purposes, except that the portfolio may
borrow through reverse repurchase agreements or dollar rolls up to 33% of the
value of the portfolio's total assets. Such borrowings (other than borrowings
relating to reverse repurchase agreements and dollar rolls) will be repaid
before any investments are purchased.
2. Underwrite securities issued by other persons except to the extent that, in
connection with the disposition of its portfolio investments, it may be deemed
to be an underwriter under federal securities laws.
3. Purchase or sell real estate (including real estate limited partnerships),
although it may purchase securities of issuers which deal in real estate,
including securities of real estate investment trusts, securities which
represent interests in real estate and securities which are secured by interests
in real estate, and the portfolio may acquire and dispose of real estate or
interests in real estate acquired through the exercise of its rights as holder
of debt obligations secured by real estate or interests therein or for use as
office space for the portfolio.
4. Make loans, except by purchase of debt obligations (including non-publicly
traded debt obligations), by entering into repurchase agreements or through the
lending of the portfolio's portfolio securities. Loans of portfolio securities
may be made with respect to up to 100% of the portfolio's assets.
5. Issue any senior security (as that term is defined in the investment company
act of 1940 (the "1940 act")), if such issuance is specifically prohibited by
the 1940 act or the rules and regulations promulgated thereunder. (the portfolio
has no intention of issuing senior securities except as set forth in fundamental
investment restriction no. 1).
6. Invest 25% or more of the value of its total assets in securities of issuers
in any one industry. (securities issued or guaranteed as to principal or
interest by the u.s. government or its agencies or instrumentalities are not
considered to represent industries.)
7. Purchase or sell commodities or commodity contracts.
The board of directors has adopted the following nonfundamental investment
restrictions. A nonfundamental investment restriction can be changed by the
board at any time without a shareholder vote. The portfolio may not:
1. Invest in (a) securities which at the time of such investment are not readily
marketable, (b) securities the disposition of which is restricted under federal
securities laws, excluding restricted securities that have been determined by
the directors of the fund (or the person designated by them to make such
determination) to be readily marketable, and (c) repurchase agreements maturing
in more than seven days if, as a result, more than 15% of the portfolio's net
assets (taken at current value) would then be invested in securities described
in (a), (b) and (c) above.
PURCHASE AND REDEMPTION OF SHARES
---------------------------------
The portfolios continuously offer their shares at prices equal to the
Respective net asset values of the portfolios determined in the manner set forth
Below under "net asset value." The portfolios offer their shares, without sales
Charge, only for purchase by various insurance companies for allocation to their
Variable accounts. It is conceivable that in the future it may be
Disadvantageous for both annuity variable accounts and life insurance variable
Accounts of different insurance companies, to invest simultaneously in the
Portfolios, although currently neither the insurance companies nor the portfolio
Foresee any such disadvantages to either variable annuity or variable life
Insurance policy holders of any insurance company. The portfolios' board of
Directors intends to monitor events in order to identify any material conflicts
Between such policyholders and to determine what action, if any, should be taken
In response to any conflicts.
the portfolios are required to redeem all full and fractional shares for
Cash. The redemption price is the net asset value per share, which may be more
Or less than the original cost, depending on the investment experience of the
Portfolio. Payment for shares redeemed will generally be made within seven days
After receipt of a proper notice of redemption. The right of redemption may be
Suspended or the date of payment postponed for any period during which the new
York stock exchange is closed (other than customary weekend and holiday
Closings), when trading on the new york stock exchange is restricted, or an
Emergency exists, as determined by the commission, or if the commission has
Ordered such a suspension for the protection of shareholders.
net asset value
---------------
the net asset value of the shares of each portfolio of the fund is
Determined by adding the values of all securities and other assets of the
Portfolio, subtracting liabilities and expenses, and dividing by the number of
Shares of the portfolio outstanding. Expenses are accrued daily, including the
Investment advisory fee. The money market portfolio attempts to maintain a
Constant net asset value of $1.00 per share. The net asset values of the income
& growth, growth, small capitalization, midcap growth, emerging growth,
Research, growth with income and index 500 portfolios fluctuate based on the
Respective market value of a portfolio's investments. The net asset value per
Share of each of the portfolios is determined every business day as of the close
Of the regular session of the new york stock exchange (generally 4:00 p.m.
Eastern time), and at such other times as may be necessary or appropriate. The
Portfolios do not determine net asset value on certain national holidays or
Other days on which the new york stock exchange is closed: new year's day,
Presidents' day, dr. Martin luther king, jr. Day, good friday, memorial day,
Independence day, labor day, thanksgiving day, and christmas day. Each
Portfolio's net asset value per share is determined by dividing that portfolio's
Total net assets (the value of its assets net of liabilities, including accrued
Expenses and fees) by the number of shares outstanding.
the assets of the income & growth, growth, small capitalization, midcap
Growth, emerging growth, research, growth with income and index 500 portfolios
Are valued as follows: (a) securities for which market quotations are readily
Available are valued at the most recent closing price, mean between bid and
Asked price, or yield equivalent as obtained from one or more market makers for
Such securities; (b) securities maturing within 60 days may be valued at cost,
Plus or minus any amortized discount or premium, unless the board of directors
Determines such method not to be appropriate under the circumstances; and (c)
All other securities and assets for which market quotations are not readily
Available will be fairly valued by the advisor in good faith under the
Supervision of the board of directors. Securities primarily traded on foreign
Securities exchanges are generally valued at the preceding closing values on
Their respective exchanges where primarily traded. Equity options are valued at
The last sale price unless the bid price is higher or the asked price is lower,
In which event such bid or asked price is used. Exchange traded fixed income
Options are valued at the last sale price unless there is no sale price, in
Which event current prices provided by market makers are used. Over-the-counter
Fixed income options are valued based upon current prices provided by market
Makers. Financial futures are valued at the settlement price established each
Day by the board of trade or exchange on which they are traded. Because of the
Need to obtain prices as of the close of trading on various exchanges throughout
The world, the calculation of the portfolio's net asset value does not take
Place for contemporaneously with the determination of the prices of u.s.
