As Filed with the Securities and Exchange
Commission on October 16, 1995
1933 Act Registration No. 33-6405
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[X] Pre-Effective [ ] Post-Effective
Amendment No.1 Amendment No.
ACACIA CAPITAL CORPORATION
CRI Capital Accumulation Portfolio
(Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (301) 951-4800
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
-------------------------------------------
(Address of Principal Executive Offices)
William M. Tartikoff, Esq.
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
(Name and Address of Agent for Service)
Approximate date of proposed public offering: As soon as possible after the
effective date of this Registration Statement.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933, as amended (the "1933 Act") pursuant to Section 24(f)
under the Investment Company Act of 1940, as amended (the "1940 Act") (File No.
2-80154); accordingly, no fee is payable herewith. Registrant is filing as an
exhibit to this Registration Statement a copy of an earlier declaration under
Rule 24f-2 under the 1940 Act. Pursuant to Rule 429 under the 1933 Act, this
Registration Statement relates to the aforementioned registration on Form N-1A.
A Rule 24f-2 Notice for the Registrant's most recent fiscal year ended December
31, 1994 was filed with the Commission on February 28, 1995.
The Regristrant is requesting acceleration of the effective date of this
Registration Statement to December 22, 1995 or as soon thereafter as
noticeable.
<PAGE>
ACACIA CAPITAL CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Location in Prospectus/Proxy
Item of Part A of Form N-14 Statement
1. Beginning of Registration Cross Reference Sheet;
Statement and Outside Front Cover Page
Cover Page of Prospectus
2. Beginning and Outside Back Table of Contents
Cover Page of Prospectus
3. Fee Table, Synopsis and Cover Page; Summary;
Risk Factors Risks
4. Information About the Summary; Reasons for the
Transaction Reorganization;
Description of the Merger;
Information about the
Reorganization; Distribution
of Shares; Federal Income
Tax Consequences;
Comparative Information
on Shareholders' Rights
5. Information about Comparison of Cover
the Registrant Page; Summary;
Investment Objectives
and Policies Financial
Highlights; Distribution
of Shares; Federal Income
Tax Consequences;
Comparative Information
on Shareholders' Rights;
Additional Information
6. Information about Cover Page; Summary;
the Portfolio Comparison of
Being Acquired Investment Objective
and Policies;
Distribution of Shares;
Federal Income Tax
Consequences; Comparative
Information on Shareholders'
Rights; Additional
Information
7. Voting Information Cover Page; Summary;
Information about the
Reorganization; Voting
Information Concerning
the Meeting
8. Interest of Certain Financial Statements
Persons and Experts and Experts; Legal
Matters
9. Additional Information Inapplicable
Required for Reoffering
by Persons Deemed
to be Underwriters
Item of Part B of Form N-14 Location in Statement
of Additional Information
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information Statement of Additional
About the Registrant Information
of Acacia Capital
Corporation
13. Additional Information Statement of
about the Company Additional
Being Acquired Information of
Acacia Capital
Corporation
14. Financial Statements Incorporated by
reference; Pro Forma
Financial Statements
Item of Part C of Form N-14 Location in Part C
15. Indemnification Incorporated by
Reference to Part A
Caption -
"Comparative
Information on
Shareholders'
Rights -
Indemnification
of Directors"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17.Undertakings
<PAGE>
ACACIA CAPITAL CORPORATION
--CALVERT RESPONSIBLY INVESTED
EQUITY PORTFOLIO
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
December 30, 1995
To Persons Invested in the Calvert
Responsibly Invested Equity Portfolio:
The Prospectus/Proxy Statement accompanying this letter contains information
concerning a proposed amendment to the Acacia Capital Corporation (the
"Company") Articles of Incorporation that would, in effect, merge the Calvert
Responsibly Invested ("CRI") Equity Portfolio into the Company's CRI Capital
Accumulation Portfolio (the "Capital Accumulation Portfolio"). The Equity
Portfolio has grown little since its inception and as of August 31, 1995 had
only approximately $2.8 million in assets. It is difficult to manage such a
small fund on a competitive and cost-effective basis. The Company's Directors
have determined it to be in the best interests of persons invested in the Equity
Portfolio to approve an amendment to the Company's Articles of Incorporation to,
in effect, combine the Equity Portfolio into the Company's existing Capital
Accumulation Portfolio by a reclassification of Equity Portfolio shares. The
Directors of the Company believe that persons invested in the Equity Portfolio
will receive the benefits of economies of scale and a better "track" record of
performance and possible increased distribution possibilities.
The proposal contained in the accompanying Prospectus/Proxy Statement provides
for a combination of the Equity Portfolio with the Capital Accumulation
Portfolio. Your Portfolio and the Capital Accumulation Portfolio have relatively
similar investment objectives and policies. Under the proposed Agreement and
Plan of Reclassification (the "Plan"), the Company would amend its Articles of
Incorporation to reclassify the issued and unissued shares of the class of the
Company's common stock currently designated as CRI Equity Portfolio into the
class of the Company's common stock currently designated as CRI Capital
Accumulation Portfolio. In effect, shareholders of the Equity Portfolio would
exchange their shares for Capital Accumulation Portfolio and the Equity
Portfolio would be eliminated (the "Proposed Merger"). Shareholders of the
Equity Portfolio will receive that number of shares of the Capital Accumulation
Portfolio equal in value to their equity Portfolio shares immediately prior to
the closing of the Proposed Meager. As of August 31, 1995, the Equity
Portfolio had net assets of approximately $2.8 million and the Capital
Accumulation Portfolio had approximately $7.6 million of net assets. If the
Proposed Merger had taken place as of August 31, 1995, the Capital
Accumulation Portfolio's net assets would have been approximately $10.4 million.
I believe that the combination will achieve the goal of efficient investment
management.
The proposed transaction will not result in any federal income tax liability for
you or for the Equity Portfolio and will not change the benefits described in
your annuity contract such as variable annuity options, rights of termination or
death benefits prior to the commencement date.
The Directors of the Company have called a special meeting of shareholders of
the Equity Portfolio to be held on February 16, 1996 to consider the proposed
transaction. I STRONGLY INVITE YOUR PARTICIPATION BY ASKING YOU TO REVIEW,
COMPLETE AND RETURN THE ENCLOSED VOTING INSTRUCTION FORM AS SOON AS POSSIBLE.
Detailed information about the proposed transaction is described in the enclosed
Prospectus/Proxy Statement. I thank you for your participation as an investor in
the Equity Portfolio and urge you to please exercise your right to vote by
completing, dating and signing the enclosed voting instruction form.
A self-addressed, postage-paid envelope has been enclosed for your convenience.
A copy of the Company's CRI Prospectus with information on both the Equity
Portfolio and the Capital Accumulation Portfolio was previously sent to you.
If you would like another copy, have any questions regarding the proposed
transaction or would like additional information, please telephone
1-800-866-6007.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED AS SOON AS
POSSIBLE.
Sincerely,
Clifton S. Sorrell, President
ACACIA CAPITAL CORPORATION
<PAGE>
ACACIA CAPITAL CORPORATION
--CALVERT RESPONSIBLY INVESTED
EQUITY PORTFOLIO
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON February 16, 1996
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of the Calvert Responsibly Invested ("CRI") Equity Portfolio
(the "Equity Portfolio") of Acacia Capital Corporation (the "Company") will
be held at the offices of the Company, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814 on February 16, 1996 at 10:00 a.m., Eastern Time,
for the following purposes: 1. To consider and act upon an amendment to the
Company's Articles of Incorporation to, in effect, combine the Equity Portfolio
into the company's existing CRI Capital Accumulation Fund (the "Capital
Accumulation Fund") by a reclassification of Equity Portfolio shares.
A vote in favor of the proposed amendment is a vote in favor of the elimination
of the Equity Portfolio; and
2. To transact any other business which may properly come before the
Meeting or any adjournments thereof.
The Directors of the Company have fixed the close of business on December 18,
1995 as the record date for the determination of shareholders of the Equity
Portfolio entitled to notice of and to vote at the Meeting and any adjournment
thereof.
IT IS IMPORTANT THAT VOTING INSTRUCTIONS BE RETURNED PROMPTLY. SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED WITHOUT DELAY TO SIGN
AND RETURN THE ENCLOSED VOTING INSTRUCTION FORM IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE, SO THAT THEIR SHARES MAY BE REPRESENTED AND VOTED AT THE
MEETING. YOUR PROMPT ATTENTION TO THE ENCLOSED VOTING INSTRUCTION FORM WILL HELP
TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors
William M. Tartikoff, Esq.
Secretary
December 30, 1995
INSTRUCTIONS FOR EXECUTING VOTING INSTRUCTION FORM
The following general rules for signing voting instruction forms may
be of assistance to you and may help to avoid the time and expense involved
in validating your vote if you fail to sign your voting instruction form
properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the voting instruction form.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration on the
voting instruction form.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the voting
instruction form should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe, Treasurer
(4) ABC Corp. Profit
Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr., Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED December 30, 1995
THE CALVERT RESPONSIBLY INVESTED
EQUITY PORTFOLIO OF ACACIA
CAPITAL CORPORATION
4550 MONTGOMERY AVENUE
SUITE 1000N
BETHESDA, MARYLAND 20814
This Prospectus/Proxy Statement is being furnished to shareholders of the
Calvert Responsibly Invested ("CRI") Equity Portfolio (the "Equity Portfolio")
of Acacia Capital Corporation (the "Company"), in connection with a proposed
amendment to the Company's Articles of Incorporation that would, in effect,
combine the Equity Portfolio into the Company's existing CRI Capital
Accumulation Portfolio (the "Capital Accumulation Portfolio") (the "Proposed
Merger"). The Proposed Merger would be accomplished by a reclassification of
shares and tax-free transfer of all assets and liabilities of the Equity
Portfolio in exchange for shares of the Capital Accumulation Portfolio. As a
result of the Proposed Merger, shareholders of the Equity Portfolio would
exchange their shares and become shareholders of the Capital Accumulation
Portfolio and the Equity Portfolio would be eliminated. Each Portfolio will pay
its respective expenses attributable to the Proposed Merger.
The Company is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"). The Company
currently consists of 7 portfolios, each with a different investment objective.
The Capital Accumulation Portfolio seeks to provide long-term capital
appreciation by investing primarily in a non-diversified portfolio of the equity
securities of small-to mid-sized companies that are undervalued but demonstrate
a potential for growth. The Portfolio relies 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.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Capital
Accumulation Portfolio that shareholders of the Equity Portfolio should
know before voting on the Proposed Merger. Certain relevant documents
listed below, which have been filed with the Securities and Exchange
Commission (the "SEC"), are incorporated in whole or in part by reference.
A Statement of Additional Information dated May 1, 1995, relating to this
Prospectus/Proxy Statement and the Proposed Merger, incorporating by
reference the financial statements of the Capital Accumulation Portfolio
and the Equity Portfolio (each a "Portfolio" and together, the
"Portfolios"), dated December 31, 1994 has been filed with the SEC and is
incorporated by reference in its entirety into this Prospectus/Proxy
Statement. A copy of such Statement of Additional Information is available
upon request and without charge by writing to the Company at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 or by calling
toll-free 1-800-368-2748.
The Prospectus of the CRI portfolios of the Company, including the
Portfolios, dated May 1, 1995, the Company's Annual Report for such CRI
portfolios for the fiscal year ended December 31, 1994 and the Company's
CRI Capital Accumulation Portfolio's unaudited balance sheet dated June
30, 1995 and unaudited income statement for the six months ended June 30,
1995 are incorporated herein by reference in their entirety, insofar as
they relate to the Capital Accumulation Portfolio and the Equity Portfolio
only, and not to any other portfolios described therein.
Included as Exhibit A to this Prospectus/Proxy Statement is a copy of
the Plan of Reclassification (the "Plan") and included as Exhibit B to this
Prospectus/Proxy Statement is the form of amendment to the Company's
Articles of Incorporation to be filed with the State of Maryland if
shareholders of the Equity Portfolio approve the Plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS
OR OBLIGATIONS OF OR ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS. WHEN INVESTORS SELL
SHARES OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT
ORIGINALLY PAID.
<PAGE>
TABLE OF CONTENTS
VOTING INFORMATION..............................
SUMMARY.........................................
THE COMPANY.............................
PROPOSED MERGER
TAX CONSEQUENCES..........................
INVESTMENT OBJECTIVES AND POLICIES OF THE
CAPITAL ACCUMULATION PORTFOLIO AND
THE EQUITY PORTFOLIO...............
MANAGEMENT OF THE FUNDS.................
INVESTMENT ADVISERS, SUB-ADVISERS AND ADMINISTRATOR
PORTFOLIO MANAGEMENT........
DISTRIBUTION OF SHARES......
PURCHASE AND REDEMPTION PROCEDURES.........
DIVIDENDS AND DISTRIBUTIONS............
FINANCIAL HIGHLIGHTS.........................
PRINCIPAL RISKS......................
INFORMATION ABOUT THE PROPOSED MERGER.........
DESCRIPTION OF THE MERGER...............
REASONS FOR THE PROPOSED MERGER.........
PRO-FORMA CAPITALIZATION...............
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES......................
PERFORMANCE INFORMATION
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS.......
FORM OF ORGANIZATION.......................
CAPITALIZATION.......................
SHAREHOLDER MEETINGS AND VOTING RIGHTS.....
LIQUIDATION OR DISSOLUTION............
RIGHTS OF INSPECTION..................
ADDITIONAL INFORMATION......................
FINANCIAL STATEMENTS AND EXPERTS.............
LEGAL MATTERS................................
OTHER BUSINESS................................
<PAGE>
VOTING INFORMATION
This Prospectus/Proxy Statement solicits the accompanying voting
instructions ("Proxy") on behalf of the Board of Directors of the
Company for use at the Special Meeting of Shareholders of the Equity
Portfolio to be held February 16, 1996 at 10:00 a.m.,
Eastern Time, and any adjournments thereof (the "Meeting"). The
Equity Portfolio will bear all expenses in connection with the
solicitation of Proxies. Employees of Calvert Asset Management Company, Inc.
("CAMCO"), the Portfolio's investment adviser, and Providian Life and Health
Insurance Company ("Providian"), will solicit Proxies. The solicitation will
be by mail and may also be by telephone, telegram or personal interview.
Outstanding Shares and Voting Requirements
The Board of Directors of the Company has fixed the close of
business on December 18, 1995 as the record date (the "Record
Date") for determination of shareholders entitled to notice of and to
vote at the Meeting and any adjournments thereof. All outstanding
shares of the Equity Portfolio are owned of record by Providian Separate
Account V, which is registered with the Securities and Exchange Commission
(the "SEC"), (the "Separate Account") to fund variable annuity contracts
(the "contracts") issued by Providian.
Approval of the Proposed Merger requires the affirmative vote of
the holders of at least a majority (as defined in the 1940 Act) of the
interest in the Equity Portfolio shares entitled to vote.
Providian holds through its Separate Account, all of the
Equity Portfolio shares entitled to vote. Providian will attend
the Meeting and vote the Equity Portfolio shares held by its
Separate Account in accordance with instructions received
from contract owners having values allocated to the Equity Portfolio,
as provided in the contracts. Providian will vote Equity
Portfolio shares for which no instructions are received in the same
proportion as to which instructions are received with respect to
the Separate Account.
Each contract participant (other than participants under
contracts issued in connection with non-qualified and unfunded
deferred compensation plans or contracts issued in connection with a
deferred compensation plan) has the right to give instructions as to
how shares of the Equity Portfolio attributable to the participant's
account should be voted, notwithstanding that the contract owner may
be the participant's employer. Contract owners will instruct the
Separate Accounts in accordance with such instructions. Fractional
shares also will be voted in accordance with instructions received. A
contract owner or participant who has given voting instructions may
revoke such voting instructions only through the Separate Account
prior to the Meeting date. There are no appraisal rights.
The number of Equity Portfolio shares deemed attributable to a
participant's account prior to the annuity date and during the
lifetime of the annuitant will be determined on the basis of the value
of accumulation units credited to the participant's account as of the
Record Date. On or after the annuity date or after the death of the
participant, the number of Equity Portfolio shares deemed attributable
to the participant's account will be based on the liability for future
variable annuity payments to the payee under the contract as of the
Record Date. Such liability for future payments will be calculated on
the basis of the mortality assumptions and the assumed investment rate
used in determining the number of annuity units credited to the
participant's account and the applicable annuity unit value on the
Record Date.
As of the close of business on the Record Date, there were
outstanding 234,843.126 shares of common stock of the Equity Portfolio.
Each share is entitled to one vote. To the Company's knowledge no person
owns annuity contracts or interests therein entitling that person to give
voting instructions regarding five percent or more of the total outstanding
shares of the Equity Portfolio.
Directors and officers of the Company as a group own annuity
contracts or interests therein entitling them to give voting
instructions regarding less than one percent of the total outstanding
shares of the Equity Portfolio.
The cost of this proxy solicitation, including the printing and
mailing of the proxy materials, will be borne by the Equity
Portfolio. A proxy may be revoked at anythime before or during the
meeting by oral or written notice to William M. Tartikoff, Esq., Secretary
of the Company, 4550 Montgomery Ave., Suite 1000N, Bethesda, MD 20814.
This Prospectus/Proxy Statement was first mailed to contract owners on or
about December 30, 1995. If you have any questions about the proposed merger,
please call 1-800-866-6007.
<PAGE>
SUMMARY
THE COMPANY
The Equity Portfolio and the Capital Accumulation Portfolio are
each a series of the Company, an open-end management investment
company organized as a Maryland corporation on December 22, 1982. The
Company currently consists of seven separate investment portfolios,
each of which is, in effect, a separate mutual fund issuing its own
separate class of common stock. By investing in a portfolio, an
investor becomes entitled to a pro-rata share of all dividends and
distributions arising from the net income and capital gains on the
investments of that portfolio. Each portfolio is governed by the
Company's Articles of Incorporation, its Bylaws and applicable
Maryland law.
THE PROPOSED MERGER
The Board of Directors of the Company has approved a Plan of
Reclassification (the "Plan") providing for the Company to amend its
Articles of Incorporation, subject to the approval of the shareholders
of the Equity Portfolio, to reclassify the issued and unissued shares
of the class of the Company's common stock currently designated as CRI
Equity Portfolio into the class of the Company's common stock
currently designated as CRI Capital Accumulation Portfolio. In
effect, shareholders of the Equity Portfolio would exchange their
shares for shares of the Capital Accumulation Portfolio and the Equity
Portfolio would be eliminated.
The Plan contemplates a Proposed Merger in which shares of the
Equity Portfolio will be reclassified and the Equity Portfolio will
transfer all of its assets and liabilities to the Capital Accumulation
Portfolio in exchange for shares of the Capital Accumulation
Portfolio. The number of shares of the Capital Accumulation Portfolio
to be issued to the Equity Portfolio will be determined on the basis
of the relative net asset values of the Equity Portfolio and the
Capital Accumulation Portfolio calculated as of the close of business
on the business day immediately preceding the effective date of the
Proposed Merger, currently scheduled for February 26, 1996. The Equity
Portfolio will then distribute the Capital Accumulation Portfolio
shares it receives to Equity Portfolio shareholders in exchange for
their Equity Portfolio shares, on a pro-rata basis.
The Directors of the Company, including the Directors who are not
"interested persons," as such term is defined in the 1940 Act (the
"Independent Directors"), have concluded that the Proposed Merger
would be in the best interests of shareholders of the Equity Portfolio
and that the interests of the shareholders of the Equity Portfolio and
the Capital Accumulation Portfolio will not be economically diluted as
a result of the transactions contemplated by the Reorganization.
Accordingly, the Directors have submitted the Plan for the approval of
the Equity Portfolio's shareholders. THE DIRECTORS OF THE COMPANY
RECOMMEND APPROVAL BY SHAREHOLDERS OF THE EQUITY PORTFOLIO OF THE PLAN
EFFECTING THE PROPOSED MERGER.
If the shareholders of the Equity Portfolio do not vote to
approve the Proposed Merger, the Directors of the Company will
consider other possible courses of action in the best interests of
shareholders.
TAX CONSEQUENCES
The completion of the Proposed Merger is contingent upon the
receipt by the Company of an opinion of outside tax counsel to the
effect that the Proposed Merger will qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code"). As such, the Proposed Merger will not result
in the recognition, for federal income tax purposes, of any gain or
loss to the Equity Portfolio or its shareholders, the aggregate tax
basis of the shares of the Capital Accumulation Portfolio received by
shareholders of the Equity Portfolio will be the same as the tax basis
of those shareholders' Equity Portfolio shares and the aggregate tax
basis of the assets of the Equity Portfolio in the hands of the
Capital Accumulation Portfolio will be the same as the tax basis of
such assets in the hands of the Equity Portfolio prior to the Proposed
Merger. In addition, the Proposed Merger will not result in the
recognition of any gain or loss to contract owners.
INVESTMENT OBJECTIVES AND POLICIES OF THE CAPITAL ACCUMULATION
PORTFOLIO AND THE EQUITY PORTFOLIO
The Capital Accumulation Portfolio. The Capital Accumulation
Portfolio 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 relies 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 takes 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.
