As Filed with the Securities and Exchange
Commission on November [___], 1995
1933 Act Registration No. 33-_________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. _____
[ ] Post-Effective Amendment No. _____
ACACIA CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (301) 951-4800
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
-------------------------------------------
(Address of Principal Executive Offices)
William M. Tartikoff, Esq.
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as
possible after the effective date of this Registration Statement.
The Registrant has registered an indefinite amount of
securities under the Securities Act of 1933, as amended (the "1933 Act")
pursuant to Section 24(f) under the Investment Company Act of 1940, as
amended (the "1940 Act") (File No. 2-80154); accordingly, no fee is
payable herewith. Registrant is filing as an exhibit to this
Registration Statement a copy of an earlier declaration under Rule 24f-2
under the 1940 Act. Pursuant to Rule 429 under the 1933 Act, this
Registration Statement relates to the aforementioned registration on
Form N-1A. A Rule 24f-2 Notice for the Registrant's most recent fiscal
year ended December 31, 1994 was filed with the Commission on or about
February 28, 1995.
It is proposed that this filing will become effective 30 days
after filing pursuant to Rule 488 of the Securities Act of 1933.
<PAGE>
ACACIA CAPITAL CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Item of Part A of Form N-14 Statement Location in
Prospectus/Proxy
1. Beginning of Registration Statement Cross Reference
Sheet; Cover
and Outside Front Cover Page of Prospectus Page
2. Beginning and Outside Back Cover Page Table of Contents
of Prospectus
3. Fee Table, Synopsis and Risk Factors Cover Page; Summary;
Risks
4. Information About the Transaction Summary; Reasons for
the Reorganization;
Description of the
Reorganization;
Distribution of Shares;
Federal Income Tax
Consequences; Comparative
Information on
Shareholders' Rights
5. Information about the Registrant Cover Page; Summary;
Comparison of Investment
Objectives and Policies;
Financial Highlights;
Distribution of Shares;
Federal Income Tax
Consequences; Comparative
Information on
Shareholders' Rights;
Additional Information
6. Information about the Portfolio Cover Page; Summary;
Comparison of Being
Acquired Investment
Objective and Policies;
Distribution of Shares;
Federal Income Tax
Consequences; Comparative
Information on
Shareholders' Rights;
Additional Information
7. Voting Information Cover Page; Summary;
Information about the
Reorganization; Voting
Information Concerning the
Meeting
8. Interest of Certain Persons and Experts Financial Statements and
Experts; Legal Matters
9. Additional Information Required for Inapplicable
Reoffering by Persons Deemed to be
Underwriters
Item of Part B of Form N-14 Location in Statement of
Additional Information
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information About the Statement of Additional
Registrant Information of Acacia
Capital Corporation
13. Additional Information about the Company Statement of Additional
Being Acquired Information of Acacia
Capital Corporation
14. Financial Statements Incorporated by reference
Item of Part C of Form N-14 Location in Part C
15. Indemnification Incorporated by Reference
to Part A Caption -
"Comparative Information
on Shareholders' Rights -
Indemnification of
Directors"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
<PAGE>
ACACIA CAPITAL CORPORATION
--CALVERT RESPONSIBLY INVESTED BOND PORTFOLIO
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
December __, 1995
To Persons Invested in the Calvert
Responsibly Invested Bond Portfolio:
The Prospectus/Proxy Statement accompanying this letter
contains information concerning a proposed amendment to the Acacia
Capital Corporation (the "Company") Articles of Incorporation that
would, in effect, merge the Calvert Responsibly Invested ("CRI") Bond
Portfolio ("Bond Portfolio") into the Company's CRI Balanced Portfolio
(the "Balanced Portfolio"). The Bond Portfolio has grown little since
its inception and as of October 31, 1995 had only $3.4 million in
assets. It is difficult to manage such a small fund on a competitive and
cost-effective basis. The Company's Directors have determined it to be
in the best interests of persons invested in the Bond Portfolio to
approve an amendment to the Company's Articles of Incorporation to, in
effect, combine the Bond Portfolio into the Company's existing Balanced
Portfolio by a reclassification of Bond Portfolio shares. The Directors
of the Company believe that persons invested in the Bond Portfolio will
receive the benefits of economies of scale and a better "track" record
of performance and possible increased distribution possibilities.
The proposal contained in the accompanying Prospectus/Proxy
Statement provides for a combination of the Bond Portfolio with the
Balanced Portfolio. Your Portfolio and the Balanced Portfolio have
different investment objectives and policies. Under the proposed
Agreement and Plan of Reclassification (the "Plan"), the Company would
amend its Articles of Incorporation to reclassify the issued and
unissued shares of the class of the Company's common stock currently
designated as CRI Bond Portfolio into the class of the Company's common
stock currently designated as CRI Balanced Portfolio. In effect,
shareholders of the Bond Portfolio would exchange their shares for
Balanced Portfolio and the Bond Portfolio would be eliminated (the
"Proposed Merger"). As of October 31, 1995, the Balanced Portfolio had
approximately $102 million of net assets. If the Proposed Merger had
taken place as of October 31, 1995, the Balanced Portfolio's net assets
would have been approximately $105.4 million. I believe that the
combination will achieve the goal of efficient investment management.
The proposed transaction will not result in any federal income
tax liability for you or for the Bond Portfolio and will not change the
benefits described in your annuity contract such as variable annuity
options, rights of termination or death benefits prior to the
commencement date.
The Directors of the Company have called a special meeting of
shareholders of the Bond Portfolio to be held on ________, 1996 to
consider the proposed transaction. I URGE YOU TO COMPLETE AND RETURN THE
ENCLOSED VOTING INSTRUCTION FORM AS SOON AS POSSIBLE.
Detailed information about the proposed transaction is
described in the enclosed Prospectus/Proxy Statement. I thank you for
your participation as an investor in the Bond Portfolio and urge you to
please exercise your right to vote by completing, dating and signing the
enclosed voting instruction form. A self-addressed, postage-paid
envelope has been enclosed for your convenience.
A copy of the Company's CRI Balanced Portfolio Prospectus
accompanies the Prospectus/Proxy Statement. I urge you to read the
Prospectus and retain it for future reference.
If you have any questions regarding the proposed transaction or
if you would like additional information, please telephone
1-800-368-2748.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED
AS SOON AS POSSIBLE.
Sincerely,
Clifton S. Sorrell, President
ACACIA CAPITAL CORPORATION
<PAGE>
[PRELIMINARY PROSPECTUS/PROXY STATEMENT
SUBJECT TO COMPLETION, DECEMBER ___, 1995]
ACACIA CAPITAL CORPORATION
--CALVERT RESPONSIBLY INVESTED BOND PORTFOLIO
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ________ ___, 1996
Notice is hereby given that a Special Meeting (the "Meeting")
of Shareholders of the Calvert Responsibly Invested ("CRI") Bond
Portfolio (the "Bond Portfolio") of Acacia Capital Corporation (the
"Company") will be held at the offices of the Company, 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814 on ________, 1996 at 10:00
a.m., Eastern Time, for the following purposes:
1. To consider and act upon an amendment to the Company's
Articles of Incorporation to, in effect, combine the Bond Portfolio into
the Company's existing CRI Balanced Portfolio (the "Balanced Portfolio")
by a reclassification of Bond Portfolio shares. A vote in favor of the
proposed amendment is a vote in favor of the elimination of the Bond
Portfolio; and
2. To transact any other business which may properly come
before the Meeting or any adjournments thereof.
The Directors of the Company have fixed the close of business
on ______________, 199___ as the record date for the determination of
shareholders of the Bond Portfolio entitled to notice of and to vote at
the Meeting and any adjournment thereof.
IT IS IMPORTANT THAT VOTING INSTRUCTIONS BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED
WITHOUT DELAY TO SIGN AND RETURN THE ENCLOSED VOTING INSTRUCTION FORM IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT THEIR SHARES
MAY BE REPRESENTED AND VOTED AT THE MEETING. YOUR PROMPT ATTENTION TO
THE ENCLOSED VOTING INSTRUCTION FORM WILL HELP TO AVOID THE EXPENSE OF
FURTHER SOLICITATION.
By Order of the Board of Directors
William M. Tartikoff, Esq.
Secretary
__________ ___, 199___
INSTRUCTIONS FOR EXECUTING VOTING INSTRUCTION FORMS
The following general rules for signing voting instruction
forms may be of assistance to you and may help to avoid the time and
expense involved in validating your vote if you fail to sign your voting
instruction form properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in
the registration on the voting instruction form.
2. JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the registration
on the voting instruction form.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing
the voting instruction form should be indicated unless it is reflected
in the form of registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr., Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED ___________ ___, 1995
CALVERT RESPONSIBLY INVESTED BOND PORTFOLIO
ACACIA CAPITAL CORPORATION
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
This Prospectus/Proxy Statement is being furnished to
shareholders of the Calvert Responsibly Invested ("CRI") Bond Portfolio
(the "Bond Portfolio") of Acacia Capital Corporation (the "Company"), in
connection with a proposed amendment to the Company's Articles of
Incorporation that would, in effect, combine the Bond Portfolio into the
Company's existing CRI Balanced Portfolio (the "Balanced Portfolio")
(the "Proposed Merger"). The Proposed Merger would be accomplished by a
reclassification of shares and tax-free transfer of all assets and
liabilities of the Bond Portfolio in exchange for shares of the Balanced
Portfolio. As a result of the Proposed Merger, shareholders of the Bond
Portfolio would exchange their shares and become shareholders of the
Balanced Portfolio and the Bond Portfolio would be eliminated. Each
Portfolio will pay its respective expenses attributable to the Proposed
Merger.
The Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Company currently consists of 7 portfolios, each with a
different investment objective. The Bond Portfolio and the Balanced
Portfolio have different investment objectives, policies and
restrictions. The Balanced Portfolio seeks to achieve a total return
above the rate of inflation through an actively managed portfolio of
stocks, bonds and money market instruments, including repurchase
agreements secured by such instruments, selected with a concern for the
investment and social impact of each investment. The Balanced Portfolio,
unlike the Bond Portfolio, is non-diversified.
This Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information about the
Balanced Portfolio that shareholders of the Bond Portfolio should know
before voting on the Proposed Merger. Certain relevant documents listed
below, which have been filed with the Securities and Exchange Commission
(the "SEC"), are incorporated in whole or in part by reference. A
Statement of Additional Information dated May 1, 1995, relating to this
Prospectus/Proxy Statement and the Proposed Merger, incorporating by
reference the financial statements of the Balanced Portfolio and the
Bond Portfolio (each a "Portfolio" and together, the "Portfolios"),
dated December 31, 1994 has been filed with the SEC and is incorporated
by reference in its entirety into this Prospectus/Proxy Statement. A
copy of such Statement of Additional Information is available upon
request and without charge by writing to the Company at 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814 or by calling toll-free
1-800-368-2748.
The Prospectus of the CRI Balanced Portfolio of the Company,
dated May 1, 1995, the Company's Annual Report for such CRI Portfolio
for the fiscal year ended December 31, 1994 are incorporated herein by
reference in their entirety, insofar as they relate to the Balanced
Portfolio only, and not to any other portfolios described therein.
Shareholders of the Bond Portfolio will receive with this
Prospectus/Proxy Statement, copies of the Prospectus dated May 1, 1995
pertaining to the shares of the Balanced Portfolio that they will
receive as a result of the consummation of the Proposed Merger.
Included as Exhibit A to this Prospectus/Proxy Statement is a
copy of the Plan of Reclassification (the "Plan") and included as
Exhibit B to this Prospectus/Proxy Statement is the form of amendment to
the Company's Articles of Incorporation to be filed with the State of
Maryland if shareholders of the Bond Portfolio approve the Plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT
DEPOSITS OR OBLIGATIONS OF OR ENDORSED OR GUARANTEED BY ANY BANK, AND
ARE NOT INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS. WHEN INVESTORS
SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE
AMOUNT ORIGINALLY PAID.
<PAGE>
TABLE OF CONTENTS
VOTING INFORMATION...............................................
SUMMARY..........................................................
THE COMPANY.................................................
THE PROPOSED MERGER........................................
TAX CONSEQUENCES............................................
INVESTMENT OBJECTIVES AND POLICIES OF THE BALANCED PORTFOLIO
AND THE BOND PORTFOLIO......................................
MANAGEMENT OF THE PORTFOLIOS...............................
INVESTMENT ADVISORS AND SUBADVISORS.............
PORTFOLIO MANAGEMENT........................................
DISTRIBUTION OF SHARES......................................
PURCHASE AND REDEMPTION PROCEDURES..........................
DIVIDENDS AND DISTRIBUTIONS.................................
FINANCIAL HIGHLIGHTS.............................................
PRINCIPAL RISKS..................................................
INFORMATION ABOUT THE PROPOSED MERGER............................
DESCRIPTION OF THE MERGER...................................
REASONS FOR THE PROPOSED MERGER.............................
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.................
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS..................
FORM OF ORGANIZATION........................................
CAPITALIZATION..............................................
SHAREHOLDER MEETINGS AND VOTING RIGHTS..........................
LIQUIDATION OR DISSOLUTION..................................
RIGHTS OF INSPECTION...................................
ADDITIONAL INFORMATION...........................................
FINANCIAL STATEMENTS AND EXPERTS.................................
LEGAL MATTERS....................................................
OTHER BUSINESS...................................................
<PAGE>
VOTING INFORMATION
This Prospectus/Proxy Statement solicits the accompanying
voting instructions ("Proxy") on behalf of the Board of Directors of the
Company for use at the Special Meeting of Shareholders of the Bond
Portfolio to be held ___________, ___________ ___, 1996 at 10:00 a.m.,
Eastern Time, and any adjournments thereof (the "Meeting"). The Bond
Portfolio will bear all expenses in connection with the solicitation of
Proxies. Employees of Calvert Asset Management Company, Inc. ("CAM"),
the Portfolios' investment advisor, and National Home Life Insurance
Company ("National Home") will solicit Proxies. The solicitation will be
by mail and may also be by telephone, telegram or personal interview.
Outstanding Shares and Voting Requirements
The Board of Directors of the Company has fixed the close of
business on _______________ ___, 199___ as the record date (the "Record
Date") for determination of shareholders entitled to notice of and to
vote at the Meeting and any adjournments thereof. All outstanding shares
of the Bond Portfolio are owned of record by National Home Separate
Account ______________________, which is registered with the Securities
and Exchange Commission (the "SEC"), (the "Separate Account"), to fund
variable annuity contracts (the "contracts") issued by National Home.
Approval of the Proposed Merger requires the affirmative vote
of the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")), of the Bond Portfolio shares
entitled to vote.
National Home holds through its Separate Account ___, all of
the Bond Portfolio shares entitled to vote. National Home will attend
the Meeting and vote the Bond Portfolio shares held by its Separate
Account in accordance with instructions received from contract owners
having values allocated to the Bond Portfolio, as provided in the
contracts. National Home will vote Bond Portfolio shares for which no
instructions are received in the same proportion as to which
instructions are received with respect to Separate Account ___.
Each contract participant (other than participants under
contracts issued in connection with non-qualified and unfunded deferred
compensation plans or contracts issued in connection with a deferred
compensation plan) has the right to give instructions as to how shares
of the Bond Portfolio attributable to the participant's account should
be voted, notwithstanding that the contract owner may be the
participant's employer. Contract owners will instruct the Separate
Account in accordance with such instructions. Fractional shares also
will be voted in accordance with instructions received. A contract owner
or participant who has given voting instructions may revoke such voting
instructions only through the Separate Account prior to the Meeting
date. There are no appraisal rights.
The number of Bond Portfolio shares deemed attributable to a
participant's account prior to the annuity date and during the lifetime
of the annuitant will be determined on the basis of the value of
accumulation units credited to the participant's account as of the
Record Date. On or after the annuity date or after the death of the
participant, the number of Bond Portfolio shares deemed attributable to
the participant's account will be based on the liability for future
variable annuity payments to the payee under the contract as of the
Record Date. Such liability for future payments will be calculated on
the basis of the mortality assumptions and the assumed investment rate
used in determining the number of annuity units credited to the
participant's account and the applicable annuity unit value on the
Record Date.
As of the Record Date, there were outstanding ____________
shares of common stock of the Bond Portfolio. Each share is entitled to
one vote. To the Company's knowledge no person owns annuity contracts or
interests therein entitling that person to give voting instructions
regarding as much as five percent of the total outstanding shares of the
Bond Portfolio. As of the Record Date, National Home Separate Account
___, owned ___ shares (or 100%) of the Bond Portfolio's total
outstanding shares.
Directors and officers of the Company as a group own annuity
contracts or interests therein entitling them to give voting
instructions regarding less than one percent of the total outstanding
shares of the Bond Portfolio.
The cost of this proxy solicitation, including the printing and
mailing of the proxy materials, will be borne by the Bond Portfolio.
This Prospectus/Proxy Statement was first mailed to contract owners on
or about December 5, 1995.
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
ADDITIONAL INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY
STATEMENT, AND, TO THE EXTENT NOT INCONSISTENT WITH SUCH ADDITIONAL
INFORMATION, THE CRI PROSPECTUS OF THE COMPANY AND THE PORTFOLIOS DATED
MAY 1, 1995 (WHICH IS INCORPORATED HEREIN BY REFERENCE) AND THE PLAN, A
FORM OF WHICH IS ATTACHED TO THIS PROSPECTUS/PROXY STATEMENT AS EXHIBIT
A.
THE COMPANY
The Bond Portfolio and the Balanced Portfolio are each a series
of the Company, an open-end management investment company organized as a
Maryland corporation on December 22, 1982. The Company currently
consists of seven separate investment portfolios, each of which is, in
effect, a separate mutual fund issuing its own separate class of common
stock. By investing in a portfolio, an investor becomes entitled to a
pro-rata share of all dividends and distributions arising from the net
income and capital gains on the investments of that portfolio. Each
portfolio is governed by the Company's Articles of Incorporation, its
Bylaws and applicable Maryland law.
THE PROPOSED MERGER
The Board of Directors of the Company has approved a Plan of
Reclassification (the "Plan") providing for the Company to amend its
Articles of Incorporation, subject to the approval of the shareholders
of the Bond Portfolio, to reclassify the issued and unissued shares of
the class of the Company's common stock currently designated as CRI Bond
Portfolio into the class of the Company's common stock currently
designated as CRI Balanced Portfolio. In effect, shareholders of the
Bond Portfolio would exchange their shares for shares of the Balanced
Portfolio and the Bond Portfolio would be eliminated.
The Plan contemplates a Proposed Merger in which shares of the
Bond Portfolio will be reclassified and the Bond Portfolio will transfer
all of its assets and liabilities to the Balanced Portfolio in exchange
for shares of the Balanced Portfolio. The number of shares of the
Balanced Portfolio to be issued to the Bond Portfolio will be determined
on the basis of the relative net asset values of the Bond Portfolio and
the Balanced Portfolio calculated as of the close of business on the
business day immediately preceding the effective date of the Proposed
Merger, currently scheduled for ____________ ___, 1996. The Bond
Portfolio will then distribute the Balanced Portfolio shares it receives
to Bond Portfolio shareholders in exchange for their Bond Portfolio
shares, on a pro-rata basis.
The Directors of the Company, including the Directors who are
not "interested persons," as such term is defined in the 1940 Act (the
"Independent Directors"), have concluded that the Proposed Merger would
be in the best interests of shareholders of the Bond Portfolio and that
the interests of the shareholders of the Bond Portfolio and the Balanced
Portfolio will not be economically diluted as a result of the
transactions contemplated by the Reorganization. Accordingly, the
Directors have submitted the Plan for the approval of the BOND
Portfolio's shareholders. THE DIRECTORS OF THE COMPANY RECOMMEND
APPROVAL BY SHAREHOLDERS OF THE BOND PORTFOLIO OF THE PLAN EFFECTING THE
PROPOSED MERGER.
If the shareholders of the Bond Portfolio do not vote to
approve the Proposed Merger, the Directors of the Company will consider
other possible courses of action in the best interests of shareholders.
TAX CONSEQUENCES
The completion of the Proposed Merger is contingent upon the
receipt by the Company of an opinion of outside tax counsel to the
effect that the Proposed Merger will qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"). As such, the Proposed Merger will not result in
the recognition, for federal income tax purposes, of any gain or loss to
the Bond Portfolio or its shareholders, the aggregate tax basis of the
shares of the Balanced Portfolio received by shareholders of the Bond
Portfolio will be the same as the tax basis of those shareholders' Bond
Portfolio shares and the aggregate tax basis of the assets of the Bond
Portfolio in the hands of the Balanced Portfolio will be the same as the
tax basis of such assets in the hands of the Bond Portfolio prior to the
Proposed Merger. In addition, completion of the Proposed Merger is
contingent upon the receipt by the Company of an opinion of outside tax
counsel to the effect that the Proposed Merger will not result in the
recognition of any gain or loss to contract owners.
INVESTMENT OBJECTIVES AND POLICIES OF THE BALANCED PORTFOLIO AND THE
BOND PORTFOLIO
The Balanced Portfolio. The Balanced Portfolio seeks to achieve
a total return above the rate of inflation through an actively managed
portfolio of stocks, bonds and money market instruments (including
repurchase agreements secured by such instruments) selected with a
concern for the investment and social impact of each investment. It is
not the policy of the Balanced Portfolio to take risks to obtain
speculatively or aggressively high returns. There is no predetermined
percentage of assets allocated to stocks, bonds or money market
instruments, although, as an operating policy, the Balanced Portfolio
will have at least 25% of its assets in fixed income senior securities.
Fixed-income investments are selected by the Advisor Calvert Asset
Management Company, Inc. ("CAM" or "Advisor"). The Balanced Portfolio's
Subadvisor, NCM Capital Management Group, Inc. ("NCM"), selects equity
investments for the portfolio, subject to direction and control by the
Portfolio's Advisor and the Board of Directors of the Company. CAM and
NCM determine the mix for the Balanced Portfolio depending on their view
of market conditions and the economic outlook.
The Balanced Portfolio may purchase both common and preferred
stock. For its fixed-income investments, the Portfolio normally invests
in bonds which are considered investment grade, including bonds which
are direct or indirect obligations of the U.S. Government, or which at
the date of investment are rated AAA, AA, A, or BBB by Standard & Poor's
Corporation ("S&P") or Aaa, Aa, A, or Baa by Moody's Investors Service
Inc. ("Moody's"). Bonds rated Baa or BBB are considered medium grade
obligations and possess speculative characteristics. The Portfolio may
purchase lower-rated obligations but no more than 20% of its assets may
be invested in obligations rated lower than B. The Portfolio may
purchase without limitation bonds which are unrated but of comparable
quality to bonds rated B or better as determined by the Advisors under
the supervision of the Board of Directors. See "Non-Investment Grade
Debt Securities" and the Company's CRI Statement of Additional
Information for additional information concerning bond ratings.
The Balanced Portfolio may invest in foreign securities,
including emerging markets, to a limited extent. See "Risks of Foreign
Securities."
The Bond Portfolio. The Bond Portfolio seeks to provide as high
a level of current income as is consistent with prudent investment risk
and preservation of capital though investment in bonds and other
straight debt securities, selected pursuant to the Portfolio's
investment and social criteria. The Bond Portfolio is neither
speculative nor conservative in its investment policies and will take
reasonable risks in seeking to achieve its investment objective of
current income and preservation of capital. Debt securities may be
long-term, intermediate-term, short-term, or any combination thereof,
depending on the Advisors' evaluation of current and anticipated market
patterns and trends; the Advisors expect that the Bond Portfolio's
average weighted maturity will range between 5 and 20 years. The value
of the Portfolio generally will vary inversely with changes in interest
rates.
In seeking to achieve these objectives, it is anticipated that
under normal conditions the Bond Portfolio will invest at least 80% of
the value of its assets in publicly-traded straight debt securities
which have a rating within the four highest grades as determined by a
nationally recognized rating service such as S&P or Moody's; obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities; or cash and cash equivalents. Up to 20% of the
Portfolio's total assets may be invested in straight debt securities
which are not rated within the four highest grades as described above
(including unrated securities), in convertible debt securities,
convertible preferred and preferred stocks, or other securities. The
Bond Portfolio does not currently hold or intend to invest more than 5%
of its assets in non-investment grade securities. See "Non-Investment
Grade Debt Securities" for additional information concerning bond
ratings.
MANAGEMENT OF THE PORTFOLIOS
The overall management of the Company and the Portfolios is the
responsibility of, and is supervised by, the Board of Directors of the
Company.
INVESTMENT ADVISORS AND SUBADVISORS
Calvert Asset Management Company, Inc. ("CAM"), 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the investment adviser
to both Portfolios. CAM is a wholly-owned subsidiary of The Calvert
Group, Ltd., of the same address, which is in turn an indirect
wholly-owned subsidiary of Acacia Mutual Life Insurance Company, 51
Louisiana Avenue, N.W., Washington, D.C. 20001. As of October 31, 1995,
CAM had assets under management and administration in excess of $4.9
billion. Pursuant to its investment advisory agreement with the Company,
CAM manages the investment and reinvestment of the assets of each
Portfolio and is responsible for the overall management of the business
affairs of each Portfolio, subject to the direction and authority of the
Company's Board of Directors. CAM also serves as investment advisor to
seven other registered investment companies in the Calvert Group of
Funds: First Variable Rate Fund for Government Income, Calvert Cash
Reserves (doing business as Money Management Plus), Calvert Social
Investment Fund, Calvert Tax-Free Reserves, The Calvert Fund, Calvert
Municipal Fund, Inc., and Calvert World Values Fund, Inc. CAM has
retained certain investment Subadvisors ("Subadvisors") for the
Portfolios.
The Balanced Portfolio
The Subadvisor to the Balanced Portfolio is NCM Capital
Management Group, Inc. ("NCM") Address. Pursuant to its Investment
Sub-Advisory Agreement with the Investment Advisor, NCM manages the
equity portion of the portfolio selections for the Balanced Portfolio.
NCM was founded by Maceo K. Sloan in 1986 as a subsidiary of North
Carolina Mutual Life Insurance Company, which was established by Mr.
Sloan's ancestors in 1898 and is one of the oldest and largest
minority-owned financial institutions in the country. NCM has been an
employee-owned subsidiary of Sloan Financial Group since 1991. Sloan
Financial Group is controlled by Mr. Sloan and Justin F. Beckett,
Executive Vice President and a Director of NCM. NCM is one of the
largest minority-owned investment management firms in the country, and
provides products in equity, fixed-incomed and balanced portfolio
management. It is also one of the industry leaders in the employment and
training of minority and women investment professionals. NCM has served
as Subadvisor to the Balanced Portfolio since February 1995.
Wendell E. Mackey, Vice President of NCM, is the portfolio
manager with respect to the Portfolio's equity investments. Mr. Mackey
earned his B.B.A. degree from Howard University, and his M.M. degree
from Kellogg Graduate School of Management at Northwestern University.
He subsequently worked with several securities firms before joining NCM
as an equity portfolio manager in 1993. He has managed the Balanced
Portfolio since February 1995.
Colleen M. Denzler manages the Balanced Portfolio's
fixed-income investments. She has been managing funds for CAM since
1988. Ms. Denzler holds a B.S. degree from Radford University and is a
Chartered Financial Analyst.
The Bond Portfolio
The Subadvisor to the Bond Portfolio is United States Trust
Company of Boston ("US Trust") Address. US Trust is a wholly-owned
subsidiary of UST Corporation, a Massachusetts bank holding company. The
address of UST Corporation is _____________. The individual portfolio
manager responsible for the Bond Portfolio is Cheryl Smith, Vice
President of US Trust. Ms. Smith joined US Trust in 1992. In addition to
the management of the Bond Portfolio, her duties at US Trust include
management of institutional and individual client investment portfolios
and integration of client social criteria into the portfolio management
process. She served as Vice President of Franklin Research & Development
from 1987 to 1992. Ms. Smith has managed the Bond Portfolio since August
1994. She is a Chartered Financial Analyst and holds a Ph.D. in
Economics from Yale University.
Fees
For its services, CAM, as the Portfolios' investment advisor,
is entitled to receive a fee based on a percentage of the average daily
net assets of each of the Portfolios. CAM is currently entitled to
receive an annual base fee, paid monthly, of 0.65% of average daily net
assets of the Bond Portfolio and 0.70% of the average daily net assets
of the Balanced Portfolio.
CAM will pay the Subadvisor of the Balanced Portfolio an annual base
fee of 0.25% of one-half of the Balanced Portfolio's average daily net
assets. In addition, under the circumstances described below, CAM and
NCM, as the Advisor and Subadvisor, respectively, to the Balanced
Portfolio may earn (or have their respective fees reduced by)
performance fee adjustments based on the extent to which performance of
the Balanced Portfolio exceeds or trails the Lipper Balanced Funds
Index. The specific adjustments are as follows:
The Balanced Portfolio: CAM's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
CAM's performance fee adjustment will be paid directly from the
Portfolio to CAM.
The Balanced Portfolio: NCM's Performance Fee Adjustment:
Performance versus Performance Fee
Lipper Balanced Funds' Index Adjustment
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
Payment of an upward performance fee adjustment to the Subadvisor is
paid out of the fee CAM receives from the Balanced Portfolio. The
initial performance period is the twelve month period between July 1,
1995 and July 1, 1996. Each month an additional month's performance will
be factored into the calculation until a total of 36 months comprises
the performance computation period. Payment by the Portfolio of the
performance adjustment will be conditioned on: (1) the performance of
the Portfolio as a whole having exceeded the Lipper Balanced Funds
Index; and (2) payment of the performance adjustment not causing the
Portfolio's performance to fall below the Lipper Balanced Funds Index.
CAM pays an annual fee of 0.25% of the average daily net assets of the
Bond Portfolio to US Trust as a subadvisory fee.
PORTFOLIO MANAGEMENT
See "Investment Advisor and Investment Subadvisors" above.
DISTRIBUTION OF SHARES
With regard to the Portfolios, the Company's shares are sold to
National Home for allocation to the Separate Account to fund the
benefits under certain variable annuity and variable life insurance
policies (the "Variable Accounts"). Shares of the Portfolios may also be
sold to other insurance companies for the same purpose. In this
Prospectus/Proxy Statement, National Home and any other applicable
companies may be referred to as the "Insurance Companies," and the
variable annuity and variable life insurance policies may be referred to
as the "Policies."
Shares of the Portfolios may only be sold to the Insurance
Companies for their Separate Accounts, and not to individual investors.
As such, the "shareholders" referred to in this prospectus are the
Insurance Companies. Nevertheless, as a policyholder you have an
opportunity to choose among the various Portfolios in order to fund the
benefits under any Policies you purchase, subject to any limitations
described in the Insurance Companies' prospectuses.
Shares are purchased by the Variable Accounts at the net asset
value of a Portfolio next determined after the Insurance Company
receives the premium payment. The Company continuously offers its shares
in the Portfolios at a price equal to the net asset value per share.