Portfolio securities. For purposes of determining the net asset value all assets
And liabilities initially expressed in foreign currency values will be converted
Into united states dollar values at the mean between the bid and offered
Quotations of such currencies against united states dollars at last quoted by
Any recognized dealer. If an event were to occur after the value of an
Investment was so established but before the net asset value per share was
Determined which was likely to materially change the net asset value, then the
Instrument would be valued using fair value consideration by the directors or
Their delegates.
the money market portfolio's assets, including securities subject to
Repurchase agreements, are normally valued at their amortized cost which does
Not take into account unrealized capital gains or losses. This involves valuing
An instrument at its cost and thereafter assuming a constant amortization to
Maturity of any discount or premium, regardless of the impact of fluctuating
Interest rates on the market value of the instrument. While this method provides
Certainty in valuation, it may result in periods during which value, as
Determined by amortized cost, is higher or lower than the price that would be
Received upon sale of the instrument.
taxes
-----
in 1999 the portfolios qualified, and in 2000, the portfolios intend to
Qualify, as a "regulated investment company" under the provisions of subchapter
M of the internal revenue code (the "code"). If for any reason the fund should
Fail to qualify, it would be taxed as a corporation at the fund level, rather
Than passing through its income and gains to shareholders.
Distributions of realized net capital gains, if any, are normally paid once a
Year; however, the portfolios do not intend to make any such distributions
Unless available capital loss carryovers, if any, have been used or have
Expired. Capital loss carryforwards as of december 31, 1999, for income & growth
Was $0, growth was $228,348 small capitalization was $0, midcap growth was $0,
Emerging growth was $0, research was $0, growth with income was $0, index 500
Was $0, and money market was $0.
since the shareholders of the portfolios are insurance companies, this
Statement of additional information does not contain a discussion of the federal
Income tax consequences at the shareholder level. For information concerning the
Federal tax consequences to purchasers of annuity or life insurance policies,
See the prospectus for the policies.
calculation of yield and total return
-------------------------------------
Yield (money market):
from time to time the money market portfolio advertises its "yield" and
"effective yield." Both yield figures are based on historical earnings and are
Not intended to indicate future performance. The "yield" of the money market
Portfolio refers to the actual income generated by an investment in the
Portfolio over a particular base period of time. If the base period is less than
One year, the yield is then "annualized." That is, the net change, exclusive of
Capital changes, in the value of a share during the base period is divided by
The net asset value per share at the beginning of the period, and the result is
Multiplied by 365 and divided by the number of days in the base period. Capital
Changes excluded from the calculation of yield are: (1) realized gains and
Losses from the sale of securities, and (2) unrealized appreciation and
Depreciation. The money market portfolio's "effective yield" for a seven-day
Period is its annualized compounded yield during the period, calculated
According to the following formula:
Effective yield = [(base period return) + 1]365/7 - 1
the "effective yield" is calculated like yield, but assumes reinvestment of
Earned income. The effective yield will be slightly higher than the yield
Because of the compounding effect of this assumed reinvestment. The "effective
Yield" is calculated like yield, but assumes reinvestment of earned income. The
Effective yield will be slightly higher than the yield because of the
Compounding effect of this assumed reinvestment. For the seven-day period ended
December 31, 1999, money market's yield was 6.13% and its effective yield was
6.32%.
the yield of the money market portfolio will fluctuate in response to
Changes in interest rates and general economic conditions, portfolio quality,
Portfolio maturity, and operating expenses. Yield is not fixed or insured and
Therefore is not comparable to a savings or other similar type of account. Yield
During any particular time period should not be considered an indication of
Future yield. It is, however, useful in evaluating a portfolio's performance in
Meeting its investment objective.
Total return and other quotations (all portfolios except money market):
the portfolios may each advertise "total return." Total return is computed
By taking the total number of shares purchased by a hypothetical $1,000
Investment, adding all additional shares purchased within the period with
Reinvested dividends and distributions, calculating the value of those shares at
The end of the period, and dividing the result by the initial $1,000 investment.
For periods of more than one year, the cumulative total return is then adjusted
For the number of years, taking compounding into account, to calculate average
Annual total return during that period.
total return is computed according to the following formula:
P(1 + t)n = erv
Where p = a hypothetical initial payment of $1,000; t = total return; n = number
Of years; and erv = the ending redeemable value of a hypothetical $1,000 payment
Made at the beginning of the period. Total return is historical in nature and is
Not intended to indicate future performance. Total return for the portfolios for
The periods indicated are as follows:
Period ended
December 31, 1999 sec annual return
Income & growth
From inception* 29.14%
Growth
From inception* 15.70%
Small capitalization
From inception* 29.10%
Midcap growth
From inception* 22.09%
Emerging growth
From inception* 46.63%
Research
From inception* 14.90%
Growth with income
From inception* 4.65%
Index 500
From inception* 8.09%
* inception for these eight portfolios was november 1, 1999.
total return, like yield and net asset value per share, fluctuates in
Response to changes in market conditions. Neither total return nor yield for any
Particular time period should be considered an indication of future return.
DIRECTORS AND OFFICERS
----------------------
The fund's board of directors supervises the fund's activities and reviews
Its contracts with companies that provide it with services. The directors and
Officers of the fund and their principal occupations are set forth below.
Directors and officers who are active employees of the investment advisor or its
Affiliates will not receive any additional compensation for their services to
The fund.