The Equity Portfolio. The Equity Portfolio 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 Portfolio's investment and social
criteria. The Portfolio is neither speculative nor conservative in
its investment policies and takes reasonable risks in seeking to
achieve its investment objective of growth of capital. The Portfolio
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 $1 billion; 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 the Equity Portfolio 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 "Comparison of Investment
Objectives and Policies" below.
MANAGEMENT OF THE FUNDS
The overall management of the Company and the Portfolios is the
responsibility of, and is supervised by, the Board of Directors of the
Company.
INVESTMENT ADVISERS, SUB-ADVISERS AND ADMINISTRATOR
Calvert Asset Management Company, Inc. ("CAMCO"), 4550 Montgomery
Avenue, Suite 1000N, Bethesda, Maryland 20814, is the investment
adviser to both Portfolios. CAMCO is a wholly-owned subsidiary of
Calvert Group, Ltd., of the same address, which is in turn an indirect
wholly-owned subsidiary of Acacia Mutual Life Insurance Company, 51
Louisiana Avenue, N.W., Washington, D.C. 20001. As of August 31,
1995, CAMCO had assets under management and administration in excess of
$4.8 billion. Pursuant to its investment advisory agreement with the
Company, CAMCO manages the investment and reinvestment of the assets of
each Portfolio and is responsible for the overall management of the
business affairs of each Portfolio, subject to the direction and
authority of the Company's Board of Directors. CAMCO also serves as
investment adviser 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. CAMCO has retained certain investment subadvisers
("Subadvisers") for the Portfolios.
The Capital Accumulation Portfolio
The Capital Accumulation Portfolio has a pool of six investment
subadvisers ready to manage the Portfolio's assets. The Subadvisers
along with their investment style and ownership characteristics, are
listed below, the asterisks indicating those comprising the current
portfolio management team who have managed the Portfolio since
December 8, 1994:
Subadviser Investment Style Ownership
*Apodaca-
Johnston Small-Cap Growt Hispanic American
*Brown
Capital Mid-/Large-Cap African American
Growth
*Fortalez
Asset
Management Small-Cap Growth Hispanic/Women
New
Amsterdam Mid-Cap Value
Growth Women
Seneca,Inc. Large-Cap Value Women
Sturdivant Large-Cap Value African Americans
CAMCO selects which Subadvisers will manage the Capital Accumulation
Portfolio's assets at any given time and the allocation of assets
among the managers. CAMCO retains a consultant, Progress Investment
Management Company ("Progress"), to aid it in making these
determinations. Progress is a California state-certified minority
business enterprise, registered as an investment adviser with the SEC,
that evaluates and monitors emerging minority/women-owned investment
management firms. Each firm has selected a performance index against
which the performance fee adjustment, if any, will be calculated, as
explained below.
Apodaca-Johnston Capital Management, Inc. Apodaca-Johnston Capital
Management, Inc., 580 California Street, Suite 200, San Francisco,
California 94104, 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 price strength.
Its performance index is the Russell 2000.
Mr. Scott is President and Chief Investment Officer of
Apodaca-Johnston. In 1985 Mr. Johnston founded Sterling Financial
Group, an independent SEC-registered investment advisory firm, which
was merged into Apodaca-Johnston Capital Management.
Brown Capital Management, Inc. Brown Capital Management, Inc.,
809 Cathedral Street, Baltimore, Maryland 21201, 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. Eddie Brown is founder and President of Brown Capital Management.
He has over 22 years of investment experience, having served as Vice
President and Portfolio Manager for 10 years at T. Rowe Price
Associates immediately prior to starting his own firm.
Fortaleza Asset Management, Inc., 200 West Adams, Suite 1900,
Chicago, Illinois 60606, is a small-cap growth manager that bases
its investment principles on: (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 (selecting the
individual companies first, rather than the industry sector). Its
performance index is the Russell 2000.
Ms. Margarita 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.
New Amsterdam Partners, L.P. is a mid-cap value investment manager
located at 475 Park Avenue , New York, New York 10016. 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.
Seneca, Inc., 100 Campus Drive, Second Floor West, Flovham Park,
Basking Ridge, New Jersey 07932, 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 price/earnings 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., 223 Gibbsboro Road,
Clementon, New Jersey 08021, 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.
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.
The Equity Portfolio
The Subadviser to the Equity Portfolio is Loomis, Sayles and
Company ("Loomis Sayles") 2001 Pennsylvania Avenue, N.W., Washington,
D.c. 20006, which replaced United States Trust Company as of February 1, 1994
upon shareholder approval. The individual portfolio manager responsible for
the Equity Portfolio 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.
For its services, CAMCO, as the Portfolios' investment adviser, is
entitled to receive a fee based on a percentage of the average daily
net assets of each of the Portfolios. CAMCO is currently entitled to
receive a base fee of 0.70% of average daily net assets of the Equity
Portfolio and 0.80% of the average daily net assets of the Capital
Accumulation Portfolio.
CAMCO will pay the Subadvisers of the Portfolios a base fee of 0.25%
of average net assets. In addition, under the circumstances described
below, for each Portfolio, the investment advisers to the Capital
Accumulation Portfolios and the investment subadvisers to the
Portfolios 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 the Equity Portfolio, payment consistent with the performance
fee adjustment began June 1, 1995. In the case of the Capital
Accumulation Portfolio, the performance fee adjustment will begin on
January 1, 1997. The specific adjustments are as follows:
The Equity Portfolio Subadviser's Performance Fee Adjustment
Performance
versus the Performance
S&P 500 Stock Fee
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 for the Equity Portfolio is collected from or
disbursed by the Portfolio directly to the investment adviser, which acts as a
conduit to the investment subadviser, but which does not retain any of
in the performance fee adjustment.
The Capital Accumulation Portfolio: CAMCO's Performance Fee Adjustment
Performance
versus the Performance
S&P 400 Mid- Fee
Cap Index Adjustment
10% to less
than 25% 0.01%
25% to less
than 40% 0.03%
40% or more 0.05%
CAMCO's performance fee adjustment will be paid directly from the Portfolio
to CAMCO.
The Capital Accumulation Portfolio: Each Subadviser's Performance Fee Adjustment
Performance Performance
versus the 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 to a Subadviser
will be paid from the Capital Accumulation Portfolio to CAMCO and
not out of CAMCO's own fee, and CAMCO will pass on the
appropriate amount to the particular Subadviser; fees adjusted
downward from the base fee as a result of under performance 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.
Calvert Administrative Services Company ("CASC"), an affiliate of
CAM, has been retained by the Capital Accumulation Portfolio to
provide certain administrative services necessary to the conduct
of its 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 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.
PORTFOLIO MANAGEMENT
See "Investment Adviser, Sub-Advisers and Administrator" above.
DISTRIBUTION OF SHARES
With regard to the Portfolios, the Company's shares are sold to
Providian for allocation to the Separate Account to fund the
benefits under certain variable annuity and variable life insurance
policies (the "Variable Accounts"). Shares of the Portfolios may also
be sold to other insurance companies for the same purpose. In this
Prospectus/Proxy Statement, Providian 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 Portfolios may only be sold to the Insurance
Companies for their Separate Accounts, and not to individual
investors. As such, the "shareholders" referred to in this prospectus
are the Insurance Companies. Nevertheless, as a policyholder you have
an opportunity to choose among the various Portfolios in order to fund
the benefits under any Policies you purchase, subject to any
limitations described in the Insurance Companies' prospectuses.
Shares are purchased by the Variable Accounts at the net asset
value of a Portfolio next determined after the Insurance Company
receives the premium payment. The Company continuously offers its
shares in the Portfolios at a price equal to the net asset value per
share. Initial and subsequent payments allocated to a Portfolio are
subject to the limits applicable in the Policies issued by the
Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable
Accounts, or for Variable Accounts of different Insurance Companies,
to invest simultaneously in a Portfolio, although currently neither
the Insurance Companies nor the Company foresees any such
disadvantages to either variable annuity or variable life insurance
policyholders of any Insurance Company. The Company's Directors
intend to monitor events in order to identify any material conflict
between such policyholders and to determine what action, if any,
should be taken in response to the problem.
PURCHASE AND REDEMPTION PROCEDURES
Information concerning the purchase of shares is described above.
The Insurance Companies redeem shares of the Portfolios to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Company is open for
business (each day the New York Stock Exchange is open), and are made
at a Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, and in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the
Rules under the 1940 Act. The amount received on redemption of the
shares of a Portfolio may be more or less than the amount paid for the
shares, depending on the fluctuations in the market value of the
assets owned by the Portfolio. The Company redeems all full and
fractional shares of the Portfolios for cash.
The net asset value of the shares of each Portfolio is determined
once daily as of the close of business of the New York Stock Exchange,
on days when the Exchange is open for business, or for any other day
when there is a sufficient degree of trading in the investments of a
Portfolio to affect materially its asset value per share (except on
days when no orders to purchase or redeem shares of the Portfolio have
been received). The net asset value is determined by adding the
values of all securities and other assets of a Portfolio, subtracting
liabilities and expenses, and dividing by the number of outstanding
shares of the Portfolio.
Except for money market instruments maturing in 60 days or less,
securities held by the Portfolios are valued at their market value if
market quotations are readily available. Otherwise, securities are
valued at fair value as determined in good faith by the Board of
Directors, although the actual calculations may be made by persons
acting pursuant to the direction of the Board of Directors of the
Company. All money market instruments with a remaining maturity of 60
days or less held by a Portfolio, are valued on an amortized cost
basis.
DIVIDENDS AND DISTRIBUTIONS
It is the Company's intention to distribute substantially all
of the net investment income, if any, of the Portfolios. Net
investment income consists of all payments of dividends or interest
received by a Portfolio less estimated expenses, including the
investment advisory fee. All net realized capital gains, if any, are
declared and distributed periodically, at least annually. All
dividends and distributions are reinvested in additional shares of the
Portfolio at net asset value.
FINANCIAL HIGHLIGHTS
The following tables provide information about the Capital
Accumulation Portfolio'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 Capital Accumulation
Portfolio Six months
ended
June 30, 1995
(Unaudited) Year Ended
December 31,
1995 1994
<S> <C> <C>
$ 16.97 $ 18.95
Net asset value, beginning of period
Income from investment operations
Net investment income (.05) .10
Net realized and unrealized gain
(loss) on investments 4.30 (1.98)
Total from investment
operations 4.25 (1.88)
Distributions to shareholders
Dividends from net investment
income -- (.10)
--
Distribution from capital gains -- --
Total distributions -- (.10)
Total increase (decrease) in net 4.25 (1.98)
asset value
Net asset value, end of period $ 21.22 $ 16.97
Total return<F1> 25.04% (9.92)%
Ratio of expenses to average net assets 98%(a) .79%
Ratio of net income to average net (.53%)(a) .68%
assets
Increase reflected in net income ratio
due to expense reimbursement -- --
Portfolio turnover 65% 79%
Net assets, end of period $$6,808,661 %$5,688,821
Number of shares outstanding at end
of period (in thousands) 321 335
<FN>
<F1>Total return is for the Portfolio only and does not reflect sales charges
and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
<TABLE>
<CAPTION>
CRI Capital Accumulation
Portfolio
Year Ended December 31,
1993 1992
<S> <C> <C>
$ 17.87 $ 15.82
Net asset value, beginning of period
Income from investment operations
Net investment income .08 .09
Net realized and unrealized gain
(loss) on investments 1.27 2.09
Total from investment
operations 1.35 2.18
Distributions to shareholders
Dividends from net investment
income (.08) (.09)
Distribution from capital gains (.19) (.04)
Total distributions (.27) (.13)
Total increase (decrease) in net 1.08 2.05
asset value
Net asset value, end of period $ 18.95 17.87
Total return<F2> 7.56% 13.73%
Ratio of expenses to average net assets .80% .39%
Ratio of net income to average net .66% 1.19%
assets
Increase reflected in net income ratio
due to expense reimbursement -- .87%
Portfolio turnover 26% 2%
Net assets, end of period $$4,986,223 $$870,066
Number of shares outstanding at end
of period (in thousands) 263 49
<FN>
<F2>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 From
inception
July 16,
1991 through
December 31,
1991
<S> <C>
$ 15.00
Net asset value, beginning of period
Income from investment operations
Net investment income .26
Net realized and unrealized gain
(loss) on investments .82
Total from investment
operations 1.08
Distributions to shareholders
Dividends from net investment
income (.26)
Distribution from capital gains --
Total distributions (.26)
Total increase (decrease) in net .82
asset value
Net asset value, end of period 15.82
Total return<F3> 7.25%
Ratio of expenses to average net assets --
Ratio of net income to average net .84%(a)
assets
Increase reflected in net income ratio
due to expense reimbursement 4.23%(a)
Portfolio turnover 5%
Net assets, end of period $268,040
Number of shares outstanding at end 17
of period (in thousands)
<FN>
<F3>Total return is for the Portfolio only and does not reflect sales charges
and expenses deducted by the Insurance Companies.
(a) = Annualized
</FN>
</TABLE>
PRINCIPAL RISKS
The Equity Portfolio and the Capital Accumulation Portfolio have
distinct investment objectives that they pursue through their separate
investment policies, as stated above. There can be no assurance that the
objectives of either the Equity Portfolio or the Capital Accumulation
Portfolio will be achieved. The differences in objectives and policies
between the Equity Portfolio and the Capital Accumulation Portfolio can be
expected to affect the return of each. As described below under "Comparison
of Investment Objectives and Policies", the Capital Accumulation
Portfolio may be viewed as more aggressive and concomitantly more
volatile than the Equity Portfolio for five principal reasons.
First, the Capital Accumulation Portfolio is "non-diversified" which
means that, as opposed to the "diversified" Equity Portfolio, a higher
percentage of its assets may be invested in a more limited number of issues,
with the result that its shares are more susceptible to any single economic,
political or regulatory event than the shares of the Equity Portfolio.
Second, The Capital Accumulation Portfolio invests in small-cap issuers.
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. There is no limit on the percentage of
assets that may be invested in small-cap issuers.
Third, the Capital Accumulation Portfolio may borrow up to one-third of
its total assets while the Equity Portfolio may only borrow up to 10% of its
total assets. This allows the Capital Accumulation Portfolio to use
potentially more leverage than the Equity Portfolio, although in any event, the
Capital Accumulation Portfolio will only borrow from banks and then only for
temporary or emergency purposes.
Fourth, the Capital Accumulation Portfolio may invest up to 3% (while the
Equity Portfolio may invest up to 1%) of its total assets in investments that
offer a below market return but that further the Portfolio's social criteria.
Finally, the Capital Accumulation Portfolio may invest up to 15% of its
net assets in illiquid securities while the Equity Portfolio may invest up to
10% of its net assets in such securities.
INFORMATION ABOUT THE PROPOSED MERGER
DESCRIPTION ABOUT THE PROPOSED MERGER
The Plan provides that after the Effective Time on the Closing Date the
Equity Portfolio will transfer all of its assets and liabilities to the
Capital Accumulation Portfolio if all of the conditions of the Plan are
fulfilled and are not waived and the Closing Date is not extended. In
exchange for the Equity Portfolio assets and liabilities, the Capital
Accumulation Portfolio will issue to the Equity Portfolio a number of
Capital Accumulation Portfolio shares having a value equal to the aggregate
net assets of the Equity Portfolio acquired. The Closing Date is currently
scheduled for February 26, 1996 and may be changed as determined by officers
of the Company. As part of the Plan, the Company's shareholders are being
asked to approve a proposed amendment to the Company's Articles of
Incorporation to reclassify the issued and unissued shares of the class of the
Company's common stock currently designated as the Equity Portfolio into the
class of common stock currently designated as the Capital Accumulation
Portfolio. Copies of the Plan and the proposed amendment to the Company's
Articles of Incorporation are attached as Exhibits A and B, respectively,
to this Prospectus/Proxy Statement.
The number of shares of the Capital Accumulation Portfolio to be issued
in the Proposed Merger will be determined on the basis of the relative net
asset values of the Equity Portfolio and the Capital Accumulation Portfolio
calculated as of the Valuation Date. The net asset value of each Portfolio
will be determined by dividing the value of that Portfolio's portfolio
securities, cash and other assets (including accrued but uncollected interest
and dividends), less all liabilities (including accrued expenses but excluding
capital and surplus) by the number of shares of that Portfolio outstanding.
Capital Accumulation Portfolio shares will be distributed to Equity
Portfolio shareholders in exchange for their Equity Portfolio shares, on a pro
rata basis. The number of such full and fractional Capital Accumulation
shares issued to each Equity Portfolio shareholder will be determined by
multiplying the number of Equity Portfolio shares to be exchanged by a
fraction, the numerator of which is the net asset value per share of the
Equity Portfolio and the denominator of which is the net asset value per share
of the Capital Accumulation Portfolio. Thus, the Equity Portfolio shares of
each Equity Portfolio shareholder will be exchanged for the number of full and
fractional shares of the Capital Accumulation Portfolio which, when multiplied
by the net asset value per share of the Capital Accumulation Portfolio, will
have a value equal to the aggregate net asset value of that shareholder's
shares in the Equity Portfolio at the Effective Time on the Closing Date. The
aggregate value of the Capital Accumulation Portfolio shares attributable to
shareholders previously holding Equity Portfolio shares will be the same
immediately after the Proposed Merger as the aggregate value of the Equity
Portfolio shares attributable to such shareholders immediately before the
Proposed Merger.
The Proposed Merger as provided in the Plan is subject to approval of the
shareholders of the Equity Portfolio. Approval requires the affirmative vote
of at least a majority of the Equity Portfolio shares entitled to vote. The
Plan is also conditioned on: (i) acceptance of the amendment to the Company's
Articles of Incorporation by the Maryland Department of Assessments and
Taxation and the amendment's having become effective; (ii) receipt of any
necessary regulatory approvals from the SEC; (iii) receipt of an opinion of
outside counsel that the Proposed Merger qualifies as a tax-free
reorganization under the Code; and (iv) receipt of any necessary regulatory
approvals by relevant state insurance authorities.
REASONS FOR THE PROPOSED MERGER
The Directors of the Company have considered and approved the Proposed
Merger, as recommended by CAM, including entry by the Company on behalf of
each Portfolio into the Plan, as in the best interests of the shareholders.
In making their recommendation to the Directors, the representatives of
CAM reviewed with the Directors various factors about the Company and its
Portfolios and the Proposed Merger. There are certain similarities between
the Capital Accumulation Portfolio and the Equity Portfolio. Specifically,
the Capital Accumulation Portfolio and the Equity Portfolio have certain
similar investment objectives and policies, and relatively comparable risk
profiles. See, "Comparison of Investment Objectives and Policies" below. In
terms of total net assets the Equity Portfolio at August 31, 1995 had net
assets of only approximately $2.8 million. The Capital Accumulation
Portfolio's net assets at such date were approximately $7.6 million. The
Equity Portfolio has not, since its inception in 1992 achieved asset levels on
a continuing basis that would permit it to operate economically and generate a
competitive return. Given the relative similarities between the Portfolios
and the fact that the Portfolios are offered through common distribution
channels and are both managed by CAM, CAM believes that the Equity Portfolio
will not be able to achieve significant increases in asset levels in the
foreseeable future.
The Directors of the Company met on August 2, 1995 and considered the
recommendation of CAM, and, in addition, considered among other things in
general, (i) the terms and conditions of the Proposed Merger; (ii) whether the
Proposed Merger would result in the economic dilution of shareholder
interests; (iii) the comparative performance records of each of the Portfolios;
compatibility of their investment objectives and policies; the investment
experience, expertise and resources of CAM and the Subadvisers; and the
personnel and financial resources of CAM and the Subadvisers; (iv) the fact that
the Capital Accumulation Portfolio will assume certain identified liabilities
of the Equity Portfolio; and (v) the expected federal income tax consequences
of the Proposed Merger.
The Directors also considered the benefits to be derived by shareholders
of the Equity Portfolio from the transfer of its assets to the Capital
Accumulation Portfolio. In this regard, the Directors considered the
economies of scale that could be realized by the participation by shareholders
of the Equity Portfolio in the combined portfolio.
During their consideration of the Proposed Merger, the Directors met with
members of the legal staff at CAM, as well as counsel to the Independent
Directors, regarding the legal issues involved. The Directors also concluded
at a meeting on August 2, 1995 that the Proposed Merger would be in the best
interests of shareholders of the Capital Accumulation Portfolio and that the
interests of the shareholders of the Capital Accumulation Portfolio will not
be diluted as a result of the transactions contemplated by the Proposed Merger.
THE DIRECTORS OF THE COMPANY RECOMMEND THAT THE SHAREHOLDERS OF THE
EQUITY PORTFOLIO APPROVE THE PROPOSED MERGER.
PRO-FORMA CAPITALIZATION
The following tables show the capitalization of the Capital Accumulation
Portfolio and the Equity Portfolio as of August 31, 1995 individually and on a
pro forma basis as of that date, giving effect to the proposed acquisition of
assets and liabilities of the Equity Portfolio at the then net asset value:
CAPITALIZATION OF THE EQUITY PORTFOLIO
AND THE CAPITAL ACCUMULATION PORTFOLIO
CAPITAL PRO FORMA FOR
EQUITY ACCUMULATION CAPITAL ACCUMULATION
PORTFOLIO PORTFOLIO PORTFOLIO
Net Assets............ $2,754,925 $7,612,117 $10,367,042
Shares Outstanding.... 154,804 328,606 447,532
Net Asset Value per
Share................. $17.80 $23.16 $23.16
The table above should be read in conjunction with the Funds' Annual
Report for the fiscal year ended December 31, 1994 and the unaudited statement
of assets and liabilities and statement of operations for June 30, 1995 and the
periods then ended, and the unaudited proforma statement of assets and
liabilities and statement of operations for December 31, 1994 and
August 31, 1995, and the periods then ended, each of which is hereby
incorporated herein by reference.