Initial and subsequent payments allocated to a Portfolio 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 a Portfolio, although currently neither the Insurance
Companies nor the Company foresees any such disadvantages to either
variable annuity or variable life insurance policyholders of any
Insurance Company. The Company's Directors intend to monitor events in
order to identify any material conflict between such policyholders and
to determine what action, if any, should be taken in response to the
problem.
PURCHASE AND REDEMPTION PROCEDURES
Information concerning the purchase of shares is described
above.
The Insurance Companies redeem shares of the Portfolios to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Company is open for
business (each day the New York Stock Exchange is open), and are made at
a 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, and 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 1940 Act. The amount received on redemption of the shares of a
Portfolio may be more or less than the amount paid for the shares,
depending on the fluctuations in the market value of the assets owned by
the Portfolio. The Company redeems all full and fractional shares of the
Portfolios for cash.
The net asset value of the shares of each 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, or for any
other day when there is a sufficient degree of trading in the
investments of a Portfolio to affect materially net asset value per
share (except on days when no orders to purchase or redeem shares of the
Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of a 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 Portfolios are valued at their market value
if market quotations are readily available. Otherwise, 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 of Directors of the
Company. All money market instruments with a remaining maturity of 60
days or less held by a Portfolio, are valued on an amortized cost basis.
DIVIDENDS AND DISTRIBUTIONS
It is the Company's intention to distribute substantially all
of the net investment income, if any, of the Portfolios. Net investment
income consists of all payments of dividends or interest received by a
Portfolio less estimated expenses, including the investment advisory
fee. All net realized capital gains, if any, are declared and
distributed periodically, at least annually. All dividends and
distributions are reinvested in additional shares of the Portfolio at
net asset value.
FINANCIAL HIGHLIGHTS
The following tables provide information about the Portfolio's
financial history. They express the information in terms of a single
share outstanding throughout each period. The table has been audited by
those independent accountants whose reports are included in the Fund's
Annual Report to Shareholders, for each of the respective periods
presented, except for the six month period ended June 30, 1995 which is
unaudited. The tables should be read in conjunction with the financial
statements and their related notes. The current Annual Report to
Shareholders is incorporated by reference into the Statement of
Additional Information.
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995
(unaudited)
<S> <C>
Net asset value, beginning of period $ 1.440
Income from investment operations
Net investment income .025
Net realized and unrealized gain
(loss) on investments .226
Total from investment operations
.251
Distributions to shareholders
Dividends from net investment income
--
Total increase (decrease) in net asset value .251
Net asset value, end of period $ 1.691
Total return<F1> 17.43%
Ratio of expenses to average net assets .93%(a)
Ratio of net income to average net assets 3.25%(a)
Increase reflected in net income ratio due
to expense reimbursement --
Portfolio turnover 83%
Net assets, end of period $87,719,128
Number of shares outstanding at end of
period (in thousands) 51,873
<FN>
<F1>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993
---------------------------------
---------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.537 $ 1.465x
Income from investment operations
Net investment income .046 .045
Net realized and unrealized gain
(loss) on investments (.097) .072
Total from investment operations
(.051) .117
Distributions to shareholders
Dividends from net investment income
(.046) (.045)
Total increase (decrease) in net asset value (.097) .072
Net asset value, end of period $$ 1.440 $ 1.537
Total return<F1> (3.30)% 8.00%
Ratio of expenses to average net assets .80% .81%
Ratio of net income to average net assets 3.39% 3.69%
Increase reflected in net income ratio due
to expense reimbursement -- --
Portfolio turnover 43% 14%
Net assets, end of period $$66,592,680 $53,999,759
Number of shares outstanding at end of
period (in thousands) 46,244 35,142
<FN>
<F1>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1991
----------------------------------
----------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.403 $ 1.249
Income from investment operations
Net investment income .044 .050
Net realized and unrealized gain on
investments .062 .154
Total from investment operations
.106 .204
Distributions to shareholders
Dividends from net investment income
(.044) (.050)
Total increase in net asset value .062 .154
Net asset value, end of period $ 1.465 $ 1.403
Total return<F2> 7.61% 16.40%
Ratio of expenses to average net assets .85% .85%
Ratio of net income to average net assets 4.05% 4.49%
Increase reflected in net income ratio due
to expense reimbursement -- --
Portfolio turnover 15% 12%
Net assets, end of period $28,471,358 $14,945,973
Number of shares outstanding at end of
period (in thousands) 19,433 10,656
<FN>
<F2>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1990
------------------
------------------
<S> <C>
Net asset value, beginning of period $ 1.247
Income from investment operations
Net investment income .050
Net realized and unrealized gain on
investments .002
Total from investment operations
.052
Distributions to shareholders
Dividends from net investment income
(.050)
Total increase in net asset value .002
Net asset value, end of period $ 1.249
Total return<F2> 4.18%
Ratio of expenses to average net assets .77%
Ratio of net income to average net assets 5.69%
Increase reflected in net income ratio due
to expense reimbursement --
Portfolio turnover 11%
Net assets, end of period $6,759,546
Number of shares outstanding at end of
period (in thousands) 5,410
<FN>
<F2>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1989 1988
---------------------------------
---------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.068 $ 1.004
Income from investment operations
Net investment income .042 .054
Net realized and unrealized gain
(loss) on investments .179 .064
Total from investment operations
.221 .118
Distributions to shareholders
Dividends from net investment income
(.042) (.054)
Total increase (decrease) in net asset value
.179 .064
Net asset value, end of period $ 1.247 $ 1.068
Total return<F3> 20.69% 11.75%
Ratio of expenses to average net assets
.50% .50%
Ratio of net income to average net assets
4.85% 4.95%
Increase reflected in net income ratio due
to expense reimbursement .46% .30%
Portfolio turnover 28% 40%
Net assets, end of period $2,572,761 $1,293,692
Number of shares outstanding at end of
period (in thousands) 2,064 1,211
<FN>
<F3>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
From inception
(Sept. 2, 1986)
to Dec. 31,
Year Ended December 31,
1987 1986
-----------------------------------
-----------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 0.958 $ 1.000
Income from investment operations
Net investment income .019 .010
Net realized and unrealized gain
(loss) on investments .046 (.042)
Total from investment operations
.065 (.032)
Distributions to shareholders
Dividends from net investment income
(.019) (.010)
Total increase (decrease) in net asset value
.046 (.042)
Net asset value, end of period $ 1.004 $ 0.958
Total return<F3> 6.78% 3.31%
Ratio of expenses to average net assets
.50% .10%(a)
Ratio of net income to average net assets
3.72% 1.59%(a)
Increase reflected in net income ratio due
to expense reimbursement .82% 1.41%(a)
Portfolio turnover 17% --
Net assets, end of period $1,022,484 $143,745
Number of shares outstanding at end of
period (in thousands) 1,018 150
<FN>
<F3>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) = Annualized
</FN>
</TABLE>
PRINCIPAL RISKS
The Bond Portfolio and the Balanced Portfolio have different and
distinct investment objectives that they pursue through their separate
investment policies, as stated above. There can be no assurance that the
objectives of either the Bond Portfolio or the Balanced Portfolio will
be achieved. The differences in objectives and policies between the Bond
Portfolio and the Balanced Portfolio can be expected to affect the
return of each. As described below under "Comparison of Investment
Objectives and Policies", the Balanced Portfolio maintains an actively
managed nondiversified portfolio of stocks, bonds and money market
instruments and as such may be viewed as more aggressive and
concomitantly more volatile than the Bond Portfolio for the following
principal reasons.
First, the Balanced Portfolio is "non-diversified" which means that,
as opposed to the "diversified" Bond Portfolio, a higher percentage of
its assets may be invested in a more limited number of issuers, with the
result that its shares are more susceptible to any single economic,
political or regulatory event than the shares of the Bond Portfolio.
Second, while there is no predetermined percentage of assets
allocated to stocks, bonds or money market instruments held by the
Balanced Portfolio, as an operating policy, the Balanced Portfolio will
have at least 25% of its assets in fixed income securities. This means
that the Balanced Portfolio could have up to 75% of its assets invested
in common stocks which, historically, have been more volatile than the
types of fixed income securities in which the Bond Portfolio invests.
Third, the Balanced Portfolio may purchase non-investment grade
fixed income securities (i.e., "junk bonds") and up to 20% of its assets
may be invested in fixed income securities rated lower than B. The Bond
Portfolio may invest up to 20% of its assets in straight debt securities
which are not rated investment grade (i.e., within the four highest
ratings categories); however, neither the Balanced nor the Bond
Portfolio currently holds nor intends to invest more than 5% of its
respective assets in non-investment grade securities. See
"Non-Investment Grade Debt Securities and the Portfolios' Statement of
Additional Information concerning bond ratings.
INFORMATION ABOUT THE PROPOSED MERGER
DESCRIPTION OF THE PROPOSED MERGER
The Plan provides that after the Effective Time on the Closing
Date the Bond Portfolio will transfer all of its assets and liabilities
to the Balanced Portfolio if all of the conditions of the Plan are
fulfilled and are not waived and the Closing Date is not extended. In
exchange for the Bond Portfolio assets and liabilities, the Bond
Portfolio will issue to the Bond Portfolio shareholders a number of
Balanced Portfolio shares having a value equal to the aggregate net
assets of the Bond Portfolio acquired. The Closing Date is currently
scheduled for _____________, 1996 and may be changed as determined by
officers of the Company. As part of the Plan, the Company's shareholders
are being asked to approve a proposed amendment to the Company's
Articles of Incorporation to reclassify the issued and unissued shares
of the class of the Company's common stock currently designated as the
CRI Bond Portfolio into the class of common stock currently designated
as the CRI Balanced Portfolio. Copies of the Plan and the proposed
amendment to the Company's Articles of Incorporation are attached as
Exhibits A and B, respectively, to this Prospectus/Proxy Statement.
The number of shares of the Balanced Portfolio to be issued in
the Proposed Merger will be determined on the basis of the relative net
asset values of the Bond Portfolio and the Balanced Portfolio calculated
as of the Valuation Date. The net asset value of each Portfolio will be
determined by dividing the value of that Portfolio's portfolio
securities, cash and other assets (including accrued but uncollected
interest and dividends), less all liabilities (including accrued
expenses but excluding capital and surplus) by the number of shares of
that Portfolio outstanding.
Balanced Portfolio shares will be distributed to Bond Portfolio
shareholders in exchange for their Bond Portfolio shares, on a pro rata
basis. The number of such full and fractional Balanced shares issued to
each Bond Portfolio shareholder will be determined by multiplying the
number of Bond Portfolio shares to be exchanged by a fraction, the
numerator of which is the net asset value per share of the Bond
Portfolio and the denominator of which is the net asset value per share
of the Balanced Portfolio. Thus, the Bond Portfolio shares of each Bond
Portfolio shareholder will be exchanged for the number of full and
fractional shares of the Balanced Portfolio which, when multiplied by
the net asset value per share of the Balanced Portfolio, will have a
value equal to the aggregate net asset value of that shareholder's
shares in the Bond Portfolio at the Effective Time on the Closing Date.
The aggregate value of the Balanced Portfolio shares attributable to
shareholders previously holding Bond Portfolio shares will be the same
immediately after the Proposed Merger as the aggregate value of the Bond
Portfolio shares attributable to such shareholders immediately before
the Proposed Merger.
The Proposed Merger as provided in the Plan is subject to
approval of the shareholders of the Bond Portfolio. Approval requires
the affirmative vote of the holders of at least a majority (as defined
in the 1940 Act) of the Bond Portfolio shares entitled to vote. The Plan
is also conditioned on: (i) acceptance of the amendment to the Company's
Articles of Incorporation by the Maryland Department of Assessments and
Taxation and the amendment's having become effective; (ii) receipt of
any necessary regulatory approvals from the SEC; (iii) receipt of an
opinion of outside counsel that the Proposed Merger qualifies as a
tax-free reorganization under the Code; and (iv) receipt of any
necessary regulatory approvals by relevant state insurance authorities.
REASONS FOR THE PROPOSED MERGER
The Directors of the Company have considered and approved the
Proposed Merger, as recommended by CAM, including entry by the Company
on behalf of each Portfolio into the Plan, as in the best interests of
the shareholders.
In making their recommendation to the Directors, the
representatives of CAM reviewed with the Directors various factors about
the Company and its Portfolios and the Proposed Merger. In terms of
total net assets the Bond Portfolio at October 31, 1995 had net assets
of approximately $3.4 million. The Balanced Portfolio's net assets at
such date were approximately $102 million. The Bond Portfolio has not,
since its inception in 1992 achieved asset levels on a continuing basis
that would permit it to operate economically and generate a competitive
return.
The Directors of the Company met on August 2, 1995 and
considered the recommendation of CAM, and, in addition, considered among
other things in general, (i) the terms and conditions of the Proposed
Merger; (ii) whether the Proposed Merger would result in the economic
dilution of shareholder interests; (iii) the comparative performance
records of each of the Portfolios; relative compatibility of their
investment objectives and policies; the investment experience, expertise
and resources of CAM and the Subadvisor; and the personnel and financial
resources of CAM and the Subadvisor; (iv) the fact that the Balanced
Portfolio will assume certain identified liabilities of the Bond
Portfolio; and (v) the expected federal income tax consequences of the
Proposed Merger.
The Directors also considered the benefits to be derived by
shareholders of the Bond Portfolio from the transfer of its assets to
the Balanced Portfolio. In this regard, the Directors considered the
economies of scale that could be realized by the participation by
shareholders of the Bond Portfolio in the combined portfolio. They also
considered that for small funds such as the Bond Portfolio, it is
difficult for the portfolio manager to fine profitable investments of
small denomination that will comply with regulatory requirements for
diversification.
During their consideration of the Proposed Merger, the
Directors met with members of the legal staff at CAM, as well as counsel
to the Independent Directors, regarding the legal issues involved. The
Directors also concluded at a meeting on August 2, 1995 that the
Proposed Merger would be in the best interests of shareholders of the
Balanced Portfolio and that the interests of the shareholders of the
Balanced Portfolio will not be diluted as a result of the transactions
contemplated by the Proposed Merger.
THE DIRECTORS OF THE COMPANY RECOMMEND THAT THE SHAREHOLDERS OF
THE BOND PORTFOLIO APPROVE THE PROPOSED MERGER.
PRO-FORMA CAPITALIZATION
The following tables show the capitalization of the Balanced
Portfolio and the Bond Portfolio as of October 31, 1995 individually and
on a pro forma basis as of that date, giving effect to the proposed
acquisition of assets and liabilities of the Bond Portfolio at the then
net asset value:
<TABLE>
<CAPTION>
CAPITALIZATION OF THE BOND PORTFOLIO
AND THE BALANCED PORTFOLIO
BOND BALANCED PRO FORMA FOR BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
Net Assets..........$3,396,914 $102,812,724 $106,209,638
Shares Outstanding..$ 205,571 $ 56,987,022 $ 58,869,524
Net Asset Value per
Share................. $16.52 $1.804 $1.804
The table above should be read in conjunction with the
Portfolios' Annual Report for the fiscal year ended December 31, 1994
which is hereby incorporated herein by reference, and the unaudited
balance sheet and income statement for June 30, 1995.
</TABLE>
On the Record Date, there were and shares of the Bond
Portfolio and the Balanced Portfolio, respectively, outstanding.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is based upon and qualified in its
entirety by the descriptions of the respective investment objectives,
policies and restrictions set forth in the Company's CRI Prospectus and
Statement of Additional Information for the CRI portfolios. The Company
also offers additional portfolios which are not involved in the Proposed
Merger, and their investment objectives, policies and restrictions are
not discussed in this Prospectus/Proxy Statement and their shares are
not offered hereby.
The Bond Portfolio invests primarily in corporate bonds and
other straight debt securities while the Balanced Portfolio maintains an
actively managed portfolio of stocks, bonds and money market
instruments. Each Portfolio may invest in non-investment grade debt
securities.
The Bond Portfolio may, in pursuit of its investment
objectives, purchase put and call options and engage in the writing of
covered call options and secured put options on securities of issuers
that meet its social criteria, and employ a variety of other investment
techniques, including the purchase and sale of market index futures
contracts, financial futures contracts and options on such futures. The
Bond Portfolio may engage in futures contracts and related options only
to protect against market declines. The Bond Portfolio does not engage
in such transactions for speculation or leverage. It is an operating
policy of the Company that the Bond Portfolio may not invest in options
and futures contracts if as a result more than 5% of its assets would be
so invested.
Each Portfolio may engage in repurchase agreements and reverse
repurchase agreements. No more than 10% of either Portfolio's assets may
be invested in repurchase agreements not terminable within seven days.
The Portfolios may borrow no more than 10% of the value of
their assets from banks (and pledge their assets to secure such
borrowings) for temporary or emergency purposes, but not for leverage.
Each Portfolio may also make loans of the securities it holds.
Each Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with assets of $1 billion
or more. The Portfolios may only make loans if the value of the
securities loaned does not exceed 10% of the Portfolio's assets.
The Bond Portfolio may invest up to 25% of its assets in the
securities of foreign issuers and the Balanced Portfolio may invest up
to 10% of its assets in such securities.
The Bond Portfolio may write exchange-traded call options on
its securities. Call options may be written on portfolio securities,
securities indices, or foreign currencies. With respect to securities
and foreign currencies, the Bond Portfolio may write call and put
options on an exchange or over-the-counter. The Bond Portfolio may not
write options on more than 50% of its total assets. Management presently
intends to cease writing options if and as long as 25% of such total
assets are subject to outstanding options contracts or if required under
regulations of state securities administrators.
Each Portfolio may write call and put options in order to
obtain a return on its investments from the premiums received and will
retain the premiums whether or not the options are exercised.
The Bond Portfolio may invest up to an aggregate of 5% of its
total assets in exchange-traded or over-the-counter call and put options
on securities and securities indices and foreign currencies. Purchases
of such options may be made for the purpose of hedging against changes
in the market value of the underlying securities or foreign currencies.
The Bond Portfolios may sell a call option or a put option which it has
previously purchased prior to the purchase (in the case of a call) or
the sale (in the case of a put) of the underlying security or foreign
currency.
Each Portfolio may invest up to 5% of its net assets in
warrants and stock rights, but no more than 2% of its net assets in
warrants and stock rights not listed on the New York Stock Exchange or
the American Stock Exchange.
The Bond Portfolio may enter into financial futures contracts
and related options as a hedge against anticipated changes in the market
value of its portfolio securities or securities which it intends to
purchase or in the exchange rate of foreign currencies.
The Bond Portfolio may purchase and sell financial futures
contracts which are traded on a recognized exchange or board of trade
and may purchase exchange or board-traded put and call options in
financial futures contracts. The Bond Portfolio may engage in
transactions in financial futures contracts and related options only for
hedging purposes and not for speculation. In addition, the Bond
Portfolio will not purchase or sell any financial futures contract or
related option if, immediately thereafter, the sum of the cash or U.S.
Treasury bills committed with respect to the Bond Portfolio's existing
futures and related options positions and the premiums paid for related
options would exceed 5% of the market value of its total assets.
The value of each Portfolio's assets as measured in United
States dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and
the Portfolios may incur costs in connection with conversions between
various currencies. The Portfolios conduct their foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through
forward contracts to purchase or sell foreign currencies.
The Bond Portfolio may also hedge its foreign currency exchange
rate risk by engaging in currency financial futures and options
transactions.
When CAM or a Subadvisor believes that the currency of a
particular foreign country may suffer a substantial decline against the
United States dollar, it may enter into a forward contract to sell an
amount of foreign currency approximating the value of some or all of a
Portfolio's portfolio securities denominated in such foreign currency.
Each Portfolio may invest up to less than 1% of its assets in
investments in securities that offer a rate of return below the then
prevailing market rate and that present attractive opportunities for
furthering the Portfolios' social criteria.
Neither Portfolio may purchase illiquid securities if more than
10%, of the value of its net assets would be invested in such securities.
The Bond Portfolio is diversified while the Balanced Portfolio
is not diversified. There are risks associated with the Balanced
Portfolio being non-diversified. Specifically, since a relatively high
percentage of the assets of the Balanced Portfolio may be invested in
the obligations of a limited number of issuers, the value of the shares
of the Balanced Portfolio may be more susceptible to any single
economic, political or regulatory event than the shares of a diversified
Portfolio.
All fixed income instruments are subject to interest-rate risk:
that is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
Noninvestment-grade securities tend to be less sensitive to
interest rate changes than higher-rated investments, but are more
sensitive to adverse economic changes and individual corporate
developments. This may affect the issuer's ability to make principal and
interest payments on the debt obligation. There is also a greater risk
of price declines due to changes in the issue's creditworthiness.
Because the market for lower-rated securities may be less active
("thinner") than for higher-rated securities, it may be difficult for a
Portfolio to sell the securities. Because of a lack of objective data, a
thinly-traded market may make it difficult to value the securities, so
that the Board of Directors may have to exercise its judgment in
assigning a value. See the Appendix in the Statement of Additional
Information for more information on bond ratings.
The Balanced Portfolio and the Bond Portfolio are subject to
the same investment screens. Each investment is selected with a concern
for its social impact. Both Portfolios invest in accordance with their
philosophy that long-term rewards to investors will come from those
organizations whose products, services, and methods enhance the human
condition and the traditional American values of individual initiative,
equality of opportunity and cooperative effort. The Portfolios have
developed the following criteria for the selection of organizations in
which they invest. The Portfolios recognize, however, that these
criteria represent standards of behavior which few, if any,
organizations totally satisfy and that, as a matter of practice,
evaluation of a particular organization in the context of these criteria
will involve subjective judgment by the Portfolios' Investment Advisor
and Subadvisor.
The characteristics of each investment policy and the
associated risks are described in the Company's CRI Prospectus and
Statement of Additional Information. Both Portfolios have other
investment policies and restrictions which are also set forth in the
Company's CRI Prospectus and Statement of Additional Information, which
are hereby incorporated herein by reference and available upon request.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION
The Company was incorporated in Maryland on September 27, 1982,
and is an open-end management investment company registered under the
1940 Act. The Company has seven CRI portfolios, including the
Portfolios, each designed to provide opportunities for investing in
enterprises that make a significant contribution to society through
their products and services and through the way they do business.
CAPITALIZATION
The total number of shares of stock of all classes which the
Company is currently authorized to issue is 100 million shares. The par
value of each share is $1.00. The Balanced Portfolio currently has
75,000,000 authorized shares and the Bond Portfolio currently has
1,000,000 authorized shares. Fractional shares may be issued. Each
Portfolio's shares have equal voting rights and represent equal
proportionate interests in the assets belonging to the Portfolio.
Shareholders of each Portfolio are entitled to receive dividends and
other amounts as determined by the Directors of the Company.
Shareholders of each Portfolio vote separately, as to matters, that
affect only their particular Portfolio such as approval or amendments of
investment advisory agreements or proposed reclassifications, that
affect only their particular portfolio.
SHAREHOLDER MEETINGS AND VOTING RIGHTS
The Company is not required to hold annual meetings of
shareholders. The Company does not permit cumulative voting. A majority
of shares entitled to vote on a matter constitutes a quorum for
consideration of such matter. In either case, a majority of the shares
voting is sufficient to act on a matter (unless otherwise specifically
required by the applicable governing documents or other law, including
the 1940 Act).
LIQUIDATION OR DISSOLUTION
In the event of the liquidation of a portfolio the shareholders
are entitled to receive, when, and as declared by the Directors, the
excess of the assets belonging to such portfolio over the liabilities
belonging to the portfolio. The assets so distributable to shareholders
of a Portfolio will be distributed among the shareholders in proportion
to the number of shares of the Portfolio held by them and recorded on
the books of the Company.
RIGHTS OF INSPECTION
Shareholders of the respective Funds have the same right to
inspect in Maryland the governing documents, records of meetings of
shareholders, shareholder lists, share transfer records, accounts and
books of the Company as are permitted shareholders of a corporation
under the Maryland corporation law. The purpose of inspection must be
for interests of shareholders relative to the affairs of the Portfolios.
The foregoing is only a summary of certain characteristics of
the operations of the Company's Articles of Incorporation, its By-Laws
and Maryland law and is not a complete description of those documents or
the law. Shareholders should refer to the provisions of such respective
Articles of Incorporation, By-Laws, and Maryland law directly for more
complete information.
ADDITIONAL INFORMATION
Information concerning the operation and management of the
Company and the Portfolios is incorporated herein by reference from the
Prospectus dated May 1, 1995, a copy of which is enclosed, and the
Statement of Additional Information dated as of the same date. A copy of
such Statement of Additional Information is available upon request and
without charge by writing to the Company, at the address listed on the
cover page of this Prospectus/Proxy Statement or by calling toll-free
1-800-368-2748.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended and the 1940 Act, and in
accordance therewith files reports and other information including proxy
material, and charter documents with the SEC. These items can be
inspected and copies obtained at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
FINANCIAL STATEMENTS AND EXPERTS
The Statement of Additional Information relating to this
Prospectus/Proxy Statement includes the following financial statements:
(i) financial statements for the fiscal year ended December 31, 1994,
included in the Company's Annual Report for that period; and (ii)
unaudited financial statements for the six-months ended June 30, 1995.
The financial statements included in the Company's Annual Report are
incorporated by reference into the Statement of Additional Information.
The financial statements for the year ended December 31, 1994 included
in the Company's Annual Report have been audited by Coopers & Lybrand
LLP, independent accountants, and have been included in the Statement of
Additional Information in reliance upon the report of Coopers & Lybrand
LLP given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the
Company will be passed upon by William M. Tartikoff, Esq., General
Counsel of The Calvert Group, Ltd. Sullivan & Worcester, Washington,
D.C., has advised the Company on certain federal income tax matters.
OTHER BUSINESS
The Directors of the Company do not intend to present any other
business at the Meeting. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying form
of proxy will vote thereon in accordance with their judgment.
THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THE
INDEPENDENT DIRECTORS, RECOMMENDS APPROVAL OF THE PROPOSED MERGER, ANY
UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN
FAVOR OF APPROVAL OF THE PROPOSED MERGER.
______________ __, 199___
<PAGE>
EXHIBIT A
Ex-99.17
ACACIA CAPITAL CORPORATION
(the "Company")
PLAN OF RECLASSIFICATION
(the "Plan")
I. RECITALS
The Company is a Maryland corporation whose shares of common
stock are currently classified into seven classes or series
("Portfolios"), including the Calvert Responsibly Invested ("CRI") Bond
Portfolio (the "Bond Portfolio") and the CRI Balanced Portfolio (the
"Balanced Portfolio").
The Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end management investment
company, and its shares of common stock are registered under the
Securities Act of 1933, as amended (the "1933 Act").
The Company offers shares of certain Portfolios to National
Home Life Insurance Company ("National Home") and its Separate Accounts
and other insurance companies and their separate accounts.
National Home issues, or intends to issue, variable annuity
contracts ("contracts") through its Separate Account or Accounts. The
Company understands that National Home votes the shares of the Bond
Portfolio held by its Separate Account that are attributable to
contracts in accordance with instructions received from holders of
interests in the contracts (hereinafter, "shareholders"). The Company
further understands that National Home votes shares of the Bond
Portfolio as to which no instructions have been received in the same
proportion as the shares of the relevant Separate Account as to which
instructions have been received.
The Directors of the Company have determined that it is
advisable to amend the Articles of Incorporation of the Company to
reclassify the issued and unissued shares of common stock currently
designated as the CRI Bond Portfolio into the class of common stock
currently designated as the CRI Balanced Portfolio (the
"Reclassification") and have directed that the proposed amendment be
submitted for consideration at a special meeting of shareholders.
The Directors of the Company have determined - independently
for the Bond Portfolio and for the Balanced Portfolio - that the
Reclassification, including the consideration, is reasonable and fair,
does not involve overreaching on the part of any person concerned, and
will not dilute the interests of shareholders. Furthermore, the
Directors have determined that the Reclassification would be in the best
interests of shareholders and is consistent with the general purposes of
the 1940 Act, the protection of investors, and the purposes fairly
intended by the policies and provisions of the 1940 Act.
It is intended that the Reclassification shall qualify as a
tax-free reorganization under Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
II. MECHANICS OF RECLASSIFICATION
A. Approval of Shareholders.
1. Meeting Date. In accordance with Section 2-604 of the
Maryland General Corporation Law (the "Maryland Law") and the Company's
Articles of Incorporation, the Reclassification shall be submitted to
the shareholders of the Bond Portfolio for their approval at a special
meeting (the "Meeting") to be held on or about ________, _________ __,
1996 at 10:00 a.m., Eastern Time, at the offices of the Company, 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
2. Record Date. The close of business on ___________, 199___,
shall be the record date (the "Record Date") for the Meeting and only
shareholders of record of the Bond Portfolio on such date shall be
entitled to notice of and be permitted to give voting instructions at
the Meeting.
3. Required Vote. The Reclassification shall not become
effective without the affirmative vote of the holders of a majority (as
defined in the 1940 Act) of the Bond Portfolio shares outstanding and
entitled to vote thereon.
4. Form N-14 Registration Statement/Proxy Materials. The
appropriate officers of the Company shall take all actions necessary or
appropriate to solicit the approval of the shareholders of the Bond
Portfolio, including the preparation and execution of a registration
statement on Form N-14 of the Securities and Exchange Commission (the
"SEC"), and any amendments thereto, containing a notice of meeting,
proxy statement, and voting instruction forms (collectively, the "proxy
materials"), and the filing of such proxy materials with the SEC.
5. Mailing of Proxy Materials. The appropriate officers of the
Company shall cause the proxy materials to be mailed on or about
____________, 1995, as appropriate, to each shareholder of the Bond
Portfolio of record on the Record Date.
B. Amendment of Articles of Incorporation.
In accordance with Maryland Law, the Company shall effect the
Reclassification by amending its Articles of Incorporation.
1. Form of Amendment. The amendment to the Company's Articles
of Incorporation (the "Amendment") shall be substantially in the form
attached hereto and made a part hereof, with such modifications as the
officers executing the same deem necessary or appropriate, consistent
with the purposes of this Plan.
2. Date of Filing. The appropriate officers of the Company
shall execute, acknowledge, verify and file the Amendment with the
Maryland State Department of Assessments and Taxation (the "Maryland
State Department") on or about _____________, 1996, following
shareholder approval, for effectiveness at 12:01 a.m. on
_______________, 1996.
C. Transfer of Assets.
In connection with the Reclassification of shares, the Bond
Portfolio shall transfer all of its assets and liabilities to the
Balanced Portfolio, in exchange for which the Balanced Portfolio shall
issue to the Bond Portfolio a number of the Balanced Portfolio shares
having a value equal to the aggregate net assets of the Bond Portfolio
acquired.
1. Time of Transfer. The above-described transfer shall occur
on _______________, 1996 (the "Closing Date"), or such other time and
date as determined by the appropriate officers of the Company.