*william j. Atherton, president and director. Mr. Atherton is president and
Director of ameritas variable life insurance company, a subsidiary of ameritas
Life and ameritas acacia mutual holding company, which manufactures and
Distributes variable and fixed life and annuity policies. He was formerly
President and director of north american security life insurance company of
Boston, ma. He serves on the board of directors of amal corporation. Address:
2441 bretigue drive, lincoln, nebraska 68512. Bob: 01/15/39.
frank h. Blatz, jr., Esq., Director. Mr. Blatz is a partner in the law firm
Of snevily, ely, williams, gurrieri & blatz. He was formerly a partner with
Abrams, blatz, gran, hendricks & reina, p.a. he is also a director/trustee of
The calvert fund, calvert cash reserves, first variable rate fund, calvert
Tax-free reserves, and calvert municipal fund, inc. Address: 308 east broad
Street, westfield, new jersey 07091. Dob: 10/29/35.
alice gresham bullock, director. Ms. Bullock is a dean and professor at
Howard university school of law. She was formerly deputy director of the
Association of american law schools. Ms. Bullock is a member of the board of
Visitors of j. Reuben clark law school, brigham young university and the board
Of directors of council on legal education opportunity. Address: 6127 utah
Avenue, washington, d.c. 20015. Dob: 05/17/50.
charles e. Diehl, director. Mr. Diehl is vice president and treasurer
Emeritus of the george washington university, and has retired from university
Support services, inc. Of herndon, virginia. He is also a director of acacia
Mutual life insurance company. Address: 1658 quail hollow court, mclean,
Virginia 22101. Dob: 10/13/22.
*thomas c. Godlasky, director mr. Godlasky is executive vice president and
Chief investment officer of amerus life holdings, inc. He was formerly a manager
Of fixed income products at providian corp. He also serves on the board of
Directors of amerus home equity, amvestors corp. Delta life & annuity, ameritas
Variable life insurance company, ameritas investment company and amerus group
Foundation. He is also a chartered financial analyst. Address: 1516 s. 42nd
Street, west des moines, iowa 50265. Dob: 10/30/55.
*barbara j. Krumsiek, president and director. Ms. Krumsiek serves as
President, chief executive officer and vice chairman of calvert group, ltd. And
As an officer and director of each of its affiliated companies. She is a
Director of calvert-sloan advisers, l.l.c., and a trustee/director of each of
The investment companies in the calvert group of funds. Prior to joining calvert
Group, ms. Krumsiek served as senior vice president of alliance capital lp's
Mutual fund division. Dob: 08/09/52.
m. Charito kruvant, director. Ms. Kruvant is president of creative
Associates international, inc., A firm that specializes in human resources
Development, information management, public affairs and private enterprise
Development. She is also a director of acacia federal savings bank. Dob:
12/08/45. Address: 5301 wisconsin avenue, n.w. washington, d.c. 20015.
cynthia h. Milligan, director. Ms. Milligan is dean, college of business
Administration, university of nebraska, lincoln. Formerly, she was the president
And chief executive officer for cma, a consulting firm for financial
Institutions. She serves on the board of directors of wells fargo and gallup,
Inc. She also serves on the board of trustees of w.k. kellogg foundation.
Address: 2633 south 24th street, lincoln, nebraska 68502. Dob: 4/11/46.
arthur j. Pugh, trustee. Mr. Pugh serves as a director of acacia federal
Savings bank. Address: 4823 prestwick drive, fairfax, virginia 22030. Dob:
09/24/37.
ronald m. Wolfsheimer, cpa, treasurer. Mr. Wolfsheimer is senior vice
President and chief financial officer of calvert group, ltd. And its
Subsidiaries and an officer of each of the other investment companies in the
Calvert group of funds. Mr. Wolfsheimer is vice president and treasurer of
Calvert-sloan advisers, l.l.c., and a director of calvert distributors, inc.
Dob: 07/24/47.
william m. Tartikoff, esq., Vice president and secretary. Mr. Tartikoff is
General counsel, secretary, and senior vice president of calvert group, ltd.,
And its subsidiaries, and is an officer of each of the other investment
Companies in the calvert group of funds. Mr. Tartikoff is vice president and
Secretary of calvert-sloan advisers, l.l.c., a director of calvert distributors,
Inc., And is an officer of acacia national life insurance company. Dob:
08/12/47.
reno j. Martini, senior vice president. Mr. Martini is a director and
Senior vice president of calvert group, ltd., And senior vice president and
Chief investment officer of calvert asset management company, inc. Mr. Martini
Is also a director and president of calvert-sloan advisers, l.l.c., and a
Director and officer of calvert new world fund, inc. Dob: 1/13/50.
daniel k. Hayes, vice president. Mr. Hayes is vice president of calvert
Asset management company, inc., And is an officer of each of the other
Investment companies in the calvert group of funds, except for calvert new world
Fund, inc. Dob: 09/09/50.
robert j. O'meara, vice president, mr. O'meara is assistant vice president,
Investment funds administrator and budget administrator of ameritas variable
Life insurance company. Dob: 12/12/62.
susan walker bender, esq., Assistant secretary. Ms. Bender is associate
General counsel of calvert group, and an officer of each of its subsidiaries and
Calvert-sloan advisers, l.l.c. she is also an officer of each of the other
Investment companies in the calvert group of funds. Dob: 1/29/59.
ivy wafford duke, esq., Assistant secretary. Ms. Duke is associate general
Counsel of calvert group and an officer of each of its subsidiaries and
Calvert-sloan advisers, l.l.c. she is also an officer of each of the other
Investment companies in the calvert group of funds. Prior to working at calvert
Group, ms. Duke was an associate in the investment management group of the
Business and finance department at drinker biddle and reath. Dob: 9/7/68.
victor frye, esq., Assistant secretary and compliance officer. Mr. Frye is
Counsel and compliance officer of calvert group and an officer of each of its
Subsidiaries and calvert-sloan advisers, l.l.c. he is also an officer of each of
The other investment companies in the calvert group of funds. Prior to working
At calvert group, mr. Frye was counsel and manager of the compliance department
At the advisors group. Dob: 10/15/58.
jennifer streaks, esq., Assistant secretary. Ms. Streaks is assistant
General counsel of calvert group and an officer of each of its subsidiaries and
Calvert-sloan advisers, l.l.c. she is also an officer of each of the other
Investment companies in the calvert group of funds. Prior to working at calvert
Group, ms. Streaks was a regulatory analyst in the market regulation department
Of the national association of securities dealers. Dob: 08/02/71.
michael v. Yuhas, jr., Cpa, controller of funds. Mr. Yuhas is the director
Of fund administration of calvert group, ltd., And an officer of each of the
Other investment companies in the calvert group of funds. Dob: 08/04/61.
the address of directors and officers, unless otherwise noted, is 4550
Montgomery avenue, suite 1000n, bethesda, maryland 20814. Directors and officers
Of the fund as a group own less than 1% of the fund's outstanding shares.