On the Record Date, there were 234,843.126 and 368,096.669 shares of the
Equity Portfolio and the Capital Accumulation Portfolio, respectively,
outstanding.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES OF INVESTMENT OBJECTIVES
The following discussion is based upon the descriptions of the respective
investment objectives, policies and restrictions set forth in the Company's
CRI Prospectus and Statement of Additional Information for the CRI portfolios.
The Company's CRI Prospectus also offers additional portfolios managed by CAM.
These additional portfolios are not involved in the Proposed Merger, their
investment objectives, policies and restrictions are not discussed in this
Prospectus/Proxy Statement and their shares are not offered hereby.
Although the Capital Accumulation Portfolio invests primarily in
equity securities, it may invest in debt securities. These debt securities
may consist of investment-grade and noninvestment-grade obligations.
Both the Capital Accumulation and Equity 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 their 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. Both
Portfolios may engage in futures contracts and related options only to protect
against market declines. Neither Portfolio engages in such transactions for
speculation or leverage. It is an operating policy of the Company that
neither Portfolio may invest in options and futures contracts if as a result
more than 5% of its assets would be so invested.
Each Portfolio may engage in repurchase agreements and reverse
repurchase agreements. No more than 10% of either Portfolio's assets may be
invested in repurchase agreements not terminable within seven days.
The Equity Portfolio may borrow no more than 10% of the value of its
assets from banks (and pledge its assets to secure such borrowing) for
temporary or emergency purposes, but not for leverage, while the Capital
Accumulation Portfolio may borrow up to one-third of the value of its assets.
Each Portfolio may also make loans of the securities it holds.
Each Portfolio may lend its securities to New York Stock Exchange
member firms and to commercial banks with assets of $1 billion or more. The
Equity Portfolio may only make loans if the value of the securities loaned
does not exceed 10% of the Portfolio's assets and the Capital Accumulation
Portfolio may lend no more than 5% of its securities.
Each Portfolio may invest up to 25% of its assets in the securities of
foreign issuers. The Portfolios may write exchange-traded call options on
their securities. Call options may be written on portfolio securities,
securities indices, or foreign currencies. With respect to securities and
foreign currencies, each Portfolio may write call and put options on an
exchange or over-the-counter. Neither Portfolio may write options on more
than 50% of its total assets. Management presently intends to cease writing
options if and as long as 25% of such total assets are subject to
outstanding options contracts or if required under regulations of state
securities administrators.
Each Portfolio may write call and put options in order to obtain a
return on its investments from the premiums received and will retain the
premiums whether or not the options are exercised.
The Portfolios may invest up to an aggregate of 5% of their total
assets in exchange-traded or over-the-counter call and put options on
securities and securities indices and foreign currencies. Purchases of such
options may be made for the purpose of hedging against changes in the market
value of the underlying securities or foreign currencies. The Portfolios may
sell a call option or a put option which they have previously purchased prior
to the purchase (in the case of a call) or the sale (in the case of a put) of
the underlying security or foreign currency.
Each Portfolio may invest up to 5% of its net assets in warrants and
stock rights, but no more than 2% of its net assets in warrants and stock
rights not listed on the New York Stock Exchange.
A Portfolio may enter into financial futures contracts and related
options as a hedge against anticipated changes in the market value of its
portfolio securities or securities which it intends to purchase or in the
exchange rate of foreign currencies.
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 in financial futures contracts.
Each Portfolio may engage in transactions in financial futures contracts and
related options only for hedging purposes and not for speculation. In
addition, a 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 a Portfolio's existing futures and
related options positions and the premiums paid for related options would
exceed 5% of the market value of its total assets.
The value of a Portfolio's assets as measured in Untied States dollars
may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and the Portfolios may
incur costs in connection with conversions between various currencies. The
Portfolios conduct their foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through forward contracts to purchase or sell foreign
currencies.
The Portfolios may also hedge their foreign currency exchange rate
risk by engaging in currency financial futures and options transactions.
When CAM or a Subadviser believes that the currency of a particular
foreign country may suffer a substantial decline against the United States
dollar, it may enter into a forward contract to sell an amount of foreign
currency approximating the value of some or all of a Portfolio's portfolio
securities denominated in such foreign currency.
The Equity Portfolio may invest up to less than 1% and the Capital
Accumulation Portfolio up to 3% of its assets in investments in securities
that offer a rate of return below the then prevailing market rate and that
present attractive opportunities for furthering the Portfolios' social
criteria.
The Equity Portfolio may not purchase illiquid securities if more than
10%, and the Capital Accumulation Portfolio may not purchase illiquid
securities if more than 15%, of the value of its net assets would be
invested in such securities.
The Capital Accumulation Portfolio and the Equity Portfolio are
subject to different investment screens.
1. The Capital Accumulation Portfolio avoids investing in
companies that, in CAM's opinion, have significant or
historical patterns of violating environmental regulations,
or otherwise have an egregious environmental record.
Additionally, the Portfolio avoids investing in nuclear power
plant operators and owners, or manufacturers of key
components in the nuclear power process.
2. The Capital Accumulation Portfolio will not invest in
companies that are significantly engaged in weapons
production.
3. The Capital Accumulation Portfolio will not invest in
companies that, in CAM'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 Capital Accumulation Portfolio will not invest in
companies that are significantly involved in the manufacture
of tobacco or alcohol products. The Capital Accumulation
Portfolio will not invest in companies that make products or
offer services that, under proper use, in the Advisor's
opinion, are considered harmful.
The Equity Portfolio seeks 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 particpation throughout the organization in defining
and achieving objectives.
3. Negotiate fairly with their workers, provide an enviornment
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 whome equal
opportunities have often been denied.
4. Foster awareness of a commitment to human goals, such as creativity,
productivity ,self-respect and responsiblility, within the
organization and the world, and continually recreate a context
within which these goals can be realized.
The Equity Portfolio 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 Portfolio 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 characteristics of each investment policy and the associated risks
are described in the Company's CRI Prospectus and Statement of Additional
Information. Both Portfolios have other investment policies and restrictions
which are also set forth in the Company's CRI Prospectus and Statement of
Additional Information, which are hereby incorporated herein by reference and
available upon request.
PERFORMANCE INFORMATION
The current sub-advisers, Apodaca-Johnston, Brown Capital Management and
Fortaleza Asset Management, assumed the investment management of the Capital
Accumulation Portfolio effective December 8, 1994. Prior to then, it had been
managed by Ariel Capital Management. For the 12 months ended December 31, 1994,
which reflects management by Ariel Capital Management until December 8, and the
new investment managers after that, the Portfolio returned -9.92%. Annual
performance was behind that of the Lipper Growth Funds Average, which returned
- -2.15% for the year.
For the six months ended June 30, 1995, the Portfolio's return was 24.12%,
well ahead of the 17.47% return for the Lipper Growth Funds Average. Each of
the Portfolio's investment managers contributed positive returns that were
ahead of their individual benchmarks. Concentrations in the better performing
sectors, including technology, health care and specialty retailers boosted
performance. Within the technology sector, the Portfolio's investments in
semi-conductor/silicon-related issues experienced enormous growth.
The line graph below is comparing a hypothetical $10,000 investment of the
Capital Accumulation Portfolio to the S&P 400, Russell 2000, and S&P 500:
CALVERT RESPONSIBLY INVESTED
CAPITAL ACCUMULATION PORTFOLIO
Comparison of change in value of a
hypothetical $10,000 investment.
$28,000
====================================
$15,000
==================================== (not able to show graph)
$10,000
====================================
7/91 8/92 6/93 8/94 8/95
......Calvert Responsibly Invested Capital Accumualtion
------S&P 400
======Russell 2000
++++++S&P 500
___________________________________________________________________
Average Annual Total Returns
Period Ending
12/31/94 6/30/95
One Year -9.92% 18.06%
Life of Portfolio (7/91) 4.88% 10.37%
Performance information is for the Capital Accumulation Portfolio only
and does not reflect chganges and expenses of the variable annuity.
Past performance does not indicate future results. The current Adviser
and Sub-Advisers have managed the Portfolio since December 8, 1994.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION
The Company was incorporated in Maryland on September 27, 1982, and is an
open-end management investment company registered under the 1940 Act. The
Company has seven CRI portfolios, including the Portfolios, designed to
provide opportunities for investing in enterprises that make a significant
contribution to society through their products and services and through the
way they do business.
CAPITALIZATION
The total number of shares of stock of all classes which the Company is
currently authorized to issue is 100 million shares. The par value of each
share is $1.00. The Capital Accumulation Portfolio currently has 4,000,000
authorized shares and the Equity Portfolio currently has 2,000,000 authorized
shares. Fractional shares may be issued. Each Portfolio's shares have equal
voting rights and represent equal proportionate interests in the assets
belonging to the Portfolio. Shareholders of each Portfolio are entitled to
receive dividends and other amounts as determined by the Directors of the
Company. Shareholders of each Portfolio vote separately as to matters that
affect only their particular Portfolio such as approval or amendments of
investment advisory agreements or proposed reclassifications, that affect only
their particular portfolio.
SHAREHOLDER MEETINGS AND VOTING RIGHTS
The Company is not required to hold annual meetings of shareholders. The
Company does not permit cumulative voting. A majority of shares entitled to
vote on a matter constitutes a quorum for consideration of such matter. In
either case, a majority of the shares voting is sufficient to act on a matter
(unless otherwise specifically required by the applicable governing documents
or other law, including the 1940 Act).
LIQUIDATION OR DISSOLUTION
In the event of the liquidation of a Portfolio the shareholders are
entitled to receive, when, and as declared by the Directors, the excess of the
assets belonging to such portfolio over the liabilities belonging to the
Portfolio. The assets so distributable to shareholders of a Portfolio will be
distributed among the shareholders in proportion to the number of shares of
the Portfolio held by them and recorded on the books of the Company.
RIGHTS OF INSPECTION
Shareholders of the respective Funds have the same right to inspect in
Maryland the governing documents, records of meetings of shareholders,
shareholder lists, share transfer records, accounts and books of the Company
as are permitted shareholders of a corporation under the Maryland corporation
law. The purpose of inspection must be for interests of shareholders relative
to the affairs of the Portfolios.
The foregoing is only a summary of certain characteristics of the
operations of the Company's Articles of Incorporation, its By-Laws and
Maryland law and is not a complete description of those documents or the law.
Shareholders should refer to the provisions of such respective Articles of
Incorporation, By-Laws, and Maryland law directly for more complete
information.
ADDITIONAL INFORMATION
Information concerning the operation and management of the Company and
the Portfolios is incorporated herein by reference from the Prospectus dated
May 1, 1995, a copy of which is enclosed, and the Statement of Additional
Information dated as of the same date. A copy of such Statement of Additional
Information is available upon request and without charge by writing to the
Company, at the address listed on the cover page of this Prospectus/Proxy
Statement or by calling toll-free 1-800-368-2748.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended and the 1940 Act, and in
accordance therewith files reports and other information including proxy
material, and charter documents with the SEC. These items can be inspected and
copies obtained at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549.
FINANCIAL STATEMENTS AND EXPERTS
The Statement of Additional Information relating to this
Prospectus/Proxy Statement includes the following financial statements: (i)
financial statements for the fiscal year ended December 31, 1994, included in
the Company's Annual Report for that period; (ii) unaudited financial
statements for the six-months ended June 30, 1995, and (iii) unaudited
pro-forma financial statements combining the Equity Portfolios and the Capital
Accumulation Portfolio's statement of net assets and statement of operations
for December 31, 1994 and August 31, 1995. The financial statements included
in the Company's Annual and Semi-Annual Reports are incorporated by reference
into the Statement of Additional Information. The financial statements for the
year ended December 31, 1994 included in the Company's Annual Report have been
audited by Coopers & Lybrand LLP, independent accountants, and have been
included in the Statement of Additional Information in reliance upon the report
of Coopers & Lybrand LLP given upon the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Company
will be passed upon by William M. Tartikoff, Esq., General Counsel of The
Calvert Group, Ltd. Sullivan & Worcester, Washington, D.C., has advised the
Company on certain federal income tax matters.
OTHER BUSINESS
The Directors of the Company do not intend to present any other business
at the Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the accompanying form of proxy will vote thereon
in accordance with their judgment.
THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING THE INDEPENDENT
DIRECTORS, RECOMMENDS APPROVAL OF THE PROPOSED MERGER AND ANY UNMARKED PROXIES
WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE
PROPOSED MERGER.
December 30, 1995
<PAGE>
EXHIBIT A
Ex-99.17
ACACIA CAPITAL CORPORATION
(the "Company")
PLAN OF RECLASSIFICATION
(the "Plan")
I. RECITALS
The Company is a Maryland corporation whose shares of common stock
are currently classified into seven classes or series ("Portfolios"),
including the Calvert Responsibly Invested ("CRI") Equity Portfolio (the
"Equity Portfolio") and the CRI Capital Accumulation Portfolio (the
"Capital Accumulation Portfolio").
The Company is registered under the Investment Company Act of 1940,
as amended ("1940 Act") as an open-end management investment
company, and its shares of common stock are registered under the
Securities Act of 1933, as amended (the "1933 Act").
The Company offers shares of certain Portfolios to Providian Life and
Health Insurance Company ("Providian") and its Separate Accounts and other
insurance companies and their separate accounts.
Providian issues, or intends to issue, variable annuity contracts
("contracts") through its Separate Account or Accounts. The Company
understands that Providian votes the shares of the Equity Portfolio
held by its Separate Account that are attributable to contracts in
accordance with instructions received from holders of interests in the
contracts (hereinafter, "shareholders"). The Company further understands
that Providian votes shares of the Equity Portfolio as to which no
instructions have been received in the same proportion as the shares of
the relevant Separate Account as to which instructions have been received.
The Directors of the Company have determined that it is advisable to
amend the Articles of Incorporation of the Company to reclassify the
issued and unissued shares of common stock currently designated as the
Equity Portfolio into the class of common stock currently designated as
the Capital Accumulation Portfolio (the "Reclassification") and have
directed that the proposed amendment be submitted for consideration at a
special meeting of shareholders.
The Directors of the Company have determined - independently for the
Equity Portfolio and for the Capital Accumulation Portfolio - that the
Reclassification, including the consideration, is reasonable and fair,
does not involve overreaching on the part of any person concerned, and
will not dilute the interests of shareholders. In addition, the Directors
have determined that the investment objectives of the Equity Portfolio and
the Capital Accumulation Portfolio are compatible so that the
Reclassification will be compatible with the investment objectives and
policies recited in the registration statement and reports relating to
each. Furthermore, the Directors have determined that the
Reclassification would be in the best interests of shareholders and is
consistent with the general purposes of the 1940 Act, the protection of
investors, and the purposes fairly intended by the policy and provisions
of the 1940 Act.
It is intended that the Reclassification shall qualify as a tax-free
reorganization under Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
II. MECHANICS OF RECLASSIFICATION
A. Approval of Shareholders.
1. Meeting Date. In accordance with Section 2-604 of the Maryland
General Corporation Law (the "Maryland Law") and the Company's Articles of
Incorporation, the Reclassification shall be submitted to the shareholders
of the Equity Portfolio for their approval at a special meeting (the
"Meeting") to be held on or about February 16, 1996 at 10:00 a.m., Eastern
Time, at the offices of the Company, 4550 Montgomery Avenue, Suite 1000N,
Bethesda, Maryland 20814.
2. Record Date. The close of business on December 18, 1995, shall
be the record date (the "Record Date") for the Meeting and only
shareholders of record of the Equity Portfolio on such date shall be
entitled to notice of and be permitted to give voting instructions at the
Meeting.
3. Required Vote. The Reclassification shall not become effective
without the affirmative vote of the holders of a majority (as defined in the
1940 Act) of the interests of the total number of Equity Portfolio shares
outstanding and entitled to vote thereon.
4. Form N-14 Registration Statement/Proxy Materials. The
appropriate officers of the Company shall take all actions necessary or
appropriate to solicit the approval of the shareholders of the Equity
Portfolio, including the preparation and execution of a registration
statement on Form N-14 of the Securities and Exchange Commission (the
"SEC"), and any amendments thereto, containing a
notice of meeting, proxy statement, and voting instruction forms
(collectively, the "proxy materials"), and the filing of such proxy
materials with the SEC.
5. Mailing of Proxy Materials. The appropriate officers of the
Company shall cause the proxy materials to be mailed on or about
December 30, 1995, as appropriate, to each shareholder of the Equity
Portfolio of record on the Record Date.
B. Amendment of Articles of Incorporation.
In accordance with Maryland Law, the Company shall effect the
Reclassification by amending its Articles of Incorporation.
1. Form of Amendment. The amendment to the Company's Articles of
Incorporation (the "Amendment") shall be in the form of Articles Supplementary
with such modifications as the officers executing the same deem necessary
or appropriate, consistent with the purposes of this Plan.
2. Date of Filing. The appropriate officers of the Company shall
execute, acknowledge, verify and file the Amendment with the Maryland
State Department of Assessments and Taxation (the "Maryland State
Department") on or about Feburary 19, 1996, following shareholder approval,
for effectiveness at 12:01 a.m. or Feburary 26, 1996.
C. Transfer of Assets.
In connection with the Reclassification of shares, the Equity
Portfolio shall transfer all of its assets and liabilities to the Capital
Accumulation Portfolio, in exchange for which the Capital Accumulation
Portfolio shall issue to the Equity Portfolio a number of the Capital
Accumulation Portfolio shares having a value equal to the aggregate net
assets of the Equity Portfolio acquired.
1. Time of Transfer. The above-described transfer shall occur on
February 26, 1996 (the "Closing Date"), or such other time and date
as determined by the appropriate officers of the Company.
2. Issuance of Capital Accumulation Portfolio Shares to the Equity
Portfolio. The number of shares of the Capital Accumulation Portfolio to
be issued to the Equity Portfolio shall be determined on the basis of the
relative net asset values of the Capital Accumulation Portfolio and the
Equity Portfolio calculated as of the close of business on the business
day immediately preceding the Closing Date. The net asset value of each
Portfolio shall be determined by dividing the value of that Portfolio's
securities, cash, and other assets (including accrued but uncollected
interest and dividends), less all liabilities (including accrued expenses
but excluding capital and surplus) by the number of shares of that
Portfolio outstanding.
3. Distribution of Capital Accumulation Portfolio Shares to Equity
Portfolio Shareholders. Upon effectiveness of the Amendment, the Equity
Portfolio shall distribute the Capital Accumulation Portfolio shares it
receives to the Equity Portfolio shareholders in exchange for their Equity
Portfolio shares, on a pro rata basis. The number of such full and
fractional Capital Accumulation Portfolio shares issued to each Equity
Portfolio shareholder shall be determined by multiplying the number of
Equity Portfolio shares to be exchanged by a fraction, the numerator of
which is the net asset value per share of the Equity Portfolio and the
denominator of which is the net asset value per share of the Equity
Portfolio. Thus, the Equity Portfolio shares of each Equity Portfolio
shareholder shall be exchanged for the number of full and fractional
shares of the Capital Accumulation Portfolio which, when multiplied by the
net asset value per share of the Capital Accumulation Portfolio, will have
a value equal to the aggregate net asset value of that shareholder's
shares in the Equity Portfolio on the Closing Date.
D. Costs of Effecting the Reclassification.
The Equity Portfolio and the Capital Accumulation Portfolio shall
each pay its portion of the expenses attributable to the Reclassification.
E. Miscellaneous.
1. Termination of Agreements. The appropriate officers of the
Company shall cause all agreements with the Equity Portfolio or the
Company to be terminated as they relate to the Equity Portfolio.
2. General Authority. The appropriate officers of the Company
shall, in the name and on behalf of the Company or either of the
Portfolios, do and perform such further acts and things, modify any dates
or deadlines, and execute and deliver or file such other instruments,
certificates, and documents as they shall determine to be necessary,
appropriate, or desirable to carry out the foregoing, any such
determination to be conclusively evidenced by the doing or performing of
any such act or thing or the execution and delivery or filing of any such
instrument, certificate, or document.
III. CONDITIONS PRECEDENT
The Reclassification shall not become effective unless each of the
following has occurred:
A. The Amendment shall have been approved by the affirmative vote of
the holders of a majority (as defined in the 1940 Act) in interests of the
total number of Equity Portfolio shares outstanding and entitled to vote
thereon;
B. The Articles Supplementary shall have been accepted for filing by the
Maryland Department of Assessments and Taxation and become effective;
C. The Company shall have received any necessary regulatory
approvals of the proposed Reclassification by the SEC;
D. The Company shall have received an opinion of counsel reasonably
satisfactory to it that the Reclassification shall qualify as a tax-free
reorganization under Section 368 of the Code; and
E. The Insurance Companies shall have received any necessary
regulatory approvals of the proposed Reclassification by relevant state
insurance authorities.