2. Issuance of Balanced Portfolio Shares to the Bond Portfolio.
The number of shares of the Balanced Portfolio to be issued to the Bond
Portfolio shall be determined on the basis of the relative net asset
values of the Balanced Portfolio and the Bond Portfolio calculated as of
the close of business on the business day immediately preceding the
Closing Date. The net asset value of each Portfolio shall be determined
by dividing the value of that Portfolio's securities, cash, and other
assets (including accrued but uncollected interest and dividends), less
all liabilities (including accrued expenses but excluding capital and
surplus) by the number of shares of that Portfolio outstanding.
3. Distribution of Balanced Portfolio Shares to Bond Portfolio
Shareholders. Upon effectiveness of the Amendment, the Bond Portfolio
shall distribute the Balanced Portfolio shares it receives to the Bond
Portfolio shareholders in exchange for their Bond Portfolio shares, on a
pro rata basis. The number of such full and fractional Balanced
Portfolio shares issued to each Bond Portfolio shareholder shall be
determined by multiplying the number of Bond Portfolio shares to be
exchanged by a fraction, the numerator of which is the net asset value
per share of the Balanced Portfolio and the denominator of which is the
net asset value per share of the Bond Portfolio. Thus, the Bond
Portfolio shares of each Bond Portfolio shareholder shall be exchanged
for the number of full and fractional shares of the Balanced Portfolio
which, when multiplied by the net asset value per share of the Balanced
Portfolio, will have a value equal to the aggregate net asset value of
that shareholder's shares in the Bond Portfolio on the Closing Date.
D. Costs of Effecting the Reclassification.
The Bond Portfolio and the Balanced Portfolio shall each pay
its portion of the expenses attributable to the Reclassification.
E. Miscellaneous.
1. Termination of Agreements. The appropriate officers of the
Company shall cause all agreements with the Bond Portfolio or the
Company to be terminated as they relate to the Bond Portfolio.
2. General Authority. The appropriate officers of the Company
shall, in the name and on behalf of the Company or either of the
Portfolios, do and perform such further acts and things, modify any
dates or deadlines, and execute and deliver or file such other
instruments, certificates, and documents as they shall determine to be
necessary, appropriate, or desirable to carry out the foregoing, any
such determination to be conclusively evidenced by the doing or
performing of any such act or thing or the execution and delivery or
filing of any such instrument, certificate, or document.
III. CONDITIONS PRECEDENT
The Reclassification shall not become effective unless each of
the following has occurred:
A. The Amendment shall have been approved by the affirmative
vote of the holders of a majority (as defined in the 1940 Act) of Bond
Portfolio shares outstanding and entitled to vote thereon;
B. The Amendment shall have been accepted for filing by the
Maryland Department of Assessments and Taxation and become effective;
C. The Company shall have received any necessary regulatory
approvals of the proposed Reclassification by the SEC;
D. The Company shall have received an opinion of counsel
reasonably satisfactory to it that the Reclassification shall qualify as
a tax-free reorganization under Section 368 of the Code; and
E. The Insurance Companies shall have received any necessary
regulatory approvals of the proposed Reclassification by relevant state
insurance authorities.
At the Closing Date, the Balanced Portfolio shall succeed,
without any transfer other than that contemplated in Section II.C above,
to all the assets belonging to the Bond Portfolio (or allocated to the
Bond Portfolio by the Board of Directors of the Company pursuant to
Article Ninth of the Company's Articles of Incorporation) and shall be
subject to all the liabilities of the Bond Portfolio in the same manner
as if the liabilities had been incurred by, or allocated to, the
Balanced Portfolio in the first instance.
Upon effectiveness of the Amendment, all of the Shares of the
Bond Portfolio shall be reclassified as Balanced Portfolio shares, and
the Bond Portfolio shall cease to be a separate class of stock of the
Company.
Acacia Capital Corporation
By:
William M. Tartikoff
Vice President
<PAGE>
EXHIBIT B
Ex-3.(i)
FORM OF AMENDMENT TO
THE RESTATED ARTICLES OF INCORPORATION
OF ACACIA CAPITAL CORPORATION
Acacia Capital Corporation, a Maryland corporation, having its
principal office in the State of Maryland in Baltimore City, Maryland
(hereafter called the "Corporation"), hereby amends, effective
_______________, 1996 its Articles of Incorporation, (the "Articles of
Incorporation"), to redesignate and reclassify the issued and unissued
shares of the Corporation which were divided and classified as the class
of common stock bearing the designation CRI Bond Portfolio into the
class of common stock bearing the designation CRI Balanced Portfolio.
All of such shares have the powers, preferences, other special rights,
qualifications, restrictions and limitations set forth in Article Tenth
of the Articles of Incorporation.
ARTICLE NINTH, of the Articles of Incorporation of the Company
is amended to read as follows:
(1) The total number of shares of stock of all classes which
the Corporation is authorized to issue is one hundred million
(100,000,000) shares of capital stock. The par value of each share shall
be One Dollar ($1.00). The shares shall be allocated as follows for each
series:
No. of Shares per Series
CRI Balanced Portfolio
76,000,000
CRI Money Market Portfolio 9,000,000
CRI Global Equity Portfolio 4,000,000
CRI Capital Accumulation Portfolio 4,000,000
CRI Equity Portfolio 2,000,000
CRI Strategic Growth Portfolio 5,000,000
The Board of Directors shall have the authority to classify or
reclassify and issue authorized stock in such other classes as it may
determine, each comprising such number of shares and having such
designations, powers, preferences and rights and such qualifications,
limitations and restrictions thereof, as may be fixed or determined from
time to time by resolution or resolutions providing for the issue of
such stock. The Board of Directors may increase or decrease the number
of shares of any class provided that it may not decrease the number of
shares of any class below the number of shares thereof then outstanding.
The foregoing amendment was advised by the Board of Directors
of the Company and approved by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote
on the proposed amendment.
IN WITNESS WHEREOF, the Company has caused these presents to be
signed in its name and on its behalf by its President and witnessed by
its Secretary on the ___ day of ______, 199_ to be effective on the ___
day of _____, 1996.
WITNESS: ACACIA CAPITAL CORPORATION
/s/ William M. Tartikoff /s/ Clifton S. Sorrell, Jr.
William M. Tartikoff Clifton S. Sorrell
Secretary President
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
ACACIA CAPITAL CORPORATION
FIRST: The name of the Corporation is Acacia Capital
Corporation.
SECOND: The Corporation desires to restate its charter as
currently in effect.
THIRD: The provisions set forth in the Articles of Restatement
are all the provisions of the charter currently in effect.
FOURTH: These Articles of Restatement have been approved by a
majority of the entire Board of Directors.
FIFTH: The charter is not amended by the Articles of
Restatement.
SIXTH: The nature of the business or purposes to be conducted
or promoted are as follows:
(A) To conduct and carry on the business of an investment
trust or investment company of the general management
type.
(B) To invest and reinvest the property and assets of the
corporation in securities of different types and
classes, including, without in any way limiting the
generality thereof, stocks, bonds, notes, debentures,
and certificates of interest or participation, and in
other personal property without limitation or
restriction except for the specific restrictions
hereinafter set forth.
(C) To act as financial or fiscal agent for any person,
firm, or corporation and as such to manage, control,
and deal with, in any and every way whatsoever, the
property, holdings, investments, and business interests
thereof.
(D) To endorse, guarantee, or undertake the performance of
any obligation, contract, or engagement of any other
corporation, or other party, if the Corporation is
interested in such obligation, contract or engagement.
(E) To purchase, retire, redeem, hold, sell, reissue,
transfer, and otherwise deal in, shares of its own
capital stock; and to apply to such purchase,
retirement, or acquisition any funds or property of the
Corporation, whether capital or surplus or otherwise,
as may be permitted by law.
(F) To engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of Maryland.
(G) To do and all of the acts herein set forth or implied
and such other acts as are incidental or conducive to
the attainment of the objectives and purposes of the
Corporation; and to do any and all such acts either as
principal or in the capacity of agent, broker, factor,
contractor, or otherwise.
SEVENTH: The current address of the principal office of the
Corporation is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814.
EIGHTH: The Corporation's current resident agent is William M.
Tartikoff, Calvert Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
NINTH: The total number of shares of stock of all classes
which the Corporation is authorized to issue is One Hundred Million
(100,000,000) shares of stock. The par value of each share shall be One
Dollar ($1.00). The shares shall be allocated as follows for each series:
No. of Shares per Series
CRI Balanced Portfolio 76,000,000
CRI Money Market Portfolio 9,000,000
CRI Global Equity Portfolio 4,000,000
CRI Capital Accumulation Portfolio 4,000,000
CRI Equity Portfolio 2,000,000
CRI Strategic Growth Portfolio 5,000,000
Total Shares Authorized 100,000,000
The Board of Directors is hereby expressly granted the authority to
issue any remaining unissued shares and to establish additional series.
The Board of Directors is also expressly granted the authority to
increase or decrease the number of shares of any series, subject to the
provisions that the aggregate number of shares, and the number of shares
allocated to all series cannot exceed the total authorized number of
shares, and that the number of shares allocated to any series may not be
decreased below the number of shares issued and outstanding for such
series.
TENTH: The powers, preferences and rights of each series and
the qualifications, limitations and restrictions on each such series
shall be as follows:
(A) (1) The assets of the Corporation received as
consideration for the issue of stock of each
series, together with all income, earnings and
profits on such assets, and proceeds derived
from the sale, exchange or liquidation of such
assets, and any assets derived from the
reinvestment of such income, earnings and
profits, and proceeds in whatever form
received, shall for all purposes, subject only
to the rights of creditors, be irrevocably
allocated to the series for which such assets
were received by the Corporation, and be so
entered upon the books of account and referred
to in these Articles as "the assigned assets"
of such series.
(2) Each series will be managed in accordance with
the investment policy for such series.
(3) The assigned assets of each series shall be
charged with the specific liabilities
(including accrued expenses and reserves as
conclusively determined from time to time by
the Board of Directors) of such series and the
general liabilities of the Corporation in
proportion to the net asset values of the
respective series. Any liability applicable
to more than one series, but not to all
series, shall be allocated to each series to
which it is applicable in proportion to the
net asset values of such series. The
allocation of any liability to a series by the
Board of Directors shall be conclusive.
(B) Each share of stock of a series shall have the same rights,
privileges and preferences with respect to the
assigned assets of such series as each of the
other shares of stock of that series. Each
share of stock of a series shall be entitled
to participate equally in such dividends as
may be declared from time to time by the Board
of Directors. Each fractional share of stock
of a series shall have proportionately the
same rights, privileges and preferences with
respect to the assigned assets of such series
as a whole share, and shall participate
proportionately in dividends as declared.
(C) (1) "Shareholder" as used in these Articles shall
mean a shareholder of record as defined in the
By-Laws.
(2) Each shareholder of the Corporation shall have
one vote for each share held by the
shareholder, and shall have a fractional vote
for each fraction of a share held by the
shareholder.
(3) Whenever the vote of shareholders is required
or permitted to be taken in connection with
any matter affecting the Corporation or any
series, such vote shall be taken, and
effective action shall be determined in
accordance with the General Laws of the State
of Maryland or the Investment Company Act of
1940, whichever is more strict.
ELEVENTH: The number of directors of the Corporation
shall be five (5), which number may be increased or decreased pursuant
to the By-Laws of the Corporation but shall not be less than three (3).
The names of the Directors are Clifton S. Sorrell, Jr., Frank H. Blatz,
Jr., Charles E. Diehl, Arthur J. Pugh, and South Trimble III.
TWELFTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the Directors and shareholders.
(A) No holder of shares of stock shall be entitled as a matter
of right to subscribe for or purchase or
receive any part of any treasury shares held
by the Corporation, or of any new or
additional issues of shares of stock or
securities convertible into shares of stock of
the Corporation, whether now or hereafter
authorized, or whether issued for money, for a
consideration other than money, or by way of
dividends.
(B) Upon the request of any shareholder, the Corporation shall
repurchase shares owned by such shareholder on
the terms and conditions specified in the
By-Laws.
(C) With respect to the issuance and sale of shares of the
Corporation's stock, or securities convertible
into shares of stock, the Corporation shall
receive not less than the net asset value per
share determined in accordance with the
By-Laws.
(D) Assets of this Corporation may be held or deposited with a
bank or trust company or other organization as
custodian and, except as provided below, the
Corporation may employ any agency or
instrumentality, incorporated or
unincorporated, to render management services
of any nature with respect to the conduct of
the business of the Corporation, and to manage
and direct the business and activities of the
Corporation to such extent as the Board of
Directors may determine from time to time,
whether or not such employment involves
delegation of functions usually or customarily
performed by the Board of Directors or
officers of the Corporation. However, this
Corporation shall contract with a professional
investment manager which is registered under
the Investment Advisers Act of 1940 to provide
investment advice to the Corporation and to
manage the investments of the Corporation's
assets.
(E) The Corporation reserves the right from time to time to
make any amendment of its Articles, now or
hereafter authorized by law, including any
amendment which alters the contract rights of
any outstanding stock.
(F) The original By-Laws of the Corporation have been adopted
by the Directors. The Board of
Directors shall have the power to make, alter
or repeal any By-Law, except those By-Laws
which by statute or By-Law provision must be
submitted to shareholders for a vote.
(G) The use of the Corporation of the name "Acacia" and all
trademarks now or hereafter associated with
Acacia Mutual Life Insurance Company are
subject to and conditioned upon the continuing
consent of Acacia Mutual Life Insurance
Company, a Washington, D.C. Corporation, which
consent may be withdrawn at any time.
(H) The Corporation shall have the power and authority to
indemnify its directors, officers and
employees to the fullest extent permitted by
law.
THIRTEENTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, the undersigned hereby execute these Articles of
Restatement and acknowledge the same to be their act and further
acknowledge that, to the best of their knowledge, the matters and facts
set forth herein are true in all materials respects, under the penalties
of perjury.
Dated this 21st day of November, 1995.
Acknowledgement:___________________________
Clifton S. Sorrell, Jr.
Chairman of the Board
and Director
ATTEST:_____________________________________
William M. Tartikoff
Secretary
PLEASE VOTE THIS VOTING INSTRUCTION FORM
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..........................................
ACACIA CAPITAL CORPORATION
-- CALVERT RESPONSIBLY
INVESTED BOND PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS
-- DECEMBER __, 1995
The undersigned hereby appoints William M. Tartikoff, Susan Walker
Bender and Beth-ann Roth and each of them, attorneys and proxies for the
undersigned, with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all
shares of the Calvert Responsibly Invested ("CRI") Bond Portfolio (the
"Portfolio") of Acacia Capital Corporation (the "Company"), which the
undersigned is entitled to vote at a Meeting of Shareholders of the Fund
to be held at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814 on December __, 1995, at 10:00 a.m, Eastern Time, and any
adjournments thereof (the "Meeting"). The undersigned hereby
acknowledges receipt of the Notice of Meeting and Prospectus/Proxy
Statement, and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other matters as may properly come before
the Meeting. A majority of the proxies present and acting at the
Meeting in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all of the powers and
authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
NOTE: Please sign exactly as your name appears on this Proxy. If joint
owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporate officer, please give your
full title.
DATE: December __, 1995 _____________________________
______________________________
Signature(s)
______________________________
Title(s), if applicable
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW. THIS
VOTING INSTRUCTION FORM WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO
THE ACTION TO BE TAKEN. IN THE ABSENCE OF ANY SPECIFICATION, THIS
VOTING INSTRUCTION FORM WILL BE VOTED IN FAVOR OF THE PROPOSAL.
1. To approve the proposed amendment to the Company's Articles of
Incorporation to, in effect, combine the Company's CRI Bond Portfolio,
with the Company's CRI Balanced Portfolio by a reclassification of the
shares of the Equity Portfolio.
|_| YES |_| NO |_| ABSTAIN
These items are discussed in greater detail in the attached
Prospectus/Proxy Statement. The Directors of the Company have fixed the
close of business on December __, 1995, as the record date for the
determination of shareholders entitled to notice of and to vote at the
Meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE VOTING INSTRUCTION FORM
IN THE ENCLOSED ENVELOPE WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH
ON THE INSIDE COVER.
William M. Tartikoff
Secretary
November __, 1995
In their discretion, the Proxies, and each of them, are authorized
to vote upon any other business that may properly come before the
Meeting, or any adjournment(s) thereof, including any adjournment(s)
necessary to obtain the requisite quorum and for approval.
<PAGE>
Ex-99.17
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER ___, 1995
Acquisition of the Assets of
CRI BOND PORTFOLIO
(a series of Acacia Capital Corporation)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
By and In Exchange for Shares of
CRI Balanced Portfolio
(a series of Acacia Capital Corporation)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
This Statement of Additional Information relates to the
proposed transfer of assets of CRI Bond Portfolio to CRI Balanced
Portfolio. The Statement consists of this cover page, the Statement of
Additional Information of Acacia Capital Corporation dated May 1, 1995,
the Annual Report of Acacia Capital Corporation for the year ended
December 31, 1994, and the unaudited balance sheet and statement of
operations for the CRI Balanced Portfolio for the six-month period ended
June 30, 1995.
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement dated May 1, 1995 relating to the
above-referenced matter may be obtained from The Calvert Group, Ltd.,
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Prospectus/Proxy Statement.
The date of this Statement of Additional Information is
December __, 1995.
<PAGE>
ACACIA CAPITAL CORPORATION'S
CALVERT RESPONSIBLY INVESTED PORTFOLIOS
Statement of Additional Information
May 1, 1995
- - --------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Calvert Responsibly Invested Portfolios Prospectus,
dated May 1, 1995, which may be obtained free of charge by calling (301)
951-4820 or (800) 368-2748, or by writing to the Portfolio at 4550
Montgomery Avenue, Bethesda, Maryland 20814.
- - --------------------------------------------------------------------------
TABLE OF CONTENTS
Investment Objectives and Policies 1
Investment Restrictions 11
Investment Selection Process 19
Portfolio Turnover 20
Purchase and Redemption of Shares 21
Determination of Net Asset Value 21
Taxes 23
Calculation of Yield and Total Return 23
Investment Advisory Agreement 25
Management of the Fund 28
Method of Distribution 30
General Information 30
Reports to Shareholders and Policyholders 31
Additional Information 31
Financial Statements 31
Independent Accountants and Custodians 31
Appendix 31
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- - --------------------------------------------------------------------------
Acacia Capital Corporation ("the Fund") offers investors the
opportunity to invest in several professionally-managed securities
portfolios which may be more diversified, stable and liquid than might
be obtainable by an investor on an individual basis. In addition, the
Fund's Calvert Responsibly Invested ("CRI") Portfolios offer the
opportunity for growth of capital or current income through investment
in enterprises that make a significant contribution to society through
their products and services and through the way they do business. The
Calvert Responsibly Invested Portfolios offer investors a choice of
seven separate portfolios selected with a concern for the social impact
of each investment: CRI Money Market, Balanced, Equity, Bond, Capital
Accumulation, Global and Strategic Growth Portfolios. References to the
"Investment Advisor" refer to the advisor appropriate to the Portfolio
being discussed. (See "Investment Advisors")
Foreign Securities
CRI Global and Strategic Growth may invest all of their assets
in foreign securities, although CRI Global intends to invest part of its
assets in securities of U.S. issuers, and CRI Strategic Growth does not
presently intend to invest in foreign securities. CRI Money Market,
Bond, Equity, Balanced and Capital Accumulation may each invest up to
25%, and CRI Balanced may invest up to 10% of its assets in the
securities of foreign issuers. CRI Money Market may purchase only high
quality, U.S. dollar-denominated instruments. Investments in foreign
securities may present risks not typically involved in domestic
investments. Foreign securities may be affected by such circumstances as
possible adverse changes in exchange control or investment regulations,
expropriation or confiscatory taxation, political or economic
instability, and diplomatic or other developments. In purchasing foreign
securities, the Portfolios may purchase American Depository Receipts for
such securities. These are certificates issued by United States banks
evidencing the right to receive securities of the foreign issuer
deposited in that bank or its correspondent bank.
It is contemplated that the Portfolios may trade foreign
securities on U.S. securities markets and stock exchanges located in the
countries in which the respective principal offices of the issuers of
the various securities are located, if that is the best available
market. Foreign securities markets may not be as developed or efficient
as those in the United States. While growing in volume, they usually
have substantially less volume than U.S. securities markets, and
securities of some foreign companies are less liquid and more volatile
than securities of comparable United States companies. Similarly, volume
and liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in the
United States.
Additional costs may be incurred which are related to any
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 Portfolios change investments
from one country to another or convert foreign securities holdings into
U.S. dollars. Foreign companies and foreign investment practices are not
generally subject to uniform accounting, auditing and financial
reporting standards and practices or regulatory requirements comparable
to those applicable to United States companies. There may be less public
information available about foreign companies.
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. While such taxes or restrictions are not presently in effect,
they may be reinstituted from time to time as a means of fostering a
favorable United States balance of payments. In addition, foreign
countries may impose withholding and taxes on dividends and interest.
Since investments in securities of issuers domiciled in foreign
countries usually involve currencies of the foreign countries, and since
the Portfolios may temporarily hold funds in foreign currencies during
the completion of investment programs, the value of the assets of the
Portfolios 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 declines in relation
to the value of the U.S. dollar, the value of the security in U.S.
dollars will decline. Similarly, if the value of the foreign currency in
which a security is denominated appreciates in relation to the value of
the U.S. dollar, the value of the security in U.S. dollars will
appreciate. The Portfolios will conduct foreign currency exchange
transactions either on a spot (i.the., 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. The
Portfolio will 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, the Portfolio enters 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's investment 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.
Foreign Money Market Instruments
CRI Money Market 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 CRI Money Market
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.
Private Placements and Illiquid Securities
Due to the particular social objective of the Portfolios,
opportunities may exist to promote especially promising approaches to
social goals through privately-placed investments. The private placement
investments undertaken by the Portfolios, if any, may be subject to a
high degree of risk. Such investments may involve relatively small and
untried enterprises that have been selected in the first instance
because of some attractive social objectives or policies. The Investment
Advisors seek to structure the Portfolios' investments to provide the
greatest assurance of attaining the intended investment return. It is an
operating policy of the Portfolios that no private placements shall be
acquired until the value of that Portfolio's investments exceeds $20
million.
Many private placement investments have no readily available
market and may therefore be considered illiquid. It is an operating
policy of the Portfolios not to purchase illiquid securities if more
than a certain percentage of the value of its net assets would be
invested in such securities. Securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 may be determined by the
Board of Directors to be liquid. The Board may delegate such
determinations of liquidity to the Advisor, pursuant to guidelines and
oversight by the Board. Portfolio investments in private placements and
other securities for which market quotations are not readily available
are valued at fair market value as determined by the Advisor under the
direction and control of the Board.
Repurchase Agreements
The Portfolios may purchase debt securities subject to
repurchase agreements, which are arrangements under which the Portfolio
buys a security and the seller simultaneously agrees to repurchase the
security at a specified time and price. The Portfolios 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. The Portfolios will only engage in repurchase agreements with
recognized securities dealers and banks determined to present minimal
credit risk by the Advisor under the direction and supervision of the
Board of Directors. In addition, the Portfolios 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
The Portfolios may also engage in 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. The Portfolios
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 Portfolios' 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.
GNMA Certificates-CRI Balanced
The CRI Balanced Portfolio is not expected generally to invest
more than a small portion of its assets in GNMA Certificates. GNMA
Certificates are mortgage-backed securities representing part ownership
of a pool of mortgage loans that are issued by lenders such as mortgage
bankers, commercial banks and savings and loan associations and are
either insured by the Federal Housing Administration or guaranteed by
the Veterans Housing Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors
through securities dealers.
Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full
faith and credit of the U.S. Government. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrower over the
term of the loan rather than returned in a lump sum at maturity. GNMA
Certificates are called "pass-through" securities because both interest
and principal payments (including prepayments) are passed through to the
holder of the Certificate. Upon receipt, principal payments will be
reinvested by the Series in additional securities.
Because interest and principal payments on the underlying
mortgages pass through to holders, the average life of GNMA Certificates
varies with the maturities of the underlying mortgage instruments, which
have maximum maturities of 30 years. However, because unscheduled
principal payments on the underlying mortgages resulting from
prepayment, refinancing or foreclosure are also passed through to
holders, the average life of GNMA Certificates is normally substantially
shorter than the original maturity of the underlying mortgage pools.
The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, the degree of the increase or
decrease in interest rates over time, general economic conditions, the
location and age of the mortgage, and social and demographic conditions.
Prepayments generally occur when interest rates have fallen; thus,
reinvestments of principal prepayments will usually be at lower rates.
Prepayments also tend to occur more frequently in mortgage pools with
rates significantly higher than prevailing mortgage rates. The coupon
rate of GNMA Certificates is lower than the interest rate paid on the
underlying mortgages only by the amount of the fee paid to GNMA and the
issuer, usually 1/2 of 1%. Therefore, GNMA Certificates trading at a
premium, which are usually Certificates with coupon rates significantly
higher than the rates of Certificates being issued at the time of
purchase, are subject to greater risk of prepayment at par.
The Investment 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.
Noninvestment-grade Debt Securities
CRI Balanced, Bond and Equity may invest in lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's). Subject to the Portfolios' investment policy provides that it
may not invest more than 20% of its 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. CRI Global may invest up to 5% of its assets in lower quality
debt securities[, and CRI Strategic Growth may invest up to 35% of its
assets in debt securities without regard to investment grade.
Noninvestment-grade] 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. Unrated securities
usually are not attractive to as many buyers as rated securities are,
which may make them less marketable.
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
Advisors prepare their 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.
Options and Futures Contracts
CRI Bond, Equity, Global, Strategic Growth and Capital
Accumulation 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 which meet the Portfolios' social
criteria, 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. As an operating policy,
which may be changed without approval of a majority of the outstanding
shares, CRI Bond and Equity will not invest in options and futures
contracts if as a result more than 5% of a Portfolio's assets would be
so invested. CRI Global, Strategic Growth and Capital Accumulation may
not write options on more than 50% of their total assets. 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' social
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' social
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.
To preserve the Portfolio's status as a regulated investment
company under Subchapter M of the Internal Revenue Code, it is the
Portfolio's policy to limit any gains on put or call options and other
securities held less than three months to less than 30% of a Portfolio's
annual gross income.
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' social 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 and that the
aggregate initial margin on futures contracts and premium on options
relating to futures shall not exceed 5% of the Portfolio's assets.
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' social 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 (Not applicable to CRI Money Market
Portfolio)
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.
The Portfolios 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
Advisors and Subadvisors 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 (Not applicable to CRI Money Market or
Balanced Portfolios).
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. The 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.
- - --------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- - --------------------------------------------------------------------------
CRI BALANCED
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which, together with the foregoing investment objectives and fundamental
policies, cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Portfolio at a meeting where more than 50% of
the outstanding shares are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Portfolio. Shares have equal
rights as to voting, except that only shares of a Portfolio are entitled
to vote on matters affecting only that Portfolio (such as changes in
investment objective, policies or restrictions).
The Portfolio may not:
1. Issue senior securities (except that it may
borrow money as described in restriction 11 below).
2. With respect to at least 75% of the value of
its total assets, invest more than 5% of its total
assets in the securities (other than securities issued
or guaranteed by the United States Government or its
agencies or instrumentalities) of any one issuer
(including repurchase agreements with any one bank).
3. Purchase more than either (1) 10% in principal
amount of the outstanding debt securities of an issuer,
or (ii) 10% of the outstanding voting securities of an
issuer, except that such restrictions shall not apply
to securities issued or guaranteed by the United States
Government or its agencies or instrumentalities.
4. Invest more than 25% of its total assets in
the securities of issuers primarily engaged in the same
industry. For purposes of this restriction, gas, gas
transmission, electric, water, and telephone utilities
each will be considered a separate industry. This
restriction does not apply to obligations of domestic
branches of domestic banks or savings and loan
associations or to obligations issued or guaranteed by
the United States Government, its agencies or
instrumentalities.
5. Invest in companies for the purpose of
exercising control (along or together with the other
Portfolios).
6. Purchase securities of other investment
companies, [except in connection with a
trustee's/director's deferred compensation plan, as
long as there is no duplicaton of advisory fees; or]
except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment
companies where no underwriter or dealer's commission
or profit, other than customary broker's commission, is
involved, if immediately thereafter the Portfolio would
own: (a) securities of investment companies having an
aggregate value in excess of 10% of such Portfolio's
total assets; (b) more than 3% of the outstanding
voting stock of the investment company; or (c)
securities of the investment company having an
aggregate value in excess of 5% of the Portfolio's
total assets.
7. Purchase or sell interests in oil, gas or
other mineral exploration or development programs,
commodities, commodity contracts, real estate mortgage
loans, except that each Portfolio may purchase
securities of issuers which invest or deal in any of
the above, and except that each Portfolio may invest in
securities that are secured by real estate or real
estate mortgages. This restriction does not apply to
obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities.
8. Purchase any securities on margin (except that
the Portfolio may obtain such short-term credit as may
be necessary for the clearance of purchases and sales
of portfolio securities) or make short sales of
securities or maintain a short position.
9. Make loans, except as provided in (10) below
or through the purchase of obligations in private
placements or by entering into repurchase agreements
(the purchase of publicly-traded obligations are being
considered the making of a loan).
10. Lend its securities in excess of 10% of its
total assets, provided that such loan shall be made in
accordance with the guidelines set forth below under
"Lending of Portfolio Securities."
11. Borrow amounts in excess of 10% of its total
assets taken at market value at the time of the
borrowing, and then only from banks as a temporary
measure for extraordinary or emergency purposes, or to
meet redemption requests that might otherwise require
the untimely disposition of securities, and not for
investment or leveraging, except by entering into
reverse repurchase agreements. Borrowings and reverse
repurchase agreements combined will not exceed 1/3 of a
Portfolio' total assets, and additional investments
will not be made by a Portfolio if borrowings exceed 5%
of its total assets.
12. Mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities
owned or held by such Portfolio except as may be
necessary in connection with reverse repurchase
agreements or borrowings mentioned in (11) above, and
then such mortgaging, pledging or hypothecating may not
exceed 10% of such Portfolio' total assets. In order to
comply with certain state statutes, such Portfolio will
not, as a matter of operating policy, mortgage, pledge
or hypothecate its securities to the extent that at any
time the percentage of the value of pledged securities
plus the maximum sales charge will exceed 10% of the
value of such Portfolio shares at the maximum offering
price.
13. Underwrite securities of other issuers except
insofar as the Portfolio may be deemed an underwriter
under the Securities Act of 1933 in selling shares of
each Portfolio, and except as it may be deemed such in
a sale of restricted securities.
14. Write, purchase or sell puts, calls or
combinations thereof, except in connection with
when-issued securities.
15. Invest in securities of foreign issuers if at
the time of acquisition more than 10% of its total
assets taken at market value at the time of the
investment, would be invested in such securities.