Directors marked with an *, above, are "interested persons" of the fund, under
The investment company act of 1940.
during fiscal 1999, directors of the fund not affiliated with the fund's
Advisor were paid $1,012 by income & growth, $2,869 by growth, $1,581 by small
Capitalization, $1,042 by midcap growth, $1,439 by emerging growth, $380 by
Research, $621 by growth with income, $2,942 by index 500, and $2,544 by money
Market. Each director of the fund who is not affiliated with the advisor
Receives a meeting fee of $1,500 for each board meeting attended; such fees are
Allocated among the series based upon their relative net assets. Directors not
On any other calvert group fund boards receive an annual fee of $15,000.
directors of the fund not affiliated with the fund's advisor
("noninterested persons") may elect to defer receipt of all or a percentage of
Their annual fees and invest them in any fund in the calvert group family of
Funds through the directors/trustees deferred compensation plan (shown as
"pension or retirement benefits accrued as part of fund expenses," below).
Deferral of the fees is designed to maintain the parties in the same position as
If the fees were paid on a current basis. Management believes this will have a
Negligible effect on the fund's assets, liabilities, net assets, and net income
Per share.
director compensation table
fiscal year 1999
(unaudited numbers)
aggregate pension or total compensation
compensation retirement benefits from
from registrant accrued as registrant and fund
for service part of complex paid to
as trustee/directors registrant trustee/directors**
expenses*
Name of director
Frank h. Blatz, jr. $10,501 $10,501 $48,250
Alice gresham bullock $18,000 $0 $18,000
Charles e. Diehl $10,501 $0 $48,250
M. Charito kruvant $9,749 $5,849 $45,250
Cynthia h. Milligan $5,250 $0 $5,250
Arthur j. Pugh $10,500 $10,500 $48,250
*messrs. Blatz, diehl, and pugh and ms. Kruvant have chosen to defer a
Portion of their compensation. As of december 31, 1999, total deferred
Compensation, including dividends and capital appreciation, was: blatz,
$784,000; diehl, $760,650; pugh, $134,450 and kruvant,
$58,700.
**the fund complex consists of eleven (11) registered investment companies.
INVESTMENT ADVISOR AND SUBADVISORS
----------------------------------
The fund's investment advisor is ameritas investment corp. ("aic"), 5900
"o" street, 4th floor, lincoln, nebraska 68510-1889. Aic is registered as an
Investment advisor under the investment advisors act of 1940 and also is
Registered as a broker dealer under the securities exchange act of 1934. Aic
Serves as the underwriter of variable products issued by its affiliates,
Ameritas variable life insurance company and ameritas life insurance corp.
the advisor receives monthly fees based on the following annual rates of
The portfolio's average daily net assets:
Income & growth 0.625%
Growth 0.75%
Small capitalization 0.85%
Midcap growth 0.80%
Emerging growth 0.75%
Research 0.75%
Growth with income 0.75%
Index 500 0.24%
Money market 0.20%
Select 0.92%
Micro cap 1.12%
for a period of one year following november 1, 1999 (october 29, 1999 for
Money market), the advisor is required to waive its fee and/or reimburse the
Expenses of each portfolio to the extent that aggregate expenses exceed the
Following expense ratios:
Income & growth 0.68%
Growth 0.79%
Small capitalization 0.90%
Midcap growth 0.84%
Emerging growth 0.85%
Research 0.86%
Growth with income 0.88%
Index 500 0.28%
Money market 0.26%
Following this one year period, expenses will not be permitted to exceed an
Expense ratio which is .10% greater than the current expense ratios, unless an
Amendment to the investment advisory contract is approved modifying or
Eliminating the expense guarantee.
for the fund's fiscal year ended december 31, 1999, income & growth paid
Aic investment advisory fees of $75,862 and received expense reimbursements from
Aic of $13,526, growth paid $238,838 and received expense reimbursements from
Aic of $35,281, small capitalization paid $157,905 and received expense
Reimbursements from aic of $19,219, midcap growth paid $93,241 and received
Expense reimbursements from aic of $15,191, emerging growth paid $130,638 and
Received expense reimbursements from aic of $21,431, research paid $31,003 and
Received expense reimbursements from aic of $21,930, growth with income paid
$42,591 and received expense reimbursements from aic of $21,396, index 500 paid
$79,768 and received expense reimbursements from aic of $38,459, and money
Market paid $57,951 and received expense reimbursements from aic of $19,277.
SUBADVISORS
Aic has retained fred alger management, inc. As subadvisor for income &
Growth, growth, small capitalization and midcap growth portfolios. Fred alger
Management, inc. Is owned by alger inc. Which in turn is owned by alger
Associates, inc., A financial services holding company. Fred m. Alger, iii and
David d. Alger are the majority shareholders of alger associates, inc. And may
Be deemed to control that company and its subsidiaries. It receives a
Subadvisory fee, paid by the advisor, of 0.355%, 0.48%, 0.58% and 0.53%,
Respectively, of each portfolio's average daily net assets.
aic has retained massachusetts financial services company as subadvisor for
The emerging growth, research, and growth with income portfolios. Massachusetts
Financial services company is a subsidiary of sun life of canada (u.s.)