At the Closing Date, the Capital Accumulation Portfolio shall
succeed, without any transfer other than that contemplated in Section II.C
above, to all the assets belonging to the Equity Portfolio (or allocated
to the Equity Portfolio by the Board of Directors of the Company pursuant
to Article Ninth of the Company's Restated Articles of Incorporation) and
shall be subject to all the liabilities of the Equity Portfolio in the same
manneras if the liabilities had been incurred by, or allocated to, the Capital
Accumulation Portfolio in the first instance.
Upon effectiveness of the Amendment, all of the Shares of the Equity
Portfolio shall be reclassified as Capital Accumulation Portfolio shares,
and the Equity Portfolio shall cease to be a separate class of stock of
the Company.
Acacia Capital Corporation
By:
William M. Tartikoff
Vice President
<PAGE>
EXHIBIT B
Ex-3.(i)
RESTATED
ARTICLES OF INCORPORATION
ACACIA CAPITAL CORPORATION
FIRST: The name of the Corporation is Acacia Capital
Corporation.
SECOND: The Corporation desires to restate its charter as
currently in effect.
THIRD: The provisions set forth in the Articles of Restatement
are all the provisions of the charter currently in effect.
FOURTH: These Articles of Restatement have been approved by a
majority of the entire Board of Directors.
FIFTH: The charter is not amended by the Articles of
Restatement.
SIXTH: The nature of the business or purposes to be conducted
or promoted are as follows:
(A) To conduct and carry on the business of an investment
trust or investment company of the general management
type.
(B) To invest and reinvest the property and assets of the
corporation in securities of different types and
classes, including, without in any way limiting the
generality thereof, stocks, bonds, notes, debentures,
and certificates of interest or participation, and in
other personal property without limitation or
restriction except for the specific restrictions
hereinafter set forth.
(C) To act as financial or fiscal agent for any person,
firm, or corporation and as such to manage, control,
and deal with, in any and every way whatsoever, the
property, holdings, investments, and business interests
thereof.
(D) To endorse, guarantee, or undertake the performance of
any obligation, contract, or engagement of any other
corporation, or other party, if the Corporation is
interested in such obligation, contract or engagement.
(E) To purchase, retire, redeem, hold, sell, reissue,
transfer, and otherwise deal in, shares of its own
capital stock; and to apply to such purchase,
retirement, or acquisition any funds or property of the
Corporation, whether capital or surplus or otherwise,
as may be permitted by law.
(F) To engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of Maryland.
(G) To do and all of the acts herein set forth or implied
and such other acts as are incidental or conducive to
the attainment of the objectives and purposes of the
Corporation; and to do any and all such acts either as
principal or in the capacity of agent, broker, factor,
contractor, or otherwise.
SEVENTH: The current address of the principal office of the
Corporation is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814.
EIGHTH: The Corporation's current resident agent is William M.
Tartikoff, Calvert Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
NINTH: The total number of shares of stock of all classes
which the Corporation is authorized to issue is One Hundred Million
(100,000,000) shares of stock. The par value of each share shall be One
Cent ($0.01). The shares shall be allocated as follows for each series:
No. of Shares per Series
CRI Balanced Growth Portfolio 75,000,000
CRI Money Market Portfolio 9,000,000
CRI Global Equity Portfolio 4,000,000
CRI Capital Accumulation Portfolio 6,000,000
CRI Bond Portfolio 1,000,000
CRI Strategic Growth Portfolio 5,000,000
Total Shares Authorized 100,000,000
The Board of Directors is hereby expressly granted the authority to
issue any remaining unissued shares and to establish additional series.
The Board of Directors is also expressly granted the authority to
increase or decrease the number of shares of any series, subject to the
provisions that the aggregate number of shares, and the number of shares
allocated to all series cannot exceed the total authorized number of
shares, and that the number of shares allocated to any series may not be
decreased below the number of shares issued and outstanding for such
series.
TENTH: The powers, preferences and rights of each series and
the qualifications, limitations and restrictions on each such series
shall be as follows:
(A) (1) The assets of the Corporation received as
consideration for the issue of stock of each
series, together with all income, earnings and
profits on such assets, and proceeds derived
from the sale, exchange or liquidation of such
assets, and any assets derived from the
reinvestment of such income, earnings and
profits, and proceeds in whatever form
received, shall for all purposes, subject only
to the rights of creditors, be irrevocably
allocated to the series for which such assets
were received by the Corporation, and be so
entered upon the books of account and referred
to in these Articles as "the assigned assets"
of such series.
(2) Each series will be managed in accordance with
the investment policy for such series.
(3) The assigned assets of each series shall be
charged with the specific liabilities
(including accrued expenses and reserves as
conclusively determined from time to time by
the Board of Directors) of such series and the
general liabilities of the Corporation in
proportion to the net asset values of the
respective series. Any liability applicable
to more than one series, but not to all
series, shall be allocated to each series to
which it is applicable in proportion to the
net asset values of such series. The
allocation of any liability to a series by the
Board of Directors shall be conclusive.
(B) Each share of stock of a series shall have the same rights,
privileges and preferences with respect to the
assigned assets of such series as each of the
other shares of stock of that series. Each
share of stock of a series shall be entitled
to participate equally in such dividends as
may be declared from time to time by the Board
of Directors. Each fractional share of stock
of a series shall have proportionately the
same rights, privileges and preferences with
respect to the assigned assets of such series
as a whole share, and shall participate
proportionately in dividends as declared.
(C) (1) "Shareholder" as used in these Articles shall
mean a shareholder of record as defined in the
By-Laws.
(2) Each shareholder of the Corporation shall have
one vote for each share held by the
shareholder, and shall have a fractional vote
for each fraction of a share held by the
shareholder.
(3) Whenever the vote of shareholders is required
or permitted to be taken in connection with
any matter affecting the Corporation or any
series, such vote shall be taken, and
effective action shall be determined in
accordance with the General Laws of the State
of Maryland or the Investment Company Act of
1940, whichever is more strict.
ELEVENTH: The number of directors of the Corporation
shall be five (5), which number may be increased or decreased pursuant
to the By-Laws of the Corporation but shall not be less than three (3).
The names of the Directors are Clifton S. Sorrell, Jr., Frank H. Blatz,
Jr., Charles E. Diehl, Arthur J. Pugh, and South Trimble III.
TWELFTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the Directors and shareholders.
(A) No holder of shares of stock shall be entitled as a matter
of right to subscribe for or purchase or
receive any part of any treasury shares held
by the Corporation, or of any new or
additional issues of shares of stock or
securities convertible into shares of stock of
the Corporation, whether now or hereafter
authorized, or whether issued for money, for a
consideration other than money, or by way of
dividends.
(B) Upon the request of any shareholder, the Corporation shall
repurchase shares owned by such shareholder on
the terms and conditions specified in the
By-Laws.
(C) With respect to the issuance and sale of shares of the
Corporation's stock, or securities convertible
into shares of stock, the Corporation shall
receive not less than the net asset value per
share determined in accordance with the
By-Laws.
(D) Assets of this Corporation may be held or deposited with a
bank or trust company or other organization as
custodian and, except as provided below, the
Corporation may employ any agency or
instrumentality, incorporated or
unincorporated, to render management services
of any nature with respect to the conduct of
the business of the Corporation, and to manage
and direct the business and activities of the
Corporation to such extent as the Board of
Directors may determine from time to time,
whether or not such employment involves
delegation of functions usually or customarily
performed by the Board of Directors or
officers of the Corporation. However, this
Corporation shall contract with a professional
investment manager which is registered under
the Investment Advisers Act of 1940 to provide
investment advice to the Corporation and to
manage the investments of the Corporation's
assets.
(E) The Corporation reserves the right from time to time to
make any amendment of its Articles, now or
hereafter authorized by law, including any
amendment which alters the contract rights of
any outstanding stock.
(F) The original By-Laws of the Corporation have been adopted
by the Directors. The Board of
Directors shall have the power to make, alter
or repeal any By-Law, except those By-Laws
which by statute or By-Law provision must be
submitted to shareholders for a vote.
(G) The use of the Corporation of the name "Acacia" and all
trademarks now or hereafter associated with
Acacia Mutual Life Insurance Company are
subject to and conditioned upon the continuing
consent of Acacia Mutual Life Insurance
Company, a Washington, D.C. Corporation, which
consent may be withdrawn at any time.
(H) The Corporation shall have the power and authority to
indemnify its directors, officers and
employees to the fullest extent permitted by
law.
THIRTEENTH:The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, the undersigned hereby execute these Articles of
Restatement and acknowledge the same to be their act and further
acknowledge that, to the best of their knowledge, the matters and facts
set forth herein are true in all materials respects, under the penalties
of perjury.
Dated this 3 rd day of November, 1995.
Acknowledgement:___________________________
Clifton S. Sorrell, Jr.
Chairman of the Board
and Director
ATTEST:_____________________________________
William M. Tartikoff
Secretary
<PAGE>
PLEASE VOTE THIS VOTING INSTRUCTION FORM
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..........................................
ACACIA CAPITAL CORPORATION
-- CALVERT RESPONSIBLY
INVESTED EQUITY PORTFOLIO
SPECIAL MEETING OF SHAREHOLDERS
-- February 16, 1996
The undersigned hereby appoints William M. Tartikoff, Susan Walker
Bender and Beth-ann Roth and each of them, attorneys and proxies for the
undersigned, with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all
shares of the Calvert Responsibly Invested ("CRI") Equity Portfolio (the
"Portfolio") of Acacia Capital Corporation (the "Company"), which the
undersigned is entitled to vote at a Meeting of Shareholders of the Fund
to be held at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814 on February 16, 1996, at 10:00 a.m, Eastern Time, and any
adjournments thereof (the "Meeting"). The undersigned hereby
acknowledges receipt of the Notice of Meeting and Prospectus/Proxy
Statement, and hereby instructs said attorneys and proxies to vote said
shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other matters as may properly come before
the Meeting. A majority of the proxies present and acting at the
Meeting in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all of the powers and
authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
NOTE: Please sign exactly as your name appears on this Proxy. If joint
owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or corporate officer, please give your
full title.
DATE: December 30, 1995 _____________________________
______________________________
Signature(s)
______________________________
Title(s), if applicable
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW. THIS
VOTING INSTRUCTION FORM WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO
THE ACTION TO BE TAKEN. IN THE ABSENCE OF ANY SPECIFICATION, THIS
VOTING INSTRUCTION FORM WILL BE VOTED IN FAVOR OF THE PROPOSAL.
1. To approve the proposed amendment to the Company's Articles of
Incorporation to, in effect, combine the Company's CRI Equity Portfolio,
with the Company's CRI Capital Accumulation Portfolio by a
reclassification of the shares of the Equity Portfolio.
|_| YES |_| NO |_| ABSTAIN
These items are discussed in greater detail in the attached
Prospectus/Proxy Statement. The Directors of the Company have fixed the
close of business on December 18, 1995, as the record date for the
determination of shareholders entitled to notice of and to vote at the
Meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE VOTING INSTRUCTION FORM
IN THE ENCLOSED ENVELOPE WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH
ON THE INSIDE COVER.
William M. Tartikoff
Secretary
December 30, 1995
In their discretion, the Proxies, and each of them, are authorized
to vote upon any other business that may properly come before the
Meeting, or any adjournment(s) thereof, including any adjournment(s)
necessary to obtain the requisite quorum and for approval.
<PAGE>
Ex-99.17
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
CRI EQUITY PORTFOLIO
(a series of Acacia Capital Corporation)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
By and In Exchange for Shares of
CRI Capital Accumulation Portfolio
(a series of Acacia Capital Corporation)
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
This Statement of Additional Information relates to the proposed
transfer of assets of CRI Equity Portfolio to CRI Capital Accumulation
Portfolio. The Statement consists of this cover page, the Statement of
Additional Information of Acacia Capital Corporation dated May 1,
1995, the unaudited Statement of Assets and Liabilities and Statement
of Operations for June 30, 1995 and the periods then ended, and
the unaudited Pro Forma Statement of Assets and Liabilities and Pro Forma
Statement of Operations for December 31, 1995 and August 31, 1995 and
the periods then ended. This Statement of Additional Information is
not a prospectus.
A Prospectus/Proxy Statement dated May 1, 1995 relating to the
above-referenced matter may be obtained from Calvert Group, 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. This
Statement of Additional Information relates to, and should be read in
conjunction with, such Prospectus/Proxy Statement. The date of this
Statement of Additional Information is December 30, 1995.
<PAGE>
ACACIA CAPITAL CORPORATION'S
CALVERT RESPONSIBLY INVESTED PORTFOLIOS
Statement of Additional Information
May 1, 1995
- --------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with the Calvert Responsibly Invested Portfolios Prospectus,
dated May 1, 1995, which may be obtained free of charge by calling (301)
951-4820 or (800) 368-2748, or by writing to the Portfolio at 4550
Montgomery Avenue, Bethesda, Maryland 20814.
- --------------------------------------------------------------------------
TABLE OF CONTENTS
Investment Objectives and Policies 1
Investment Restrictions 11
Investment Selection Process 19
Portfolio Turnover 20
Purchase and Redemption of Shares 21
Determination of Net Asset Value 21
Taxes 23
Calculation of Yield and Total Return 23
Investment Advisory Agreement 25
Management of the Fund 28
Method of Distribution 30
General Information 30
Reports to Shareholders and Policyholders 31
Additional Information 31
Financial Statements 31
Independent Accountants and Custodians 31
Appendix 31
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------
Acacia Capital Corporation ("the Fund") offers investors the
opportunity to invest in several professionally-managed securities
portfolios which may be more diversified, stable and liquid than might
be obtainable by an investor on an individual basis. In addition, the
Fund's Calvert Responsibly Invested ("CRI") Portfolios offer the
opportunity for growth of capital or current income through investment
in enterprises that make a significant contribution to society through
their products and services and through the way they do business. The
Calvert Responsibly Invested Portfolios offer investors a choice of
seven separate portfolios selected with a concern for the social impact
of each investment: CRI Money Market, Balanced, Equity, Bond, Capital
Accumulation, Global and Strategic Growth Portfolios. References to the
"Investment Advisor" refer to the advisor appropriate to the Portfolio
being discussed. (See "Investment Advisors")
Foreign Securities
CRI Global and Strategic Growth may invest all of their assets
in foreign securities, although CRI Global intends to invest part of its
assets in securities of U.S. issuers, and CRI Strategic Growth does not
presently intend to invest in foreign securities. CRI Money Market,
Bond, Equity, Balanced and Capital Accumulation may each invest up to
25%, and CRI Balanced may invest up to 10% of its assets in the
securities of foreign issuers. CRI Money Market may purchase only high
quality, U.S. dollar-denominated instruments. Investments in foreign
securities may present risks not typically involved in domestic
investments. Foreign securities may be affected by such circumstances as
possible adverse changes in exchange control or investment regulations,
expropriation or confiscatory taxation, political or economic
instability, and diplomatic or other developments. In purchasing foreign
securities, the Portfolios may purchase American Depository Receipts for
such securities. These are certificates issued by United States banks
evidencing the right to receive securities of the foreign issuer
deposited in that bank or its correspondent bank.
It is contemplated that the Portfolios may trade foreign
securities on U.S. securities markets and stock exchanges located in the
countries in which the respective principal offices of the issuers of
the various securities are located, if that is the best available
market. Foreign securities markets may not be as developed or efficient
as those in the United States. While growing in volume, they usually
have substantially less volume than U.S. securities markets, and
securities of some foreign companies are less liquid and more volatile
than securities of comparable United States companies. Similarly, volume
and liquidity in most foreign bond markets is less than in the United
States and, at times, volatility of price can be greater than in the
United States.
Additional costs may be incurred which are related to any
international investment, since foreign brokerage commissions and the
custodial costs associated with maintaining foreign portfolio securities
are generally higher than in the United States. Fee expense may also be
incurred on currency exchanges when the Portfolios change investments
from one country to another or convert foreign securities holdings into
U.S. dollars. Foreign companies and foreign investment practices are not
generally subject to uniform accounting, auditing and financial
reporting standards and practices or regulatory requirements comparable
to those applicable to United States companies. There may be less public
information available about foreign companies.
United States Government policies have at times, in the past,
through imposition of interest equalization taxes and other
restrictions, discouraged certain investments abroad by United States
investors. While such taxes or restrictions are not presently in effect,
they may be reinstituted from time to time as a means of fostering a
favorable United States balance of payments. In addition, foreign
countries may impose withholding and taxes on dividends and interest.
Since investments in securities of issuers domiciled in foreign
countries usually involve currencies of the foreign countries, and since
the Portfolios may temporarily hold funds in foreign currencies during
the completion of investment programs, the value of the assets of the
Portfolios as measured in United States dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates
and exchange control regulations. For example, if the value of the
foreign currency in which a security is denominated declines in relation
to the value of the U.S. dollar, the value of the security in U.S.
dollars will decline. Similarly, if the value of the foreign currency in
which a security is denominated appreciates in relation to the value of
the U.S. dollar, the value of the security in U.S. dollars will
appreciate. The Portfolios will conduct foreign currency exchange
transactions either on a spot (i.the., cash) basis at the spot rate
prevailing in the foreign exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. A forward
foreign currency contract involves an obligation to purchase or sell a
specific currency at a future date which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are traded in the interbank
market conducted directly between currency traders (usually large,
commercial banks) and their customers. A forward foreign currency
contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
A Portfolio may enter into forward foreign currency contracts
for two reasons. First, the Portfolio may desire to preserve the United
States dollar price of a security when it enters into a contract for the
purchase or sale of a security denominated in a foreign currency. The
Portfolio will be able to protect itself against possible losses
resulting from changes in the relationship between the United States
dollar and foreign currencies during the period between the date the
security is purchased or sold and the date on which payment is made or
received by entering into a forward contract for the purchase or sale,
for a fixed amount of dollars, of the amount of the foreign currency
involved in the underlying security transactions.
Second, when the Advisor or Subadvisor believes that the
currency of a particular foreign country may suffer a substantial
decline against the United States dollar, the Portfolio enters into a
forward foreign currency contract to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some
or all of the Portfolio's investment securities denominated in such
foreign currency. The precise matching of the forward foreign currency
contract amounts and the value of the portfolio securities involved will
not generally be possible since the future value of the securities will
change as a consequence of market movements between the date the forward
contract is entered into and the date it matures. The projection of
short-term currency market movement is difficult, and the successful
execution of this short-term hedging strategy is uncertain. Although
forward foreign currency contracts tend to minimize the risk of loss due
to a decline in the value of the hedged currency, at the same time they
tend to limit any potential gain which might result should the value of
such currency increase. The Portfolios do not intend to enter into such
forward contracts under this circumstance on a regular or continuous
basis.
Foreign Money Market Instruments
CRI Money Market may invest without limitation in money market
instruments of banks, whether foreign or domestic, including obligations
of U.S. branches of foreign banks ("Yankee" instruments) and obligations
of foreign branches of U.S. banks ("Eurodollar" instruments). All such
instruments must be high-quality, U.S. dollar-denominated obligations.
It is an operating (i.e., nonfundamental) policy of CRI Money Market
that it may invest only in foreign money market instruments if they are
of comparable quality to the obligations of domestic banks. Although
these instruments are not subject to foreign currency risk since they
are U.S. dollar-denominated, investments in foreign money market
instruments may involve risks that are different than investments in
securities of U.S. issuers. See "Foreign Securities" above.
Private Placements and Illiquid Securities
Due to the particular social objective of the Portfolios,
opportunities may exist to promote especially promising approaches to
social goals through privately-placed investments. The private placement
investments undertaken by the Portfolios, if any, may be subject to a
high degree of risk. Such investments may involve relatively small and
untried enterprises that have been selected in the first instance
because of some attractive social objectives or policies. The Investment
Advisors seek to structure the Portfolios' investments to provide the
greatest assurance of attaining the intended investment return. It is an
operating policy of the Portfolios that no private placements shall be
acquired until the value of that Portfolio's investments exceeds $20
million.
Many private placement investments have no readily available
market and may therefore be considered illiquid. It is an operating
policy of the Portfolios not to purchase illiquid securities if more
than a certain percentage of the value of its net assets would be
invested in such securities. Securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933 may be determined by the
Board of Directors to be liquid. The Board may delegate such
determinations of liquidity to the Advisor, pursuant to guidelines and
oversight by the Board. Portfolio investments in private placements and
other securities for which market quotations are not readily available
are valued at fair market value as determined by the Advisor under the
direction and control of the Board.
Repurchase Agreements
The Portfolios may purchase debt securities subject to
repurchase agreements, which are arrangements under which the Portfolio
buys a security and the seller simultaneously agrees to repurchase the
security at a specified time and price. The Portfolios engage in
repurchase agreements in order to earn a higher rate of return than it
could earn simply by investing in the obligation which is the subject of
the repurchase agreement. Repurchase agreements are not, however,
without risk. In the event of the bankruptcy of a seller during the term
of a repurchase agreement, a legal question exists as to whether the
Portfolio would be deemed the owner of the underlying security or would
be deemed only to have a security interest in and lien upon such
security. The Portfolios will only engage in repurchase agreements with
recognized securities dealers and banks determined to present minimal
credit risk by the Advisor under the direction and supervision of the
Board of Directors. In addition, the Portfolios will only engage in
repurchase agreements reasonably designed to secure fully during the
term of the agreement the seller's obligation to repurchase the
underlying security and will monitor the market value of the underlying
security during the term of the agreement. If the value of the
underlying security declines and is not at least equal to the repurchase
price due the Portfolio pursuant to the agreement, the Portfolio will
require the seller to pledge additional securities or cash to secure the
seller's obligations pursuant to the agreement. If the seller defaults
on its obligation to repurchase and the value of the underlying security
declines, the Portfolio may incur a loss and may incur expenses in
selling the underlying security. Repurchase agreements are always for
periods of less than one year. Repurchase agreements not terminable
within seven days are considered illiquid.