16. Participate on a joint (or a joint and
several) basis in any trading account in securities
(but this does not prohibit the "bunching" of orders
for the sale or purchase of Portfolio securities with
the other Portfolio or with other accounts advised or
sponsored by the Investment Advisor or any of its
affiliates to reduce brokerage commissions or otherwise
to achieve best overall execution; see "Investment
Advisor," below):
17. Purchase or retain the securities of any
issuer, if, to the knowledge of the Portfolio, officers
and directors of the Portfolio, the Investment Advisor,
or any subsidiary thereof, each owning beneficially
more than 1/2 of 1% of the securities of such issuer,
own in the aggregate more than 5% of the securities of
such issuer.
18. Invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days
and other illiquid investments.
To comply with certain state investment restrictions, the
Portfolio will not, as a matter of operating policy, permit any
Portfolio to purchase or otherwise acquire the securities of any issuer,
other than securities issued or guaranteed as to principal and interest
by the United States, if immediately after such purchase or acquisition
the value of such investment, together with prior investments of that
Portfolio in the securities of such issuer, would exceed 10% of the
value of the Portfolio's assets. The Portfolio may change or modify this
policy only if the Portfolio obtains a waiver of the applicable
requirement from the commissioner of insurance of the state imposing the
requirement.
CRI MONEY MARKET, BOND, EQUITY AND GLOBAL
Fundamental Investment Restrictions
The Portfolios have adopted the following investment
restrictions which, together with the foregoing investment objectives
and fundamental policies, cannot be changed without the approval of the
holders of a majority of the outstanding shares of the Portfolio. As
defined in the Investment Company Act of 1940, this means the lesser of
the vote of (a) 67% of the shares of the Portfolio at a meeting where
more than 50% of the outstanding shares are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Portfolio.
Shares have equal rights as to voting, except that only shares of a
Portfolio are entitled to vote on matters affecting only that Portfolio
(such as changes in investment objective, policies or restrictions).
None of these Portfolios may:
1. With respect to 75% of assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer.
2. Concentrate more than 25% of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby or with respect
to investments in money market instruments of banks.
3. Purchase more than 10% of the outstanding
voting securities of any issuer.
4. Make loans other than through the purchase of
money market instruments and repurchase agreements or
by the purchase of bonds, debentures or other debt
securities. The purchase by the Portfolio of all or a
portion of an issue of publicly or privately
distributed debt obligations in accordance with its
investment objective, policies and restrictions, shall
not constitute the making of a loan.
5. Underwrite the securities of other issuers,
except to the extent that in connection with the
disposition of its portfolio securities, the Portfolio
may be deemed to be an underwriter.
6. Purchase from or sell to any of the Fund's
officers or Directors, or firms of which any of them
are members, any securities (other than capital stock
of the Portfolio), but such persons or firms may act as
brokers for the Portfolio for customary commissions.
7. Borrow money, except from banks for temporary
or emergency purposes and then only in an amount up to
10% of the value of the Portfolio's total assets and
except by engaging in reverse repurchase agreements;
provided, however, that it may only engage in reverse
repurchase agreements so long as, at the time it enters
into a reverse repurchase agreement, the aggregate
proceeds from outstanding reverse repurchase
agreements, when added to other outstanding borrowings
permitted by this section, do not exceed 33 1/3% of the
Portfolio's total assets. In order to secure any
permitted borrowings and reverse repurchase agreements
under this section, the Portfolio may pledge, mortgage
or hypothecate its assets.
8. Make short sales of securities or purchase any
securities on margin except that the Portfolio may
obtain such short-term credits as may be necessary for
the clearance of purchases and sales of securities. The
deposit or payment by the Portfolio of initial or
maintenance margin in connection with financial futures
contracts or related options transactions is not
considered the purchase of a security on margin.
9. Write, purchase or sell puts, calls or
combinations thereof except that the Portfolio may (a)
write exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions
with respect to such options, and the Portfolio may
write exchange-traded covered call options on foreign
currencies and secured put options on securities and
foreign currencies and write covered call and secured
put options on securities and foreign currencies traded
over the counter, and enter into closing purchase
transactions with respect to such options, (b) purchase
exchange-traded call options and put options and
purchase call and put options traded over the counter,
provided that the premiums on all outstanding call and
put options do not exceed 5% of its total assets, and
enter into closing sale transaction with respect to
such options, and (c) engage in financial futures
contracts and related options transactions, provided
that the sum of the initial margin deposits on the
Portfolio's existing futures and related options
positions and the premiums paid for related options
would not exceed 5% of its total assets.
10. Invest for the purpose of exercising control
or management of another issuer.
11. Invest in commodities, commodities futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or sell stock index futures, foreign currency
futures, interest rate futures and options thereon.
12. Purchase or retain securities issued by
investment companies except to the extent permitted by
the Investment Company Act of 1940, as amended; or in
connection with a trustee's/director's deferred
compensation plan, as long as there is no duplicaton of
advisory fees.
Nonfundamental Investment Restrictions
CRI Money Market, Bond, Equity and Global have adopted the
following operating (i.e., non-fundamental) investment policies and
restrictions which may be changed by the Board of Directors without
shareholder approval. None of these Portfolios may:
1. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
2. Purchase illiquid securities if more than 15%
of the value of a Portfolio's net assets would be
invested in such securities. A Portfolio may buy and
sell rewrites outside the U.S. that are not registered
with the SEC or marketable in the U.S.
3. Purchase or retain securities of any issuer if
the officers, directors of the Portfolio or its
Advisors, owning beneficially more than 1/2 of 1% of
the securities of such issuer, together own
beneficially more than 5% of such issuer's securities.
4. Invest in warrants if more than 5% of the
value of the Portfolio's net assets would be invested
in such securities.
5. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
Any investment restriction that involves a maximum percentage
of securities or assets will not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets, and the excess is
attributable to that event.
CRI STRATEGIC GROWTH
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than
50% of the outstanding shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer. (The remaining
50% of its total assets may be invested without
restriction except to the extent other investment
restrictions may be applicable).
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Fund, or as permitted by law. The
purchase by the Fund of all or a portion of an issue of
publicly or privately distributed debt obligations in
accordance with its investment objective, policies and
restrictions, shall not constitute the making of a loan.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Trustees within
applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's
officers or trustees, or companies of which any of them
are directors, officers or employees, any securities
(other than shares of beneficial interest of the Fund),
but such persons or firms may act as brokers for the
Fund for customary commissions.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Fund, invest in commodities, commodity futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or enter into futures contracts and options on
futures contracts, foreign currency futures, interest
rate futures and options thereon.
Nonfundamental Investment Restrictions
The Portfolio has adopted the following operating (i.e.,
non-fundamental) investment policies and restrictions which may be
changed by the Board of Trustees without shareholder approval. The
Portfolio may not:
7. Purchase the securities of any issuer with
less than three years continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
8. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
9. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute.
10. Purchase or retain securities of any issuer if
the officers, Trustees of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
11. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
12. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
13. Borrow money in an amount exceeding one-third
of the Fund's total assets, or as permitted by law. In
order to secure any permitted borrowings under this
section, the Fund may pledge, mortgage or hypothecate
its assets.
14. Invest for the purpose of exercising control
or management of another issuer.
15. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or
pursuant to Calvert's nonqualified deferred
compensation plan adopted by the Board of Trustees.
16. Purchase more than 10% of the outstanding
voting securities of any issuer.
For purposes of the Portfolio's concentration policy contained
in restriction (2), above, the Portfolio intends to comply with the SEC
staff position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
CRI CAPITAL ACCUMULATION
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than
50% of the outstanding shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer. The remaining
50% of its total assets may be invested without
restriction, except as disclosed elsewhere in the
Prospectus or SAI and except that no more than 25% may
be invested in the securities of any one issuer.
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Portfolio, or as permitted by law. The
purchase by the Portfolio of all or a portion of an
issue of publicly or privately distributed debt
obligations in accordance with its investment
objective, policies and restrictions, shall not
constitute the making of a loan.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Directors within
applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's
officers or directors, or companies of which any of
them are directors, officers or employees, any
securities (other than shares of beneficial interest of
the Portfolio), but such persons or firms may act as
brokers for the Fund for customary commissions.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Portfolio, invest in commodities, commodity
futures contracts, real estate or real estate limited
partnerships, although it may invest in securities
which are secured by real estate or real estate
mortgages and securities of issuers which invest or
deal in commodities, commodity futures, real estate or
real estate mortgages and provided that it may purchase
or sell stock index futures, foreign currency futures,
interest rate futures and options thereon.
7. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or other
applicable law, or pursuant to Calvert's nonqualified
deferred compensation plan adopted by the Board of
Directors in an amount not to exceed 10% or as
permitted by law.
8. Purchase more than 10% of the outstanding
voting securities of any issuer.
Nonfundamental Investment Restrictions
Capital Accumulation has adopted the following operating (i.e.,
nonfundamental) investment policies and restrictions which may be
changed by the Board of Directors without shareholder approval. The Fund
may not:
9. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
10. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
11. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute. Purchases of securities outside the U.S. that
are not registered with the SEC or marketable in the
U.S. are not per se restricted.
12. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain
such short-term credits as may be necessary for the
clearance of purchases and sales of securities. The
depositor payment by the Fund of initial or maintenance
margin in connection with financial futures contracts
or related options transactions is not considered the
purchase of a security on margin.
13. Purchase or retain securities of any issuer if
the officers, Directors of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
14. Invest in warrants if more than 5% of the
value of the Portfolio's net assets would be invested
in such securities.
15. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
16. Borrow money, except from banks for temporary
or emergency purposes, and then only in an amount not
to exceed one-third of the Portfolio's total assets, or
as permitted by law. In order to secure any permitted
borrowings under this section, the Portfolio may
pledge, mortgage or hypothecate its assets.
17. Invest for the purpose of exercising control
or management of another issuer.
For purposes of the Portfolio's concentration policy contained
in restriction (2), above, the Fund intends to comply with the SEC staff
position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
Any investment restriction which involves a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
Virginia Law Restrictions
In addition to the investment restrictions described above, the
Portfolios will comply with restrictions contained in the current
Virginia Insurance Laws in order that the assets of the Variable
Accounts may be invested in Portfolio shares. The Virginia Insurance
Laws currently permit the Variable Accounts to invest in Portfolio
shares without restricting the Portfolios' investments. However, those
laws or their interpretation may change.
Lending of Portfolio Securities
Subject to the investment restrictions above, a Portfolio may
lend its securities to brokers, dealers and financial institutions and
receive as collateral cash or United States Treasury securities. At all
times while the loan is outstanding, collateral will be maintained in
amounts equal to at least 100% of the current market value of the loaned
securities. Any cash collateral will be invested in short-term
securities, which will increase the current income the Portfolio lending
its securities. Such loans will be terminable by the Portfolio at any
time and will not be made to affiliates of the Portfolio. The Portfolio
will have the right to regain record ownership of loaned securities to
exercise beneficial rights such as voting rights, subscription rights
and rights to dividends, interest or other distributions. The Portfolio
may pay reasonable fees to persons unaffiliated with the Portfolio for
arranging loans. The dividends, interest and other distributions
received by the Portfolio on loaned securities, for tax purposes, may be
treated as income other than qualified income for purposes of the 90%
test discussed below under "Taxes." The Portfolios intend to lend their
securities only to the extent that such activity does not jeopardize
their qualification as a regulated investment company under certain
provisions of the Internal Revenue Code. Loans of securities will be
made only to firms that the Investment Advisor deems creditworthy.
However, as with any extensions of credit, there are risks of delay in
recovery and even loss of rights in the collateral should the borrower
of securities fail financially.
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, each Portfolio will establish a segregated account with the
Portfolio's custodian bank in which it will maintain cash or cash
equivalents or other portfolio securities equal in value to commitments
for such when-issued or delayed delivery securities. Subject to this
restriction, a Portfolio may purchase these securities without limit.
- - --------------------------------------------------------------------------
INVESTMENT SELECTION PROCESS
- - --------------------------------------------------------------------------
Investments in the Portfolios are selected on the basis of
their ability to contribute to the dual objective of the Portfolios. The
Subadvisors have each developed a number of techniques for evaluating
the performance of issuers in each of these areas. The primary sources
of information are reports published by the issuers themselves, the
reports of public agencies, and the reports of groups which monitor
performance in particular areas. These sources of information are
sometimes augmented with direct interviews or written questionnaires
addressed to the issuers. It should be recognized, however, that there
are few generally accepted measures by which achievement in these areas
can be readily distinguished; therefore, the development of suitable
measurement techniques is largely within the discretion and judgment of
the Advisors and Subadvisors of the Portfolio.
In making investment selections, each Portfolio Manager
determines and evaluates the appropriate portfolio composition on the
basis of asset prices and the perceived consequences and probabilities
of various economic outcomes that it deems possible. It then evaluates
numerous individual securities as candidates to fulfill the Portfolio's
investment objective and policies. Securities remain candidates for
inclusion in the Portfolios only if their prices and other
characteristics indicate that they have the potential to perform in a
way that is representative of their class of securities under the
different economic outcomes considered more probable by the Advisor or
Subadvisor.
Candidates for inclusion in any particular class of assets are
then examined according to the social criteria. The issuers are
classified into three categories of suitability under the social
criteria. In the first category are those issuers which exhibit unusual
positive accomplishment with respect to some of the criteria and do not
fail to meet minimum standards with respect to the remaining criteria.
To the greatest extent possible, investment selections are made from
this group. In the second category are those issuers which meet minimum
standards with respect to all the criteria but do not exhibit
outstanding accomplishment with respect to any criterion. This category
includes issuers which may lack an affirmative record of accomplishment
in these areas but which are not known by the Advisor or Subadvisor to
violate any of the social criteria. The third category under the social
criteria consists of issuers which flagrantly violate, or have violated,
one or more of those values, for example, a company which repeatedly
engages in unfair labor practices. The Portfolios will not knowingly
purchase the securities of issuers in this third category.
It should be noted that the Portfolios' social criteria tend to
limit the availability of investment opportunities more than is
customary with other investment companies. The Advisor and Subadvisors,
however, believe that within the first and second categories there are
sufficient investment opportunities to permit full investment among
issuers that satisfy the Portfolios' social investment objective.
To the greatest extent possible, the same social criteria is
applied to the purchase of non-equity securities as to equity
investments. Bank certificates of deposit, commercial paper, repurchase
agreements, and corporate bonds are judged in the same way as a
prospective purchase of the bank's or issuing company's common stock.
The Portfolios may invest, however, in certificates of deposit of banks
and savings and loan associations in which the Portfolios would not
otherwise invest because such institutions have assets of $1 billion or
less, but generally only to the extent all such investments are fully
insured as to principal by the Federal Deposit Insurance Corporation.
Obligations issued by the U.S. Treasury, such as U.S. Treasury
bills, notes and bonds, are supported by the full faith and credit of
the U.S. Government. Certain obligations issued or guaranteed by a U.S.
Government agency or instrumentality are supported by the full faith and
credit of the U.S. Government. These include obligations issued by the
Export-Import Bank, Farmers Home Administration, Government National
Mortgage Association, Postal Service, Merchant Marine, and Washington
Metropolitan Area Transit Authority. The Portfolios may also invest in
other U.S. Government agency or instrumentality obligations which are
supported only by the credit of the agency or instrumentality and may be
further supported by the right of the issuer to borrow from the U.S.
Treasury. Such obligations include securities issued by the Bank for
Cooperatives, Federal Intermediate Credit Bank, Federal Land Bank,
Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
- - --------------------------------------------------------------------------
PORTFOLIO TURNOVER
- - --------------------------------------------------------------------------
Each Portfolio has a different expected annual rate of
portfolio turnover. Portfolio turnover is defined as the lesser of
annual purchases or sales of portfolio securities divided by the monthly
average of the value of the Portfolios' securities (excluding from the
computation all securities, including options, with maturities or
expiration dates at the time of acquisition of one year or less). A high
rate of portfolio turnover generally involves correspondingly greater
brokerage commission expenses, which must be borne directly by the
Portfolio. Notwithstanding increased brokerage commission expenses,
particular holdings may be sold at any time if investment judgment or
Portfolio operations make a sale advisable.
Under normal circumstances the turnover rate can be expected to
be between 50% and 150%. For the fiscal years 1992, 1993, and 1994, the
portfolio turnover rates for CRI Balanced were 15%, 14%, and 43%,
respectively. For the same time periods, the portfolio turnover rates
for CRI Capital Accumulation were 2%, 26%, and 79% respectively. For the
1992 period since inception (June 30, 1992) to December 31, 1992, and
fiscal years 1993 and 1994, the portfolio turnover rates for the Bond
series were 56%, 57%, and 12%, respectively. For the same time periods,
the portfolio turnover rates for the Equity series were 7%, 4%, and
115%, respectively. For the same time periods, the portfolio turnover
rates for the Global Equity series were 0%, 64%, and 84%, respectively.
No Portfolio turnover rate can be calculated for CRI Money
Market due to the short maturities of the instruments purchased.
Portfolio turnover should not affect the income or net asset value of
CRI Money Market because brokerage commissions are not normally charged
on the purchase or sale of money market instruments.
- - --------------------------------------------------------------------------
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 "Determination of 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
Portfolio's 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 to redeem shares or to receive payment with
respect to any redemption may only be suspended for any period during
which (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is
is closed for other than weekends and holidays; (b) an emergency exists,
as determined by the Securities and Exchange Commission, as a result of
which disposal of Portfolio securities or determination of the net asset
value of a Portfolio is not practicable; or (c) the Securities and
Exchange Commission by order permits postponement for the protection of
shareholders.
- - --------------------------------------------------------------------------
DETERMINATION OF 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. CRI Money Market attempts
to maintain a constant net asset value of $1.00 per share; the net asset
values of CRI Balanced, Equity, Global, Bond and Capital Accumulation
fluctuate based on the respective market value of the 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 Exhcange (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, 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 CRI Balanced, Equity, Global Equity, Bond,
Capital Accumulation and Strategic Growth 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.
CRI Money Market'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.
Rule 2a-7 under the Investment Company Act of 1940 permits CRI
Money Market's assets to be valued at amortized cost if the Portfolio
maintains a dollar-weighted average maturity of 90 days or less and only
purchases obligations having remaining maturities of thirteen months or
less. Rule 2a-7 requires, as a condition of its use, that CRI Money
Market invest only in obligations determined by the Directors to be of
good quality with minimal credit risks and requires the Directors to
establish procedures designed to stabilize, to the extent reasonably
possible, the Portfolio's price per share as computed for the purpose of
sales and redemptions at $1.00. Such procedures include review of the
Portfolio's investment holdings by the Directors, at such intervals as
they may deem appropriate, to determine whether the Portfolio's net
asset value calculated by using available market quotations or
equivalents deviates from $1.00 per share based on amortized cost. If
such deviation exceeds 0.50%, the Directors will promptly consider what
action, if any, will be initiated. In the event the Directors determine
that a deviation exists which may result in material dilution or other
unfair results to investors or existing shareholders, the Directors will
take such corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions from
capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based upon available market
quotations.
- - --------------------------------------------------------------------------
TAXES
- - --------------------------------------------------------------------------
In 1994 the Portfolios qualified, and in 1995 the Portfolios
intend to qualify, as a "regulated investment company" under the
provisions of Subchapter M of the Internal Revenue Code (the "Code"). To
qualify for treatment as a regulated investment company, each Portfolio
must, among other things, have assets that meet certain requirements
specified in the Code and (i) derive in each taxable year at least 90%
of its gross income from dividends, interest, payments with respect to
securities loans, and gains (without deduction for losses) from the sale
or other disposition of stock or securities, and (ii) derive less than
30% of its gross income in each taxable year from gains (without
deduction for losses) from the sale or other disposition of stock or
securities held less than three months. If the Portfolio distributes
substantially all of its net ordinary and capital gains income, the
Portfolio qualifies as a regulated investment company and is relieved
from paying federal income tax on amounts distributed. Each Portfolio
will be taxed as a separate entity.
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
- - --------------------------------------------------------------------------
CRI Money Market: Yield
From time to time CRI Money Market 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 CRI
Money Market 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. CRI Money
Market'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 minus 1
For the seven-day period ended December 31, 1994, CRI Money
Market's yield was 6.00% and its effective yield was 6.18%.
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.
CRI Bond: Yield
CRI Bond may also advertise yield from time to time. Yield
quotations are historical and are not intended to indicate future
performance. Yield quotations for the Bond Portfolio refer to the
aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period, less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price on
the last day of the period, compounded on a "bond equivalent," or
semiannual, basis. The Bond Portfolio's yield is computed according to
the following formula:
Yield = 2[(+1)6 - 1]
where a = dividends and interest earned during the period using the
aggregate imputed yield-to maturity for each of the Portfolio's
investments as noted above; b = expenses accrued for the period (net of
reimbursement); c = the average daily number of shares outstanding
during the period that were entitled to receive dividends; and d = the
maximum offering price per share on the last day of the period. For the
30 days ended December 31, 1994, CRI Bond's yield was 6.84%.
The yield of the Bond 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.
CRI Balanced, Equity, Bond, Global, Capital Accumulation and Strategic
Growth: Total Return and Other Quotations
CRI Balanced, Equity, Bond, Global, Capital Accumulation and
Strategic Growth 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 Series for the periods indicated are
as follows:
<TABLE>
<CAPTION>
Periods Ended
December 31, 1994 SEC Total Return
============================================================================
<S> <C>
CRI Balanced
One Year -3.30%
Five Years 6.39%
From Inception<F1> 8.00%
CRI Equity
One Year -9.58%
From Inception<F2> 1.78%
CRI Bond
One Year -3.45%
From Inception<F3> 2.72%
CRI Global Equity
One Year -2.13%
From Inception<F4> 8.55%
CRI Capital Accumulation (formerly
known as CRI Ariel)
One Year -9.92%
From Inception<F5> 4.88%
<FN>
<F1>Average annual total return from September 2, 1986.
<F2>Average annual total return from June 30, 1992.
<F3>Average annual total return from June 30, 1992.
<F4>Average annual total return from June 30, 1992.
<F5>Average annual total return from July 16, 1991.
</FN>
</TABLE>
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.
INVESTMENT ADVISORY AGREEMENT
The Investment Advisory agreement between the Fund's original investment
advisor, Acacia Investment Management Corporation, and the Fund regarding
CRI Balanced was approved by the Fund's Board of Directors, including a
majority of the Directors who were not interested persons of Acacia
Investment Management Corporation, and by the shareholder of the Portfolio.
The Investment Advisory Agreement was also approved on July 9, 1986, by
Acacia National pursuant to the instructions of variable annuity and
variable life insurance policyowners. On February 29, 1988, Calvert Asset
Management Company, Inc. acquired all the assets and liabilities of Acacia
Investment Management Corporation, including the rights and duties under
the Advisory Agreement, pursuant to merger (see "Investment Advisor"). An
amendment to the Investment Agreement adding CRI Money Market, Bond, Equity
and Global were presented to the Fund's Board for approval in May 1992.
Unless earlier terminated as described below, the Agreement will remain in
effect indefinitely if approved annually (a) by the Board of Directors of
the Fund or by a majority of the outstanding shares of the Portfolio,
including a majority of the outstanding shares of each Portfolio, and (b)
by a majority of the Directors who are not parties to such contract or
interested persons (as defined by the Investment Company Act of 1940) of
any such party. The Agreement is not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party or
by the vote of the shareholders of the Portfolio.
The investment advisory fee described in the Prospectus will be accrued
daily and allocated to the various Portfolios on the basis of the size of
the respective Portfolio, as determined each day. There is no assurance
that the Portfolio will reach a net asset level high enough to realize
reduction to each Portfolio regardless of size on a "uniform percentage"
basis. Determination of the portion of the net assets of each Portfolio to
which a reduced rate is applicable is made by multiplying the net assets of
that Portfolio by the "uniform percentage," which is derived by dividing
the amount of the combined assets of all Portfolios to which such rate
applies by such combined assets.
The Investment Advisory Agreement provides that the Advisor will not be
liable to the Portfolio or to any shareholder or policy owner for any error
of judgment or mistake of law or for any loss suffered by the Portfolio or
by any shareholder or policy owner in connection with matters to which the
Investment Advisory Agreement relates, except a loss resulting form willful
misfeasance, bad faith, gross negligence, or reckless disregard on the part
of the advisor in the performance of its duties thereunder.
For the Fund's fiscal years ended December 31, 1992, 1993, and 1994
respectively, CRI Balanced paid CAM a fee of $137,160, $292,412, and
$425,429. CAM waived a portion of its advisory fee for 1992 for CRI Money
Market, Bond, Equity, and Global Equity, and waived its entire fee for 1993
for CRI Money Market, Bond, and Equity. For 1994, CRI Money Market, Bond
and Equity paid investment adviser fees of $14,484, $5,823, and $9,773,
respectively. For 1993, CRI Global Equity paid investment advisory fees of
$13,558, and received expense reimbursement of $2,354 by CAM. For 1994, CRI
Global paid investment advisory fees of $46,185, and received expense
reimbursements from CAM of $307. For the period from inception (July 16,
1991) through December 31, 1991, CRI Ariel paid CAM $519 and was reimbursed
$4,903. For the 1992 fiscal year, CRI Ariel paid investment advisory fees
of $1,924, and was reimbursed $3,045 from the Advisor. For 1993, CRI Ariel
paid investment advisory fees of $22,809, and received no expense
reimbursement from CAM. CAM paid Ariel Capital Management 0.05% of CRI
Ariel's average daily net assets for use of the "Ariel" name.
Securities Activities of the Investment Advisor
Securities held by the Portfolios may also be held by the Insurance
Companies, their separate accounts or mutual funds for which the Investment
Advisor or a Subadvisor acts as an investment advisor. Because of different
investment objectives or other factors, any of these parties may buy shares
of the Portfolios when one or more other clients are selling the same
security. Such transactions will be done in a manner deemed equitable to
all parties. To the extent that such transactions increase the demand for a
Portfolio's shares, there may be an effect on share prices.
When deemed to be in the best interest of the Portfolios, the Investment
Advisors or Subadvisors may aggregate the securities with those to be sold
or purchased for other accounts or companies in order to obtain favorable
execution and low brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Advisor or Subadvisor in the
manner it considers to be most equitable and consistent with its fiduciary
obligations to the Portfolios and to the other accounts or companies
involved. In some cases this procedure may adversely affect the size of the
position obtainable for a Portfolio.
Payment of Expenses
In addition to the portfolio management and investment advice described
above, CAM also is obligated to perform certain administrative and
management services and to provide all executive, administrative, clerical
and other personnel necessary to operate the Portfolio and to pay the
salaries of all these persons. CAM will furnish the Portfolio with office
space, facilities, and equipment and pay the day-to-day expenses related to
the operation and maintenance of such office space, facilities and
equipment. Legal, accounting and all other expenses incurred in the
organization of the Portfolio, including costs of registering under federal
and state securities laws, will also be paid by CAM except with respect to
those administrative services provided by Calvert Administrative Services
Company to CRI Global pursuant to the Administrative Services Agreement.
Those expenses not specifically stated in the Agreements as being paid by
the Portfolio will be assumed by CAM.
Expenses of the Fund will be accrued daily. Expenses that the respective
Portfolios of the Fund will pay individually include, but are not limited
to the following: brokerage commissions, dealer markups and other expenses
incurred in the acquisition or disposition of any securities, printing
costs (including the daily calculation of net asset value), interest,
certain taxes, charges of the custodian and transfer agent, and other
expenses attributable to a particular Portfolio. Expenses which will be
allocated to the various Portfolios on the basis of the size of the
respective portfolio, determined each day, include legal and auditing fees,
expenses of shareholder and director meetings, independent director fees,
bookkeeping expenses related to shareholder accounts, insurance charges,
cost of printing and mailing shareholder reports and proxy statements, the
cost to pay dividends and capital gain distributions, the costs of printing
and mailing registration statements, the cost to pay dividends and capital
gain distributions, the costs of printing and mailing registration
statements and updated prospectuses to current shareholders, and the fees
of any trade association of which the Portfolio is a member. Expenses
resulting form legal actions involving the Portfolio and any amount for
which it may be obligated to indemnify its officers, directors and
employees, may either be directly applicable to particular Portfolios or
allocated on the basis of the size of the respective Portfolios, depending
on the nature of the legal action.
CAM has agreed to reimburse the Portfolios for the amount, if any, by which
the aggregate expenses of any Portfolios (including the Investment
Advisor's fee, but excluding brokerage commissions, interest, taxes and
extraordinary expenses) in any calendar year, exceed a certain percentage
of the average daily net assets of the Portfolios, as detailed in the
Prospectus.
Securities Transactions and Brokerage
The Investment Advisor, and in some cases the Subadvisor, is primarily
responsible for the investment decisions of each Portfolio, including
decisions to buy and sell securities, the selection of brokers and dealers
to effect the transactions, the placing of investment transactions, and the
negotiation of brokerage commissions, if any. No Portfolio has any
obligation to deal with any dealer or group of dealers in the execution of
transactions in Portfolio securities. In placing orders, it is the policy
of each Portfolio to obtain the most favorable net results, taking into
account various factors, including price, dealer spread or commission, the
size of the transaction, and difficulty of execution. While the Investment
Advisor and Subadvisors generally seek reasonably competitive spreads or
commissions, the Portfolios will not necessarily be paying the lowest
spread or commission available.
If the securities in which a particular Portfolio invests are traded
primarily in the over-the-counter market, the Portfolio will deal, where
possible, with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. These "market
makers" usually act as principals for their own account. On occasion, the
Portfolios may purchase securities directly from the issuer. Bonds and
money market securities are generally traded on a net basis and do not
normally involve either brokerage commission or transfer taxes. The cost of
Portfolio securities transactions will consist primarily of brokerage
commissions or dealer or underwriter spreads.
Portfolio transactions are undertaken on the basis of their desirability
from an investment standpoint. Investment decisions and the choice of
brokers and dealers are made by the Advisor and Subadvisors under the
direction and supervision of the Board of Directors. The Advisor and
Subadvisors select broker-dealers on the basis of their professional
capability and the value and quality of their services. The Advisor and
Subadvisor reserve the right to place orders for the purchase or sale of
portfolio securities with broker-dealers that have sold shares of the
Portfolios or that provide the Portfolios with statistical, research, or
other information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to the
Advisor and the Subadvisors, the dollar value of such information and
services is generally indeterminable, and its availability or receipt does
not serve materially to reduce the Advisor's or Subadvisor's normal
research activities or expenses.
The Advisors and Subadvisors may also execute portfolio transactions with
or through broker-dealers that have sold shares of the Portfolio. However,
such sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer be
based on the volume of Portfolio shares sold. The Advisors or Subadvisors
may compensate such broker-dealers at their own expense in consideration of
their promotional and administrative services.
MANAGEMENT OF THE FUND
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.