Financial services holdings, inc., Which in turn is an indirect wholly owned
Subsidiary of sun life of canada (an insurance company). It receives a
Subadvisory fee, paid by the advisor, of 0.50% of each portfolio's average daily
Net assets.
aic has retained state street global advisors as subadvisor for the index
500 portfolio. State street global advisors is a division of state street bank
And trust. It receives a subadvisory fee, paid by the advisor, of 0.05 % of the
Portfolio's average daily net assets.
aic has retained calvert asset management company, inc. As subadvisor for
The money market portfolio. Calvert asset management company, inc. Is a
Subsidiary of calvert group, ltd., Which is a subsidiary of acacia mutual life
Insurance company of washington, d.c. ("acacia "). Acacia, in turn, is a
Subsidiary of ameritas acacia mutual holding company. It receives a subadvisory
Fee, paid by the advisor, of 0.15% of the portfolio's average daily net assets.
aic has retained harris associates l.p. as subadvisor for the select
portfolio. Harris associates is a limited partnership managed by its general
partner, harris associates, inc., Which is a wholly-owned subsidiary of cdc
asset management - north america, the investment management arm of france's
caisse des depots group, a . It receives a subadvisory fee, paid by the advisor,
of 0.65% of the portfolio's average daily net assets.
aic has retained david l. Babson & company inc. As subadvisor for the
micro cap portfolio. David l. Babson & company is a wholly owned subsidiary of
dlb acquisition corp., A holding company that is a majority-owned subsidiary of
massmutual holding trust i, which in turn is a holding company and wholly owned
subsidiary of massmutual holding company, a holding company and a wholly owned
subsidiary of massmutual, a mutual life insurance company. It receives a
subadvisory fee, paid by the advisor, of 0.85% of the portfolio's average daily
net assets.
administrative services agent
-----------------------------
calvert administrative services company ("casc"), a subsidiary of calvert
Group, ltd., Has been retained by the fund to provide certain administrative
Services necessary to the conduct of its affairs, including the preparation of
Regulatory filings and shareholder reports. For providing such services, casc
Receives an annual administrative service fee payable monthly of 0.05% of each
Portfolio's net assets or a minimum of $50,000 per portfolio.
for fiscal year 1999, income & growth paid $8,356, growth paid, $15,922,
Small capitalization paid $9,289, midcap growth paid $8,356, emerging growth
Paid 8,710, research paid $8,356, growth with income paid $8,356, index 500 paid
$16,618, and money market paid $14,488.
TRANSFER AND SHAREHOLDER SERVICING AGENT
----------------------------------------
National financial data services, inc. ("nfds"), 1004 baltimore, 6th floor,
Kansas city, missouri 64105, a subsidiary of state street bank & trust, has been
Retained by the fund to act as transfer agent and dividend disbursing agent.
These responsibilities include: responding to certain shareholder inquiries and
Instructions, crediting and debiting shareholder accounts for purchases and
Redemptions of fund shares and confirming such transactions, and daily updating
Of shareholder accounts to reflect declaration and payment of dividends.
calvert shareholder services, inc. ("cssi"), 4550 montgomery avenue, suite
1000n, bethesda, maryland 20814, a subsidiary of calvert group, ltd. And acacia
Mutual, has been retained by the fund to act as shareholder servicing agent.
Shareholder servicing responsibilities include responding to shareholder
Inquiries and instructions concerning their accounts, entering any telephoned
Purchases or redemptions into the nfds system, maintenance of broker-dealer
Data, and preparing and distributing statements to shareholders regarding their
Accounts.
for these services, cssi and nfds may receive a fee based on the number of
Shareholder accounts in each portfolio.
independent accountants and custodians
--------------------------------------
Arthur Andersen LLP, 1601 Market Street, Philadelphia, PA 19103, has been
selected by the board of directors to serve as independent
Accountants for fiscal year 2000. State street bank and trust company, n.a., 225
Franklin street, boston, massachusetts 02110, serves as custodian of the fund's
Investments. Allfirst financial, inc., 25 south charles street, baltimore,
Maryland 21203 also serves as custodian of certain of the fund's cash assets
The custodians have no part in deciding the fund's investment policies or the
Choice of securities that are to be purchased or sold for the fund's portfolios
method of distribution
----------------------
ameritas investment corp. Also serves as the principal underwriter and
Distributor for the fund. Under the terms of its underwriting agreement with the
Fund, aic markets and distributes the fund's shares and is responsible for
Preparing advertising and sales literature, and printing and mailing
Prospectuses to prospective investors. Aic is entitled to compensation for
Services performed and expenses assumed. Payments to aic may be authorized by
The fund's board of directors from time to time in accordance with applicable
Law. No payments were authorized in 1999. Aic is responsible for paying (i) all
Commissions or other fees to its associated persons which are due for the sale
Of the policies, and (ii) any compensation to other broker-dealers and their
Associated persons due under the terms of any sales agreement between aic and
The broker-dealers. As the advisor and distributor, aic, at its own expense, may
Incur costs or pay expenses associated with the distribution of the fund's
Shares.