Reverse Repurchase Agreements
The Portfolios may also engage in reverse repurchase
agreements. Under a reverse repurchase agreement, a Portfolio sells
securities to a bank or securities dealer and agrees to repurchase those
securities from such party at an agreed upon date and price reflecting a
market rate of interest. The Portfolio invests the proceeds from each
reverse repurchase agreement in obligations in which it is authorized to
invest. The Portfolios intend to enter into a reverse repurchase
agreement only when the interest income provided for in the obligation
in which the Portfolio invests the proceeds is expected to exceed the
amount the Portfolio will pay in interest to the other party to the
agreement plus all costs associated with the transactions. The
Portfolios do not intend to borrow for leverage purposes. The Portfolios
will only be permitted to pledge assets to the extent necessary to
secure borrowings and reverse repurchase agreements.
During the time a reverse repurchase agreement is outstanding,
the Portfolio will maintain in a segregated custodial account an amount
of cash, U.S. Government securities or other liquid, high-quality debt
securities equal in value to the repurchase price. The Portfolio will
mark to market the value of assets held in the segregated account, and
will place additional assets in the account whenever the total value of
the account falls below the amount required under applicable regulations.
The Portfolios' use of reverse repurchase agreements involves
the risk that the other party to the agreements could become subject to
bankruptcy or liquidation proceedings during the period the agreements
are outstanding. In such event, the Portfolio may not be able to
repurchase the securities it has sold to that other party. Under those
circumstances, if at the expiration of the agreement such securities are
of greater value than the proceeds obtained by the Portfolio under the
agreements, the Portfolio may have been better off had it not entered
into the agreement. However, the Portfolio will enter into reverse
repurchase agreements only with banks and dealers which the Advisor
believes present minimal credit risks under guidelines adopted by the
Fund's Board of Directors. In addition, the Portfolio bears the risk
that the market value of the securities sold by the Portfolio may
decline below the agreed-upon repurchase price, in which case the dealer
may request the Portfolio to post additional collateral.
GNMA Certificates-CRI Balanced
The CRI Balanced Portfolio is not expected generally to invest
more than a small portion of its assets in GNMA Certificates. GNMA
Certificates are mortgage-backed securities representing part ownership
of a pool of mortgage loans that are issued by lenders such as mortgage
bankers, commercial banks and savings and loan associations and are
either insured by the Federal Housing Administration or guaranteed by
the Veterans Housing Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors
through securities dealers.
Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full
faith and credit of the U.S. Government. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrower over the
term of the loan rather than returned in a lump sum at maturity. GNMA
Certificates are called "pass-through" securities because both interest
and principal payments (including prepayments) are passed through to the
holder of the Certificate. Upon receipt, principal payments will be
reinvested by the Series in additional securities.
Because interest and principal payments on the underlying
mortgages pass through to holders, the average life of GNMA Certificates
varies with the maturities of the underlying mortgage instruments, which
have maximum maturities of 30 years. However, because unscheduled
principal payments on the underlying mortgages resulting from
prepayment, refinancing or foreclosure are also passed through to
holders, the average life of GNMA Certificates is normally substantially
shorter than the original maturity of the underlying mortgage pools.
The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, the degree of the increase or
decrease in interest rates over time, general economic conditions, the
location and age of the mortgage, and social and demographic conditions.
Prepayments generally occur when interest rates have fallen; thus,
reinvestments of principal prepayments will usually be at lower rates.
Prepayments also tend to occur more frequently in mortgage pools with
rates significantly higher than prevailing mortgage rates. The coupon
rate of GNMA Certificates is lower than the interest rate paid on the
underlying mortgages only by the amount of the fee paid to GNMA and the
issuer, usually 1/2 of 1%. Therefore, GNMA Certificates trading at a
premium, which are usually Certificates with coupon rates significantly
higher than the rates of Certificates being issued at the time of
purchase, are subject to greater risk of prepayment at par.
The Investment Advisor will attempt, through careful evaluation
of available GNMA issues and prevailing market conditions, to invest in
GNMA Certificates which provide a high income return but are not subject
to substantial risk of loss of principal. Accordingly, the Advisor may
forego the opportunity to invest in certain issues of GNMA Certificates
which would provide a high current income yield if the Advisor
determines that such issues would be subject to a risk of prepayment and
loss of principal over the long term that would outweigh the short-term
increment in yield.
Noninvestment-grade Debt Securities
CRI Balanced, Bond and Equity may invest in lower quality debt
securities (generally those rated BB or lower by S&P or Ba or lower by
Moody's). Subject to the Portfolios' investment policy provides that it
may not invest more than 20% of its assets in securities rated below B
by either rating service, or in unrated securities determined by the
Advisor to be comparable to securities rated below B by either rating
service. CRI Global may invest up to 5% of its assets in lower quality
debt securities[, and CRI Strategic Growth may invest up to 35% of its
assets in debt securities without regard to investment grade.
Noninvestment-grade] securities have moderate to poor protection of
principal and interest payments and have speculative characteristics.
(See Appendix for a description of the ratings.) These securities
involve greater risk of default or price declines due to changes in the
issuer's creditworthiness than investment-grade debt securities. Because
the market for lower-rated securities may be thinner and less active
than for higher-rated securities, there may be market price volatility
for these securities and limited liquidity in the resale market. Market
prices for these securities may decline significantly in periods of
general economic difficulty or rising interest rates. Unrated debt
securities may fall into the lower quality category. Unrated securities
usually are not attractive to as many buyers as rated securities are,
which may make them less marketable.
The quality limitation set forth in the Portfolios' investment
policy is determined immediately after a Portfolio's acquisition of a
given security. Accordingly, any later change in ratings will not be
considered when determining whether an investment complies with the
Portfolio's investment policy.
When purchasing high-yielding securities, rated or unrated, the
Advisors prepare their own careful credit analysis to attempt to
identify those issuers whose financial condition is adequate to meet
future obligations or is expected to be adequate in the future. Through
portfolio diversification and credit analysis, investment risk can be
reduced, although there can be no assurance that losses will not occur.
Options and Futures Contracts
CRI Bond, Equity, Global, Strategic Growth and Capital
Accumulation may, in pursuit of their investment objectives, purchase
put and call options and engage in the writing of covered call options
and secured put options on securities which meet the Portfolios' social
criteria, and employ a variety of other investment techniques.
Specifically, these Portfolios may also engage in the purchase and sale
of stock index future contracts, foreign currency futures contracts,
interest rate futures contracts, and options on such futures, as
described more fully below.
These Portfolios will engage in such transactions only to hedge
the existing positions in the respective Portfolios. They will not
engage in such transactions for the purposes of speculation or leverage.
Such investment policies and techniques may involve a greater degree of
risk than those inherent in more conservative investment approaches.
These Portfolios will not engage in such options or futures
transactions unless they receive appropriate regulatory approvals
permitting them to engage in such transactions. As an operating policy,
which may be changed without approval of a majority of the outstanding
shares, CRI Bond and Equity will not invest in options and futures
contracts if as a result more than 5% of a Portfolio's assets would be
so invested. CRI Global, Strategic Growth and Capital Accumulation may
not write options on more than 50% of their total assets. These
Portfolios may write "covered options" on securities in standard
contracts traded on national securities exchanges. These Portfolios will
write such options in order to receive the premiums from options that
expire and to seek net gains from closing purchase transactions with
respect to such options.
Put and Call Options - These Portfolios may purchase put and
call options, in standard contracts traded on national securities
exchanges, on securities of issuers which meet the Portfolios' social
criteria. These Portfolios will purchase such options only to hedge
against changes in the value of securities the Portfolios hold and not
for the purposes of speculation or leverage. In buying a put, a
Portfolio has the right to sell the security at the exercise price, thus
limiting its risk of loss through a decline in the market value of the
security until the put expires. The amount of any appreciation in the
value of the underlying security will be partially offset by the amount
of the premium paid for the put option and any related transaction
costs. Prior to its expiration, a put option may be sold in a closing
sale transaction and any profit or loss from the sale will depend on
whether the amount received is more or less than the premium paid for
the put option plus the related transaction costs.
These Portfolios may purchase call options on securities that
they may intend to purchase and that meet the Portfolios' social
criteria. Such transactions may be entered into in order to limit the
risk of a substantial increase in the market price of the security which
the Portfolio intends to purchase. Prior to its expiration, a call
option may be sold in a closing sale transaction. Any profit or loss
from such a sale will depend on whether the amount received is more or
less than the premium paid for the call option plus the related
transaction costs.
Covered Options - These Portfolios may write only covered
options on equity and debt securities in standard contracts traded on
national securities exchanges. For call options, this means that so long
as a Portfolio is obligated as the writer of a call option, that
Portfolio will own the underlying security subject to the option and, in
the case of put options, that Portfolio will, through its custodian,
deposit and maintain either cash or securities with a market value equal
to or greater than the exercise price of the option.
When a Portfolio writes a covered call option, the Portfolio
gives the purchaser the right to purchase the security at the call
option price at any time during the life of the option. As the writer of
the option, the Portfolio receives a premium, less a commission, and in
exchange foregoes the opportunity to profit from any increase in the
market value of the security exceeding the call option price. The
premium serves to mitigate the effect of any depreciation in the market
value of the security. Writing covered call options can increase the
income of the Portfolio and thus reduce declines in the net asset value
per share of the Portfolio if securities covered by such options decline
in value. Exercise of a call option by the purchaser, however, will
cause the Portfolio to forego future appreciation of the securities
covered by the option.
When a Portfolio writes a secured put option, it will gain a
profit in the amount of the premium, less a commission, so long as the
price of the underlying security remains above the exercise price.
However, the Portfolio remains obligated to purchase the underlying
security from the buyer of the put option (usually in the event the
price of the security funds below the exercise price) at any time during
the option period. If the price of the underlying security falls below
the exercise price, the Portfolio may realize a loss in the amount of
the difference between the exercise price and the sale price of the
security, less the premium received.
These Portfolios may purchase securities that may be covered by
call options solely on the basis of considerations consistent with the
investment objectives and policies of the Portfolios. The Portfolio
turnover rate may increase through the exercise of a call option; this
will generally occur if the market value of a "covered" security
increases and the portfolio has not entered into a closing purchase
transaction.
To preserve the Portfolio's status as a regulated investment
company under Subchapter M of the Internal Revenue Code, it is the
Portfolio's policy to limit any gains on put or call options and other
securities held less than three months to less than 30% of a Portfolio's
annual gross income.
Risks Related to Options Transactions - The Portfolios can
close out their respective positions in exchange-traded options only on
an exchange which provides a secondary market in such options. Although
these Portfolios intend to acquire and write only such exchange-traded
options for which an active secondary market appears to exist, there can
be no assurance that such a market will exist for any particular option
contract at any particular time. This might prevent the Portfolios from
closing an options position, which could impair the Portfolios' ability
to hedge effectively. The inability to close out a call position may
have an adverse effect on liquidity because the Portfolio may be
required to hold the securities underlying the option until the option
expires or is exercised.
Futures Transactions - These Portfolios may purchase and sell
futures contracts ("futures contracts") but only when, in the judgment
of the Advisor, such a position acts as a hedge against market changes
which would adversely affect the securities held by the Portfolios.
These futures contracts may include, but are not limited to, market
index futures contracts and futures contracts based on U.S. Government
obligations.
A futures contract is an agreement between two parties to buy
and sell a security on a future date which has the effect of
establishing the current price for the security. Although futures
contracts by their terms require actual delivery and acceptance of
securities, in most cases the contracts are closed out before the
settlement date without the making or taking of delivery of securities.
Upon buying or selling a futures contract, the Portfolio deposits
initial margin with its custodian, and thereafter daily payments of
maintenance margin are made to and from the executing broker. Payments
of maintenance margin reflect changes in the value of the futures
contract, with the Portfolio being obligated to make such payments if
its futures position becomes less valuable and entitled to receive such
payments if its positions become more valuable.
These Portfolios may only invest in futures contracts to hedge
their respective existing investment positions and not for income
enhancement, speculation or leverage purposes. Although some of the
securities underlying the futures contract may not necessarily meet the
Portfolios' social criteria, any such hedge position taken by these
Portfolios will not constitute a direct ownership interest in the
underlying securities.
Futures contracts have been designed by boards of trade which
have been designated "contracts markets" by the Commodity Futures
Trading Commission ("CFTC"). As series of a registered investment
company, the Portfolios are eligible for exclusion from the CFTC's
definition of "commodity pool operator," meaning that the Portfolios may
invest in futures contracts under specified conditions without
registering with the CFTC. Among these conditions are requirements that
each Portfolio invest in futures only for hedging purposes and that the
aggregate initial margin on futures contracts and premium on options
relating to futures shall not exceed 5% of the Portfolio's assets.
Futures contracts trade on contracts markets in a manner that is similar
to the way a stock trades on a stock exchange and the boards of trade,
through their clearing corporations, guarantee performance of the
contracts.
Options on Futures Contracts - These Portfolios may purchase
and write put or call options and sell call options on futures contracts
in which a Portfolio could otherwise invest and which are traded on a
U.S. exchange or board of trade. The Portfolios may also enter into
closing transactions with respect to such options to terminate an
existing position; that is, to sell a put option already owned and to
buy a call option to close a position where the Portfolio has already
sold a corresponding call option.
The Portfolios may only invest in options on futures contracts
to hedge their respective existing investment positions and not for
income enhancement, speculation or leverage purposes. Although some of
the securities underlying the futures contract underlying the option may
not necessarily meet the Portfolios' social criteria, any such hedge
position taken by these Portfolios will not constitute a direct
ownership interest in the underlying securities.
An option on a futures contract gives the purchaser the right,
in return for the premium paid, to assume a position in a futures
contract-a long position if the option is a call and a short position if
the option is a put-at a specified exercise price at any time during the
period of the option. The Portfolios will pay a premium for such options
purchased or sold. In connection with such options bought or sold, the
Portfolios will make initial margin deposits and make or receive
maintenance margin payments which reflect changes in the market value of
such options. This arrangement is similar to the margin arrangements
applicable to futures contracts described above.
Put Options on Futures Contracts - The purchase of put options
on futures contracts is analogous to the sale of futures contracts and
is used to protect the portfolio against the risk of declining prices.
These Portfolios may purchase put options and sell put options on
futures contracts that are already owned by that Portfolio. The
Portfolios will only engage in the purchase of put options and the sale
of covered put options on market index futures for hedging purposes.
Call Options on Futures Contracts - The sale of call options on
futures contracts is analogous to the sale of futures contracts and is
used to protect the portfolio against the risk of declining prices. The
purchase of call options on futures contracts is analogous to the
purchase of a futures contract. These Portfolios may only buy call
options to close an existing position where the Portfolio has already
sold a corresponding call option, or for a cash hedge. The Portfolios
will only engage in the sale of call options and the purchase of call
options to cover for hedging purposes.
Writing Call Options on Futures Contracts - The writing of call
options on futures contracts constitutes a partial hedge against
declining prices of the securities deliverable upon exercise of the
futures contract. If the futures contract price at expiration is below
the exercise price, the Portfolio will retain the full amount of the
option premium which provides a partial hedge against any decline that
may have occurred in the Portfolio's securities holdings.
Risks of Options and Futures Contracts - If one of these
Portfolios has sold futures or takes options positions to hedge its
portfolio against decline in the market and the market later advances,
the Portfolio may suffer a loss on the futures contracts or options
which it would not have experienced if it had not hedged. Correlation is
also imperfect between movements in the prices of futures contracts and
movements in prices of the securities which are the subject of the
hedge. Thus the price of the futures contract or option may move more
than or less than the price of the securities being hedged. Where a
Portfolio has sold futures or taken options positions to hedge against
decline in the market, the market may advance and the value of the
securities held in the Portfolio may decline. If this were to occur, the
Portfolio might lose money on the futures contracts or options and also
experience a decline in the value of its portfolio securities. However,
although this might occur for a brief period or to a slight degree, the
value of a diversified portfolio will tend to move in the direction of
the market generally.
The Portfolios can close out futures positions only on an
exchange or board of trade which provides a secondary market in such
futures. Although the Portfolios intend to purchase or sell only such
futures for which an active secondary market appears to exist, there can
be no assurance that such a market will exist for any particular futures
contract at any particular time. This might prevent the Portfolios from
closing a futures position, which could require a Portfolio to make
daily cash payments with respect to its position in the event of adverse
price movements.
Options on futures transactions bear several risks apart from
those inherent in options transactions generally. The Portfolios'
ability to close out their options positions in futures contracts will
depend upon whether an active secondary market for such options develops
and is in existence at the time the Portfolios seek to close their
positions. There can be no assurance that such a market will develop or
exist. Therefore, the Portfolios might be required to exercise the
options to realize any profit.
Foreign Currency Transactions (Not applicable to CRI Money Market
Portfolio)
Forward Foreign Currency Exchange Contracts. A forward foreign
currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of
days ("Term") from the date of the contract agreed upon by the parties,
at a price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
The Portfolios will not enter into such forward contracts or
maintain a net exposure in such contracts where it would be obligated to
deliver an amount of foreign currency in excess of the value of its
portfolio securities and other assets denominated in that currency. The
Advisors and Subadvisors believes that it is important to have the
flexibility to enter into such forward contract when it determines that
to do so is in a Portfolio's best interests.
Foreign Currency Options (Not applicable to CRI Money Market or
Balanced Portfolios).
A foreign currency option provides the option buyer with the right to
buy or sell a stated amount of foreign currency at the exercise price on
or before a specified date. A call option gives its owner the right, but
not the obligation, to buy the currency, while a put option gives its
owner the right, but not the obligation, to sell the currency. The
option seller buyer may close its position any time prior to expiration
of the option period. A call rises in value if the underlying currency
appreciates. Conversely, a put rises in value if the underlying currency
depreciates. Purchasing a foreign currency option can protect a
Portfolio against adverse movement in the value of a foreign currency.
Foreign Currency Futures Transactions. The Portfolio may use
foreign currency futures contracts and options on such futures
contracts. Through the purchase or sale of such contracts, it may be
able to achieve many of the same objectives attainable through the use
of foreign currency forward contracts, but more effectively and possibly
at a lower cost.
Unlike forward foreign currency exchange contracts, foreign
currency futures contracts and options on foreign currency futures
contracts are standardized as to amount and delivery period and are
traded on boards of trade and commodities exchanges. It is anticipated
that such contracts may provide greater liquidity and lower cost than
forward foreign currency exchange contracts.
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INVESTMENT RESTRICTIONS
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CRI BALANCED
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which, together with the foregoing investment objectives and fundamental
policies, cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Portfolio at a meeting where more than 50% of
the outstanding shares are present in person or by proxy or (b) more
than 50% of the outstanding shares of the Portfolio. Shares have equal
rights as to voting, except that only shares of a Portfolio are entitled
to vote on matters affecting only that Portfolio (such as changes in
investment objective, policies or restrictions).
The Portfolio may not:
1. Issue senior securities (except that it may
borrow money as described in restriction 11 below).
2. With respect to at least 75% of the value of
its total assets, invest more than 5% of its total
assets in the securities (other than securities issued
or guaranteed by the United States Government or its
agencies or instrumentalities) of any one issuer
(including repurchase agreements with any one bank).
3. Purchase more than either (1) 10% in principal
amount of the outstanding debt securities of an issuer,
or (ii) 10% of the outstanding voting securities of an
issuer, except that such restrictions shall not apply
to securities issued or guaranteed by the United States
Government or its agencies or instrumentalities.
4. Invest more than 25% of its total assets in
the securities of issuers primarily engaged in the same
industry. For purposes of this restriction, gas, gas
transmission, electric, water, and telephone utilities
each will be considered a separate industry. This
restriction does not apply to obligations of domestic
branches of domestic banks or savings and loan
associations or to obligations issued or guaranteed by
the United States Government, its agencies or
instrumentalities.
5. Invest in companies for the purpose of
exercising control (along or together with the other
Portfolios).
6. Purchase securities of other investment
companies, [except in connection with a
trustee's/director's deferred compensation plan, as
long as there is no duplicaton of advisory fees; or]
except in connection with a merger, consolidation,
acquisition or reorganization, or by purchase in the
open market of securities of closed-end investment
companies where no underwriter or dealer's commission
or profit, other than customary broker's commission, is
involved, if immediately thereafter the Portfolio would
own: (a) securities of investment companies having an
aggregate value in excess of 10% of such Portfolio's
total assets; (b) more than 3% of the outstanding
voting stock of the investment company; or (c)
securities of the investment company having an
aggregate value in excess of 5% of the Portfolio's
total assets.