6 CLIFTON S. SORRELL, JR., President and Chairman. Mr. Sorrell 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. Mr. Sorrell is a director of Calvert-Sloan Advisers,
L.L.C., and a director/trustee and officer of each of the other funds
in the Calvert Group. 6 Directors or Officers deemed to be "interested
persons" of the Fund, as defined in the Investment Company Act of
1940.
1 CHARLES E. DIEHL, Trustee. 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.
ARTHUR J. PUGH, Trustee. Mr. Pugh also serves as a Director of Acacia
Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax, Virginia
22030.
SOUTH TRIMBLE, III, Director. Mr. Trimble has been a partner in the
law firm of Reasoner, Davis & Fox since 1956. Address: 888 17th
Street, N.W., Suite 800, Washington, DC 20006.
FRANK H. BLATZ, JR., Esq., Director. Mr. Blatz is a partner in the law
firm of Abrams, Blatz, Gran, Hendricks, & Reina, P.A. He is also a
director/trustee of The Calvert Fund, Calvert Cash Reserves d/b/a
Money Management Plus, First Variable Rate Fund, Calvert Tax-Free
Reserves, and Calvert Municipal Fund, Inc. Address: 900 Oak Tree Road,
South Plainfield, New Jersey 07080.
1 ROBERT L. BENNETT, Vice President. Mr. Bennett is a Director of
Calvert Group, Ltd. and its subsidiaries, President of Calvert
Shareholder Services, Inc., and Executive Vice President of Calvert
Group, Ltd. He is an officer of each of the investment companies in
the Calvert Group of Funds.
1 RONALD M. WOLFSHEIMER, Treasurer. Mr. Wolfsheimer is an officer of
each of the Calvert Group Funds. He is also Senior Vice President and
Controller of Calvert Group, Ltd. and its affiliated companies. Mr.
Wolfsheimer is Vice President and Treasurer of Calvert-Sloan Advisers,
L.L.C.
1 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., and is an officer of Acacia National Life Insurance Company.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is 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 officer of Calvert-Sloan Advisers,
L.L.C.
1 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.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd., 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.
7 BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is Associate
General Counsel of Calvert Group, Ltd., 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. 7Officers and trustees deemed to be "interested persons" of the
Fund under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
The address of Directors and Officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Directors
and Officers as a group beneficially own less than 1% of the
outstanding shares of the Fund.
During fiscal 1994, directors of the Fund not affiliated with the Fund's
Advisor were paid $2,243 by CRI Money Market, $16,145 by CRI Balanced, $502
by CRI Bond Portfolio, $992 by CRI Equity, $2,009 by CRI Global Equity, and
$1,441 by CRI Capital Accumulation. Each Director of the Fund who is not
affiliated with the Advisor receives a meeting fee of $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 $2,000.
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 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, and will ensure that there is no
duplication of advisory fees.
Director Compensation Table - Fiscal Year 1994
Aggregate Compensation Total Compensation Registrant and
from Pension or from Benefits Fund Complex
Retirement Fund Accrued as part paid to
for service as of Fund Expenses Directors
Director
Name of Director
- - --------------------------------------------------------------------------------
Frank H. Blatz, Jr. $2,000 $2,000 $32,600
Charles E. Diehl $2,000 $2,000 $35,300
Arthur J. Pugh $2,000 $0 $36,500
South Trimble, III $4,500 $4,500 $4,500
- - --------------------------------------------------------------------------------
METHOD OF DISTRIBUTION
- - --------------------------------------------------------------------------------
The Fund has entered into an agreement with Calvert Distributors, Inc.
("CDI") whereby CDI, acting as principal underwriter for the Fund, makes a
continuous offering of the Fund's securities on a "best efforts" basis.
Under the terms of the agreement, CDI is entitled to receive a fee from the
Fund of $15,000 per year. However, in the past CDI has waived this fee. No
associated person or broker-dealer may have an interest in the fees payable
to CDI. CDI 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 CDI and the broker-dealers.
- - --------------------------------------------------------------------------------
GENERAL INFORMATION
- - --------------------------------------------------------------------------------
The Fund was incorporated in Maryland on September 27, 1982. The authorized
capital stock of the Fund consists of one hundred million shares of stock,
par value of $1.00 per share. The Fund's Board of Directors may, from time
to time, authorize the issuance of additional shares having the
descriptions, powers and rights, and the qualifications, limitations, and
restrictions thereof, as the Board of Directors may determine. The Board of
Directors may also change the designation of any portfolio and may increase
or decrease the number of shares of any portfolio, but may not decrease the
number of shares of any Portfolio below the number of shares of that
portfolio then outstanding. 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.
- - --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS AND POLICYHOLDERS
- - --------------------------------------------------------------------------------
The Fund will issue unaudited semi-annual reports showing the Fund's
investments and other information, and it will issue annual reports
containing financial statements audited by independent certified public
auditors.
- - --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- - --------------------------------------------------------------------------------
The Prospectus and this Statement of Additional Information do not contain
all the information set forth in the registration statement and exhibits
relating thereto, which the Fund has filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, to which reference is hereby made.
- - --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
The audited financial statements for the Fund included in the Annual Report
to Shareholders dated December 31, 1994, are expressly incorporated by
reference and made a part of this Statement of Additional Information.
Copies of the Annual Report may be obtained free of charge by writing or
calling the Fund.
- - --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- - --------------------------------------------------------------------------------
The Board of Directors has appointed Coopers & Lybrand, L.L.P. as the
Fund's independent accountants for fiscal year 1995. State Street Bank and
Trust Company of Boston, Massachusetts is custodian of the Fund's assets.
First National Bank of Maryland acts as custodian of certain of the Fund's
cash assets.
- - --------------------------------------------------------------------------------
APPENDIX
- - --------------------------------------------------------------------------------
Corporate Bond Ratings Description of 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>
ACACIA CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
CRI
Balanced
INVESTMENT INCOME Portfolio
<S> <C>
Interest Income $ 1,159,038
Dividend income 403,033
Total investment income 1,562,071
Expenses - Note B
Investment advisory fee 261,386
Directors' fees and expenses 16,366
Federal and state registration fees 2,804
Insurance 778
Postage and delivery 469
Printing and stationery 53,035
Professional fees 11,179
Miscellaneous expenses 1,381
___________
Total expenses 347,398
___________
NET INVESTMENT INCOME 1,214,673
___________
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 3,520,511
Net realized gain (loss) on foreign currency (14,982)
-
Change in unrealized appreciation or
depreciation of investments 7,431,304
Change in unrealized appreciation or
depreciation of foreign currency 57
_________
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY 10,936,890
__________
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $12,151,563
___________
___________
</TABLE>
<PAGE>
ACACIA CAPITAL CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES (continued)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
CRI
Balance
Portfolio
<S> <C>
ASSETS
Investments in securities, at value -
see accompanying portfolio $88,721,441
Cash 359
Interest and dividends receivable 469,460
Receivable for shares sold 39,368
Other assets 3,687
__________
Total assets 89,234,315
__________
LIABILITIES
Payable to Calvert Asset Management Company,
Inc. - Note B 69,569
Payable for securities purchased 1,431,283
Payable for shares redeemed 5,483
Accrued expenses and other liabilities 8,852
__________
Total liabilities 1,515,187
__________
Net assets $87,719,128
__________
__________
NET ASSETS
Net assets consist of:
Paid-in capital applicable to 51,873,106
outstanding shares of common stock, $1.00 par
value (70,000,000 shares authorized) 75,589,690
Accumulated net investment income - net
of distributions 1,214,651
Accumulated realized gains (losses) on investments -
net of distributions 2,729,060
Accumulated realized gains (losses) on foreign
currency transactions - net of distributions (14,982)
Net unrealized appreciation (depreciation)
on investments 8,200,652
Net unrealized appreciation (depreciation) on
foreign currency 57
__________
Net assets $87,719,128
___________
___________
NET ASSETS VALUE
Net asset value, offering and redemption price per share
($87,719,128 + 51,873,106) $ 1.691
___________
___________
See notes to finanical statements.
</TABLE>
<PAGE>
Ex-99.17
ACACIA CAPITAL CORPORATION
PART C. OTHER INFORMATION
Item 15. Indemnification
Registrant's Bylaws, Exhibit 2 to this Registration Statement,
provide that officers and directors will be indemnified by the Company
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 a
person who has been adjudged liable of willful misfeasance, bad faith,
gross negligence, or reckless disregard of 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 directors 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 Articles of Incorporation also provide that
Registrant may purchase and maintain liability insurance on behalf of
any officer, director, 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 $3 million in excess directors and officers liability
coverage for the independent trustees/directors only. Registrant also
maintains a $8 million Investment Company Blanket Bond issued by ICI
Mutual Insurance Company, P. O. Box 730, Burlington, Vermont 05402.
Item 16. Exhibits
(1) Restated Articles of Incorporation of Acacia Capital
Corporation, dated 11/21/95 (herewith), and Amendment
to Articles (herewith) -- Exhibit B to the Form N-14
Prospectus/Proxy Statement
(2) By-laws of Acacia Capital Corporation, incorporated
by reference to Pre-Effective Amendment No. 1, dated
8/10/83.
(4) Plan of Reclassification (herewith) -- Exhibit A to
the Form N-14 Prospectus/Proxy Statement
(6) Investment Advisory Agreement and Sub-Investment
Advisory Agreements, incorporated by reference to
Pre-Effective Amendment No. 30, dated April 25, 1995
(7) Underwriting Agreement, incorporated by reference to
Pre-Effective Amendment No. 30, dated April 25, 1995
(8) Director's Deferred Compensation Agreement (herewith)
(9) Custody Agreement, incorporated by reference to
Pre-Effective Amendment No. 1, dated 8/10/83
(11) Opinion and Consent of Counsel (herewith)
(12) Tax Opinion (herewith)
(14) Consent of Independent Auditors to Use of Report
(herewith)
(16) Powers of Attorney (herewith)
(17a) Prospectus of Acquiring Portfolio
(17b) Declaration Pursuant to Rule 24f-2
Exhibits 3, 5, 10, 13 and 15 are omitted because they are inapplicable.
Item 17. Undertakings
Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed on behalf of the Registrant
by the undersigned, thereto duly authorized in the City of Bethesda, and
the State of Maryland on the ___ day of November, 1995.
ACACIA CAPITAL CORPORATION
By:
Clifton S. Sorrell, Jr.
Chairman of the Board
and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities indicated.
Signature Title
Date
Chairman and President 11/21/95
Clifton S. Sorrell, Jr. (Principal Executive Officer)
Principal Accounting Officer 11/21/95
Ronald M. Wolfsheimer
** Director 11/21/95
Charles E. Diehl
** Director 11/21/95
Arthur James Pugh
** Director 11/21/95
Frank H. Blatz, Jr.
**Signed by Susan Walker Bender pursuant to power of attorney, attached
hereto.
<PAGE>
Exhibit 8
DEFERRED COMPENSATION AGREEMENT
Agreement entered into this (date) day of January, 19(year), between
Acacia Capital Corporation, First Variable Rate Fund for Government
Income, Calvert Tax-Free Reserves, The Calvert Fund, Calvert Cash Reserves
(d/b/a Money Management Plus), Calvert Social Investment Fund, Calvert
Municipal Fund, Inc., Calvert New World Fund, Inc., and/or Calvert World
Values Fund, Inc.(hereinafter referred to as the Fund or Funds), and (name
of trustee)(hereinafter referred to as the Trustee).
WHEREAS, the Trustee will be rendering valuable services to the Fund or
Funds as a member of the Board of Trustees, and the Fund or Funds is
willing to accommodate the Trustee's desire to be compensated for such
services on a deferred basis;
NOW, THEREFORE, the parties hereto agree as follows:
1. With respect to services performed by the Trustee for
the Fund or Funds on and after the first day of
(date), 19(year),
the Trustee shall defer (% trustee wants to defer, e.g.,
50% of fees, etc.)% of the amounts otherwise payable to
the Trustee for serving as a Trustee. The deferred
compensation shall be credited to a book reserve
maintained by the Fund or Funds in the Trustee's name
together with credited amounts in the nature of earnings
("Account(s)"). The account maintained for the Trustee
shall be paid to the Trustee on a deferred basis in
accordance with the terms of this Agreement.
2. The Fund or Funds shall credit the Trustee's Account as
of the day such amount would have been paid to the
Trustee if this Agreement were not in effect. Such
Accounts shall be valued at fair market value as of the
last day of the calendar year and such other dates as
are necessary for the proper administration of this
Agreement, and each Trustee shall receive a written
accounting of his account balance(s) following such
valuation.
A Trustee may request that his/her deferred compensation
be allocated among the available Funds or placed in a
money market deposit account. The initial allocation
request may be made at the time of enrollment. Once
made, an investment allocation request shall remain in
effect for all subsequent deferred compensation until
changed by the Trustee. A Trustee may change his/her
investment allocation by submitting a written request to
the Administrator on such form as may be required by the
Administrator or by telephoning the Administrator (or
his/her delegate). Such changes shall become effective
as soon as administratively feasible after the
Administrator receives such request. Although the Funds
intend to invest the deferred compensation according to
the Trustee's requests, it reserves the right to invest
the deferred compensation without regard to such
requests. The Administrator is the Calvert Group, Ltd.
Controller.
3. As of January 31 of the calendar year following the
calendar year the Trustee dies, retires, resigns or
otherwise ceases to be a member of the Board of Trustees
of the Fund or Funds; the Fund or Funds shall: (check
one)
( ) pay the Trustee (or his or her beneficiary) a
lump sum amount equal to the balance in the
Trustee's account on that date or
( ) commence making annual payments to the Trustee
(or his or her beneficiary) for a period of (2
through 15) years.
If the second box is selected, such payments shall be
made on January 31st of each year in approximately equal
annual installments as adjusted and computed by the Fund
or Funds, with the final payment equaling the then
remaining balance in the Trustee's account. If the
balance in the Trustee's account as of the date of the
first scheduled payment is less than $2,000, the Fund or
Funds shall instead pay such amount in a lump sum as of
that date. The Trustee may not select a period of time
which will cause an annual payment to be less than
$1,000. Notwithstanding the foregoing, in the event that
the Trustee ceases to be a Trustee of the Fund or Funds
and becomes a proprietor, officer, partner, employee, or
otherwise becomes affiliated with any business or entity
that is in competition with the Fund or Funds, or
becomes employed by any governmental agency having
jurisdiction over the affairs of the Fund or Funds, the
Fund or Funds reserves the right at the sole discretion
of the Board of Trustees to make an immediate lump sum
payment to the Trustee in an amount equal to the balance
in the Trustee's account at that time.
Notwithstanding the preceding paragraph, the Fund or
Funds may at any time make a lump sum payment to the
Trustee (or surviving beneficiary) equal to a part or
all of the balance in the Trustee's account upon a
showing of a financial emergency caused by circumstances
beyond the control of the Trustee (or surviving
beneficiary) which would result in serious financial
hardship if such payments were not made. The
determination of whether such emergency exists shall be
made at the sole discretion of the Board of Trustees of
the Fund or Funds. The amount of the payment shall be
limited to the amount necessary to meet the financial
emergency, and any remaining balance in the Trustee's
account shall thereafter be paid at the time and in the
manner otherwise set forth in this section.
4. In the event that the Trustee dies before payments have
commenced or been completed under section 3 hereof, the
Fund or Funds shall make payment in accordance with
section 3 to the Trustee's designated beneficiary, who
shall be:
(trustee's designated beneficiary name)
In the event that both the Trustee and the designated
beneficiary have died before the commencement or
completion of payments under section 3, an amount equal
to the then remaining balance in the Trustee's account
(or the portion thereof that would have been payable to
the beneficiary) shall be paid in a lump sum. Such
payment shall be made to the estate of the Trustee
unless payments to the beneficiary have already
commenced, in which case the lump sum payment shall be
made to the estate of the beneficiary.
5. The Agreement shall remain in effect with respect to the
Trustee's compensation for services performed as a
Trustee of the Fund or Funds in all future years unless
terminated on a prospective basis in accordance with
this section. Either the Trustee or the Fund or Funds
may terminate this Agreement by written notice delivered
or mailed to the other party no later than December 31
of the calendar year preceding the calendar year in
which such termination is to take effect. In addition,
the Trustee may alter the amount of deferral for any
future calendar year if the Trustee and the Fund or
Funds enter into an amendment on or before December 31st
of the calendar year preceding the calendar year for
which the amendment is to take effect. The amendment
will be deemed to supersede the amount of deferral for
all future years unless otherwise amended or terminated.
Any termination or new amendment shall relate solely to
compensation for services performed after the
termination or amendment becomes effective and shall not
alter the terms of the agreement with respect to the
deferred payment of compensation for services performed
during any calendar year in which this agreement was in
effect. Notwithstanding the foregoing, the Trustee may
at any time amend the beneficiary designation hereunder
by written notice to the Fund or Funds.
6. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall
create or be construed to create a trust of any kind, or
a fiduciary relationship between the Fund or Funds and
the Trustee, any designated beneficiary or any other
person. Any compensation deferred under the provisions
of this Agreement shall continue for all purposes to be
a part of the general funds of the Fund or Funds. To the
extent that any person acquires a right to receive
payments from the Fund or Funds under this Agreement,
such right shall be no greater than the right of any
unsecured general creditor of the Fund or Funds.
7. The right of the Trustee or any other person to receive
payments under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
8. If the Fund or Funds shall find that any person to whom
any payment is payable under this Agreement is unable to
care for his or her affairs because of illness or
accident, or is a minor, any payment due (unless a prior
claim therefor shall have been made by a duly appointed
guardian, committee or other legal representative) may
be paid to the spouse, a parent, or a brother or sister,
or to any person deemed by the Fund or Funds to have
incurred expense for the person who is otherwise
entitled to payment, in such manner and proportions as
the Fund or Funds may determine. Any such payment shall
serve to discharge the liability of the Fund or Funds
under this Agreement to make payment to the person who
is otherwise entitled to payment.
9. Any written notice to the Fund or Funds referred to in
this Agreement shall be made by mailing or delivering
such notice to the Fund or Funds at 4550 Montgomery
Avenue, Bethesda, MD 20814, to the attention of the
Controller, Calvert Group, Ltd. Any written notice to
the Trustee referred to in this Agreement shall be made
by delivery to the Trustee in person or by mailing such
notice to the Trustee at his or her place of residence
or business address.
10. To the extent required by law, the Fund or Funds shall
withhold federal or state income taxes from any payments
hereunder and shall furnish the Trustee (or beneficiary)
and the applicable governmental agency or agencies with
such reports, statements or information as may be
required in connection with such payments.
11. This Agreement shall be binding upon and inure to the
benefit of the Fund or Funds and its successors and
assigns and the Trustee and his or her heirs, executors,
administrators and legal representative.
12. This Agreement shall be construed in accordance with and
governed by the laws of Maryland.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
Acacia Capital Corporation
First Variable Rate Fund for Government Income
Calvert Tax-Free Reserves
The Calvert Fund
Calvert Cash Reserves (d/b/a Money Management Plus)
Calvert Social Investment Fund
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
By(Name of Trustee)
(Print Name of Trustee)
________________________
(Signature of Trustee)
ACKNOWLEDGMENT:
By (Calvert Officer Signature)
(Signature of Officer)
(Calvert Officer Title)
(Title)
APPLICATION FOR CALVERT GROUP
TRUSTEE DEFERRED COMPENSATION PLAN
1. Instructions
Please complete Sections 2 through 4 below. This application
should be signed by the Trustee and returned to the Controller.
2. Trustee Information (PLEASE PRINT)
Name of Fund: (Name of Fund)
Name of Trustee: (Name of Trustee)
Address of Fund: 4550 Montgomery Ave., Ste. 1000N
Bethesda, MD 20814
3. Investment of Contributions
Contributions to the Calvert Group Trustee's Deferred
Compensation Plan shall be invested in the Calvert Group Funds:
Calvert First Government Money Market Fund %*
CSIF Money Market Portfolio %*
CSIF Managed Growth Portfolio %*
CSIF Equity Portfolio %*
Money Management Plus Prime Portfolio %*
Money Management Plus Government Portfolio %*
Calvert Income Fund %*
Calvert Strategic Growth Fund %*
Calvert U.S. Government Fund %*
Calvert World Values Fund,
Global Equity Portfolio %*
Calvert Capital Accumulation Fund %*
Insured Plus %*
Calvert New Africa Fund _______________%*
Total %
*(insert % up to 100%)
4. Acceptance
Trustee Acceptance: I hereby agree to the terms and conditions of
the Calvert Group Trustee Deferred Compensation Plan. I have read
the prospectus(es) of the chosen Fund(s).
________
Name Date
============================================================================
For office use only
Owner Code: 06 Fund Number: Group ID 284
<PAGE>
Exhibit 11
Ex-99.11
November 21, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 11, Form N-14
Acacia Capital Corporation
File Numbers 811-3591, 2-80154
Ladies and Gentlemen:
As Counsel to Acacia Capital Corporation, it is my opinion,
based upon an examination of the Articles of Incorporation and By-Laws
and such other original or photostatic copies of Fund records,
certificates of proper officials, documents, papers, statutes, and
authorities as I deemed necessary to form the basis of this opinion,
that the securities being registered by this registration statement on
Form N-14 will, when sold, be legally issued, full paid and
non-assessable.
Consent is hereby given to file this opinion of counsel with
the Securities and Exchange Commission as an Exhibit to the
above-referenced Registration Statement.
Sincerely,
Susan Walker Bender
Associate General
Counsel
<PAGE>
Exhibit 12
Ex-99.12
SULLIVAN & WORCESTER
A registered Limited Liability Partnership
November 17, 1995
Calvert Responsibly Invested Bond
Portfolio
Calvert Responsibly Invested
Balanced Portfolio
4550 Montgomery Avenue
Bethesda, Maryland 20814
Re: Acquisition of Assets of Calvert
Responsibly Invested Bond Portfolio
Ladies and Gentlemen:
You have asked for our opinion as to certain tax consequences
of the proposed acquisition of assets of Calvert Responsibly Invested
Bond Portfolio ("Selling Fund"), a series of Acacia Capital Corporation,
a Maryland corporation (the "Company"), by Calvert Responsibly Invested
Balanced Portfolio ("Acquiring Fund"), also a series of the Company, in
exchange for voting shares of Acquiring Fund (the "Reclassification").
In rendering our opinion, we have reviewed and relied upon the
draft Prospectus/Proxy Statement dated November 16, 1995 and the
Agreement and Plan of Reclassification (the "Agreement") dated as of
November 17, 1995. We have relied, without independent verification,
upon the factual statements made therein, and assume that there will be
no change in material facts disclosed therein between the date of this
letter and the date of closing of the Reclassification. We further
assume that the Reclassification will be carried out in accordance with
the Agreement. We have also relied upon the following representations,
each of which has been made to us by officers of the Company on behalf
of Acquiring Fund or of Selling Fund:
A. The Reclassification will be consummated
substantially as described in the Agreement.
B. Acquiring Fund will acquire from Selling Fund
at least 90% of the fair market value of the net assets and at least 70%
of the fair market value of the gross assets held by Selling Fund
immediately prior to the Reclassification. For purposes of this
representation, assets of Selling Fund used to pay reorganization
expenses, cash retained to pay liabilities, and redemptions and
distributions (except for regular and normal distributions) made by
Selling Fund immediately preceding the transfer which are part of the
plan of reorganization, will be considered as assets held by Selling
Fund immediately prior to the transfer.
C. To the best of the knowledge of management of
Selling Fund, there is no plan or intention on the part of the
shareholders of Selling Fund to sell, exchange, or otherwise dispose of
a number of Acquiring Fund shares received in the Reclassification that
would reduce the former Selling Fund shareholders' ownership of
Acquiring Fund shares to a number of shares having a value, as of the
date of the Reclassification (the "Closing Date"), of less than 50
percent of the value of all of the formerly outstanding shares of
Selling Fund as of the same date. For purposes of this representation,
Selling Fund shares exchanged for cash or other property will be treated
as outstanding Selling Fund shares on the Closing Date. There are no
dissenters' rights in the Reclassification, and no cash will be
exchanged for Selling Fund shares in lieu of fractional shares of
Acquiring Fund. Moreover, shares of Selling Fund and shares of
Acquiring Fund held by Selling Fund shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the Reclassification
will be considered in making this representation, except for shares of
Selling Fund or Acquiring Fund redeemed in the ordinary course of
business of Selling Fund or Acquiring Fund in accordance with the
requirements of section 22(e) of the Investment Company Act of 1940.
D. Selling Fund has not redeemed and will not
redeem the shares of any of its shareholders in connection with the
Reclassification except to the extent necessary to comply with its legal
obligation to redeem its shares.
E. The management of Acquiring Fund has no plan
or intention to redeem or reacquire any of the Acquiring Fund shares to
be received by Selling Fund shareholders in connection with the
Reclassification, except to the extent necessary to comply with its
legal obligation to redeem its shares.
F. The management of Acquiring Fund has no plan
or intention to sell or dispose of any of the assets of Selling Fund
which will be acquired by Acquiring Fund in the Reclassification, except
for dispositions made in the ordinary course of business, and to the
extent necessary to enable Acquiring Fund to comply with its legal
obligation to redeem its shares.
G. Following the Reclassification, Acquiring
Fund will continue the historic business of Selling Fund in a
substantially unchanged manner as part of the regulated investment
company business of Acquiring Fund, or will use a significant portion of
Selling Fund's historic business assets in a business.
H. There is no intercorporate indebtedness
between Acquiring Fund and Selling Fund.
I. Acquiring Fund does not own, directly or
indirectly, and has not owned in the last five years, directly or
indirectly, any shares of Selling Fund. Acquiring Fund will not acquire
any shares of Selling Fund prior to the Closing Date.
J. Acquiring Fund will not make any payment of
cash or of property other than shares to Selling Fund or to any
shareholder of Selling Fund in connection with the Reclassification.
K. Pursuant to the Agreement, the shareholders
of Selling Fund will receive solely Acquiring Fund voting shares in
exchange for their voting shares of Selling Fund.
L. The fair market value of the Acquiring Fund
shares to be received by the Selling Fund shareholders will be
approximately equal to the fair market value of the Selling Fund shares
surrendered in exchange therefor.
M. Subsequent to the transfer of Selling Fund's
assets to Acquiring Fund pursuant to the Agreement, Selling Fund will
distribute the shares of Acquiring Fund, together with other assets it
may have, in final liquidation as expeditiously as possible.
N. Selling Fund is not under the jurisdiction of
a court in a Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code").
O. Selling Fund is treated as a corporation for
federal income tax purposes and at all times in its existence has
qualified as a regulated investment company, as defined in Section 851 of the
Code.
P. Acquiring Fund is treated as a corporation
for federal income tax purposes and at all times in its existence has
qualified as a regulated investment company, as defined in Section 851 of the
Code.
Q. The sum of the liabilities of Selling Fund to
be assumed by Acquiring Fund and the expenses of the Reclassification
does not exceed twenty percent of the fair market value of the assets of
Selling Fund.
R. The foregoing representations are true on the
date of this letter and will be true on the date of closing of the
Reclassification.
Based on and subject to the foregoing, and our examination of
the legal authority we have deemed to be relevant, it is our opinion
that for federal income tax purposes:
1. The acquisition by Acquiring Fund of substantially all of
the assets of Selling Fund solely in exchange for voting shares of
Acquiring Fund followed by the distribution by Selling Fund of said
Acquiring Fund shares to the shareholders of Selling Fund in exchange
for their Selling Fund shares will constitute a reorganization within
the meaning of Section 368(a)(1)(C) of the Code, and Acquiring Fund and
Selling Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code.
1. No gain or loss will be recognized to Selling Fund
upon the transfer of substantially all of its assets to Acquiring Fund
solely in exchange for Acquiring Fund voting shares and assumption by
Acquiring Fund of certain identified liabilities of Selling Fund, or
upon the distribution of such Acquiring Fund voting shares to the
shareholders of Selling Fund in exchange for all of their Selling Fund
shares.
2. No gain or loss will be recognized by Acquiring Fund
upon the receipt of the assets of Selling Fund (including any cash
retained initially by Selling Fund to pay liabilities but later
transferred) solely in exchange for Acquiring Fund voting shares and
assumption by Acquiring Fund of certain identified liabilities of
Selling Fund.
3. The basis of the assets of Selling Fund acquired by
Acquiring Fund will be the same as the basis of those assets in the
hands of Selling Fund immediately prior to the transfer, and the holding
period of the assets of Selling Fund in the hands of Acquiring Fund will
include the period during which those assets were held by Selling Fund.
4. The shareholders of Selling Fund will recognize no
gain or loss upon the exchange of all of their Selling Fund shares
solely for Acquiring Fund voting shares. Gain, if any, will be realized
by Selling Fund shareholders who in exchange for their Selling Fund
shares receive other property or money in addition to Acquiring Fund
shares, and will be recognized, but not in excess of the amount of cash
and the value of such other property received. If the exchange has the
effect of the distribution of a dividend, then the amount of gain
recognized that is not in excess of the ratable share of undistributed
earnings and profits of Selling Fund will be treated as a dividend.
5. The basis of the Acquiring Fund voting shares to be
received by the Selling Fund shareholders will be the same as the basis
of the Selling Fund shares surrendered in exchange therefor.
6. The holding period of the Acquiring Fund voting
shares to be received by the Selling Fund shareholders will include the
period during which the Selling Fund shares surrendered in exchange
therefor were held, provided the Selling Fund shares were held as a
capital asset on the date of the exchange.
This opinion letter is delivered to you in satisfaction of the
requirements of Paragraph III.D. of the Agreement. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement
on Form N-14 and to use of our name and any reference to our firm in the
Registration Statement or in the Prospectus/Proxy Statement constituting
a part thereof. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
SULLIVAN & WORCESTER
A Registered Limited Liability Partnership
<PAGE>
Exhibit 14
Ex-99.14
COOPERS Coopers & Lybrand L.L.P.
& LYBRAND
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the following with respect to the registration of
securities on Form N-14 under the securities Act of 1933, relative to
the transfer of all the assets and liabilities of the Acacia Capital
Corporation Calvert Responsibly Invested ("CRI") Bond Portfolio to the
Acacia Capital Corporation CRI Balanced Portfolio in exchange for shares
of CRI Balanced Portfolio.
1. The incorporation by reference of our report dated February
17, 1995 on our audits of the financial statements and financial
highlights of Acacia Capital Corporation CRI Balanced and
Bond Portfolios which report is included in the Annual Report to
Shareholders for the year ended December 31, 1994, in the Statement of
Additional Information of Acacia Capital Corporation's Calvert
Responsibly Invested Portfolios, dated May 1, 1995.
2. The reference to our Firm under the heading "Financial
Statements and Experts".
3. The reference to our Firm under the heading "Independent
Accountants and Custodians" in the Statement of Additional Information
of Acacia Capital Corporation's Calvert Responsibly Invested Portfolios,
dated May 1, 1995.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
November 22, 1995
Coopers & Lybrand L.L.P., a registered limited liability partnership, is
a member firm of Coopers & Lybrand International.