PORTFOLIO TRANSACTIONS
----------------------
Portfolio transactions are undertaken on the basis of their desirability
From an investment standpoint. The fund's advisor and subadvisors make
Investment decisions and the choice of brokers and dealers under the direction
And supervision of the fund's board of directors.
broker-dealers who execute portfolio transactions on behalf of the fund are
Selected on the basis of their execution capability and trading expertise
Considering, among other factors, the overall reasonableness of the brokerage
Commissions, current market conditions, size and timing of the order, difficulty
Of execution, per share price, market familiarity, reliability, integrity, and
Financial condition, subject to the advisor/subadvisor obligation to seek best
Execution. The advisor or subadvisor(s) may also consider sales of fund shares
As a factor in the selection of brokers.
for fiscal year 1999, total brokerage commissions paid are as follows:
Income & growth $22,190
Growth $53,290
Small capitalization $28,139
Midcap growth $14,991
Emerging growth $25,004
Research $6,760
Growth with income $9,414
Index 500 $3,074
Money market $0
for fiscal 1999, income & growth, growth, small capitalization and midcap
Growth paid brokerage commissions to fred alger & company, incorporated, the
Parent company of fred alger management, inc. As follows:
Income & growth $22,190
Growth $53,290
Small capitalization $26,164
Midcap growth $14,391
for the fiscal year ended december 31, 1999, aggregate brokerage
Commissions paid to fred alger & company, incorporated represented 100% of
Income & growth's total commissions and 56% of the total dollar amount of
Commission transactions; 100% of growth's total commissions and 67% of the total
Dollar amount of commission transactions; 93% of small capitalization's total
Commissions and 24% of the total dollar amount of commission transactions; and
96% of midcap growth's total commissions and 24% of the total dollar amount of
Commission transactions.
while the fund's advisor and subadvisor(s) select brokers primarily on the
Basis of best execution, in some cases they may direct transactions to brokers
Based on the quality and amount of the research and research-related services
Which the brokers provide to them. These research services include advice,
Either directly or through publications or writings, as to the value of
Securities, the advisability of investing in, purchasing or selling securities,
And the availability of securities or purchasers or sellers of securities;
Furnishing of analyses and reports concerning issuers, securities or industries;
Providing information on economic factors and trends; assisting in determining
Portfolio strategy; providing computer software used in security analyses;
Providing portfolio performance evaluation and technical market analyses; and
Providing other services relevant to the investment decision making process.
Other such services are designed primarily to assist the advisor in monitoring
The investment activities of the subadvisor(s) of the fund. Such services
Include portfolio attribution systems, return-based style analysis, and
Trade-execution analysis. The advisor may also direct selling concessions and/or
Discounts in fixed-price offerings for research services.
if, in the judgment of the advisor or subadvisor(s), the fund or other
Accounts managed by them will be benefited by supplemental research services,
They are authorized to pay brokerage commissions to a broker furnishing such
Services which are in excess of commissions which another broker may have
Charged for effecting the same transaction. It is the policy of the advisor that
Such research services will be used for the benefit of the fund as well as other
Calvert group funds and managed accounts.
the advisor did not direct any brokerage for research services for fiscal
Year 1999.
the portfolio turnover rates for fiscal year 1999 is as follows:
Income & growth 18%
Growth 18%
Small capitalization 21%
Midcap growth 21%
Emerging growth 18%
Research 16%
Growth with income 16%
Index 500 5%
no portfolio turnover rate can be calculated for money market due to the
Short maturities of the instruments purchased. Portfolio turnover should not
Affect the income or net asset value of money market because brokerage
Commissions are not normally charged on the purchase or sale of money market
Instruments.
PERSONAL SECURITIES TRANSACTIONS
--------------------------------
The fund, its advisor, and principal underwriter have adopted a code of
Ethics pursuant to rule 17j-1 of the investment company act of 1940. The code of
Ethics is designed to protect the public from abusive trading practices and to
Maintain ethical standards for access persons as defined in the rule when
Dealing with the public. The code of ethics permits the fund's investment
Personnel to invest in securities that may be purchased or held by the fund. The
Code of ethics contains certain conditions such as pre-clearance and
Restrictions on use of material information.
GENERAL INFORMATION
-------------------
The fund is an open-end, management investment company, incorporated in
Maryland on september 27, 1982. The income & growth, growth, small
Capitalization, midcap growth, emerging growth portfolios are diversified. The
Research, growth with income, index 500, money market, select and micro
capportfolios are
Non-diversified. The fund issues separate stock for each portfolio. Shares of
Each of the portfolios have equal rights with regard to voting, redemptions,
Dividends, distributions, and liquidations. No portfolio has preference over
Another portfolio. The insurance companies and the fund's shareholders will vote
Fund shares allocated to registered separate accounts in accordance with
Instructions received from policyholders. Under certain circumstances, which are
Described in the accompanying prospectus of the variable life or annuity policy,
The voting instructions received from variable life or annuity policyholders may
Be disregarded.
all shares of common stock have equal voting rights (regardless of the net
Asset value per share) except that only shares of the respective portfolio are
Entitled to vote on matters concerning only that portfolio. Pursuant to the
Investment company act of 1940 and the rules and regulations thereunder, certain
Matters approved by a vote of all shareholders of the fund may not be binding on
A portfolio whose shareholders have not approved that matter. Each issued and
Outstanding share is entitled to one vote and to participate equally in
Dividends and distributions declared by the respective portfolio and, upon
Liquidation or dissolution, in net assets of such portfolio remaining after
Satisfaction of outstanding liabilities. The shares of each portfolio, when
Issued, will be fully paid and non-assessable and have no preemptive or
Conversion rights. Holders of shares of any portfolio are entitled to redeem
Their shares as set forth above under "purchase and redemption of shares." The
Shares do not have cumulative voting rights and the holders of more than 50% of
The shares of the fund voting for the election of directors can elect all of the
Directors of the fund if they choose to do so and in such event the holders of
The remaining shares would not be able to elect any directors.
the fund's board of directors has adopted a "proportionate voting" policy,
Meaning that insurance companies will vote all of the fund's shares, including
Shares the insurance companies hold, in return for providing the fund with its
Capital and in payment of charges made against the variable annuity or variable
Life separate accounts, in proportion to the votes received from contractholders
Or policyowners.
the fund is not required to hold annual policyholder meetings, but special
Meetings may be called for certain purposes such as electing directors, changing
Fundamental policies, or approving a management contract. As a policyholder, you
Receive one vote for each share you own.