7. Purchase or sell interests in oil, gas or
other mineral exploration or development programs,
commodities, commodity contracts, real estate mortgage
loans, except that each Portfolio may purchase
securities of issuers which invest or deal in any of
the above, and except that each Portfolio may invest in
securities that are secured by real estate or real
estate mortgages. This restriction does not apply to
obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities.
8. Purchase any securities on margin (except that
the Portfolio may obtain such short-term credit as may
be necessary for the clearance of purchases and sales
of portfolio securities) or make short sales of
securities or maintain a short position.
9. Make loans, except as provided in (10) below
or through the purchase of obligations in private
placements or by entering into repurchase agreements
(the purchase of publicly-traded obligations are being
considered the making of a loan).
10. Lend its securities in excess of 10% of its
total assets, provided that such loan shall be made in
accordance with the guidelines set forth below under
"Lending of Portfolio Securities."
11. Borrow amounts in excess of 10% of its total
assets taken at market value at the time of the
borrowing, and then only from banks as a temporary
measure for extraordinary or emergency purposes, or to
meet redemption requests that might otherwise require
the untimely disposition of securities, and not for
investment or leveraging, except by entering into
reverse repurchase agreements. Borrowings and reverse
repurchase agreements combined will not exceed 1/3 of a
Portfolio' total assets, and additional investments
will not be made by a Portfolio if borrowings exceed 5%
of its total assets.
12. Mortgage, pledge, hypothecate or in any manner
transfer, as security for indebtedness, any securities
owned or held by such Portfolio except as may be
necessary in connection with reverse repurchase
agreements or borrowings mentioned in (11) above, and
then such mortgaging, pledging or hypothecating may not
exceed 10% of such Portfolio' total assets. In order to
comply with certain state statutes, such Portfolio will
not, as a matter of operating policy, mortgage, pledge
or hypothecate its securities to the extent that at any
time the percentage of the value of pledged securities
plus the maximum sales charge will exceed 10% of the
value of such Portfolio shares at the maximum offering
price.
13. Underwrite securities of other issuers except
insofar as the Portfolio may be deemed an underwriter
under the Securities Act of 1933 in selling shares of
each Portfolio, and except as it may be deemed such in
a sale of restricted securities.
14. Write, purchase or sell puts, calls or
combinations thereof, except in connection with
when-issued securities.
15. Invest in securities of foreign issuers if at
the time of acquisition more than 10% of its total
assets taken at market value at the time of the
investment, would be invested in such securities.
16. Participate on a joint (or a joint and
several) basis in any trading account in securities
(but this does not prohibit the "bunching" of orders
for the sale or purchase of Portfolio securities with
the other Portfolio or with other accounts advised or
sponsored by the Investment Advisor or any of its
affiliates to reduce brokerage commissions or otherwise
to achieve best overall execution; see "Investment
Advisor," below):
17. Purchase or retain the securities of any
issuer, if, to the knowledge of the Portfolio, officers
and directors of the Portfolio, the Investment Advisor,
or any subsidiary thereof, each owning beneficially
more than 1/2 of 1% of the securities of such issuer,
own in the aggregate more than 5% of the securities of
such issuer.
18. Invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days
and other illiquid investments.
To comply with certain state investment restrictions, the
Portfolio will not, as a matter of operating policy, permit any
Portfolio to purchase or otherwise acquire the securities of any issuer,
other than securities issued or guaranteed as to principal and interest
by the United States, if immediately after such purchase or acquisition
the value of such investment, together with prior investments of that
Portfolio in the securities of such issuer, would exceed 10% of the
value of the Portfolio's assets. The Portfolio may change or modify this
policy only if the Portfolio obtains a waiver of the applicable
requirement from the commissioner of insurance of the state imposing the
requirement.
CRI MONEY MARKET, BOND, EQUITY AND GLOBAL
Fundamental Investment Restrictions
The Portfolios have adopted the following investment
restrictions which, together with the foregoing investment objectives
and fundamental policies, cannot be changed without the approval of the
holders of a majority of the outstanding shares of the Portfolio. As
defined in the Investment Company Act of 1940, this means the lesser of
the vote of (a) 67% of the shares of the Portfolio at a meeting where
more than 50% of the outstanding shares are present in person or by
proxy or (b) more than 50% of the outstanding shares of the Portfolio.
Shares have equal rights as to voting, except that only shares of a
Portfolio are entitled to vote on matters affecting only that Portfolio
(such as changes in investment objective, policies or restrictions).
None of these Portfolios may:
1. With respect to 75% of assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer.
2. Concentrate more than 25% of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby or with respect
to investments in money market instruments of banks.
3. Purchase more than 10% of the outstanding
voting securities of any issuer.
4. Make loans other than through the purchase of
money market instruments and repurchase agreements or
by the purchase of bonds, debentures or other debt
securities. The purchase by the Portfolio of all or a
portion of an issue of publicly or privately
distributed debt obligations in accordance with its
investment objective, policies and restrictions, shall
not constitute the making of a loan.
5. Underwrite the securities of other issuers,
except to the extent that in connection with the
disposition of its portfolio securities, the Portfolio
may be deemed to be an underwriter.
6. Purchase from or sell to any of the Fund's
officers or Directors, or firms of which any of them
are members, any securities (other than capital stock
of the Portfolio), but such persons or firms may act as
brokers for the Portfolio for customary commissions.
7. Borrow money, except from banks for temporary
or emergency purposes and then only in an amount up to
10% of the value of the Portfolio's total assets and
except by engaging in reverse repurchase agreements;
provided, however, that it may only engage in reverse
repurchase agreements so long as, at the time it enters
into a reverse repurchase agreement, the aggregate
proceeds from outstanding reverse repurchase
agreements, when added to other outstanding borrowings
permitted by this section, do not exceed 33 1/3% of the
Portfolio's total assets. In order to secure any
permitted borrowings and reverse repurchase agreements
under this section, the Portfolio may pledge, mortgage
or hypothecate its assets.
8. Make short sales of securities or purchase any
securities on margin except that the Portfolio may
obtain such short-term credits as may be necessary for
the clearance of purchases and sales of securities. The
deposit or payment by the Portfolio of initial or
maintenance margin in connection with financial futures
contracts or related options transactions is not
considered the purchase of a security on margin.
9. Write, purchase or sell puts, calls or
combinations thereof except that the Portfolio may (a)
write exchange-traded covered call options on portfolio
securities and enter into closing purchase transactions
with respect to such options, and the Portfolio may
write exchange-traded covered call options on foreign
currencies and secured put options on securities and
foreign currencies and write covered call and secured
put options on securities and foreign currencies traded
over the counter, and enter into closing purchase
transactions with respect to such options, (b) purchase
exchange-traded call options and put options and
purchase call and put options traded over the counter,
provided that the premiums on all outstanding call and
put options do not exceed 5% of its total assets, and
enter into closing sale transaction with respect to
such options, and (c) engage in financial futures
contracts and related options transactions, provided
that the sum of the initial margin deposits on the
Portfolio's existing futures and related options
positions and the premiums paid for related options
would not exceed 5% of its total assets.
10. Invest for the purpose of exercising control
or management of another issuer.
11. Invest in commodities, commodities futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or sell stock index futures, foreign currency
futures, interest rate futures and options thereon.
12. Purchase or retain securities issued by
investment companies except to the extent permitted by
the Investment Company Act of 1940, as amended; or in
connection with a trustee's/director's deferred
compensation plan, as long as there is no duplicaton of
advisory fees.
Nonfundamental Investment Restrictions
CRI Money Market, Bond, Equity and Global have adopted the
following operating (i.e., non-fundamental) investment policies and
restrictions which may be changed by the Board of Directors without
shareholder approval. None of these Portfolios may:
1. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
2. Purchase illiquid securities if more than 15%
of the value of a Portfolio's net assets would be
invested in such securities. A Portfolio may buy and
sell rewrites outside the U.S. that are not registered
with the SEC or marketable in the U.S.
3. Purchase or retain securities of any issuer if
the officers, directors of the Portfolio or its
Advisors, owning beneficially more than 1/2 of 1% of
the securities of such issuer, together own
beneficially more than 5% of such issuer's securities.
4. Invest in warrants if more than 5% of the
value of the Portfolio's net assets would be invested
in such securities.
5. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
Any investment restriction that involves a maximum percentage
of securities or assets will not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets, and the excess is
attributable to that event.
CRI STRATEGIC GROWTH
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than
50% of the outstanding shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer. (The remaining
50% of its total assets may be invested without
restriction except to the extent other investment
restrictions may be applicable).
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Fund, or as permitted by law. The
purchase by the Fund of all or a portion of an issue of
publicly or privately distributed debt obligations in
accordance with its investment objective, policies and
restrictions, shall not constitute the making of a loan.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Trustees within
applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's
officers or trustees, or companies of which any of them
are directors, officers or employees, any securities
(other than shares of beneficial interest of the Fund),
but such persons or firms may act as brokers for the
Fund for customary commissions.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Fund, invest in commodities, commodity futures
contracts, or real estate, although it may invest in
securities which are secured by real estate or real
estate mortgages and securities of issuers which invest
or deal in commodities, commodity futures, real estate
or real estate mortgages and provided that it may
purchase or enter into futures contracts and options on
futures contracts, foreign currency futures, interest
rate futures and options thereon.
Nonfundamental Investment Restrictions
The Portfolio has adopted the following operating (i.e.,
non-fundamental) investment policies and restrictions which may be
changed by the Board of Trustees without shareholder approval. The
Portfolio may not:
7. Purchase the securities of any issuer with
less than three years continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
8. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
9. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute.
10. Purchase or retain securities of any issuer if
the officers, Trustees of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
11. Invest in warrants if more than 5% of the
value of the Fund's net assets would be invested in
such securities.
12. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
13. Borrow money in an amount exceeding one-third
of the Fund's total assets, or as permitted by law. In
order to secure any permitted borrowings under this
section, the Fund may pledge, mortgage or hypothecate
its assets.
14. Invest for the purpose of exercising control
or management of another issuer.
15. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or
pursuant to Calvert's nonqualified deferred
compensation plan adopted by the Board of Trustees.
16. Purchase more than 10% of the outstanding
voting securities of any issuer.
For purposes of the Portfolio's concentration policy contained
in restriction (2), above, the Portfolio intends to comply with the SEC
staff position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
CRI CAPITAL ACCUMULATION
Fundamental Investment Restrictions
The Portfolio has adopted the following investment restrictions
which cannot be changed without the approval of the holders of a
majority of the outstanding shares of the Portfolio. As defined in the
Investment Company Act of 1940, this means the lesser of the vote of (a)
67% of the shares of the Fund at a meeting where more than 50% of the
outstanding shares are present in person or by proxy or (b) more than
50% of the outstanding shares of the Portfolio. The Portfolio may not:
1. With respect to 50% of its assets, purchase
securities of any issuer (other than obligations of, or
guaranteed by, the United States Government, its
agencies or instrumentalities) if, as a result, more
than 5% of the value of its total assets would be
invested in securities of that issuer. The remaining
50% of its total assets may be invested without
restriction, except as disclosed elsewhere in the
Prospectus or SAI and except that no more than 25% may
be invested in the securities of any one issuer.
2. Concentrate 25% or more of the value of its
assets in any one industry; provided, however, that
there is no limitation with respect to investments in
obligations issued or guaranteed by the United States
Government or its agencies and instrumentalities, and
repurchase agreements secured thereby.
3. Make loans of more than one-third of the
assets of the Portfolio, or as permitted by law. The
purchase by the Portfolio of all or a portion of an
issue of publicly or privately distributed debt
obligations in accordance with its investment
objective, policies and restrictions, shall not
constitute the making of a loan.
4. Underwrite the securities of other issuers,
except as permitted by the Board of Directors within
applicable law, and except to the extent that in
connection with the disposition of its portfolio
securities, the Fund may be deemed to be an underwriter.
5. Purchase from or sell to any of the Fund's
officers or directors, or companies of which any of
them are directors, officers or employees, any
securities (other than shares of beneficial interest of
the Portfolio), but such persons or firms may act as
brokers for the Fund for customary commissions.
6. Except as required in connection with
permissible options, futures and commodity activities
of the Portfolio, invest in commodities, commodity
futures contracts, real estate or real estate limited
partnerships, although it may invest in securities
which are secured by real estate or real estate
mortgages and securities of issuers which invest or
deal in commodities, commodity futures, real estate or
real estate mortgages and provided that it may purchase
or sell stock index futures, foreign currency futures,
interest rate futures and options thereon.
7. Invest in the shares of other investment
companies, except as permitted by the 1940 Act or other
applicable law, or pursuant to Calvert's nonqualified
deferred compensation plan adopted by the Board of
Directors in an amount not to exceed 10% or as
permitted by law.
8. Purchase more than 10% of the outstanding
voting securities of any issuer.
Nonfundamental Investment Restrictions
Capital Accumulation has adopted the following operating (i.e.,
nonfundamental) investment policies and restrictions which may be
changed by the Board of Directors without shareholder approval. The Fund
may not:
9. Purchase the securities of any issuer with
less than three years' continuous operation if, as a
result, more than 5% of the value of its total assets
would be invested in securities of such issuers.
10. Invest, in the aggregate, more than 15% of its
net assets in illiquid securities. Purchases of
securities outside the U.S. that are not registered
with the SEC or marketable in the U.S. are not per se
illiquid.
11. Invest, in the aggregate, more than 5% of its
net assets in the securities of issuers restricted from
selling to the public without registration under the
Securities Act of 1933, excluding restricted securities
eligible for resale pursuant to Rule 144A under that
statute. Purchases of securities outside the U.S. that
are not registered with the SEC or marketable in the
U.S. are not per se restricted.
12. Make short sales of securities or purchase any
securities on margin except that the Fund may obtain
such short-term credits as may be necessary for the
clearance of purchases and sales of securities. The
depositor payment by the Fund of initial or maintenance
margin in connection with financial futures contracts
or related options transactions is not considered the
purchase of a security on margin.
13. Purchase or retain securities of any issuer if
the officers, Directors of the Fund or its Advisors,
owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own beneficially
more than 5% of such issuer's securities.
14. Invest in warrants if more than 5% of the
value of the Portfolio's net assets would be invested
in such securities.
15. Invest in interests in oil, gas, or other
mineral exploration or development programs or leases
although it may invest in securities of issuers which
invest in or sponsor such programs.
16. Borrow money, except from banks for temporary
or emergency purposes, and then only in an amount not
to exceed one-third of the Portfolio's total assets, or
as permitted by law. In order to secure any permitted
borrowings under this section, the Portfolio may
pledge, mortgage or hypothecate its assets.
17. Invest for the purpose of exercising control
or management of another issuer.
For purposes of the Portfolio's concentration policy contained
in restriction (2), above, the Fund intends to comply with the SEC staff
position that securities issued or guaranteed as to principal and
interest by any single foreign government are considered to be
securities of issuers in the same industry.
Any investment restriction which involves a maximum percentage
of securities or assets shall not be considered to be violated unless an
excess over the applicable percentage occurs immediately after an
acquisition of securities or utilization of assets and results therefrom.
Virginia Law Restrictions
In addition to the investment restrictions described above, the
Portfolios will comply with restrictions contained in the current
Virginia Insurance Laws in order that the assets of the Variable
Accounts may be invested in Portfolio shares. The Virginia Insurance
Laws currently permit the Variable Accounts to invest in Portfolio
shares without restricting the Portfolios' investments. However, those
laws or their interpretation may change.
Lending of Portfolio Securities
Subject to the investment restrictions above, a Portfolio may
lend its securities to brokers, dealers and financial institutions and
receive as collateral cash or United States Treasury securities. At all
times while the loan is outstanding, collateral will be maintained in
amounts equal to at least 100% of the current market value of the loaned
securities. Any cash collateral will be invested in short-term
securities, which will increase the current income the Portfolio lending
its securities. Such loans will be terminable by the Portfolio at any
time and will not be made to affiliates of the Portfolio. The Portfolio
will have the right to regain record ownership of loaned securities to
exercise beneficial rights such as voting rights, subscription rights
and rights to dividends, interest or other distributions. The Portfolio
may pay reasonable fees to persons unaffiliated with the Portfolio for
arranging loans. The dividends, interest and other distributions
received by the Portfolio on loaned securities, for tax purposes, may be
treated as income other than qualified income for purposes of the 90%
test discussed below under "Taxes." The Portfolios intend to lend their
securities only to the extent that such activity does not jeopardize
their qualification as a regulated investment company under certain
provisions of the Internal Revenue Code. Loans of securities will be
made only to firms that the Investment Advisor deems creditworthy.
However, as with any extensions of credit, there are risks of delay in
recovery and even loss of rights in the collateral should the borrower
of securities fail financially.
When-Issued and Delayed Delivery Securities
From time to time, in the ordinary course of business, each
Portfolio may purchase securities on a when-issued or delayed delivery
basis -- that is, delivery and payment can take place a month or more
after the date of the transactions. The securities purchased in this
manner are subject to market fluctuation and no interest accrues to the
purchaser during this period. At the time a Portfolio makes a commitment
to purchase securities on a when-issued or delayed delivery basis, the
price is fixed and the Portfolio will record the transaction and
thereafter reflect the value, each day, of the security in determining
the net asset value of the Portfolio. At the time of delivery of the
securities, the value may be more or less than the purchase price.
The Portfolio will enter commitments for when-issued or delayed
delivery securities only when it intends to acquire the securities.
Accordingly, each Portfolio will establish a segregated account with the
Portfolio's custodian bank in which it will maintain cash or cash
equivalents or other portfolio securities equal in value to commitments
for such when-issued or delayed delivery securities. Subject to this
restriction, a Portfolio may purchase these securities without limit.
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INVESTMENT SELECTION PROCESS
- --------------------------------------------------------------------------
Investments in the Portfolios are selected on the basis of
their ability to contribute to the dual objective of the Portfolios. The
Subadvisors have each developed a number of techniques for evaluating
the performance of issuers in each of these areas. The primary sources
of information are reports published by the issuers themselves, the
reports of public agencies, and the reports of groups which monitor
performance in particular areas. These sources of information are
sometimes augmented with direct interviews or written questionnaires
addressed to the issuers. It should be recognized, however, that there
are few generally accepted measures by which achievement in these areas
can be readily distinguished; therefore, the development of suitable
measurement techniques is largely within the discretion and judgment of
the Advisors and Subadvisors of the Portfolio.
In making investment selections, each Portfolio Manager
determines and evaluates the appropriate portfolio composition on the
basis of asset prices and the perceived consequences and probabilities
of various economic outcomes that it deems possible. It then evaluates
numerous individual securities as candidates to fulfill the Portfolio's
investment objective and policies. Securities remain candidates for
inclusion in the Portfolios only if their prices and other
characteristics indicate that they have the potential to perform in a
way that is representative of their class of securities under the
different economic outcomes considered more probable by the Advisor or
Subadvisor.
Candidates for inclusion in any particular class of assets are
then examined according to the social criteria. The issuers are
classified into three categories of suitability under the social
criteria. In the first category are those issuers which exhibit unusual
positive accomplishment with respect to some of the criteria and do not
fail to meet minimum standards with respect to the remaining criteria.
To the greatest extent possible, investment selections are made from
this group. In the second category are those issuers which meet minimum
standards with respect to all the criteria but do not exhibit
outstanding accomplishment with respect to any criterion. This category
includes issuers which may lack an affirmative record of accomplishment
in these areas but which are not known by the Advisor or Subadvisor to
violate any of the social criteria. The third category under the social
criteria consists of issuers which flagrantly violate, or have violated,
one or more of those values, for example, a company which repeatedly
engages in unfair labor practices. The Portfolios will not knowingly
purchase the securities of issuers in this third category.
It should be noted that the Portfolios' social criteria tend to
limit the availability of investment opportunities more than is
customary with other investment companies. The Advisor and Subadvisors,
however, believe that within the first and second categories there are
sufficient investment opportunities to permit full investment among
issuers that satisfy the Portfolios' social investment objective.
To the greatest extent possible, the same social criteria is
applied to the purchase of non-equity securities as to equity
investments. Bank certificates of deposit, commercial paper, repurchase
agreements, and corporate bonds are judged in the same way as a
prospective purchase of the bank's or issuing company's common stock.
The Portfolios may invest, however, in certificates of deposit of banks
and savings and loan associations in which the Portfolios would not
otherwise invest because such institutions have assets of $1 billion or
less, but generally only to the extent all such investments are fully
insured as to principal by the Federal Deposit Insurance Corporation.
Obligations issued by the U.S. Treasury, such as U.S. Treasury
bills, notes and bonds, are supported by the full faith and credit of
the U.S. Government. Certain obligations issued or guaranteed by a U.S.
Government agency or instrumentality are supported by the full faith and
credit of the U.S. Government. These include obligations issued by the
Export-Import Bank, Farmers Home Administration, Government National
Mortgage Association, Postal Service, Merchant Marine, and Washington
Metropolitan Area Transit Authority. The Portfolios may also invest in
other U.S. Government agency or instrumentality obligations which are
supported only by the credit of the agency or instrumentality and may be
further supported by the right of the issuer to borrow from the U.S.
Treasury. Such obligations include securities issued by the Bank for
Cooperatives, Federal Intermediate Credit Bank, Federal Land Bank,
Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and
Federal National Mortgage Association.