<PAGE>
Exhibit 16
Ex-99.16
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
November 21, 1995 Clifton S. Sorrell
Date Signature
Donald K. Sorrell Clifton S. Sorrell
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
November 21, 1995 Charles E. Diehl
Date Signature
Yvonne Diehl Charles E. Diehl
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
November 21, 1995 Arthur J. Pugh
Date Signature
Sharon H. Pugh Arthur J. Pugh
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
November 21, 1995 South Trimble, III
Date Signature
Mary P. Walls South Trimble, III
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
November 21, 1995 Frank H. Blatz, Jr.
Date Signature
Elizabeth T. Murray Frank H. Blatz, Jr.
Witness Name of Director
<PAGE>
Exhibit 17(a)
Ex-99.17
PROSPECTUS - May 1, 1995
ACACIA CAPITAL CORPORATION'S
CALVERT RESPONSIBLY INVESTED PORTFOLIOS
4550 Montgomery Avenue, Bethesda, Maryland 20814 (800) 368-2748
Acacia Capital Corporation (the "Fund") is an open-end
management investment company with a series of portfolios designed to
meet a wide range of investment objectives. This prospectus provides
information about the Fund's seven Calvert Responsibly Invested ("CRI")
Portfolios ("Portfolios"), which seek to achieve competitive returns
while encouraging responsible corporate conduct. The Portfolios look
for enterprises that make a significant contribution to society through
their products and services and through the way they do business.
The Calvert Responsibly Invested Capital Accumulation
Portfolio ("CRI Capital Accumulation") (formerly the Calvert-Ariel
Appreciation II Portfolio), seeks long-term capital appreciation by
investing primarily in a nondiversified portfolio of the equity
securities of small- to medium-sized companies.
The Calvert Responsibly Invested Bond Portfolio ("CRI Bond")
invests primarily in corporate bonds and other straight debt securities.
The Calvert Responsibly Invested Equity Portfolio ("CRI
Equity") maintains an actively managed portfolio of stocks.
The Calvert Responsibly Invested Balanced Portfolio ("CRI
Balanced") (formerly known as the Calvert Responsibly Invested
Portfolio or Calvert Socially Responsible Series) maintains an actively
managed nondiversified portfolio of stocks, bonds and money market
instruments.
The Calvert Responsibly Invested Global Equity Portfolio ("CRI
Global") seeks to achieve a high total return consistent with
reasonable risk by investing primarily in a globally diversified
portfolio.
The Calvert Responsibly Invested Money Market Portfolio ("CRI
Money Market") invests in money market instruments, including
repurchase agreements with banks and brokers secured by money market
instruments, and seeks to maintain a constant net asset value of $1.00
per share.
The Calvert Responsibly Invested Strategic Growth Portfolio
("CRI Strategic Growth") invests in a nondiversified portfolio of
equity securities while protecting against market declines using
techniques such as establishing short positions, writing covered calls,
and entering into index future or option contracts.
There can be no assurance that the Portfolios will be successful in
meeting their investment objectives, or that the Money Market Portfolio
will maintain a constant net asset value of $1.00 per share. An
investment in the Portfolios is neither insured nor guaranteed by the
U.S. government.
This Prospectus sets forth basic information about the
Responsibly Invested Portfolios that a prospective investor should know
before investing and should be read and retained for future reference.
A Statement of Additional Information about the Fund (dated May 1,
1995, and incorporated by reference into this Prospectus) has been
filed with the Securities and Exchange Commission and may be obtained
free of charge by writing or calling the Fund at the address or
telephone number listed above. Shares of the Fund are offered only to
insurance companies for allocation to certain of their variable
separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
- - ------------------------------------------------------------------------
THE FUND
- - ------------------------------------------------------------------------
Acacia Capital Corporation (the "Fund") was incorporated in
Maryland on September 27, 1982, and is an open-end management
investment company registered under the Investment Company Act of 1940,
as amended. The Fund has seven Responsibly Invested Portfolios designed
to provide opportunities for investing in enterprises that make a
significant contribution to society through their products and services
and through the way they do business. With regard to CRI Capital
Accumulation, Bond, Equity, Global, Balanced, Money Market, and
Strategic Growth, shares are sold to National Home Life Assurance
Company for allocation to its separate accounts to fund the benefits
under certain variable annuity and variable life insurance policies.
Shares of the different Portfolios may also be also sold to other
insurance companies for the same purpose. In this prospectus, National
Home Life Assurance Company and the other applicable companies may be
referred to as the "Insurance Companies," and the variable annuity and
variable life insurance policies may be referred to as the "Policies."
Shares of the Fund may only be sold to the Insurance Companies
for their separate accounts, and not to individual investors. As such,
the "shareholders" referred to in this prospectus are the Insurance
Companies. Nevertheless, as a policyholder you have an opportunity to
choose among the various Portfolios in order to fund the benefits under
any Policies you purchase, subject to any limitations described in the
Insurance Companies' prospectuses. In determining which portfolios to
choose, you should bear in mind that the investment return of each
portfolio will affect the value of the policy and the amount of annuity
payments or life insurance benefits you will receive under your Policy.
The Insurance Companies' prospectuses explain the relationship between
changes in the net asset value of Fund shares and the benefits provided
under a policy. The prospectuses also detail your interests as a
policyholder in the shares of the separate account and your ability to
determine the type of investment underlying the Policy. You should
carefully review the appropriate prospectus when you consider buying a
Policy.
- - ------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - ------------------------------------------------------------------------
The following tables provide information about the Fund's
financial history. They express the information in terms of a single
share outstanding throughout each period. The tables have been audited
by those independent accountants whose reports are included in the
Fund's Annual Report to Shareholders, for each of the respective
periods presented. The tables should be read in conjunction with the
financial statements and their related notes. The current Annual Report
to Shareholders is incorporated by reference into the Statement of
Additional Information.
<TABLE>
<CAPTION>
CRI Balanced (formerly, CRI Managed Growth) Year Ended December 31,
1994 1993
<S> <C> <C>
------------------------------------
------------------------------------
Net asset value, beginning of period $1.537 $1.465
Income from investment operations
Net investment income .046 .045
Net realized and unrealized gain
(loss) on investments (.097) .072
Total from investment operations
(.051) .117
Distributions to shareholders
Dividends from net investment income
(.046) (.045)
Total distributions (.046) (.045)
Total increase (decrease) in net asset value (.097) .072
Net asset value, end of period $ 1.440 $ 1.537
Total return<F1> (3.30)% 8.00%
Ratio of expenses to average net assets .80% .81%
Ratio of net income to average net assets 3.39% 3.69%
Increase reflected in net income ratio due
to expense reimbursement -- --
Portfolio turnover 43% 14%
Net assets, end of period $66,592,680 $53,999,759
Number of shares outstanding at end of
period (in thousands) 46,244 35,142
<FN>
<F1>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989 .
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Balanced (formerly, CRI Managed Growth) Year Ended December 31,
1992 1991
<S> <C> <C>
Net asset value, beginning of period $ 1.403 $ 1.249
Income from investment operations
Net investment income .044 .050
Net realized and unrealized gain on
investments .062 .154
Total from investment operations
.106 .204
Distributions to shareholders
Dividends from net investment income
(.044) (.050)
Total distributions (.044) (.050)
Total increase in net asset value .062 .154
Net asset value, end of period $ 1.465 $ 1.403
Total return<F3> 7.61% 16.40%
Ratio of expenses to average net assets .85% .85%
Ratio of net income to average net assets 4.05% 4.49%
Increase reflected in net income ratio due
to expense reimbursement -- --
Portfolio turnover 15% 12%
Net assets, end of period $28,471,358 $14,945,973
Number of shares outstanding at end of
period (in thousands) 19,433 10,656
<FN>
<F3>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Balanced (formerly, CRI Managed Growth) Year Ended December 31,
1990
<S> <C>
Net asset value, beginning of period $ 1.247
Income from investment operations
Net investment income .050
Net realized and unrealized gain on
investments .002
Total from investment operations
.052
Distributions to shareholders
Dividends from net investment income
(.050)
Total distributions (.050)
Total increase in net asset value .002
Net asset value, end of period $ 1.249
Total return<F4> 4.18%
Ratio of expenses to average net assets .77%
Ratio of net income to average net assets 5.69%
Increase reflected in net income ratio due
to expense reimbursement --
Portfolio turnover 11%
Net assets, end of period $6,759,546
Number of shares outstanding at end of
period (in thousands) 5,410
<FN>
<F4>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Balanced (formerly, CRI Managed Growth)
Year Ended December 31,
1989 1988
<S> <C> <C>
Net asset value, beginning of period $ 1.068 $ 1.004
Income from investment operations
Net investment income .042 .054
Net realized and unrealized gain
(loss) on investments .179 .064
Total from investment operations
.221 .118
Distributions to shareholders
Dividends from net investment income
(.042) (.054)
Total distributions (.042) (.054)
Total increase (decrease) in net asset value
.179 .064
Net asset value, end of period $ 1.247 $ 1.068
Total return<F5> 20.69% 11.75%
Ratio of expenses to average net assets
.50% .50%
Ratio of net income to average net assets
4.85% 4.95%
Increase reflected in net income ratio due
to expense reimbursement .46% .30%
Portfolio turnover 28% 40%
Net assets, end of period $2,572,761 $1,293,692
Number of shares outstanding at end of
period (in thousands) 2,064 1,211
<FN>
<F5>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Balanced (formerly, CRI Managed Growth)
Year Ended December 31,
1987 1986
<S> <C> <C>
Net asset value, beginning of period $ 0.958 $ 1.000
Income from investment operations
Net investment income .019 .010
Net realized and unrealized gain
(loss) on investments .046 (.042)
Total from investment operations
.065 (.032)
Distributions to shareholders
Dividends from net investment income
(.019) (.010)
Total distributions (.019) (.010)
Total increase (decrease) in net asset value
.046 (.042)
Net asset value, end of period $ 1.004 $ 0.958
Total return<F5> 6.78% 3.31%
Ratio of expenses to average net assets
.50% .10%(a)
Ratio of net income to average net assets
3.72% 1.59%(a)
Increase reflected in net income ratio due
to expense reimbursement .82% 1.41%(a)
Portfolio turnover 17% --
Net assets, end of period $1,022,484 $143,745
Number of shares outstanding at end of
period (in thousands) 1,018 150
<FN>
<F5>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Capital Accumulation Portfolio (formerly
known as CRI Ariel)
Year Ended December 31,
-----------------------------
1994 1993
<S> <C> <C>
Net asset value, beginning of period $ 18.95 $ 17.87
Income from investment operations
Net investment income .10 .08
Net realized and unrealized gain (loss) on
investments (1.98) 1.27
Total from investment operations
(1.88) 1.35
Distributions to shareholders
Dividends from net investment income
(.10) (.08)
Distribution from capital gains -- (.19)
Total distributions (.10) (.27)
Total increase (decrease) in net asset value (1.98) 1.08
Net asset value, end of period $ 16.97 $ 18.95
Total return<F6> (9.92)% 7.56%
Ratio of expenses to average net assets .79% .80%
Ratio of net income to average net assets .68% .66%
Increase reflected in net income ratio due to
expense reimbursement -- --
Portfolio turnover 79% 2
Net assets, end of period $5,688,821 $4,986,223
Number of shares outstanding at end of period
(in thousands) 335 263
<FN>
<F6>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Capital Accumulation Portfolio (formerly
known as CRI Ariel)
Year Ended December 31,
-----------------------------------
1992 1991
<S> <C> <C>
Net asset value, beginning of period $ 15.82 $ 15.00
Income from investment operations
Net investment income .09 .26
Net realized and unrealized gain (loss) on
investments 2.09 .82
Total from investment operations
2.18 1.08
Distributions to shareholders
Dividends from net investment income
(.09) (.26)
Distribution from capital gains (.04) --
Total distributions (.13) (.26)
Total increase (decrease) in net asset value 2.05 .82
Net asset value, end of period $ 17.87 $ 15.82
Total return<F6> 13.73% 7.25%
Ratio of expenses to average net assets .39% --
Ratio of net income to average net assets 1.19% .84%(a)
Increase reflected in net income ratio due to
expense reimbursement .87% 4.23%(a)
Portfolio turnover 2% 5%
Net assets, end of period $870,066 $268,040
Number of shares outstanding at end of period
(in thousands) 49 17
<FN>
<F6>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Money Market
Year Ended Year Ended
December 31, 1994 December 31,
1993
<S> <C> <C>
Net asset value, beginning of period $ 1.000 $ 1.000
Income from investment operations
Net investment income .039 .031
Total from investment operations
.039 .031
Distributions to shareholders
Dividends from net investment income
(.039) (.031)
Distribution from capital gains -- --
Total distributions (.039) (.031)
Total increase in net asset value -- --
Net asset value, end of period $ 1.000 $ 1.000
Total return<F7> 3.96% 3.09%
Ratio of expenses to average net assets .45% --
Ratio of net income to average net assets 3.91% 3.07%
Increase reflected in net income ratio due to
expense reimbursement .36% .11%
Net assets, end of period $6,479,015 $4,031,520
Number of shares outstanding at end of period
(in thousands) 6,484 4,032
<FN>
<F7>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1994.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Money Market From inception (June
30, 1992) to Dec.
31, 1992
<S> <C>
Net asset value, beginning of period $ 1.000
Income from investment operations
Net investment income .009
Total from investment operations
.009
Distributions to shareholders
Dividends from net investment income
(.009)
Distribution from capital gains --
Total distributions (.009)
Total increase in net asset value --
Net asset value, end of period $ 1.000
Total return<F7> 2.11%(a)
Ratio of expenses to average net assets --
Ratio of net income to average net assets 3.02%(a)
Increase reflected in net income ratio due to
expense reimbursement .85%(a)
Net assets, end of period $ 1,795,231
Number of shares outstanding at end of period
(in thousands) 1,795
<FN>
<F7>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1994.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Bond
Year Ended Year Ended
December 31, 1994 December 31,
1993
<S> <C> <C>
Net asset value, beginning of period $ 15.98 $ 15.10
Income from investment operations
Net investment income .81 .50
Net realized and unrealized gain (loss) on
investments 1.36 .91
Total from investment operations
2.17 1.41
Distributions to shareholders
Dividends from net investment income
(.81) (.50)
Distribution from capital gains -- (.03)
Total distributions (.81) (.53)
Total increase (decrease) in net asset value (1.36) .88
Net asset value, end of period $14.62 $ 15.98
Total return<F8> (3.45)% 9.32%
Ratio of expenses to average net assets .62% --
Ratio of net income to average net assets 5.20% 5.24%
Increase reflected in net income ratio due to
expense reimbursement .30% .13%
Portfolio turnover 12% 57%
Net assets, end of period $1,403,375 $1,627,261
Number of shares outstanding at end of period
(in thousands) 96 102
<FN>
<F8>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Bond From inception (June
30, 1992) to Dec.
31, 1992
<S> <C>
Net asset value, beginning of period $ 15.00
Income from investment operations
Net investment income .09
Net realized and unrealized gain (loss) on
investments .10
Total from investment operations
.19
Distributions to shareholders
Dividends from net investment income
(.09)
Distribution from capital gains --
Total distributions (.09)
Total increase (decrease) in net asset value .10
Net asset value, end of period $ 15.10
Total return<F8> 1.33%
Ratio of expenses to average net assets --
Ratio of net income to average net assets 5.23%(a)
Increase reflected in net income ratio due to
expense reimbursement 2.06%(a)
Portfolio turnover % 56%
Net assets, end of period $125,633
Number of shares outstanding at end of period
(in thousands) 8
<FN>
<F8>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Equity
Year Ended Year Ended
December 31, 1994 December 31,
1993
<S> <C> <C>
Net asset value, beginning of period $ 17.06 $ 16.56
Income from investment operations
Net investment income .20 .25
Net realized and unrealized gain (loss) on
investments 1.83 .50
Total from investment operations
2.03 .75
Distributions to shareholders
Dividends from net investment income
(.20) (.25)
Distribution from capital gains -- --
Total distributions (.20) (.25)
Total increase (decrease) in net asset value (1.83) .50
Net asset value, end of period $ 15.23 $ 17.06
Total return<F9> (9.58)% 4.54%
Ratio of expenses to average net assets .57% --
Ratio of net income to average net assets 1.36% 2.08%
Increase reflected in net income ratio due to
expense reimbursement .42% .12%
Portfolio turnover 115% 4%
Net assets, end of period $2,762,295 $2,526,608
Number of shares outstanding at end of period
(in thousands) 176 148
<FN>
<F9>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Equity From inception (June
30, 1992) to Dec.
31, 1992
<S> <C>
Net asset value, beginning of period $ 15.00
Income from investment operations
Net investment income .05
Net realized and unrealized gain (loss) on
investments 1.56
Total from investment operations
1.61
Distributions to shareholders
Dividends from net investment income
(.05)
Distribution from capital gains --
Total distributions (.05)
Total increase (decrease) in net asset value 1.56
Net asset value, end of period $ 16.56
Total return<F9> 10.57%
Ratio of expenses to average net assets --
Ratio of net income to average net assets 2.75%(a)
Increase reflected in net income ratio due to
expense reimbursement 2.31%(a)
Portfolio turnover 7%
Net assets, end of period $127,727
Number of shares outstanding at end of period
(in thousands) 8
<FN>
<F9>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Global Equity
Year Ended Year Ended
December 31, 1994 December 31,
1993
<S> <C> <C>
Net asset value, beginning of period $ 17.72 $ 14.57
Income from investment operations
Net investment income .11 .11
Net realized and unrealized gain (loss) on
investments (.49) 4.07
Total from investment operations
(.38) 4.18
Distributions to shareholders
Dividends from net investment income
(.13) (.08)
Distribution from capital gains (1.32) (.95)
Total distributions (1.45) (1.03)
Total increase (decrease) in net asset value
(1.83) 3.15
Net asset value, end of period $ 15.89 $ 17.72
Total return<F10> (2.13)% 29.72%
Ratio of expenses to average net assets 1.24% .94%
Ratio of net income to average net assets .59% 1.00%
Increase reflected in net income ratio due to
expense reimbursement .29% .10%
Portfolio turnover 84% 64%
Net assets, end of period $7,764,720 $4,529,297
Number of shares outstanding at end of period
(in thousands) 489 256
<FN>
<F10>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Global Equity From inception (June
30, 1992) to Dec.
31, 1992
<S> <C>
Net asset value, beginning of period $ 15.00
Income from investment operations
Net investment income (.02)
Net realized and unrealized gain (loss) on
investments (.41)
Total from investment operations
(.43)
Distributions to shareholders
Dividends from net investment income
--
Distribution from capital gains --
Total distributions --
Total increase (decrease) in net asset value
(.43)
Net asset value, end of period $ 14.57
Total return<F10> (3.27)%
Ratio of expenses to average net assets .98%(a)
Ratio of net income to average net assets (.98)%(a)
Increase reflected in net income ratio due to
expense reimbursement 1.07%(a)
Portfolio turnover --
Net assets, end of period $235,701
Number of shares outstanding at end of period
(in thousands) 16
<FN>
<F10>Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES OF THE
CALVERT RESPONSIBLY INVESTED PORTFOLIOS
Each of the Calvert Responsibly Invested Portfolios has different investment
objectives, as described below. The Portfolios seek to achieve their stated
objectives by following the investment policies established for that purpose.
The investment returns and degrees of market and financial risk depend on the
types of investments each Portfolio undertakes to make as established by its
policies. These objectives may not be changed without the approval of the
holders of a majority of the outstanding shares of each Portfolio affected by
the proposed change, except that CRI Capital Accumulation, CRI Strategic Growth,
and CRI Balanced may change their investment objectives upon thirty days' (sixty
days' for CRI Balanced) written notice to shareholders without a shareholder
vote. As a Policyholder, you may be given an opportunity to indicate how you
believe the Insurance Company should vote the shares of the portfolios you have
selected to underlie your Policy.
The Calvert Responsibly Invested Portfolios are designed to provide growth of
capital or current income by investing in enterprises that make a significant
contribution to society through their products and services and through the way
they do business. CRI Balanced is designed for long-term investment, while CRI
Money Market aims for short-term cash management and stability of principal. CRI
Equity is designed for capital growth, and CRI Bond is designed for current
income and preservation of capital. CRI Capital Accumulation seeks long-term
capital appreciation. CRI Global seeks total return through a globally
diversified investment portfolio, and CRI Strategic Growth seeks long-term
growth.
CRI MONEY MARKET seeks to provide the highest level of current income,
consistent with liquidity, safety and security of capital, by investing in money
market instruments, including repurchase agreements with recognized securities
dealers and banks secured by such instruments, selected in accordance with the
Portfolios' investment and social criteria. CRI Money Market attempts to
maintain a constant net asset value of $1.00 per share.
CRI Money Market invests only in high grade, short-term money market instruments
which may include: obligations issued or guaranteed as to principal by the
United States Government, its agencies and instrumentalities; U.S.
dollar-denominated certificates of deposit, time deposits and bankers'
acceptances of U.S. banks, generally banks with assets in excess of $1 billion;
and commercial paper (including participation interests in loans extended by
banks to issuers of commercial paper) that at the date of investment is rated
A-1 by Standard & Poor's Corporation or Prime-1 by Moody's Investors Service,
Inc., or, if not rated, is of comparable quality.
CRI BALANCED seeks to achieve a total return above the rate of inflation through
an actively managed portfolio of stocks, bonds and money market instruments
(including repurchase agreements secured by such instruments) selected with a
concern for the investment and social impact of each investment. It is not the
policy of the Portfolio to take risks to obtain speculatively or aggressively
high returns. There is no predetermined percentage of assets allocated to
stocks, bonds or money market instruments, although, as an operating policy, the
CRI Balanced Portfolio will have at least 25% of its assets in fixed income
senior securities. The Portfolio's Subadvisor, NCM Capital Management Group,
Inc., selects each investment, subject to direction and control by the Fund's
Advisor and Board of Directors. The Investment Advisors determine the mix for
CRI Balanced depending on their view of market conditions and the economic
outlook.
CRI Balanced may purchase both common and preferred stock. For its fixed-income
investments, the Portfolio normally invests in bonds which are considered
investment grade, including bonds which are direct or indirect obligations of
the U.S. Government, or which at the date of investment are rated AAA, AA, A, or
BBB by Standard & Poor's Corporation or Aaa, Aa, A, or Baa by Moody's Investors
Service Inc. Bonds rated Baa or BBB are considered medium grade obligations and
possess speculative characteristics. The Portfolio may purchase lower-rated
obligations but no more than 20% of its assets may be invested in obligations
rated lower than B. The Portfolio may purchase without limitation bonds which
are unrated but of comparable quality to bonds rated B or better as determined
by the Advisors under the supervision of the Board of Directors. See
"Non-Investment Grade Debt Securities" and the Statement of Additional
Information for additional information concerning bond ratings.
The Portfolio may invest in foreign securities, including emerging markets, to a
limited extent. See "Risks of Foreign Securities."
CRI EQUITY seeks growth of capital through investment in the equity securities
of issuers within industries perceived to offer opportunities for potential
capital appreciation and which satisfy the Fund's investment and social
criteria. The Portfolio is neither speculative nor conservative in its
investment policies and will take reasonable risks in seeking to achieve its
investment objective of growth of capital.
CRI Equity normally invests at least 80% of the value of its net assets in
equity securities. Such securities include common stocks, convertible securities
and preferred stocks. The Portfolio does not currently hold or intend to invest
more than 5% of its assets in non-investment grade debt securities. For
liquidity purposes or pending the investment of the proceeds of the sale of its
shares, the Equity Portfolio may invest up to 20% of the value of its assets in
money market instruments, including: obligations of the U.S. Government, its
agencies and instrumentalities; certificates of deposit of banks having total
assets of at least one billion dollars; and commercial paper or other corporate
notes of investment grade quality. Such securities may be purchased subject to
repurchase agreements with recognized securities dealers and banks. If CRI
Equity has assumed a temporary defensive posture, there is no limitation on the
percentage of its assets which may be invested in money market instruments.
The Portfolio may invest in foreign securities, including emerging markets, to a
limited extent. See "Risks of Foreign Securities."
CRI BOND seeks to provide as high a level of current income as is consistent
with prudent investment risk and preservation of capital through investment in
bonds and other straight debt securities, selected pursuant to the Portfolio's
investment and social criteria. CRI Bond is neither speculative nor conservative
in its investment policies and will take reasonable risks in seeking to achieve
its investment objective of current income and preservation of capital. Debt
securities may be long-term, intermediate-term, short-term, or any combination
thereof, depending on the Advisors' evaluation of current and anticipated market
patterns and trends; the Advisors expect that the Portfolio's average weighted
maturity will range between 5 and 20 years. The value of the Portfolio generally
will vary inversely with changes in interest rates.
In seeking to achieve these objectives, it is anticipated that under normal
conditions CRI Bond will invest at least 80% of the value of its assets in
publicly-traded straight debt securities which have a rating within the four
highest grades as determined by a nationally recognized rating service such as
Standard & Poor's Corporation or Moody's Investors Service, Inc.; obligations
issued or guaranteed by the United States Government or its agencies or
instrumentalities; or cash and cash equivalents. Up to 20% of the Portfolio's
total assets may be invested in straight debt securities which are not rated
within the four highest grades as described above (including unrated
securities), in convertible debt securities, convertible preferred and preferred
stocks, or other securities. CRI Bond does not currently hold or intend to
invest more than 5% of its assets in non-investment grade securities. See
"Non-Investment Grade Debt Securities" and the Statement of Additional
Information for additional information concerning bond ratings.
CRI GLOBAL seeks to provide a high total return consistent with reasonable risk
by investing primarily in a globally diversified portfolio of equity securities.
All investments are screened for financial and social criteria. It may engage in
hedging transactions involving options, futures contracts and foreign currency
transactions to reduce its risk exposure (see "Investment Techniques").
Under normal circumstances, CRI Global will invest at least 65% of its assets in
equity securities. The Portfolio will invest primarily in common stocks of
established foreign and U.S. companies believed to have potential for capital
growth, income or both. However, it may invest in any other type of security
including, but not limited, to convertible securities, preferred stocks, bonds,
notes and other debt securities of companies (including Euro-currency
instruments and securities), or of any international agency (such as the Asian
Development Bank or Inter-American Development Bank) or obligations of domestic
or foreign governments and their political subdivisions, and in foreign currency
transactions. The Portfolio may establish and maintain reserves for temporary
defensive purposes or to enable it to take advantage of buying opportunities.
CRI Global's reserves may be invested in domestic as well as foreign short-term
money market instruments including, but not limited to, government obligations,
certificates of deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt securities and repurchase and reverse repurchase
agreements. The Portfolio may also engage in certain options transactions, and
enter into futures contracts and related options for hedging purposes and lend
portfolio securities. See "Additional Fundamental Investment Policies, Risks of
Foreign Securities, Foreign Currency Transactions, and Additional
Non-Fundamental Investment Policies."
Under normal circumstances, CRI Global will invest at least 65% of its assets in
the securities of issuers in no less than three countries, one of which may be
the USA. Under normal circumstances, business activities in a number of
different foreign countries will be represented in the Portfolio's investments.
The Portfolio may, from time to time, have more than 25% of its assets invested
in any major industrial or developed country which in the the view of the
Subadvisor poses no unique investment risk. Under exceptional economic or market
conditions, CRI Global may invest substantially all of its assets in only one or
two countries, or in U.S. government obligations or securities of companies
incorporated in and having their principal activities in the U.S.
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. The Portfolio may make
investments in developing countries, which involve exposure to economic
structures that are generally less diverse and mature than in the United States,
and to political systems which may be less stable. A developing country can be
considered to be a country which is in the initial stages of its
industrialization cycle. In the past, markets of developing countries have been
more volatile than the markets of developed countries; however, such markets
often have provided higher long-term rates of return to investors. The
Subadvisor believes that these characteristics can be expected to continue in
the future.
Generally, CRI Global will not trade in securities for short-term profits, but,
when circumstances warrant, securities may be sold without regard to the length
of time held. The Portfolio may write covered call options and purchase call and
put options on securities and security indices, and may write secured put
options and enter into option transactions on foreign currency. It may also
engage in transactions in financial futures contracts and related options for
hedging purposes, and invest in repurchase agreements. These investment
techniques and the related risks are summarized below and are described in more
detail in the Statement of Additional Information.
CRI Global may purchase unrated debt instruments, if the Advisor or Subadvisor
determines they are of comparable quality to permissible rated instruments.
Although the Portfolio may invest up to 5% of its assets in non-investment grade
bonds (those rated below BBB by Standard & Poor's or equivalent), it does not
intend to purchase any such bonds unless the instrument provides an opportunity
to invest in an attractive company in which an equity investment is not
currently available or desirable. Non-investment grade bonds are commonly
referred to as "junk bonds." (See "Non-Investment Grade Debt Securities.")
CRI CAPITAL ACCUMULATION seeks to provide long-term capital appreciation by
investing primarily in a nondiversified portfolio of the equity securities of
small- to mid-sized companies that are undervalued but demonstrate a potential
for growth. The Portfolio will rely on its proprietary research to identify
stocks that may have been overlooked by analysts, investors, and the media, and
which generally have a market value between $100 million and $5 billion, but
which may be larger or smaller as deemed appropriate. Investments may also
include, but are not limited to, preferred stocks, foreign securities,
convertible securities, bonds, notes and other debt securities. The Portfolio
may use certain futures and options, invest in repurchase agreements, and lend
its portfolio securities. The Portfolio will take reasonable risks in seeking to
achieve its investment objective. There is, of course, no assurance that the
Portfolio will be successful in meeting its objective since there is risk
involved in the ownership of all equity securities. The Portfolio's investment
objective is not fundamental and may be changed without shareholder approval.
The Portfolio will notify shareholders at least thirty days in advance of a
change in the investment objective of the Portfolio so that shareholders may
determine whether the Portfolio's goals continue to meet their own. See
"Additional Risk Factors - Nondiversified Portfolios."
The Portfolio will use the services of several investment subadvisors as
portfolio managers in selecting companies in which to invest. The portfolio
managers will select investments by examining such factors as company growth
prospects, industry economic outlook, new product development, management,
security value, risk, and financial characteristics. Because of this
multi-manager approach, the Portfolio may benefit from more than one investment
strategy in seeking to achieve its goals. The Portfolio may employ "growth
managers," who generally concentrate on stocks that have demonstrated, or are
expected to produce, earnings growth rates significantly greater than the market
as a whole, as well as "value managers," who tend to make stock selections on
the basis of perceived relative value as determined by a defined model in a
bottom-up approach. The Advisor will use the services of a consultant to help it
determine the appropriate mix of management styles to be employed at any given
time in an attempt to take advantage of changing market conditions by allocating
asset management among the selection of talent in the Portfolio's management
pool.