APPENDIX
--------
Corporate bond ratings
Moody's investors service inc.'s/standard & poor's municipal bond ratings:
aaa/aaa: best quality. These bonds carry the smallest degree of investment
Risk and are generally referred to as "gilt edge." Interest payments are
Protected by a large or by an exceptionally stable margin and principal is
Secure. This rating indicates an extremely strong capacity to pay principal and
Interest.
aa/aa: bonds rated aa also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
Instances they differ from aaa issues only in small degree. They are rated lower
Than the best bonds because margins of protection may not be as large as in aaa
Securities, fluctuation of protective elements may be of greater amplitude, or
There may be other elements present which make long-term risks appear somewhat
Larger than in aaa securities.
a/a: upper-medium grade obligations. Factors giving security to principal
And interest are considered adequate, but elements may be present which make the
Bond somewhat more susceptible to the adverse effects of circumstances and
Economic conditions.
baa/bbb: medium grade obligations; adequate capacity to pay principal and
Interest. Whereas they normally exhibit adequate protection parameters, adverse
Economic conditions or changing circumstances are more likely to lead to a
Weakened capacity to pay principal and interest for bonds in this category than
For bonds in the a category.
ba/bb, b/b, caa/ccc, ca/cc: debt rated in these categories is regarded as
Predominantly speculative with respect to capacity to pay interest and repay
Principal. There may be some large uncertainties and major risk exposure to
Adverse conditions. The higher the degree of speculation, the lower the rating.
c/c: this rating is only for no-interest income bonds.
d: debt in default; payment of interest and/or principal is in arrears.
Commercial paper ratings
Moody's investors services, inc.
a prime rating is the highest commercial paper rating assigned by moody's
Investors service, inc. Issuers rated prime are further referred to by use of
Numbers 1, 2, and 3 to denote relative strength within this highest
Classification. Among the factors considered by moody's in assigning ratings for
An issuer are the following: (1) management; (2) economic evaluation of the
Inherent uncertain areas; (3) competition and customer acceptance of products;
(4) liquidity; (5) amount and quality of long-term debt; (6) ten year earnings
Trends; (7) financial strength of a parent company and the relationships which
Exist with the issuer; and (8) recognition by management of obligations which
May be present or may arise as a result of public interest questions and
Preparations to meet such obligations.
Standard & poor's corporation
commercial paper rated a by standard & poor's corporation has the following
Characteristics: liquidity ratios are better than the industry average. Long
Term senior debt rating is "a" or better. In some cases bbb credits may be
Acceptable. The issuer has access to at least two additional channels of
Borrowing. Basic earnings and cash flow have an upward trend with allowance made
For unusual circumstances. Typically, the issuer's industry is well established,
The issuer has a strong position within its industry and the reliability and
Quality of management is unquestioned. Issuers rated a are further referred to
By use of numbers 1, 2, and 3 to denote relative strength within this
Classification.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
99B.1a. Restated Articles of Incorporation of Acacia Capital Corporation,
incorporated by reference to Post-Effective Amendment No. 31,
dated 4/25/96, accession number 0000708950-96-000005.
b. Articles Supplementary of Acacia Capital Corporation, incorporated
by reference to Post-Effective Amendment No. 31, dated 4/25/96,
accession number 0000708950-96-000005.
c. Articles Supplementary of Acacia Capital Corporation incorporated
by reference to Post-Effective Amendment No. 32, dated 4/22/97,
accession number 0000708950-97-000006.
d. Articles of Amendment of Acacia Capital Corporation to change
name to Calvert Variable Series, Inc., and to change the name of
each series, incorporated by reference to Post-Effective Amendment
No. 33, dated 2/12/98, accession number 0000708950-98-000002.
99B.2 Amended By-laws of Calvert Variable Series, Inc., incorporated by
reference to Post-Effective Amendment No. 37, dated 4/30/99,
accession number 0000708950-99-000009.
99.B5. Investment Advisory Agreement, incorporated by reference to
Post-Effective Amendment No. 37, dated 4/30/99, accession
number 0000708950-99-000009.
99.B5.a Sub-Investment Advisory Agreements, incorporated by reference to
Post-Effective Agreement No. 31, dated 4/25/96, accession
number 0000708950-96-000005.
99.B6 Underwriting Agreement, incorporated by reference to Post-Effective
Amendment No. 34, dated 4/30/98, accession number
0000708950-98-000006.
99.B8. Custody Agreement, incorporated by reference to Post-Effective
Amendment No. 37, dated 4/30/99, accession
number 0000708950-99-000009.
99.B9 Deferred Compensation Agreement, incorporated by reference
to Post-Effective Agreement No. 31, dated 4/25/96, accession
number 0000708950-96-000005.
99.B9a Transfer Agency Contract and Shareholder Servicing Contract,
incorporated by reference to Post-Effective Amendment No. 34,
dated 4/30/98, accession number 0000708950-98-000006.
99.B9.b. Administrative Services Agreement incorporated by reference to
Post-Effective Amendment No. 39, dated April 27, 2000, accession
number 0000708950-00-000015.
99.B10 Opinion and Consent of Counsel filed herewith.
99.B11. Consent of Independent Accountants (Not Applicable).
99.B15 Plan of Distribution incorporated by reference to Registrant's
Post-Effective Amendment No. 28, July 19, 1995, for Class A
and Post-Effective Amendment No. 34, March 31, 1998 for
Class B and C Share incorporated by reference to
Post-Effective Amendment No. 39, dated April 27, 2000, accession
number 0000708950-00-000015.
99.B17.a Multiple-class plan pursuant to Investment Company Act of 1940 Rule
18f-3, as amended on September 12, 1999, incorporated by reference to
Post-Effective Amendment No. 39, dated April 27, 2000, accession
number 0000708950-00-000015.
99.B17.b Power of Attorney Forms signed by each Director/Trustee, incorporated
by reference to Registrant's Post-Effective Amendment No. 39, dated
January 28, 1999, accession number 000070103999000001
99.B18 Code of Ethics incorporated by reference to Post-Effective Amendment
No. 39, dated April 27, 2000, accession number 0000708950-00-000015.