- --------------------------------------------------------------------------
PORTFOLIO TURNOVER
- --------------------------------------------------------------------------
Each Portfolio has a different expected annual rate of
portfolio turnover. Portfolio turnover is defined as the lesser of
annual purchases or sales of portfolio securities divided by the monthly
average of the value of the Portfolios' securities (excluding from the
computation all securities, including options, with maturities or
expiration dates at the time of acquisition of one year or less). A high
rate of portfolio turnover generally involves correspondingly greater
brokerage commission expenses, which must be borne directly by the
Portfolio. Notwithstanding increased brokerage commission expenses,
particular holdings may be sold at any time if investment judgment or
Portfolio operations make a sale advisable.
Under normal circumstances the turnover rate can be expected to
be between 50% and 150%. For the fiscal years 1992, 1993, and 1994, the
portfolio turnover rates for CRI Balanced were 15%, 14%, and 43%,
respectively. For the same time periods, the portfolio turnover rates
for CRI Capital Accumulation were 2%, 26%, and 79% respectively. For the
1992 period since inception (June 30, 1992) to December 31, 1992, and
fiscal years 1993 and 1994, the portfolio turnover rates for the Bond
series were 56%, 57%, and 12%, respectively. For the same time periods,
the portfolio turnover rates for the Equity series were 7%, 4%, and
115%, respectively. For the same time periods, the portfolio turnover
rates for the Global Equity series were 0%, 64%, and 84%, respectively.
No Portfolio turnover rate can be calculated for CRI Money
Market due to the short maturities of the instruments purchased.
Portfolio turnover should not affect the income or net asset value of
CRI Money Market because brokerage commissions are not normally charged
on the purchase or sale of money market instruments.
- --------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------
The Portfolios continuously offer their shares at prices equal
to the respective net asset values of the Portfolios determined in the
manner set forth below under "Determination of Net Asset Value." The
Portfolios offer their shares, without sales charge, only for purchase
by various Insurance Companies for allocation to their Variable
Accounts. It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts
of different Insurance Companies, to invest simultaneously in the
Portfolios, although currently neither the Insurance Companies nor the
Portfolio foresee any such disadvantages to either variable annuity or
variable life insurance policy holders of any Insurance Company. The
Portfolio's Board of Directors intends to monitor events in order to
identify any material conflicts between such policyholders and to
determine what action, if any, should be taken in response to any
conflicts.
The Portfolios are required to redeem all full and fractional
shares for cash. The redemption price is the net asset value per share,
which may be more or less than the original cost, depending on the
investment experience of the Portfolio. Payment for shares redeemed will
generally be made within seven days after receipt of a proper notice of
redemption. The right to redeem shares or to receive payment with
respect to any redemption may only be suspended for any period during
which (a) trading on the New York Stock Exchange is restricted as
determined by the Securities and Exchange Commission, or the Exchange is
is closed for other than weekends and holidays; (b) an emergency exists,
as determined by the Securities and Exchange Commission, as a result of
which disposal of Portfolio securities or determination of the net asset
value of a Portfolio is not practicable; or (c) the Securities and
Exchange Commission by order permits postponement for the protection of
shareholders.
- --------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------
The net asset value of the shares of each Portfolio of the Fund
is determined by adding the values of all securities and other assets of
the Portfolio, subtracting liabilities and expenses, and dividing by the
number of shares of the Portfolio outstanding. Expenses are accrued
daily, including the investment advisory fee. CRI Money Market attempts
to maintain a constant net asset value of $1.00 per share; the net asset
values of CRI Balanced, Equity, Global, Bond and Capital Accumulation
fluctuate based on the respective market value of the Portfolio's
investments. The net asset value per share of each of the Portfolios is
determined every business day as of the close of the regular session of
the New York Stock Exhcange (generally 4:00 p.m. Eastern time), and at
such other times as may be necessary or appropriate. The Portfolios do
not determine net asset value on certain national holidays or other days
on which the New York Stock Exchange is closed: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day. Each Portfolio's net asset value
per share is determined by dividing that Portfolio's total net assets
(the value of its assets net of liabilities, including accrued expenses
and fees) by the number of shares outstanding.
The assets of CRI Balanced, Equity, Global Equity, Bond,
Capital Accumulation and Strategic Growth are valued as follows: (a)
securities for which market quotations are readily available are valued
at the most recent closing price, mean between bid and asked price, or
yield equivalent as obtained from one or more market makers for such
securities; (b) securities maturing within 60 days may be valued at
cost, plus or minus any amortized discount or premium, unless the Board
of Directors determines such method not to be appropriate under the
circumstances; and (c) all other securities and assets for which market
quotations are not readily available will be fairly valued by the
Advisor in good faith under the supervision of the Board of Directors.
Securities primarily traded on foreign securities exchanges are
generally valued at the preceding closing values on their respective
exchanges where primarily traded. Equity options are valued at the last
sale price unless the bid price is higher or the asked price is lower,
in which event such bid or asked price is used. Exchange traded fixed
income options are valued at the last sale price unless there is no sale
price, in which event current prices provided by market makers are used.
Over-the-counter fixed income options are valued based upon current
prices provided by market makers. Financial futures are valued at the
settlement price established each day by the board of trade or exchange
on which they are traded. Because of the need to obtain prices as of the
close of trading on various exchanges throughout the world, the
calculation of the Portfolio's net asset value does not take place for
contemporaneously with the determination of the prices of U.S. portfolio
securities. For purposes of determining the net asset value all assets
and liabilities initially expressed in foreign currency values will be
converted into United States dollar values at the mean between the bid
and offered quotations of such currencies against United States dollars
at last quoted by any recognized dealer. If an event were to occur after
the value of an investment was so established but before the net asset
value per share was determined which was likely to materially change the
net asset value, then the instrument would be valued using fair value
consideration by the Directors or their delegates.
CRI Money Market's assets, including securities subject to
repurchase agreements, are normally valued at their amortized cost which
does not take into account unrealized capital gains or losses. This
involves valuing an instrument at its cost and thereafter assuming a
constant amortization to maturity of any discount or premium, regardless
of the impact of fluctuating interest rates on the market value of the
instrument. While this method provides certainty in valuation, it may
result in periods during which value, as determined by amortized cost,
is higher or lower than the price that would be received upon sale of
the instrument.
Rule 2a-7 under the Investment Company Act of 1940 permits CRI
Money Market's assets to be valued at amortized cost if the Portfolio
maintains a dollar-weighted average maturity of 90 days or less and only
purchases obligations having remaining maturities of thirteen months or
less. Rule 2a-7 requires, as a condition of its use, that CRI Money
Market invest only in obligations determined by the Directors to be of
good quality with minimal credit risks and requires the Directors to
establish procedures designed to stabilize, to the extent reasonably
possible, the Portfolio's price per share as computed for the purpose of
sales and redemptions at $1.00. Such procedures include review of the
Portfolio's investment holdings by the Directors, at such intervals as
they may deem appropriate, to determine whether the Portfolio's net
asset value calculated by using available market quotations or
equivalents deviates from $1.00 per share based on amortized cost. If
such deviation exceeds 0.50%, the Directors will promptly consider what
action, if any, will be initiated. In the event the Directors determine
that a deviation exists which may result in material dilution or other
unfair results to investors or existing shareholders, the Directors will
take such corrective action as they regard as necessary and appropriate,
including: the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; the withholding of dividends or payment of distributions from
capital or capital gains; redemptions of shares in kind; or the
establishment of a net asset value per share based upon available market
quotations.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
In 1994 the Portfolios qualified, and in 1995 the Portfolios
intend to qualify, as a "regulated investment company" under the
provisions of Subchapter M of the Internal Revenue Code (the "Code"). To
qualify for treatment as a regulated investment company, each Portfolio
must, among other things, have assets that meet certain requirements
specified in the Code and (i) derive in each taxable year at least 90%
of its gross income from dividends, interest, payments with respect to
securities loans, and gains (without deduction for losses) from the sale
or other disposition of stock or securities, and (ii) derive less than
30% of its gross income in each taxable year from gains (without
deduction for losses) from the sale or other disposition of stock or
securities held less than three months. If the Portfolio distributes
substantially all of its net ordinary and capital gains income, the
Portfolio qualifies as a regulated investment company and is relieved
from paying federal income tax on amounts distributed. Each Portfolio
will be taxed as a separate entity.
Since the shareholders of the Portfolios are Insurance
Companies, this Statement of Additional Information does not contain a
discussion of the federal income tax consequences at the shareholder
level. For information concerning the federal tax consequences to
purchasers of annuity or life insurance policies, see the prospectus for
the policies.
- --------------------------------------------------------------------------
CALCULATION OF YIELD AND TOTAL RETURN
- --------------------------------------------------------------------------
CRI Money Market: Yield
From time to time CRI Money Market advertises its "yield" and
"effective yield." Both yield figures are based on historical earnings
and are not intended to indicate future performance. The "yield" of CRI
Money Market refers to the actual income generated by an investment in
the Portfolio over a particular base period of time. If the base period
is less than one year, the yield is then "annualized." That is, the net
change, exclusive of capital changes, in the value of a share during the
base period is divided by the net asset value per share at the beginning
of the period, and the result is multiplied by 365 and divided by the
number of days in the base period. Capital changes excluded from the
calculation of yield are: (1) realized gains and losses from the sale of
securities, and (2) unrealized appreciation and depreciation. CRI Money
Market's "effective yield" for a seven-day period is its annualized
compounded yield during the period, calculated according to the
following formula:
Effective yield = [(base period return) + 1]365/7 minus 1
For the seven-day period ended December 31, 1994, CRI Money
Market's yield was 6.00% and its effective yield was 6.18%.
The yield of the Money Market Portfolio will fluctuate in
response to changes in interest rates and general economic conditions,
portfolio quality, portfolio maturity, and operating expenses. Yield is
not fixed or insured and therefore is not comparable to a savings or
other similar type of account. Yield during any particular time period
should not be considered an indication of future yield. It is, however,
useful in evaluating a Portfolio's performance in meeting its investment
objective.
CRI Bond: Yield
CRI Bond may also advertise yield from time to time. Yield
quotations are historical and are not intended to indicate future
performance. Yield quotations for the Bond Portfolio refer to the
aggregate imputed yield-to-maturity of each of the Portfolio's
investments based on the market value as of the last day of a given
thirty-day or one-month period, less accrued expenses (net of
reimbursement), divided by the average daily number of outstanding
shares entitled to receive dividends times the maximum offering price on
the last day of the period, compounded on a "bond equivalent," or
semiannual, basis. The Bond Portfolio's yield is computed according to
the following formula:
Yield = 2[(+1)6 - 1]
where a = dividends and interest earned during the period using the
aggregate imputed yield-to maturity for each of the Portfolio's
investments as noted above; b = expenses accrued for the period (net of
reimbursement); c = the average daily number of shares outstanding
during the period that were entitled to receive dividends; and d = the
maximum offering price per share on the last day of the period. For the
30 days ended December 31, 1994, CRI Bond's yield was 6.84%.
The yield of the Bond Portfolio will fluctuate in response to
changes in interest rates and general economic conditions, portfolio
quality, portfolio maturity, and operating expenses. Yield is not fixed
or insured and therefore is not comparable to a savings or other similar
type of account. Yield during any particular time period should not be
considered an indication of future yield. It is, however, useful in
evaluating a Portfolio's performance in meeting its investment objective.
CRI Balanced, Equity, Bond, Global, Capital Accumulation and Strategic
Growth: Total Return and Other Quotations
CRI Balanced, Equity, Bond, Global, Capital Accumulation and
Strategic Growth may each advertise "total return." Total return is
computed by taking the total number of shares purchased by a
hypothetical $1,000 investment, adding all additional shares purchased
within the period with reinvested dividends and distributions,
calculating the value of those shares at the end of the period, and
dividing the result by the initial $1,000 investment. For periods of
more than one year, the cumulative total return is then adjusted for the
number of years, taking compounding into account, to calculate average
annual total return during that period.
Total return is computed according to the following formula:
P(1 + T)n = ERV
where P = a hypothetical initial payment of $1,000; T = total return; n
= number of years; and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period. Total
return is historical in nature and is not intended to indicate future
performance. Total return for the Series for the periods indicated are
as follows:
<TABLE>
<CAPTION>
Periods Ended
December 31, 1994 SEC Total Return
============================================================================
<S> <C>
CRI Balanced
One Year -3.30%
Five Years 6.39%
From Inception<F1> 8.00%
CRI Equity
One Year -9.58%
From Inception<F2> 1.78%
CRI Bond
One Year -3.45%
From Inception<F3> 2.72%
CRI Global Equity
One Year -2.13%
From Inception<F4> 8.55%
CRI Capital Accumulation (formerly
known as CRI Ariel)
One Year -9.92%
From Inception<F5> 4.88%
<FN>
<F1>Average annual total return from September 2, 1986.
<F2>Average annual total return from June 30, 1992.
<F3>Average annual total return from June 30, 1992.
<F4>Average annual total return from June 30, 1992.
<F5>Average annual total return from July 16, 1991.
</FN>
</TABLE>
Total return, like yield and net asset value per share, fluctuates in
response to changes in market conditions. Neither total return nor yield
for any particular time period should be considered an indication of future
return.
INVESTMENT ADVISORY AGREEMENT
The Investment Advisory agreement between the Fund's original investment
advisor, Acacia Investment Management Corporation, and the Fund regarding
CRI Balanced was approved by the Fund's Board of Directors, including a
majority of the Directors who were not interested persons of Acacia
Investment Management Corporation, and by the shareholder of the Portfolio.
The Investment Advisory Agreement was also approved on July 9, 1986, by
Acacia National pursuant to the instructions of variable annuity and
variable life insurance policyowners. On February 29, 1988, Calvert Asset
Management Company, Inc. acquired all the assets and liabilities of Acacia
Investment Management Corporation, including the rights and duties under
the Advisory Agreement, pursuant to merger (see "Investment Advisor"). An
amendment to the Investment Agreement adding CRI Money Market, Bond, Equity
and Global were presented to the Fund's Board for approval in May 1992.
Unless earlier terminated as described below, the Agreement will remain in
effect indefinitely if approved annually (a) by the Board of Directors of
the Fund or by a majority of the outstanding shares of the Portfolio,
including a majority of the outstanding shares of each Portfolio, and (b)
by a majority of the Directors who are not parties to such contract or
interested persons (as defined by the Investment Company Act of 1940) of
any such party. The Agreement is not assignable and may be terminated
without penalty on 60 days' written notice at the option of either party or
by the vote of the shareholders of the Portfolio.
The investment advisory fee described in the Prospectus will be accrued
daily and allocated to the various Portfolios on the basis of the size of
the respective Portfolio, as determined each day. There is no assurance
that the Portfolio will reach a net asset level high enough to realize
reduction to each Portfolio regardless of size on a "uniform percentage"
basis. Determination of the portion of the net assets of each Portfolio to
which a reduced rate is applicable is made by multiplying the net assets of
that Portfolio by the "uniform percentage," which is derived by dividing
the amount of the combined assets of all Portfolios to which such rate
applies by such combined assets.
The Investment Advisory Agreement provides that the Advisor will not be
liable to the Portfolio or to any shareholder or policy owner for any error
of judgment or mistake of law or for any loss suffered by the Portfolio or
by any shareholder or policy owner in connection with matters to which the
Investment Advisory Agreement relates, except a loss resulting form willful
misfeasance, bad faith, gross negligence, or reckless disregard on the part
of the advisor in the performance of its duties thereunder.
For the Fund's fiscal years ended December 31, 1992, 1993, and 1994
respectively, CRI Balanced paid CAM a fee of $137,160, $292,412, and
$425,429. CAM waived a portion of its advisory fee for 1992 for CRI Money
Market, Bond, Equity, and Global Equity, and waived its entire fee for 1993
for CRI Money Market, Bond, and Equity. For 1994, CRI Money Market, Bond
and Equity paid investment adviser fees of $14,484, $5,823, and $9,773,
respectively. For 1993, CRI Global Equity paid investment advisory fees of
$13,558, and received expense reimbursement of $2,354 by CAM. For 1994, CRI
Global paid investment advisory fees of $46,185, and received expense
reimbursements from CAM of $307. For the period from inception (July 16,
1991) through December 31, 1991, CRI Ariel paid CAM $519 and was reimbursed
$4,903. For the 1992 fiscal year, CRI Ariel paid investment advisory fees
of $1,924, and was reimbursed $3,045 from the Advisor. For 1993, CRI Ariel
paid investment advisory fees of $22,809, and received no expense
reimbursement from CAM. CAM paid Ariel Capital Management 0.05% of CRI
Ariel's average daily net assets for use of the "Ariel" name.
Securities Activities of the Investment Advisor
Securities held by the Portfolios may also be held by the Insurance
Companies, their separate accounts or mutual funds for which the Investment
Advisor or a Subadvisor acts as an investment advisor. Because of different
investment objectives or other factors, any of these parties may buy shares
of the Portfolios when one or more other clients are selling the same
security. Such transactions will be done in a manner deemed equitable to
all parties. To the extent that such transactions increase the demand for a
Portfolio's shares, there may be an effect on share prices.
When deemed to be in the best interest of the Portfolios, the Investment
Advisors or Subadvisors may aggregate the securities with those to be sold
or purchased for other accounts or companies in order to obtain favorable
execution and low brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Advisor or Subadvisor in the
manner it considers to be most equitable and consistent with its fiduciary
obligations to the Portfolios and to the other accounts or companies
involved. In some cases this procedure may adversely affect the size of the
position obtainable for a Portfolio.
Payment of Expenses
In addition to the portfolio management and investment advice described
above, CAM also is obligated to perform certain administrative and
management services and to provide all executive, administrative, clerical
and other personnel necessary to operate the Portfolio and to pay the
salaries of all these persons. CAM will furnish the Portfolio with office
space, facilities, and equipment and pay the day-to-day expenses related to
the operation and maintenance of such office space, facilities and
equipment. Legal, accounting and all other expenses incurred in the
organization of the Portfolio, including costs of registering under federal
and state securities laws, will also be paid by CAM except with respect to
those administrative services provided by Calvert Administrative Services
Company to CRI Global pursuant to the Administrative Services Agreement.
Those expenses not specifically stated in the Agreements as being paid by
the Portfolio will be assumed by CAM.
Expenses of the Fund will be accrued daily. Expenses that the respective
Portfolios of the Fund will pay individually include, but are not limited
to the following: brokerage commissions, dealer markups and other expenses
incurred in the acquisition or disposition of any securities, printing
costs (including the daily calculation of net asset value), interest,
certain taxes, charges of the custodian and transfer agent, and other
expenses attributable to a particular Portfolio. Expenses which will be
allocated to the various Portfolios on the basis of the size of the
respective portfolio, determined each day, include legal and auditing fees,
expenses of shareholder and director meetings, independent director fees,
bookkeeping expenses related to shareholder accounts, insurance charges,
cost of printing and mailing shareholder reports and proxy statements, the
cost to pay dividends and capital gain distributions, the costs of printing
and mailing registration statements, the cost to pay dividends and capital
gain distributions, the costs of printing and mailing registration
statements and updated prospectuses to current shareholders, and the fees
of any trade association of which the Portfolio is a member. Expenses
resulting form legal actions involving the Portfolio and any amount for
which it may be obligated to indemnify its officers, directors and
employees, may either be directly applicable to particular Portfolios or
allocated on the basis of the size of the respective Portfolios, depending
on the nature of the legal action.
CAM has agreed to reimburse the Portfolios for the amount, if any, by which
the aggregate expenses of any Portfolios (including the Investment
Advisor's fee, but excluding brokerage commissions, interest, taxes and
extraordinary expenses) in any calendar year, exceed a certain percentage
of the average daily net assets of the Portfolios, as detailed in the
Prospectus.
Securities Transactions and Brokerage
The Investment Advisor, and in some cases the Subadvisor, is primarily
responsible for the investment decisions of each Portfolio, including
decisions to buy and sell securities, the selection of brokers and dealers
to effect the transactions, the placing of investment transactions, and the
negotiation of brokerage commissions, if any. No Portfolio has any
obligation to deal with any dealer or group of dealers in the execution of
transactions in Portfolio securities. In placing orders, it is the policy
of each Portfolio to obtain the most favorable net results, taking into
account various factors, including price, dealer spread or commission, the
size of the transaction, and difficulty of execution. While the Investment
Advisor and Subadvisors generally seek reasonably competitive spreads or
commissions, the Portfolios will not necessarily be paying the lowest
spread or commission available.
If the securities in which a particular Portfolio invests are traded
primarily in the over-the-counter market, the Portfolio will deal, where
possible, with the dealers who make a market in the securities involved
unless better prices and execution are available elsewhere. These "market
makers" usually act as principals for their own account. On occasion, the
Portfolios may purchase securities directly from the issuer. Bonds and
money market securities are generally traded on a net basis and do not
normally involve either brokerage commission or transfer taxes. The cost of
Portfolio securities transactions will consist primarily of brokerage
commissions or dealer or underwriter spreads.