The securities of small-cap issuers tend to 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. The portfolio turnover rate of advisors investing in small-cap stocks
tends to range between 100-200%. There is no limit on the percentage of assets
that may be invested in small-cap issuers.
Under normal market conditions the Portfolio strives to be fully invested in
securities. However, for temporary defensive purposes -- which may include a
lack of adequate purchase candidates or an unfavorable market environment -- the
Portfolio may invest up to 100% of its assets in cash or cash equivalents. Cash
equivalents include instruments such as, but not limited to, U.S. government and
agency obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and repurchase
agreements.
Although the Portfolio invests primarily in equity securities, it may invest in
debt securities. These debt securities may consist of investment-grade and
noninvestment-grade obligations. Investment-grade obligations are those which,
at the date of investment, are rated within the four highest grades established
by Moody's Investors Services, Inc. (Aaa, Aa, A, or Baa) or by Standard and
Poor's Corporation (AAA, AA, A, or BBB). Noninvestment-grade
(high-yield/high-risk, or junk bond) securities are those rated below Baa or
BBB, or unrated obligations that the investment subadvisor has determined are
not investment-grade; such securities are speculative, and the Portfolio
currently intends to limit such investments to 5% of its assets. The Portfolio
will not buy debt securities rated lower than C. See "Additional Risk Factors -
Non-Investment Grade Securities."
CRI STRATEGIC GROWTH seeks maximum long-term growth through investments
primarily in the equity securities of companies that have little or no debt,
high relative strength and substantial management ownership. The Portfolio
considers issuers of all sizes, industries, and geographic markets, and does not
seek interest income or dividends. In selecting equity investments, the
Portfolio focuses on individual companies by screening over seven thousand
stocks traded on all major U.S. stock exchanges in addition to stocks traded on
the NASDAQ National Market System. The Portfolio invests primarily in common
stocks traded in the U.S. securities markets, including American Depositary
Receipts (ADRs). While the Portfolio does not presently invest in foreign
securities, it may do so in the future. By applying proprietary stock selection
criteria, the Portfolio identifies suitable investments to buy or sell short.
The Portfolio may invest in securities other than equities including, but not
limited to, convertible securities, preferred stocks, bonds, notes and other
debt securities. The Portfolio may hold cash or cash equivalents for temporary
defensive purposes or to enable it to take advantage of buying opportunities.
The Portfolio may engage in certain options and futures transactions as part of
a defensive strategy and may invest in precious metals. There is, of course, no
assurance that the Portfolio will be successful in meeting its objective. The
Portfolio's investment objective is not fundamental and may be changed without
shareholder approval. See "Additional Risk Factors - Nondiversified Portfolios."
Among the companies identified for investment may be some small cap issuers. The
securities of small cap issuers may be less actively traded than the securities
of larger issuers, and they accordingly will not usually participate in market
rallies to the same extent as more widely-known securities. There is also
somewhat less readily available information concerning these securities. The
issuers of these securities tend to have a relatively higher percentage of
insider ownership. Although the Portfolio invests primarily in equity
securities, it may invest up to 35% of its assets in debt securities, excluding
money market instruments.
These debt securities may consist of investment-grade and noninvestment-grade
obligations. Investment-grade obligations are those which, at the date of
investment, are rated within the four highest grades established by Moody's
Investors Services, Inc. (Aaa, Aa, A, or Baa) or by Standard and Poor's
Corporation (AAA, AA, A, or BBB). Noninvestment-grade (high-yield/high-risk, or
junk bond) securities are those rated below Baa or BBB, or unrated obligations
that the investment subadvisor has determined are not investment-grade; such
securities have speculative characteristics. The Portfolio will not buy debt
securities rated lower than C. See "Additional Risk Factors - Non-Investment
Grade Securities."
The Portfolio employs an econometric forecasting model called the "Five Market
Principles," developed by the Subadvisor. This model consists of contrarian
indicators, long- and short-term momentum factors, fundamental value, monetary
policy, and smart money activity. The degree to which these principles are, on
balance, positive or negative, determines the extent to which the Portfolio
would commit funds to individual equity positions or initiate defensive
strategies.
The contrarian principle contains "psychological" indicators that track the
level of optimism among traders. Elements include the put/call ratio (gauging
the sentiment of speculative option traders), put/call premium spread
(monitoring the spread between the relative time premium of puts or calls),
advisory sentiment (tracking the proportion of bullish versus bearish stock
market advisory services), mutual fund cash ratio (cash and cash equivalents
held in mutual funds divided by total assets of the funds), individual investor
sentiment (measured by following the weekly poll by the American Association of
Individual Investors), and short interest ratio (an indication of existing
sentiment and potential buying power, calculated by dividing the total short
sales on the New York Stock Exchange ("NYSE") by the NYSE's average daily
trading volume for the relevant period).
Fundamental value measures the valuation of stock prices relative to historical
standards, as well as the supply of stock outstanding. Its elements include
stock offerings (excessive amounts of new offerings can lead to oversupply and a
market downturn), stock buybacks (excessive amounts indicate a bullish market),
dividend yields (as compared with the S&P 500 Index), and price/earnings ratio
(an indicator of a stock's value, calculated by dividing a stock's current price
by earnings per share over the last twelve months).
Monetary policy examines behavior in credit markets for shifts in the Federal
Reserve Board's policy on interest rates, which influence stock prices. Elements
of this principle include the discount rate index (what the Federal Reserve
Board charges its member banks for direct loans, a change in rate indicating a
shift in monetary policy), discount rate/Treasury-bill spread (a sensitive
intermediate-term indicator, computed by subtracting the current 90-day Treasury
bill yield from the Federal Reserve Board Discount Rate), M2 money supply (the
total of all money held by the public - indirectly controlled by the Federal
Reserve Board and a good indicator for the stock market), free reserves (the
measure of liquidity within the U.S. banking system, liquidity indicating
availability of money for financial growth), and yield curve (a graphic
representation of the different yields among debt instruments of varying
maturities).
Momentum measures the stock market's internal strength, monitored on a real-time
basis. Indicators include the weekly advance/decline line (a measure of total
market performance, calculated by subtracting the total number of NYSE issues
advancing in price for the week versus those declining), absolute market
strength (gauged by following the relative strength of the NASDAQ Composite and
the NYSE's weekly advance/decline line versus the Dow Jones Industrials), the
McClellan oscillator (short-term market momentum indicator), the summation index
(to confirm intermediate-term moves in the market), the moving average
convergence/divergence (indicates swings in the market), and the high low logic
index (a forecaster of market tops and bottoms, indicating bullishness when
there is internal uniformity in the market).
Smart money trades measure the level of optimism among traders. Pieces of this
measure include the behavior of company insiders (heavy insider buying generally
demonstrating a stock that will outperform the market), the member activity
index (measuring trading activity by all members of the NYSE other than
specialists and floor traders, infrequent massive buying indicating a bullish
market), the specialist/public short ratio (greater volume of shorting relative
to the public short generally indicating a decline in prices), and money flow
(tracking "smart money" trades in the last hour versus "irrational" trading in
the first hour).
Many of the investment techniques used by the Portfolio are aggressive, and may
involve higher levels of risk than found in funds not employing these
techniques. Some of the techniques, such as short sales, options and futures
trading, and investment in high-yield/high-risk securities may be considered
speculative and could result in higher operating expenses.
Under normal market conditions the Portfolio strives to be fully invested in
securities. However, for temporary defensive purposes -- which may include a
lack of adequate purchase candidates or an unfavorable market environment -- the
Portfolio may invest up to 100% of its assets in cash or cash equivalents. Cash
equivalents include instruments such as, but not limited to, U.S. government and
agency obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and repurchase
agreements.
Additional Fundamental Investment Policies
CRI Capital Accumulation, Equity, Bond, Global and Strategic Growth 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 of issuers that meet the Portfolios' social criteria, and employ a
variety of other investment techniques, including the purchase and sale of
market index futures contracts, financial futures contracts and options on such
futures. Investing in options may involve a greater degree of risk than those
inherent in more conservative investment approaches. These Portfolios will
engage in futures contracts and related options only to protect against market
declines, except that CRI Strategic Growth may invest in options and futures in
the ordinary course as part of an investment strategy. The Portfolios (other
than Strategic Growth) will not engage in such transactions for speculation or
leverage. It is an operating policy of the Fund that no Portfolio may invest in
options and futures contracts if as a result more than 5% of its assets would be
so invested, except that Strategic Growth may do so up to 50% of its assets.
All of the Portfolios, including CRI Money Market, may engage in repurchase
agreements and reverse repurchase agreements. In a repurchase agreement, a
Portfolio buys a security subject to the right and obligation to sell it back at
a higher price. In order to minimize any risk involved, the Portfolio engages in
such transactions only with recognized securities dealers and banks determined
by the Advisor to present a minimal credit risk. Repurchase agreements are fully
collateralized and always have a maturity of less than one year. No more than 10
percent of a Portfolio's assets may be invested in repurchase agreements not
terminable within seven days. In a reverse repurchase agreement, a Portfolio
sells a security subject to the right and obligation to buy it back at a higher
price. The Portfolio then invests the proceeds from the transaction in another
obligation in which it is authorized to invest. For reverse repurchase
agreements, the Portfolio maintains a segregated account with liquid assets
equal in value to the repurchase price.
Each Portfolio may borrow money from banks (and pledge its assets to secure such
borrowing) for temporary or emergency purposes, but not for leverage. This type
of borrowing may not exceed 10% of the value of each Portfolio's total assets,
except that Capital Accumulation and Strategic Growth may do so in amounts not
to exceed one-third of their assets. The Portfolios may also make loans of the
securities they hold. The advantage of loaning securities is that the Portfolio
continues to receive the equivalent of the interest earned or dividends paid by
the issuers while at the same time earning interest on the cash or equivalent
collateral that may be invested in accordance with the Portfolio's investment
objective, policies, and restrictions. The purpose of the loans is usually to
facilitate the delivery of securities. As with any extension of credit, there
may be risks of delay in recovery and possible loss of rights in the loaned
security if the borrower fails financially. The Investment Advisor attempts to
reduce the risk by lending only to borrowers that it deems creditworthy and only
on terms that it believes compensates for any risk inherent in the transaction.
A Portfolio may lend its securities to New York Stock Exchange member firms and
to commercial banks with assets of one billion dollars or more. All loans must
be secured continuously in the form of cash or cash equivalents such as U.S.
Treasury bills. In addition, the amount of collateral must, on a current basis,
equal or exceed the market value of the loaned securities, and the Portfolios
may only make the loan if the value of the securities loaned does not exceed 10%
of the Portfolio's assets, except that Capital Accumulation may lend no more
than 5% of its securities, and Strategic Growth may lend up to the value of
one-third of its assets. The Portfolios must be able to terminate loans at any
time with appropriate notice. A Portfolio will exercise its right to terminate a
securities loan in order to preserve its right to vote on matters of importance
affecting holders of the securities. All securities must be returned to the
Portfolios when a loan terminates, and the Portfolios absorb any gain or loss in
the market value of the securities during the loan period.
CRI Strategic Growth may establish short positions in an attempt to protect
against market declines, and will choose from among securities that are fully
listed on a national securities exchange (unless otherwise allowed by law). The
Portfolio establishes a short position by selling a security it does not own and
makes delivery by borrowing the security it sold. It then repays the lender of
the securities by covering its purchase in the marketplace, ideally at a lower
price than that for which it sold the securities, thereby taking advantage of
declining values. Conversely, if the price of the security goes up after CRI
Strategic Growth establishes its short position, it will lose money. The
Portfolio may hold up to 25% of its assets in short positions, and will not
normally sell short more than 2% of a class of securities of any issuer or 2% of
its Portfolio's net assets, whichever is less. These restrictions may change to
reflect amendments to the law.
Funds for short-sale transactions (other than those for which CRI Strategic
Growth already owns a long position, or "sales against the box") are maintained
in a segregated account with its custodian. In that account CRI Strategic Growth
attempts to maintain, on a daily basis, liquid assets (such as cash, U.S.
government securities or other high-grade debt obligations) in an amount
sufficient to cover the current value of the securities to be replaced as well
as any dividends, interest and/or transaction costs due to the broker upon
completion of the transaction. In determining the amount to be held in the
segregated account, the securities that have been sold short are marked to
market daily. To the extent the market price of the security increases,
additional assets will be put into the segregated account to ensure adequate
reserves.
Risks of Foreign Securities
CRI Global and Strategic Growth may invest all of their assets in foreign
securities, although CRI Global intends to invest part of its assets in
securities of U.S. issuers, and CRI Strategic Growth does not presently intend
to invest in foreign securities. CRI Money Market, Bond, Equity, and Capital
Accumulation may each invest up to 25%, and CRI Balanced may invest up to 10% of
its assets, in the securities of foreign issuers. CRI Money Market may purchase
only high quality, U.S. dollar-denominated instruments.
There are substantial and different risks involved in investing in foreign
securities. You should consider these risks carefully. For example, there is
generally less publicly available information about foreign companies than is
available about companies in the U.S. Foreign companies are generally not
subject to uniform audit and financial reporting standards, practices and
requirements comparable to those in the U.S.
Foreign securities involve currency risks. The U.S. dollar value of a foreign
security tends to decrease when the value of the dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the dollar falls against such currency. Fluctuations in exchange
rates may also affect the earning power and asset value of the foreign entity
issuing the security. Dividend and interest payments may be returned to the
country of origin, based on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and other expenses may be
incurred in converting between various currencies in connections with purchases
and sales of foreign securities.
Foreign stock markets are generally not as developed or efficient as those in
the U.S. In most foreign markets volume and liquidity are less than in the U.S.
and, at times, volatility of price can be greater than that in the U.S. Fixed
commissions on foreign stock exchanges are generally higher than the negotiated
commissions on U.S. exchanges. There is generally less government supervision
and regulation of foreign stock exchanges, brokers and companies than in the
U.S.
There is also the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets, political or social instability, or diplomatic
developments which could adversely affect investments, assets or securities
transactions of the Fund in some foreign countries. The Fund is not aware of any
investment or exchange control regulations which might substantially impair the
operations of the Fund as described, although this could change at any time.
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 climatic conditions, lack
of significant history in operating under a market-oriented economy, or by
political instability, including risk of expropriation.
For many foreign securities, there are U.S. dollar-denominated American
Depositary Receipts ("ADRs"), which are traded in the U.S. on exchanges or over
the counter and are generally sponsored and issued by domestic banks. ADRs
represent the right to receive securities of foreign issuers deposited in a
domestic bank or a correspondent bank. ADRs do not eliminate all the risk
inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in foreign issuers' stock, the Fund can
avoid currency risks during the settlement period for either purchases or sales.
In general, there is a large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers may be subject. The Fund may also invest in European
Depositary Receipts ("EDRs"), which are receipts evidencing an arrangement with
a European bank similar to that for ADRs and are designed for use in the
European securities markets. EDRs are not necessarily denominated in the
currency of the underlying security.
The dividends and interest payable on certain of the Fund's foreign securities
may be subject to foreign withholding taxes, thus reducing the net amount
available for distribution to the Fund's shareholders. You should understand
that the expense ratio of the Fund can be expected to be higher than those of
investment companies investing only in domestic securities since the costs of
operations are higher.
Writing (Selling) Call and Put Options. (Not applicable to CRI Money Market and
Balanced Portfolios) A call option on a security, security index or a foreign
currency gives the purchaser of the option, in return for the premium paid to
the writer (seller), the right to buy the underlying security, index or foreign
currency at the exercise price at any time during the option period. Upon
exercise by the purchaser, the writer of a call option on an individual security
or foreign currency has the obligation to sell the underlying security or
currency at the exercise price. A call option on a securities index is similar
to a call option on an individual security, except that the value of the option
depends on the weighted value of the group of securities comprising the index
and all settlements are made in cash. A call option may be terminated by the
writer (seller) by entering into a closing purchase transaction in which it
purchases an option of the same series as the option previously written.
A put option on a security, security index, or foreign currency gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to sell the underlying security, index, or foreign currency at the
exercise price at any time during the option period.
Upon exercise by the purchaser, the writer of a put option has the obligation to
purchase the underlying security or foreign currency at the exercise price. A
put option on a securities index is similar to a put option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash.
The Portfolios may write exchange-traded call options on its securities. Call
options may be written on portfolio securities, securities indices, or foreign
currencies. With respect to securities and foreign currencies, the Portfolio may
write call and put options on an exchange or over-the-counter. Call options on
portfolio securities will be covered since the Portfolio will own the underlying
securities or other securities that are acceptable for escrow at all times
during the option period. Call options on securities indices will be written
only to hedge in an economically appropriate way portfolio securities which are
not otherwise hedged with options or financial futures contracts and will be
"covered" by identifying the specific portfolio securities being hedged. Call
options on foreign currencies and put options on securities and foreign
currencies will be covered by securities acceptable for escrow. A Portfolio may
not write options on more than 50% of its total assets. Management presently
intends to cease writing options if and as long as 25% of such total assets are
subject to outstanding options contracts or if required under regulations of
state securities administrators.
Each Portfolio will write call and put options in order to obtain a return on
its investments from the premiums received and will retain the premiums whether
or not the options are exercised. Any decline in the market value of portfolio
securities or foreign currencies will be offset to the extent of the premiums
received (net of transaction costs). If an option is exercised, the premium
received on the option will effectively increase the exercise price or reduce
the difference between the exercise price an market value.
During the option period, the writer of a call option gives up the opportunity
for appreciation in the market value of the underlying security or currency
above the exercise price. It retains the risk of loss should the price of the
underlying security or foreign currency decline. Writing call options also
involves risks relating to the Portfolio's ability to close out options it has
written.
During the option period, the writer of a put option has assumed the risk that
the price of the underlying security or foreign currency will decline below the
exercise price. However, the writer of the put option has retained the
opportunity for appreciation above the exercise price should the market price of
the underlying security or foreign currency increase. Writing put options also
involves risks relating to the Portfolio's ability to close out options it has
written.
Purchasing Call and Put Options (Not applicable to CRI Money Market and CRI
Balanced Portfolios), Warrants and Stock Rights (Not applicable to CRI Money
Market Portfolio). The Portfolios may invest up to an aggregate of 5% of its
total assets in exchange-traded or over-the-counter call and put options on
securities and securities indices and foreign currencies, except that Strategic
Growth may do so up to 50% of its total assets. Purchases of such options may be
made for the purpose of hedging against changes in the market value of the
underlying securities or foreign currencies. The Portfolio may invest in call
and put options whenever, in the opinion of the Advisor or Subadvisor, a hedging
transaction is consistent with its investment objectives. The Portfolio may sell
a call option or a put option which it has previously purchased prior to the
purchase (in the case of a call) or the sale (in the case of a put) of the
underlying security or foreign currency. Any such sale would result in a net
gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the call or put which
is sold. Purchasing a call or put option involves the risk that the Portfolio
may lose the premium it paid plus transaction costs.
Warrants and stock rights are almost identical to call options in their nature,
use and effect except that they are issued by the issuer of the underlying
security rather than an option writer, and they generally have longer expiration
dates than call options. A Portfolio may invest up to 5% of its net assets in
warrants and stock rights, but no more than 2% of its net assets in warrants and
stock rights not listed on the New York Stock Exchange or the American Stock
Exchange.
Financial Futures and Related Options (Not applicable to CRI Money Market and
CRI Balanced Portfolios). A Portfolio may enter into financial futures contracts
and related options as a hedge against anticipated changes in the market value
of their portfolio securities or securities which they intend to purchase or in
the exchange rate of foreign currencies. Hedging is the initiation of an
offsetting position in the futures market which is intended to minimize the risk
associated with a position's underlying securities in the cash market.
Investment techniques related to financial futures and options are summarized
below and are described more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures contracts, foreign
currency futures contracts and securities index futures contracts. An interest
rate futures contract obligates the seller of the contract to deliver, and the
purchaser to take delivery of, the interest rate securities called for in the
contract at a specified future time and at a specified price. A foreign currency
futures contract obligates the seller of the contract to deliver, and the
purchaser to take delivery of, the foreign currency called for in the contract
at a specified future time and at a specified price. A securities index assigns
relative values to the securities included in the index, and the index
fluctuates with changes in the market values of the securities so included. A
securities index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the index value at the close of the
last trading day of the contract and the price at which the futures contract is
originally struck. An option on a financial futures contract gives the purchaser
the right to assume a position in the 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.
A Portfolio may purchase and sell financial futures contracts which are traded
on a recognized exchange or board of trade and may purchase exchange or
board-traded put and call options on financial futures contracts. It will engage
in transactions in financial futures contracts and related options only for
hedging purposes and not for speculation. In addition, the Portfolio will not
purchase or sell any financial futures contract or related option if,
immediately thereafter, the sum of the cash or U.S. Treasury bills committed
with respect to its existing futures and related options positions and the
premiums paid for related options would exceed 5% of the market value of its
total assets. At the time of purchase of a futures contract or a call option on
a futures contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the futures
contract minus the Portfolio's initial margin deposit with respect thereto, will
be deposited in a segregated account with the Fund's custodian bank to
collateralize fully the position and thereby ensure that it is not leveraged.
The extent to which the Portfolio may enter into financial futures contracts and
related options may also be limited by requirements of the Internal Revenue Code
of 1986 for qualification as a regulated investment company.
Engaging in transactions in financial futures contracts involves certain risks,
such as the possibility of an imperfect correlation between futures market
prices and cash market prices and the possibility that the Advisor or Subadvisor
could be incorrect in its expectations as to the direction or extent of various
interest rate movements or foreign currency exchange rates, in which case the
Fund's return might have been greater had hedging not taken place. There is also
the risk that a liquid secondary market may not exist. The risk in purchasing an
option on a financial futures contract is that the Fund will lose the premium it
paid. Also, there may be circumstances when the purchase of an option on a
financial futures contract would result in a loss to the Fund while the purchase
or sale of the contract would not have resulted in a loss.
Foreign Currency Transactions (Not applicable to CRI Money Market Portfolio)
The value of a Portfolio's assets as measured in United States dollars may be
affected favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations, and the Portfolio may incur costs in
connection with conversions between various currencies. The Portfolio will
conduct its foreign currency exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign currency exchange market, or
through forward contracts to purchase or sell foreign currencies. 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 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.
When a Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, it may want to establish the United States
dollar cost or proceeds, as the case may be. By entering into a forward contract
in United States dollars for the purchase or sale of the amount of foreign
currency involved in the underlying security transaction, the Portfolio is able
to protect itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency relationships. The
Portfolio (other than CRI Balanced Portfolio) may also hedge its foreign
currency exchange rate risk by engaging in currency financial futures and
options transactions.
When the Advisor or the Subadvisor believes that the currency of a
particular foreign country may suffer a substantial decline against
the United States dollar, it may enter into a forward contract to sell
an amount of foreign currency approximating the value of some or all
of the Portfolio's portfolio securities denominated in such foreign
currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy
will be successful is highly uncertain.
It is impossible to forecast with precision the market values of portfolio
securities at the expiration of a contract. Accordingly, it may be necessary for
the Portfolio to purchase additional currency on the spot market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver when a decision is
made to sell the security and make delivery of the foreign currency in
settlement of a forward contract. Conversely, it may be necessary to sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency the
Portfolio is obligated to deliver.
If a Portfolio retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or a loss (as described below) to the extent
that there has been movement in forward contract prices. If the Portfolio
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Portfolio's entering into a forward contract for
the sale of a foreign currency and the date it enters into an offsetting
contract for the purchase of the foreign currency, it would realize gains to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
Portfolio would suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
Although such contracts tend to minimize the risk of loss due to a decline in
the value of the hedged currency, they also tend to limit any potential gain
which might result should the value of such currency increase. The Portfolio may
have to convert its holdings of foreign currencies into United States dollars
from time to time. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Additional Nonfundamental Investment Policies
CRI Capital Accumulation, Money Market, Balanced, Equity, Bond, Global and
Strategic Growth Portfolios have adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed by the Board of
Directors without shareholder approval: Each Portfolio may invest up to less
than one percent (up to three percent in the case of CRI Capital
Accumulation, Global and Strategic Growth) of its respective assets in
investments in securities that offer a rate of return below the then prevailing
market rate and that present attractive opportunities for furthering the
Portfolio's social criteria. In applying this restriction, the percentage of a
Portfolio's assets in such securities is based on the aggregate cumulative value
at the time of the respective acquisitions of such securities currently held by
the Portfolio. These securities are unrated and are generally considered
non-investment grade debt securities which involve a greater risk of default or
price decline than investment-grade securities. Through diversification and
credit analysis, investment risk can be reduced, although there can be no
assurance that losses will not occur.
No Portfolio may purchase illiquid securities if more than 10% (15% for Capital
Accumulation, CRI Global and Strategic Growth) of the value of that Portfolio's
net assets would be invested in such securities. Further, a Portfolio may not
acquire private placement investments until the value of that Portfolio's assets
exceeds $20 million.
For further information on the Portfolio's investment policies and restrictions,
as well as a description of the types of securities that may be purchased, see
the Statement of Additional Information.
Additional Risk Factors
Nondiversified Portfolios (CRI Balanced, CRI Capital Accumulation, and CRI
Strategic Growth)
There may be risks associated with a Portfolio being nondiversified.
Specifically, since a relatively high percentage of the assets of a Portfolio
may be invested in the obligations of a limited number of issuers, the value of
the shares of a nondiversified Portfolio may be more susceptible to any single
economic, political or regulatory event than the shares of a diversified
Portfolio would be.
Interest Rate Risk
All fixed income instruments are subject to interest-rate risk: that is, if
market interest rates rise, the current principal value of a bond will decline.
In general, the longer the maturity of the bond, the greater the decline in
value will be.
Non-Investment Grade Securities
Noninvestment-grade securities tend to be less sensitive to interest rate
changes than higher-rated investments, but are more sensitive to adverse
economic changes and individual corporate developments. This may affect the
issuer's ability to make principal and interest payments on the debt obligation.
There is also a greater risk of price declines due to changes in the issuer's
creditworthiness. Because the market for lower-rated securities may be less
active ("thinner") than for higher-rated securities, it may be difficult for the
fund to sell the securities. Because of a lack of objective data, a
thinly-traded market may make it difficult to value the securities, so that the
Board of Directors may have to exercise its judgment in assigning a value. See
the Appendix in the Statement of Additional Information for more information on
bond ratings.
INVESTMENT SCREENS
CRI Capital Accumulation
Once securities are determined to fall within the investment objective of the
Fund and are deemed financially viable investments, they are screened according
to the social criteria described below. These social screens are applied to
potential investment candidates by the Advisor in consultation with the
Subadvisor.
The following criteria may be changed by the Fund's Board of Directors without
shareholder approval:
(1) The Fund avoids investing in companies that, in the Advisor's opinion, have
significant or historical patterns of violating environmental regulations, or
otherwise have an egregious environmental record. Additionally, the Fund will
avoid investing in nuclear power plant operators and owners, or manufacturers of
key components in the nuclear power process.
(2) The Fund will not invest in companies that are significantly engaged in
weapons production. This includes weapons systems contractors and major nuclear
weapons systems contractors.
(3) The Fund will not invest in companies that, in the Advisor's opinion, have
significant or historical patterns of discrimination against employees on the
basis of race, gender, religion, age, disability or sexual orientation, or that
have major labor-management disputes.
(4) The Fund will not invest in companies that are significantly involved in the
manufacture of tobacco or alcohol products. The Fund will not invest in
companies that make products or offer services that, under proper use, in the
Advisor's opinion, are considered harmful.
The Advisor will seek to review companies' overseas operations consistent with
the social criteria stated above. While the Fund may invest in companies that
exhibit positive social characteristics, it makes no explicit claims to seek out
companies with such practices.
CRI Global
The Portfolio carefully reviews a company's policies and behavior in the
following social issues: environment, nuclear energy, weapons systems, health
care, human rights, and alcohol/tobacco. The Portfolio currently observes the
following operating policies which may be changed by the Portfolio's Board of
Directors without shareholder approval: (1) the Portfolio actively seeks to
invest in companies that achieve excellence in both financial return and
environmental soundness, selecting issuers that take positive steps toward
preserving our environment and avoiding companies with poor environmental
records; (2) the Portfolio will not invest in issuers primarily engaged in the
manufacture of weapons systems, the production of nuclear energy, or the
manufacture of equipment to produce nuclear energy; and (3) the Portfolio
actively seeks to invest in companies whose products or services improve the
quality of or access to health care, including public health and preventative
medicine.
The Portfolio believes that there are long-term benefits inherent in an
investment philosophy that demonstrates concern for the environment, human
rights, economic priorities, and international relations. Those enterprises
which exhibit a social awareness measured in terms of the above attributes and
considerations should be better prepared to meet future societal needs for goods
and services. By responding to social concerns, these enterprises should not
only avoid the liability that may be incurred when a product or services is
determined to have a negative social impact or has outlived its usefulness, but
also be better positioned to develop opportunities to make a profitable
contribution to society. These enterprises should be ready to respond to
external demands and ensure that over the longer term they will be viable to
provide a positive return to both investors and society as a whole.
CRI Bond, Equity, Money Market and Balanced
With regard to CRI Bond, Equity, Money Market and Balanced, each investment is
selected with a concern for its social impact. The Portfolios invest in
accordance with their philosophy that long-term rewards to investors will come
from those organizations whose products, services, and methods enhance the human
condition and the traditional American values of individual initiative, equality
of opportunity and cooperative effort.
The Portfolios have developed the following criteria for the selection of
organizations in which they invest. The Portfolios recognize, however, that
these criteria represent standards of behavior which few, if any, organizations
totally satisfy and that, as a matter of practice, evaluation of a particular
organization in the context of these criteria will involve subjective judgment
by the Portfolios' Investment Advisor and Subadvisor.
Given these considerations, the Portfolios seek to invest in producers or
service providers that:
1. Deliver safe products and services in ways that sustain our natural
environment.
2. Are managed with participation throughout the organization in defining
and achieving objectives.
3. Negotiate fairly with their workers, provide an environment supportive
of their wellness, do not discriminate on the basis of race, gender,
religion, age, disability, ethnic origin, or sexual orientation, do not
consistently violate regulations of the Equal Employment Opportunity
Commission, and provide opportunities for women, disadvantaged minorities,
and others for whom equal opportunities have often been denied.
4. Foster awareness of a commitment to human goals, such as creativity,
productivity, self-respect and responsibility, within the organization and
the world, and continually recreate a context within which these goals can
be realized.
The Portfolios will not invest in an issuer primarily engaged in:
1. The production of nuclear energy or the manufacture of equipment to
produce nuclear energy.
2. Business activities in support of repressive regimes.
3. The manufacture of weapons systems.
In addition, the Portfolios will not, as a matter of operating policy which
may be changed without the approval of a majority of the outstanding
shares, invest in an issuer primarily engaged in the manufacture of
alcoholic beverages or tobacco products, or the operation of gambling
casinos.