Item 24. Persons Controlled by or Under Common Control With Registrant
Not applicable.
Item 25. Indemnification
Registrant's Declaration of Trust, which Declaration is Exhibit 1 of
this Registration Statement, provides, in summary, that officers, trustees,
employees, and agents shall be indemnified by Registrant against liabilities
and expenses incurred by such persons in connection with actions, suits, or
proceedings arising out of their offices or duties of employment, except that
no indemnification can be made to such a person if he has been adjudged liable
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
his duties. In the absence of such an adjudication, the determination of
eligibility for indemnification shall be made by independent counsel in a
written opinion or by the vote of a majority of a quorum of trustees who are
neither "interested persons" of Registrant, as that term is defined in Section
2(a)(19) of the Investment Company Act of 1940, nor parties to the proceeding.
Registrant's Declaration of Trust also provides that Registrant may
purchase and maintain liability insurance on behalf of any officer, trustee,
employee or agent against any liabilities arising from such status. In this
regard, Registrant maintains a Directors & Officers (Partners) Liability
Insurance Policy with Chubb Group of Insurance Companies, 15 Mountain View
Road, Warren, New Jersey 07061, providing Registrant with $5 million in
directors and officers liability coverage, plus $5 million in excess directors
and officers liability coverage for the independent trustees/directors only.
Registrant also maintains an $9 million Investment Company Blanket Bond issued
by ICI Mutual Insurance Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 26. Business and Other Connections of Investment Adviser
Name of Company, Principal
Name Business and Address Capacity
Barbara J. Krumsiek Calvert Variable Series, Inc. Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Calvert Cash Reserves
The Calvert Fund
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Group, Ltd. Officer
Holding Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Alliance Capital Mgmt. L.P. Sr. Vice President
Mutual Fund Division Director
1345 Avenue of the Americas
New York, NY 10105
--------------
Ronald M. Wolfsheimer First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Officer
Broker-Dealer and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Cash Reserves
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Reno J. Martini Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Charles T. Nason Ameritas Acacia Mutual Holding Company Officer
Acacia Life Insurance and Director
Insurance Companies
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
---------------
Acacia Federal Savings Bank Director
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Square, L.L.C. Director
Realty Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Ltd. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Robert-John H. Ameritas Acacia Mutual Holding Company Officer
Acacia Life Insurance
Acacia National Life Insurance Officer
Insurance Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
Acacia Financial Corporation Officer
Holding Company and
7315 Wisconsin Avenue Director
Bethesda, Maryland 20814
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Acacia Realty Square, L.L.C. Director
Realty Investments
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
The Advisors Group, Ltd. Director
Broker-Dealer and
Investment Advisor
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
7315 Wisconsin Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Director
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management, Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
7315 Wisconsin Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co. Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Susan Walker Bender Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Ivy Wafford Duke Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Jennifer Streaks Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
Victor Frye Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Services Co. Officer
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Services, Inc. Officer
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
The Advisors Group, Ltd. Counsel
Broker-Dealer and and
Investment Advisor Compliance
7315 Wisconsin Avenue Manager
Bethesda, Maryland 20814
---------------
Daniel K. Hayes Calvert Asset Management Co., Inc. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Calvert Cash Reserves
Calvert Social Investment Fund
The Calvert Fund
Calvert Variable Series, Inc.
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert Social Index Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
John Nichols Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
David Leach Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Matthew D. Gelfand Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Strategic Investment Management Officer
Investment Advisor
1001 19th Street North
Arlington, Virginia 20009
------------------
Item 27. Principal Underwriters
(a) Registrant's principal underwriter underwrites shares of
First Variable Rate Fund for Government Income, Calvert Tax-Free Reserves,
Calvert Social Investment Fund, Calvert Cash Reserves, The Calvert Fund,
Calvert Municipal Fund, Inc., Calvert World Values Fund, Inc., Calvert New
World Fund, Inc., Calvert Variable Series, Inc., and Calvert Social Index
Fund.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address* Underwriter Registrant
Barbara J. Krumsiek Director and President President and Trustee
Ronald M. Wolfsheimer Director, Senior Vice Treasurer
President and Chief Financial Officer
William M. Tartikoff Director, Senior Vice Vice President and
President and Secretary Secretary
Craig Cloyed Senior Vice President None
Karen Becker Vice President, Operations None
Matthew Gelfand Vice President None
Geoffrey Ashton Regional Vice President None
Martin Brown Regional Vice President None
Bill Hairgrove Regional Vice President None
Anthony Eames Regional Vice President None
Steve Himber Regional Vice President None
Tanya Williams Regional Vice President None
Ben Ogbogu Regional Vice President None
Christine Teske Regional Vice President None
Jennifer Streaks Assistant Secretary None
Susan Walker Bender Assistant Secretary Assistant Secretary
Ivy Wafford Duke Assistant Secretary Assistant Secretary
Victor Frye Assistant Secretary None
and Compliance Officer
*4550 Montgomery Avenue, Bethesda, Maryland 20814
(c) Inapplicable.
Item 28. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Assistant Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 29. Management Services
Not Applicable
Item 30. Undertakings
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, duly authorized, in
the City of Bethesda, and State of Maryland, on the 27th day of September, 2000.
CALVERT VARIABLE SERIES, INC.
By:
_______________**__________________
Barbara J. Krumsiek
President and Director
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
__________**____________ President and 9/27/00
Barbara J. Krumsiek Trustee (Principal Executive Officer)
__________**____________ Principal Accounting 9/27/00
Ronald M. Wolfsheimer Officer
__________**____________ Director 9/27/00
Charles E. Diehl
__________**____________ Director 9/27/00
Arthur J. Pugh
__________**____________ Director 9/27/00
Frank H. Blatz, Jr.
**By Ivy Wafford Duke as Attorney-in-fact, pursuant to Power of Attorney
/s/ Ivy Wafford Duke
