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>
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.
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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.
- --------
2Total 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.