The Portfolios believe that social and technological change will continue
to transform America and the world for the balance of this century. Those
enterprises that exhibit a social awareness measured in terms of the above
attributes and considerations should be better prepared to meet future
societal needs for goods and services. By responding to social concerns,
these enterprises should maintain flexibility and further social goals. In
so doing they may not only avoid the liability that may be incurred when a
product or service is determined to have a negative social impact or has
outlived its usefulness, but should also be better positioned to develop
opportunities to make a profitable contribution to society. The Portfolios
believe that these enterprises will be ready to respond to external demands
and ensure that over the longer term they will be able to provide a
positive return to both investors and society as a whole.
In selecting investments under the four positive and three negative factors
outlined above, the Subadvisors consider the investments' ability to
contribute to the dual objective of the Portfolios. Potential investments
are first screened for financial soundness and then evaluated according to
the Portfolios' social criteria. To the greatest extent possible
investments are made in companies exhibiting unusual, positive
accomplishments with respect to one or more of the criteria. Companies must
meet the Portfolios' minimum standards for all the criteria. It should be
noted that the Portfolios' social criteria tend to limit the availability
of investment opportunities more than is customary with other investment
portfolios.
The selection of an organization for investment by a Portfolio does not
constitute endorsement or validation, nor does the exclusion of an
organization necessarily reflect failure to satisfy the Portfolios' social
criteria. Investors in the Portfolios are invited to send brief
descriptions of companies they believe might be suitable investments.
CRI Strategic Growth
Once equity and debt securities are determined to fall within the
investment objective of the Fund and are deemed financially viable
investments, they are screened according to the social criteria described
below. These social screens are applied to potential investment candidates
by the Advisor in consultation with the Subadvisor. However, the Fund may
purchase instruments used for defensive purposes, such as short positions,
options and futures contracts, without regard to the social criteria.
The following criteria may be changed by the Fund's Board of Directors
without shareholder approval:
(1) The Fund avoids investing in companies that, in the Advisor's opinion,
have significant or historical patterns of violating environmental
regulations, or otherwise have an egregious environmental record.
Additionally, the Fund will avoid investing in nuclear power plant
operators and owners, or manufacturers of key components in the nuclear
power process.
(2) The Fund will not invest in companies that are listed among the top 100
weapons systems contractors, or major nuclear weapons systems contractors.
(3) The Fund will not invest in companies that, in the Advisor's opinion,
have significant or historical patterns of discrimination against employees
on the basis of race, gender, religion, age, disability or sexual
orientation, or in companies that have major labor-management disputes.
(4) The Fund will not invest in companies that are significantly involved
in the manufacture of tobacco or alcohol products. The Fund will not invest
in companies that make products or offer services that, under proper use,
in the Advisor's opinion, are considered harmful.
While the Fund may invest in companies that exhibit positive social
characteristics, it makes no explicit claims to seek out companies with
such practice.
- - -------------------------------------------------------------------------------
THE FUND AND ITS MANAGEMENT
- - ------------------------------------------------------------------------------
Acacia Capital Corporation is an open-end, management investment company,
which was incorporated under the laws of the State of Maryland on September
27, 1982. The Board of Directors supervises the business affairs and
investments of the Fund, which are managed on a daily basis by the Fund's
Investment Advisor. The Fund has several investment Portfolios, each
issuing one class of stock
Investment Advisors
Calvert Asset Management Company, Inc. ("CAM"), which is located at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, is the Investment
Advisor to all of the Portfolios. Calvert Asset Management is a
wholly-owned subsidiary of Calvert Group, Ltd., which is in turn an
indirect wholly-owned subsidiary of Acacia Mutual Life Insurance Company.
As of December 31, 1994, Calvert Group, Ltd. had assets under management
and administration in excess of $4.2 billion. Pursuant to its investment
advisory agreement with the Fund, the Investment Advisor manages the
investment and reinvestment of the assets of each Portfolio and is
responsible for the overall management of the business affairs of each
Portfolio, subject to the direction and authority of the Fund's Board of
Directors. Calvert Asset Management also serves as Investment Advisor to
seven other registered investment companies in the Calvert Group of Funds:
First Variable Rate Fund for Government Income, Calvert Cash Reserves
(doing business as Money Management Plus), Calvert Social Investment Fund,
Calvert Tax-Free Reserves, The Calvert Fund, Calvert Municipal Fund, Inc.,
and Calvert World Values Fund, Inc. CAM has retained investment subadvisors
("Subadvisors") for several of the Portfolios.
CRI Capital Accumulation
CRI Capital Accumulation has a pool of seven investment subadvisors ready
to manage the Portfolio's assets. The Subadvisors are listed below, the
asterisks indicating those comprising the initial portfolio management
team.
==============================================================================
Subadvisor Investment Style Ownership
==============================================================================
==============================================================================
*Apodaca Johnston Small-Cap Growth Hispanic American
*Brown Capital Mid-/Large-Cap Growth African American
*Fortaleza Asset Management Small-Cap Growth Hispanic/Women
Lee Asset Management Small-/Mid-Cap Growth Women
New Amsterdam Mid-Cap Value/Growth Women
Seneca, Inc. Large-Cap Value Women
Sturdivant Large-Cap Value African American
===============================================================================
The Advisor will select which Subadvisors will manage the Portfolio's
assets at any given time and the allocation of assets among the managers.
The Advisor has retained a consultant, Progress Investment Management
Company, to aid it in making these determinations. Progress is a California
state-certified minority business enterprise, registered as an investment
advisor with the Securities and Exchange Commission, that evaluates and
monitors emerging minority/women-owned investment management firms. Each
firm has selected a performance index against which it will be measured
with respect to payment of a performance fee, as explained in the next
section.
Apodaca-Johnston Capital Management, Inc.: Apodaca-Johnston Capital
Management, Inc. of San Francisco, California is a small-cap growth manager
that seeks to discover compelling investment ideas by focusing on those
entrepreneurial companies that identify and capitalize on positive trends.
It looks for companies that are experiencing a powerful acceleration in
earnings, exhibit a strong, high quality balance sheet or decidedly
improving financial statements and demonstrate strong relative price
strength. Its performance index is the Russell 2000.
Mr. Johnston is President and Chief Investment Officer of Apodaca-Johnston.
He earned a B.A. from the University of California at Berkeley, and an
M.B.A. from the University of Southern California. In 1985 Mr. Johnston
founded Sterling Financial Group, an independent SEC-registered investment
advisory firm, which was merged into Apodaca-Johnston Capital Management.
Mr. Apodaca is Vice President of Apodaca-Johnston. He earned a B.A. from
the University of New Mexico in 1983, and has had active business
experience since that time.
Brown Capital Management, Inc.: Brown Capital Management, Inc. of
Baltimore, Maryland believes that capital can be enhanced in times of
opportunity and preserved in times of adversity without timing the market.
The firm uses a bottom-up approach that incorporates growth-adjusted price
earnings. Stocks purchased are generally undervalued and have momentum,
have EPS growth rates greater than the market, are more profitable than the
market, and have relatively low price-earnings ratios. Its performance
index is a blend: 60% Russell 1000 Growth and 40% Russell 2000.
Mr. Brown is founder and President of Brown Capital Management. He has over
22 years of investment experience, having served as a Vice President and
Portfolio Manager for 10 years at T. Rowe Price Associates immediately
prior to starting his own firm. Mr. Brown holds an M.S. in Business
Administration from the Indiana University School of Business.
Additionally, he is a professionally-designated Chartered Financial Analyst
(CFA) and Chartered Investment Counselor (CIC).
Mr. Oppenheim has had 24 years' investment experience for institutions,
including the State of Maryland, T. Rowe Price Associates, Inc., the
National Rural Electric Pension and Brown Capital Management. He holds a
B.S. in Economics and Juris Doctor from the University of Wisconsin, and is
a Chartered Financial Analyst (CFA).
Mr. Hall has over 30 years' investment experience including 18 years with
T. Rowe Price Associates, Inc., seven years with Emerging Growth Partners,
Inc., and four years with The Investment Center, prior to joining Brown
Capital Management. Mr. Hall is a former Trustee of the Peabody Institute
of Johns Hopkins University.
Fortaleza Asset Management, Inc.: Fortaleza Asset Management, Inc., of
Chicago, Illinois, is a small-cap growth manager that bases its investment
principles on three key elements: (1) a proprietary stock valuation system
that incorporates technical and market sentiment indicators to determine
optimal buy points; (2) an emphasis on the preservation of capital through
the implementation of a strict selling discipline to lock in capital gains
and reduce losses; and (3) a discipline that does not force equity
commitment in overvalued markets. The investment approach is based on a
bottom-up stock selection process. Its performance index is the Russell
2000.
Ms. Perez is the founder, President and Portfolio Manager of Fortaleza, and
has over 13 years of investment experience. Prior to forming Fortaleza, Ms.
Perez was Vice President and Portfolio Manager for Monetta Financial
Services, Inc., where she was directly involved in the management of equity
accounts totalling in excess of $100 million.
Ms. Perez is a native of Puerto Rico. She earned an MBA from DePaul
University School of Commerce. Ms. Perez is a member of various
professional organizations including the American Institute of CPAs,
National Society of Hispanic MBAs, Association for Investment Management
and Research (AIMR), and the National Association of Securities
Professionals (NASP). She is also a trustee of the Chicago Historical
Society.
Mr. Boves brings over 25 years of investment management and research
experience to Fortaleza. He has a master's degree in Economics from
Northern Illinois University and is a member of the Investment Analysts
Society in Chicago.
Lee Asset Management Company: Lee Asset Management Company is a small-cap
growth investment management company in Federal Way, Washington. The
company adheres to an active investment style called "Growth at a Price."
The philosophy is fundamentally oriented and combines price target
disciplines and market trends. Lee Asset Management searches for companies
with solid and/or improving earnings prospects. Also, when appropriate,
they are opportunistic with stocks in which they have had a successful
investment history and will buy for short term appreciation potential. The
company's investment process is "bottom-up."
Laura E. Lee, President and CIO, has seventeen years in investment-related
activities. Her experience includes portfolio management and equity
analysis. Prior to founding Lee Asset Management in 1989, Ms. Lee was a
Vice President, Portfolio Manager & Security Analyst at Laird Norton Trust
Company. Previously, she was a Trust Investment Officer at the Puget Sount
National Bank. Ms. Lee received a Bachelor of Arts from Pacific Lutheran
University.
Teresa D.E. Rocks-Olson is Vice President & Portfolio Manager, with ten
years' experience in the investment field. Her experience includes
portfolio management of both balanced and equity portfolios, as well as
consulting for clients with outside investment managers. She joined Lee
Asset Management in 1994 and previously spent nine years as a portfolio
manager at Capital Consultants, Inc., an investment management firm in
Portland. Ms. Rocks-Olson received a Bachelor of Science from Lewis and
Clark College and is a Chartered Financial Analyst (CFA).
New Amsterdam Partners, L.P.: New Amsterdam Partners, L.P. is a mid-cap
value investment manager in New York, New York. New Amsterdam Partners is a
quantitative investment firm, evaluating investment opportunities by
comparing expected investment returns. The firm believes that the
disciplined use of their valuation techniques, in conjunction with
fundamental analysis of companies, is the key to understanding and
maximizing investment returns.
Michelle Clayman, General Partner of New Amsterdam, was a founding partner
of the company, which was started in 1986. Prior to co-founding New
Amsterdam, Ms. Clayman was a Vice President of Salomon Brothers in charge
of STOCKFACTS, an on-line computer system that combines analytical tools
for equity analysis and databases and was designed and developed by Ms.
Clayman. Ms. Clayman received her Bachelor of Arts from Oxford University
and an MBA from Stanford University. She is a Chartered Financial Analyst
(CFA) and is past President of the Society of Quantitative Analysts.
Keith Graham is Vice President and Special Limited Partner of New
Amsterdam. Before joining the company in 1987, Mr. Graham was an Assistant
Treasurer at the Bankers Trust Company, first in the Trust Administration
Group and later in the Investment Management Consulting Group.
Seneca, Inc.: Seneca, Inc., of Basking Ridge, New Jersey, is a
value-oriented, medium-to-large capitalization equity manager with a
twelve-year performance record. The firm is majority-owned by six women
employees and a female director. The company employs a traditional low P/E
value approach enhanced by portfolio risk controls and selection of only
those securities experiencing upward revisions in analysts' earnings
estimates.
Susan Saltus and Sandi Sweeney direct the investment effort, drawing on
more than 28 years of investment experience. Ms. Saltus, CFA, is Chief
Investment Officer and has 16 years' investment experience. Ms. Sweeney is
a Portfolio Manager and has 12 years investment experience.
Sturdivant & Co., Inc.: Sturdivant & Co., Inc., of Clementon, New Jersey,
seeks to identify undervalued companies or companies undergoing significant
changes that will enhance shareholder value. The company utilizes a
conservative, disciplined and consistently-applied decision making process
designed to achieve lower risk than the market.
Ralph Sturdivant is Chairman and CEO who, prior to founding the firm, was a
Vice President at Prudential-Bache Securities and an Account Executive with
Merrill Lynch. Mr. Sturdivant holds a Bachelor of Arts from Morgan State
University and is a member of the Financial Analysts of Philadelphia.
Albert Sturdivant is President and CIO, and was a principal and manager of
the capital markets division of Grigsby, Brandford & Company prior to
co-founding Sturdivant & Co. Mr. Sturdivant earned an MBA from the Wharton
Business School of the University of Pennsylvania.
CRI Bond
The Subadvisor to CRI Bond Portfolio is United States Trust Company of
Boston, a Massachusetts-chartered commercial bank with full trust powers.
It is wholly-owned by and is the principal subsidiary of UST Corporation, a
Massachusetts bank holding company. The Trust Department of United States
Trust Company of Boston has managed funds as a fiduciary since 1895. Cheryl
Smith, Vice President of U.S. Trust, is the portfolio manager for the Bond
Portfolio. Ms. Smith joined U.S. Trust in 1992. In addition to the
management of the Bond Portfolio, her duties at U.S. Trust include
management of institutional and individual client investment portfolios and
integration of client social criteria into the portfolio management
process. She served as Vice President of Franklin Research & Development
from 1987 to 1992. Ms. Smith has managed the Bond Portfolio since August
1994. She is a Chartered Financial Analyst and holds a Ph.D. in Economics
from Yale University.
CRI Balanced
The Sub-Advisor to the Portfolio is NCM Capital Management Group, Inc.
(NCM). Pursuant to its Investment Sub-Advisory Agreement with the
Investment Advisor, NCM manages the equity portion of the Portfolio
selections for the Portfolio. NCM was founded by Maceo K. Sloan in 1986 as
a subsidiary of North Carolina Mutual Life Insurance Company, which was
established by Mr. Sloan's ancestors in 1898 and is one of the oldest and
largest minority-owned financial institutions in the country. NCM has been
an employee-owned subsidiary of Sloan Financial Group since 1991. Sloan
Financial Group is controlled by Mr. Sloan and Justin F. Beckett, Executive
Vice President and a Director of NCM. NCM is one of the largest
minority-owned investment management firms in the country, and provides
products in equity, fixed-income and balanced portfolio management. It is
also one of the industry leaders in the employment and training of minority
and women investment professionals. NCM has served as sub-advisor to the
Portfolio since February 1995.
Wendell E. Mackey, Vice President of NCM, is the portfolio manager with
respect to the Portfolio's equity investments. Mr. Mackey earned his B.B.A.
degree from Howard University, and his M.M degree from Kellogg Graduate
School of Management at Northwestern University. He subsequently worked
with several securities firms before joining NCM as an equity portfolio
manager in 1993. He has managed the Portfolio since February 1995.
Colleen M. Denzler manages the Portfolio's fixed-income investments. She
has been managing funds for the Advisor since 1988. Ms. Denzler holds a
B.S. degree from Radford University and is a Chartered Financial Analyst.
CRI Equity
The Subadvisor to CRI Equity is Loomis, Sayles and Company, which replaced
United States Trust Company as of February 1, 1994 upon shareholder
approval. The individual portfolio manager responsible for CRI Equity is
Philip J. Schettewi, Managing Partner, Vice President, and Chief Portfolio
Strategist of Loomis, Sayles. Mr. Schettewi is a Chartered Financial
Analyst and has 12 years' experience in the investment business.
CRI Global Equity
The Subadvisor to CRI Global is Murray Johnstone International, Ltd. of
Glasgow, Scotland, which has its principal U.S. office in Chicago,
Illinois, and is a wholly-owned subsidiary of United Asset Management
Company. Murray Johnstone manages the investment and reinvestment of the
assets of CRI Global, although the Advisor may manage part of CRI Global's
cash reserves required for liquidity purposes. Andrew Preston, CRI Global
Portfolio Manager, studied at Melbourne University in Australia and
Ritsumeikan University in Japan prior to working for the Australian
Department of Foreign Affairs. He joined Murray Johnstone in 1985 as an
analyst in the U.K. and U.S. departments, became Fund Manager in the
Japanese Department, and played a prominent role in the establishment and
operation of Yamaichi-Murray Johnstone.
CRI Strategic Growth
The Subadvisor to CRI Strategic Growth is Portfolio Advisory Services, Inc.
("PASI"). PASI's principal business office is 811 Wilshire Boulevard, Suite
810, Los Angeles, California, 90017. The Subadvisor manages the investment
and reinvestment of the assets of the Portfolio, although the Advisor may
screen potential investments for compatibility with the Portfolio's social
criteria.
Portfolio manager for CRI Strategic Growth is Cedd Moses, Director and Chief
Executive Officer of PASI, and PASI's principal shareholder. Mr. Moses earned a
Bachelor of Science in Mechanical Engineering from UCLA in 1982, and
subsequently worked with several securities firms before joining PASI in 1988.
As of March 31, 1995, PASI managed in excess of $300 million in non-mutual fund
assets. Mr. Moses also manages the Calvert Strategic Growth Fund series of The
Calvert Fund, an open-end investment company sponsored by Calvert Group, Ltd.
The Advisor will continuously monitor and evaluate the performance and
investment style of the Subadvisors.
Advisory Fee
For its services, CAM is entitled to receive a fee based on a percentage of the
average daily net assets of each of the Portfolios. CAM is currently entitled to
receive a maximum fee of 0.50% of net assets from CRI Money Market, 0.70% of net
assets of CRI Equity and Balanced, 0.65% of net assets of CRI Bond, 1.00% of net
assets of CRI Global, 0.80% of net assets from CRI Capital Accumulation, and
1.50% of net assets from CRI Strategic Growth. CAM pays 0.25% of net assets of
CRI Bond to United States Trust as a subadvisory fee, and a maximum of 0.45% of
the net assets of CRI Global to Murray Johnstone International, Ltd. as a
subadvisory fee.
With respect to CRI Equity, Capital Accumulation, and Balanced, CAM will pay the
Subadvisors a base fee of 0.25% of average net assets (for CRI Balanced, on
one-half of average net assets). With respect to CRI Strategic Growth, CAM will
pay the Subadvisor a base fee of 0.90%. In addition, under the circumstances
described below for each Portfolio the investment advisors to CRI Strategic
Growth, Capital Accumulation, and Balanced, and the investment subadvisors to
CRI Equity, Strategic Growth, Capital Accumulation, and Balanced may earn (or
have their fees reduced by) performance fee adjustments based on the extent to
which performance of the Portfolios exceeds or trails the index against which
they are measured. In the case of CRI Equity, Strategic Growth, and Balanced,
payment consistent with the performance fee adjustment begins the 13th month
after the investment subadvisor assumed a management role for the Portfolio
(July 1, 1996 for Balanced.) In the case of CRI Capital Accumulation, the
performance fee adjustment begins the 25th month after the investment
subadvisors assume a management role for the Portfolio. The specific adjustments
are as follows
:
CRI Equity: Subad
visor's Performance Fee Adjustment
Performance versus the Performance Fee
S&P 500 Stock Composite Index Adjustment
- - -------------------------------------------------------------------------------
6% to less than 12% 0.07%
12% to less than 18% 0.14%
18% or more 0.20%
The performance fee adjustment is collected from or disbursed by the Portfolio
directly to the investment advisor, which acts as a conduit to the investment
subadvisor, but which does not participate in the performance fee adjustment.
CRI Strategic Growth: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
- - -------------------------------------------------------------------------------
30% to less than 60% 0.05%
60% to less than 90% 0.10%
90% or more 0.15%
CRI Strategic Growth: Subadvisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
- - ------------------------------------------------------------------------------
30% to less than 60% 0.025%
60% to less than 90% 0.050%
90% or more 0.075%
The performance fee adjustment to the Subadvisor is paid out of the fee
the Advisor receives from the Portfolio.
CRI Capital Accumulation: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
S&P 400 Mid-Cap Index Adjustment
- - ------------------------------------------------------------------------------
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
CRI Capital Accumulation: Subadvisor's Performance Fee Adjustment
Performance versus Performance Fee
the Index Adjustment
- - ---------------------------------------------------------------------------
10% to less than 25% 0.02%
25% to less than 40% 0.05%
40% or more 0.10%
Payment of an upward performance fee adjustment will be from the Portfolio to
the Advisor, and the Advisor will pass on the appropriate amount to the
Subadvisor; fees adjusted downward from the base fee as a result of
underperformance will be retained by the Portfolio. Payment of an upward
performance adjustment will be conditioned on: (1) the performance of the
Portfolio as a whole having exceeded the S&P 400 Mid-Cap Index; and (2) payment
of the performance adjustment not causing the Portfolio's performance to fall
below the S&P 400 Mid-Cap Index.
CRI Balanced: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
- - -------------------------------------------------------------------------------
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
CRI Balanced: Subadvisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
- - ------------------------------------------------------------------------------
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
The performance fee adjustment to the Subadvisor is paid out of the fee the
Advisor receives from the Portfolio. The initial performance period will be the
twelve month period between July 1, 1995, and July 1, 1996. Each month an
additional month's performance will be factored into the calculation until a
total of 36 months comprises the performance computation period. Payment by the
Portfolio of the performance adjustment will be conditioned on: (1) the
performance of the Portfolio as a whole having exceeded the Lipper Balanced
Funds Index; and (1) payment of the performance adjustment not causing the
Portfolio's performance to fall below the Lipper Balanced Funds Index.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor,
has been retained by CRI Capital Accumulation, Global and Strategic Growth to
provide certain administrative services necessary to the conduct of their
affairs, including the preparation of regulatory filings and shareholder
reports, the daily determination of net asset value per share and dividends, and
the maintenance of their portfolio and general accounting records. For providing
such services, CASC is entitled to receive a fee from the Portfolio of 0.10% of
net assets per year for CRI Capital Accumulation, 0.10% of net assets per year
with a minimum fee of $40,000 for for CRI Global, and 0.20% of net assets per
year for CRI Strategic Growth.
Expenses
The Fund's expenses, which are accrued daily, include: the fee of the Investment
Advisor; costs of executing portfolio transactions; pricing costs; interest;
taxes; custodian and transfer agent fees; legal and auditing fees; bookkeeping
and dividend disbursing expenses; and certain other expenses relating to the
Fund's operations. The Fund's organizational expenses were paid by CAM, and
other expenses that the Investment Advisory Agreement does not state are payable
by the Fund will be assumed by CAM. Certain expenses are paid by the particular
Portfolio that incurs them, while other expenses are allocated among each
Portfolio on the basis of their relative size (based on net assets), or as
designated by the Board of Directors, as appropriate. CAM has agreed to
reimburse the Fund for the amount, if any, by which the aggregate expenses of
any Portfolio (including the investment advisory fee but excluding brokerage
commission, interest, taxes, and extraordinary expenses) exceed the maximum
percentage of average daily net assets allowed by law.
Capital Stock
The Fund issues separate stock for each of its Portfolios. 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. When issued, shares are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting rights. The Insurance
Companies and the Fund's shareholders will vote Fund shares allocated to
registered separate accounts in accordance with instructions received from
policyholders. The following persons or firms own 25% or more of the outstanding
stock of the Portfolios indicated: National Home Life Assurance Company (all
Portfolios except CRI Balanced). 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.
Each Portfolio has distinct investment objectives and policies and issues
separate stock. While the Fund is treated as one entity for some purposes, each
Portfolio is treated separately for other purposes. An interest in the Fund is
limited to the assets of the Portfolio in which shares are held, and
shareholders of each Portfolio are entitled to a pro rata share of all dividends
and distributions arising from the net income and capital gains on the
investment of that Portfolio.
- - ------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- - -----------------------------------------------------------------------------
The Fund offers its shares, without sales charge, only for purchase by various
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 a Portfolio
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
policyholders of any Insurance Company. The Fund's Board of Directors intends to
monitor events in order to identify any material conflict between such
policyholders and to determine what action, if any, should be taken in response
to the problem.
The Insurance Companies redeem shares of the Fund to make benefit and surrender
payments under the terms of their 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 made 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, and 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 on redemption of the shares of the Portfolio may be
more or less than the amount paid for the shares, depending on the fluctuations
in the market value of the assets owned by the Portfolio. The Fund redeems all
full and fractional shares of each Portfolio for cash.
The net asset value of the shares of each Portfolio of the Fund 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, or for any other day when there is a
sufficient degree of trading in the investments of the Portfolio to affect
materially its net asset value per share (except on days when no orders to
purchase or redeem shares of the Portfolio have been received). 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 Portfolios are valued at their market value if market quotations are
readily available. Otherwise, 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 instruments
held by CRI Money Market as well as all money market instruments with a
remaining maturity of 60 days or less held by any Portfolio, are valued on an
amortized cost basis.
- - ---------------------------------------------------------------------------
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 CRI Money Market consists of the interest income earned on investments, plus
or minus amortized purchase discount or premium, plus or minus realized and
unrealized gains and loss, less estimated expenses. For all other Portfolios,
the net investment income consists of all payments of dividends or interest
received by the Portfolio less estimated expenses, including the investment
advisory fee. All net realized capital gains, if any, are declared and
distributed periodically, at least annually. All dividends and distributions are
reinvested in additional shares of the Portfolio at net asset value.
- - ------------------------------------------------------------------------------
TOTAL RETURN AND YIELD INFORMATION
- - ------------------------------------------------------------------------------
CRI Money Market: Yield
From time to time CRI Money Market advertises its "yield" and "effective yield."
The "yield" of the Portfolio refers to the actual income generated by an
investment in the Portfolio over a particular base period of time, which will be
stated in the advertisement. If the base period is less than one year, the yield
is then "annualized." That is, the amount of income generated by the investment
during the base period is assumed to be generated over a one-year period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the
Portfolio is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield'' because of the compounding effect of this assumed
reinvestment.
CRI Bond: Yield
Yield measures the current investment performance of CRI Bond, that is, the rate
of income on its portfolio investments divided by the Portfolio's share price.
Yield is computed by annualizing the result of dividing the net investment
income per share over a 30-day period by the maximum offering price per share on
the last day of that period. Yields are calculated according to accounting
methods that are standardized for all stock and bond funds.
CRI Balanced, Equity, Bond, Global, Strategic Growth and Capital Accumulation:
Total Return and Other Quotations
CRI Balanced, Equity, Bond, Global, Strategic Growth and Capital Accumulation
may each advertise ''total return." Total return refers to the total change in
value of an investment in the Portfolio over a specified period. It differs from
yield in that yield figures measure only the income component of a Portfolio's
investments, while total return includes not only the effect of income dividends
but also any change in net asset value, or principal amount, during the stated
period. Total return shows its overall change in value, including changes in
share price and assuming all of the Portfolio's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Portfolio's
performance over a stated period of time. An average annual total return
reflects the hypothetical annual compounded return that would have produced the
same cumulative total return if the Portfolio's performance had been constant
over the entire period. Because average annual returns tend to smooth out
variations in the Portfolio's returns, you should recognize that they are not
the same as actual year-by-year results. The total return of a Portfolio
generally does not include the effect of paying the sales charges on the
particular insurance policy or annuity contract for which the Portfolio serves
as the investment vehicle.
- - -----------------------------------------------------------------------
TAXES
- - ------------------------------------------------------------------------
As a "regulated investment company" under the Internal Revenue Code of 1986, as
amended, the Fund is not subject to federal income or excise tax to the extent
that it distributes its net investment income and net capital gains. Each
Portfolio is treated as a separate entity for federal income tax purposes. Since
the sole shareholders of the Fund are Insurance Companies, no discussion is
included here 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.
- - --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- - --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place of business at
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814, is the transfer
agent and dividend disbursing agent.
<PAGE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED STRATEGIC GROWTH PORTFOLIO
Supplement to May 1, 1995 Prospectus
Date of Supplement: October 30, 1995
Insert the following after page 9 of the Prospectus, as part of the Financial
Highlights section:
<TABLE>
<CAPTION>
Calvert Responsibly Invested Strategic Growth Portfolio From inception
(March 1, 1995) to June 30, 1995
(Unaudited)
<S> <C>
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income (.04)
Net realized and unrealized gain (loss) on investments .04
Total from investment operations --
Distributions to shareholders
Dividends from net investment income --
Dividends from net realized gains --
Total distributions --
Total increase (decrease) in net asset value --
Net asset value, end of period $10.00
Total return<F1> 0.00%
Ratio of expenses to average net assets 1.56%(a)
Ratio of net investment income to average net assets (1.51)%(a)
Increase reflected in net income ratio due to
expense reimbursement --
Portfolio turnover 35%
Net assets, end of period $908,481
Number of shares outstanding at end of period (in thousands) 91
(a) Annualized
<FN>
<F1>Total return is for the Portfolio only and does not reflect sales charges
and expenses deducted by the Insurance Companies.
</FN>
</TABLE>
<PAGE>
Exhibit 17(b)
Ex-99.17
February 28, 1995
Securities and Exchange Commission
450 Fifth Street, N. W.
Washington, D.C. 20549
Re: 24f-2 Notice for
Acacia Capital Corporation
File Nos. 2-80154 and 811-3591
Gentlemen:
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, the following Notice is submitted on behalf of Acacia Capital
Corporation (the "Corporation"):
(i) fiscal year ended December 31, 1994;
(ii) None;
(iii) None;
(iv) $56,607,322.00**;
(v) $56,607,322.00.
It is my opinion, based on an examination of the Fund's
Articles of Incorporation and By-Laws and such other original or
photostatic copies of Fund records, certificates of public
officials, documents, papers, statutes, and authorities as I deemed
necessary to form the basis of the opinion, that the securities
whose registration this Notice makes definite were legally issued,
fully paid and non-assessable.
Enclosed with this Notice is a certified bank check in the
amount of $6,478.84 in payment of the filing fee set forth under
Investment Company Act Rule 24f-2 and Section 6(b) of the
Securities Act of 1933.
Sincerely,
William M. Tartikoff
Vice President and Secretary
***As authorized by paragraph (c) of Rule 24f-2, the
filing fee has been computed on the basis of aggregate sales of
$56,607,322.00 less aggregate redemptions of $37,817,175.00. No
redemptions have previously been applied by the Fund in reduction
of fees pursuant to Rule 24(e)(1).
File 74-4