Portfolio transactions are undertaken on the basis of their desirability
from an investment standpoint. Investment decisions and the choice of
brokers and dealers are made by the Advisor and Subadvisors under the
direction and supervision of the Board of Directors. The Advisor and
Subadvisors select broker-dealers on the basis of their professional
capability and the value and quality of their services. The Advisor and
Subadvisor reserve the right to place orders for the purchase or sale of
portfolio securities with broker-dealers that have sold shares of the
Portfolios or that provide the Portfolios with statistical, research, or
other information and services. Although any statistical research or other
information and services provided by broker-dealers may be useful to the
Advisor and the Subadvisors, the dollar value of such information and
services is generally indeterminable, and its availability or receipt does
not serve materially to reduce the Advisor's or Subadvisor's normal
research activities or expenses.
The Advisors and Subadvisors may also execute portfolio transactions with
or through broker-dealers that have sold shares of the Portfolio. However,
such sales will not be a qualifying or disqualifying factor in a
broker-dealer's selection nor will the selection of any broker-dealer be
based on the volume of Portfolio shares sold. The Advisors or Subadvisors
may compensate such broker-dealers at their own expense in consideration of
their promotional and administrative services.
MANAGEMENT OF THE FUND
The directors and officers of the Fund and their principal occupations
are set forth below. Directors and Officers who are active employees
of the Investment Advisor or its affiliates will not receive any
additional compensation for their services to the Fund.
6 CLIFTON S. SORRELL, JR., President and Chairman. Mr. Sorrell serves
as President, Chief Executive Officer and Vice Chairman of Calvert
Group, Ltd., and as an officer and director of each of its affiliated
companies. Mr. Sorrell is a director of Calvert-Sloan Advisers,
L.L.C., and a director/trustee and officer of each of the other funds
in the Calvert Group. 6 Directors or Officers deemed to be "interested
persons" of the Fund, as defined in the Investment Company Act of
1940.
1 CHARLES E. DIEHL, Trustee. Mr. Diehl is Vice President and Treasurer
Emeritus of the George Washington University, and has retired from
University Support Services, Inc. of Herndon, Virginia. He is also a
Director of Acacia Mutual Life Insurance Company. Address: 1658 Quail
Hollow Court, McLean, Virginia 22101.
ARTHUR J. PUGH, Trustee. Mr. Pugh also serves as a Director of Acacia
Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax, Virginia
22030.
SOUTH TRIMBLE, III, Director. Mr. Trimble has been a partner in the
law firm of Reasoner, Davis & Fox since 1956. Address: 888 17th
Street, N.W., Suite 800, Washington, DC 20006.
FRANK H. BLATZ, JR., Esq., Director. Mr. Blatz is a partner in the law
firm of Abrams, Blatz, Gran, Hendricks, & Reina, P.A. He is also a
director/trustee of The Calvert Fund, Calvert Cash Reserves d/b/a
Money Management Plus, First Variable Rate Fund, Calvert Tax-Free
Reserves, and Calvert Municipal Fund, Inc. Address: 900 Oak Tree Road,
South Plainfield, New Jersey 07080.
1 ROBERT L. BENNETT, Vice President. Mr. Bennett is a Director of
Calvert Group, Ltd. and its subsidiaries, President of Calvert
Shareholder Services, Inc., and Executive Vice President of Calvert
Group, Ltd. He is an officer of each of the investment companies in
the Calvert Group of Funds.
1 RONALD M. WOLFSHEIMER, Treasurer. Mr. Wolfsheimer is an officer of
each of the Calvert Group Funds. He is also Senior Vice President and
Controller of Calvert Group, Ltd. and its affiliated companies. Mr.
Wolfsheimer is Vice President and Treasurer of Calvert-Sloan Advisers,
L.L.C.
1 WILLIAM M. TARTIKOFF, Esq., Vice President and Secretary. Mr.
Tartikoff is General Counsel, Secretary, and Senior Vice President of
Calvert Group, Ltd., and its subsidiaries, and is an officer of each
of the other investment companies in the Calvert Group of Funds.Mr.
Tartikoff is Vice President and Secretary of Calvert-Sloan Advisers,
L.L.C., and is an officer of Acacia National Life Insurance Company.
1 RENO J. MARTINI, Senior Vice President. Mr. Martini is Senior Vice
President of Calvert Group, Ltd., and Senior Vice President and Chief
Investment Officer of Calvert Asset Management Company, Inc. Mr.
Martini is also a director and officer of Calvert-Sloan Advisers,
L.L.C.
1 DANIEL K. HAYES, Vice President. Mr. Hayes is Vice President of
Calvert Asset Management Company, Inc., and is an officer of each of
the other investment companies in the Calvert Group of Funds.
1 SUSAN WALKER BENDER, Esq., Assistant Secretary. Ms. Bender is
Associate General Counsel of Calvert Group, Ltd., and an officer of
each of its subsidiaries and Calvert-Sloan Advisers, L.L.C. She is
also an officer of each of the other investment companies in the
Calvert Group of Funds.
7 BETH-ANN ROTH, Esq., Assistant Secretary. Ms. Roth is Associate
General Counsel of Calvert Group, Ltd., and an officer of each of its
subsidiaries and Calvert-Sloan Advisers, L.L.C. She is also an officer
of each of the other investment companies in the Calvert Group of
Funds. 7Officers and trustees deemed to be "interested persons" of the
Fund under the Investment Company Act of 1940, by virtue of of their
affiliation with the Fund's Advisor.
The address of Directors and Officers, unless otherwise noted, is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Directors
and Officers as a group beneficially own less than 1% of the
outstanding shares of the Fund.
During fiscal 1994, directors of the Fund not affiliated with the Fund's
Advisor were paid $2,243 by CRI Money Market, $16,145 by CRI Balanced, $502
by CRI Bond Portfolio, $992 by CRI Equity, $2,009 by CRI Global Equity, and
$1,441 by CRI Capital Accumulation. Each Director of the Fund who is not
affiliated with the Advisor receives a meeting fee of $500 for each Board
meeting attended; such fees are allocated among the Series based upon their
relative net assets. Directors not on any other Calvert Group Fund Boards
receive an annual fee of $2,000.
Directors of the Fund not affiliated with the Fund's Advisor
("noninterested persons") may elect to defer receipt of all or a percentage
of their annual fees and invest them in any fund in the Calvert Family of
Funds through the Directors/Trustees Deferred Compensation Plan (shown as
"Pension or Retirement Benefits Accrued as part of Fund Expenses," below).
Deferral of the fees is designed to maintain the parties in the same
position as if the fees were paid on a current basis. Management believes
this will have a negligible effect on the Fund's assets, liabilities, net
assets, and net income per share, and will ensure that there is no
duplication of advisory fees.
Director Compensation Table - Fiscal Year 1994
Aggregate Compensation Total Compensation Registrant and
from Pension or from Benefits Fund Complex
Retirement Fund Accrued as part paid to
for service as of Fund Expenses Directors
Director
Name of Director
- --------------------------------------------------------------------------------
Frank H. Blatz, Jr. $2,000 $2,000 $32,600
Charles E. Diehl $2,000 $2,000 $35,300
Arthur J. Pugh $2,000 $0 $36,500
South Trimble, III $4,500 $4,500 $4,500
- --------------------------------------------------------------------------------
METHOD OF DISTRIBUTION
- --------------------------------------------------------------------------------
The Fund has entered into an agreement with Calvert Distributors, Inc.
("CDI") whereby CDI, acting as principal underwriter for the Fund, makes a
continuous offering of the Fund's securities on a "best efforts" basis.
Under the terms of the agreement, CDI is entitled to receive a fee from the
Fund of $15,000 per year. However, in the past CDI has waived this fee. No
associated person or broker-dealer may have an interest in the fees payable
to CDI. CDI is responsible for paying (i) all commissions or other fees to
its associated persons which are due for the sale of the Policies, and (ii)
any compensation to other broker-dealers and their associated persons due
under the terms of any sales agreement between CDI and the broker-dealers.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
- --------------------------------------------------------------------------------
The Fund was incorporated in Maryland on September 27, 1982. The authorized
capital stock of the Fund consists of one hundred million shares of stock,
par value of $1.00 per share. The Fund's Board of Directors may, from time
to time, authorize the issuance of additional shares having the
descriptions, powers and rights, and the qualifications, limitations, and
restrictions thereof, as the Board of Directors may determine. The Board of
Directors may also change the designation of any portfolio and may increase
or decrease the number of shares of any portfolio, but may not decrease the
number of shares of any Portfolio below the number of shares of that
portfolio then outstanding. All shares of common stock have equal voting
rights (regardless of the net asset value per share) except that only
shares of the respective portfolio are entitled to vote on matters
concerning only that portfolio. Pursuant to the Investment Company Act of
1940 and the rules and regulations thereunder, certain matters approved by
a vote of all shareholders of the Fund may not be binding on a portfolio
whose shareholders have not approved that matter. Each issued and
outstanding share is entitled to one vote and to participate equally in
dividends and distributions declared by the respective portfolio and, upon
liquidation or dissolution, in net assets of such portfolio remaining after
satisfaction of outstanding liabilities. The shares of each portfolio, when
issued, will be fully paid and non-assessable and have no preemptive or
conversion rights. Holders of shares of any portfolio are entitled to
redeem their shares as set forth above under "Purchase and Redemption of
Shares." The shares do not have cumulative voting rights and the holders of
more than 50% of the shares of the Fund voting for the election of
directors can elect all of the directors of the Fund if they choose to do
so and in such event the holders of the remaining shares would not be able
to elect any directors.
The Fund's Board of Directors has adopted a "proportionate voting" policy,
meaning that Insurance Companies will vote all of the Fund's shares,
including shares the Insurance Companies hold, in return for providing the
Fund with its capital and in payment of charges made against the variable
annuity or variable life separate accounts, in proportion to the votes
received from contractholders or policyowners.
- --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS AND POLICYHOLDERS
- --------------------------------------------------------------------------------
The Fund will issue unaudited semi-annual reports showing the Fund's
investments and other information, and it will issue annual reports
containing financial statements audited by independent certified public
auditors.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Prospectus and this Statement of Additional Information do not contain
all the information set forth in the registration statement and exhibits
relating thereto, which the Fund has filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, to which reference is hereby made.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements for the Fund included in the Annual Report
to Shareholders dated December 31, 1994, are expressly incorporated by
reference and made a part of this Statement of Additional Information.
Copies of the Annual Report may be obtained free of charge by writing or
calling the Fund.
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS AND CUSTODIANS
- --------------------------------------------------------------------------------
The Board of Directors has appointed Coopers & Lybrand, L.L.P. as the
Fund's independent accountants for fiscal year 1995. State Street Bank and
Trust Company of Boston, Massachusetts is custodian of the Fund's assets.
First National Bank of Maryland acts as custodian of certain of the Fund's
cash assets.
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
Corporate Bond Ratings Description of Moody's Investors Service
Inc.'s/Standard & Poor's municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of investment
risk and are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure. This rating indicates an extremely strong capacity to pay principal
and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from AAA issues only in small degree. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities, fluctuation of protective elements may be of
greater amplitude, or there may be other elements present which make
long-term risks appear somewhat larger than in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to principal
and interest are considered adequate, but elements may be present which
make the bond somewhat more susceptible to the adverse effects of
circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay principal and
interest. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay principal and interest for bonds in this
category than for bonds in the A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is regarded as
predominantly speculative with respect to capacity to pay interest and
repay principal. There may be some large uncertainties and major risk
exposure to adverse conditions. The higher the degree of speculation, the
lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in arrears.
Commercial Paper Ratings
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. Issuers rated Prime are further
referred to by use of numbers 1, 2, and 3 to denote relative strength
within this highest classification. Among the factors considered by
Moody's in assigning ratings for an issuer are the following: (1)
management; (2) economic evaluation of the inherent uncertain areas;
(3) competition and customer acceptance of products; (4) liquidity;
(5) amount and quality of long-term debt; (6) ten year earnings
trends; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by
management of obligations which may be present or may arise as a
result of public interest questions and preparations to meet such
obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are better than the
industry average. Long term senior debt rating is "A" or better. In
some cases BBB credits may be acceptable. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established,
the issuer has a strong position within its industry and the
reliability and quality of management is unquestioned. Issuers rated A
are further referred to by use of numbers 1, 2, and 3 to denote
relative strength within this classification.
<PAGE>
<PAGE>
ACACIA CAPITAL CORPORATION
STATEMENTS OF OPERATIONS (continued)
SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
CRI
CAPITAL
INVESTMENT INCOME ACCUMULATION
<S> <C>
Interest Income $ 2,615
Dividend income 10,353
Total investment income 12,968
Expenses - Note B
Investment advisory fee 21,758
Directors' fees and expenses 1,266
Federal and state registration fees 224
Insurance 71
Postage and delivery 47
Printing and stationery 4,084
Professional fees 867
Miscellaneous expenses 107
___________
Total expenses 28,424
___________
NET INVESTMENT INCOME (LOSS) (15,456)
___________
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
Net realized gain (loss) on investments 188,613
Net realized gain (loss) on foreign currency
-
Change in unrealized appreciation or
depreciation of investments 1,176,503
Change in unrealized appreciation or
depreciation of foreign currency -
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY 1,365,116
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,349,660
__________
__________
</TABLE>
<PAGE>
ACACIA CAPITAL CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES (continued)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
CRI
CAPITAL
ACCUMULATION
<S> <C>
ASSETS
Investments in securities, at value -
see accompanying portfolio
$6,661,688
Cash 171,579
Interest and dividends receivable 1,938
Receivable for securities sold 171,609
Receivable for shares sold -
Other assets 297
Total assets 7,007,111
LIABILITIES
Payable to Calvert Asset Management Company,
Inc. - Note B 5,606
Payable for securities purchased 192,254
Payable for shares redeemed 590
Accrued expenses and other liabilities -
_________
Total liabilities 198,450
_________
Net assets $6,808,661
_________
_________
NET ASSETS
Net assets consist of:
Paid-in capital applicable to 51,873,106
outstanding shares of common stock, for
the CRI Balanced Portfolio, $1.00 par
value (70,000,000 shares authorized)
Paid-in capital applicable to 320,874
outstanding shares of common stock, for
the CRI Capital Accumulation Portfolio,
$1.00 par value (4,000,000 shares authorized) 5,633,955
Paid-in capital applicable to 90,840 outstanding
shares of common stock, for the CRI Strategic
Growth Portfolio, $1.00 par value (5,000,000
shares authorized)
Accumulated net investment income - net
of distributions (11,828)
Accumulated realized gains (losses) on investments -
net of distributions (71,541)
Accumulated realized gains (losses) on foreign
currency transactions - net of distributions -
Net unrealized appreciation (depreciation)
on investments 1,258,075
Net unrealized appreciation (depreciation) on
foreign currency -
_________
Net assets $6,808,661
__________
__________
NET ASSETS VALUE, offering and redemption price per share
CRI Balanced Portfolio
($87,719,128 divided by 51,873,106 shares)
CRI Capital Accumulation Portfolio
($6,808,661 divided by 320,874 shares) $ 21.22
CRI Strategic Growth Portfolio
($908,481 divided by 90,840 shares)
</TABLE>
<PAGE>
<PAGE>
Ex-99.17
PROFORMA STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
August 31, 1995
<TABLE>
<CAPTION>
CRI
Capital CRI
Accumulation Equity
Portfolio Portfolio
--------------- ---------------
<S> <C> <C>
ASSETS
-----------------------------------------------------------------------------
Investments in securities, at value - $7,178,073 $2,660,866
(Cost $5,686,897, $2,557,873
and $8,244,770, respectively).
Cash 372,693 54,801
Interest and dividends receivable 1,187 3,567
Receivable for securities sold 174,532 64,154
Other assets 16,202 -
--------------- ---------------
Total assets 7,742,687 2,783,388
--------------- ---------------
LIABILITIES
-----------------------------------------------------------------------------
Payable to Calvert Asset Management Co., Inc. 24,812 1,423
Payable for securities purchased 105,758 25,691
Accrued expenses and other liabilities - 1,349
-------------- ---------------
Total liabilities 130,570 28,463
-------------- ---------------
Net assets $7,612,117 $2,754,925
=============== ===============
</TABLE>
PROFORMA STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
August 31, 1995
<TABLE>
<CAPTION>
Proforma Proforma
Adjustments Combined
------------------------------
<S> <C> <C>
ASSETS
-----------------------------------------------------------------------------
Investments in securities, at value - - $9,838,939
(Cost $5,686,897, $2,557,873
and $8,244,770, respectively).
Cash - 427,494
Interest and dividends receivable - 4,754
Receivable for securities sold - 238,686
Other assets - 16,202
------------- ---------------
Total assets - 10,526,075
------------- ---------------
LIABILITIES
-----------------------------------------------------------------------------
Payable to Calvert Asset Management Co., Inc. - 26,235
Payable for securities purchased - 131,449
Accrued expenses and other liabilities - 1,349
------------- ---------------
Total liabilities - 159,033
------------- ---------------
Net assets - 10,367,042
============= ===============
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS
-----------------------------------------------------------------------------
<S> <C> <C>
Paid-in capital applicable to 328,606 outstanding
shares of common stock, for the CRI Capital Accumu-
lation Portfolio, $1.00 par value, (4,000,000 shares
authorized) and for 154,804 outstanding shares,
for the CRI Equity Portfolio, $1.00 par value,
(2,000,000 shares authorized) 5,807,783 2,573,770
Accumulated net investment income -
net of distributions (18,660) 14,034
Accumulated realized gains/(losses) on investments -
net of distributions 331,818 64,128
Net unrealized appreciation (depreciation) on
investments 1,491,176 102,993
--------------- ---------------
Net assets $7,612,117 $2,754,925
=============== ===============
NET ASSETS $7,612,117 $2,754,925
=============== ===============
SHARES OUTSTANDING 328,606 154,804
=============== ===============
NET ASSET VALUE $23.16 $17.80
=============== ===============
Paid-in capital applicable to 328,606 outstanding
shares of common stock, for the CRI Capital Accumu-
lation Portfolio, $1.00 par value, (4,000,000 shares
authorized) and for 154,804 outstanding shares,
for the CRI Equity Portfolio, $1.00 par value,
(2,000,000 shares authorized) - 8,381,553
Accumulated net investment income -
net of distributions - (4,626)
Accumulated realized gains/(losses) on investments -
net of distributions - 395,946
Net unrealized appreciation (depreciation) on
investments - 1,594,169
-------------- ---------------
Net assets 10,367,042
============== ===============
NET ASSETS 10,367,042
===============
SHARES OUTSTANDING<F1> 447,583
===============
NET ASSET VALUE $23.16
===============
<FN>
<F1> The proforma combined shares outstanding consists of 328,606
shares of CRI Capital Accumulation Portfolio and 118,977 shares of CRI
Equity Portfolio.
</FN>
</TABLE>
See Notes to Proforma Financial Statements.
<PAGE>
PROFORMA STATEMENT OF OPERATIONS (UNAUDITED)
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
Eight Months Ended August 31, 1995
<TABLE>
<CAPTION>
CRI
Capital CRI
Accumulation Equity
Portfolio Portfolio
-------------- ---------------
<S> <C> <C>
INVESTMENT INCOME
-----------------------------------------------------------------------------
Interest Income $5,704 $1,173
Dividend Income 13,898 24,999
-------------- ---------------
Total investment income 19,602 26,172
-------------- ---------------
EXPENSES
Investment advisory fee 32,958 11,148
Contract services 1,097 5
Custodian fee - (4)
Directors' fees and expense 1,495 85
Federal and state registration fees 314 -
Insurance 95 -
Postage and delivery 2,038 68
Printing and stationery 3,200 1,134
Professional fees 593 204
Miscellaneous expenses 100 -
Less: Reimbursement from Advisor - -
-------------- ---------------
Total expenses 41,890 12,640
-------------- ---------------
NET INVESTMENT INCOME (22,288) 13,532
-------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Proforma Proforma
Adjustments Combined
------------------------------
<S> <C> <C>
INVESTMENT INCOME
------------------------------------------------ ----------------------------
Interest Income - $6,877
Dividend Income - 38,897
------------- ---------------
Total investment income - 45,774
------------- ---------------
EXPENSES
Investment advisory fee 2,776 46,882
Contract services - 1,102
Custodian fee - (4)
Directors' fees and expense - 1,580
Federal and state registration fees - 314
Insurance - 95
Postage and delivery - 2,106
Printing and stationery - 4,334
Professional fees - 797
Miscellaneous expenses - 100
Less: Reimbursement from Advisor - 0
------------- ---------------
Total expenses 2,776 57,306
------------- ---------------
NET INVESTMENT INCOME (2,776) (11,532)
------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
-----------------------------------------------------------------------------
<S> <C> <C>
Net realized gain (loss) on investments 591,972 133,085
Change in unrealized appreciation
or depreciation of investments 1,409,604 261,805
-------------- ---------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 2,001,576 394,890
-------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,979,288 $408,422
============== ===============
AVERAGE NET ASSETS 6,232,443 2,570,062
============== ===============
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.01% 0.74%
</TABLE>
<TABLE>
<CAPTION>
============== ===============
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
-----------------------------------------------------------------------------
<S> <C> <C>
Net realized gain (loss) on investments - 725,057
Change in unrealized appreciation
or depreciation of investments - 1,671,409
-------------- ---------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS - 2,396,466
-------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ ($2,776) $2,384,934
============== ===============
AVERAGE NET ASSETS 8,802,505
==== ===============
RATIO OF EXPENSES TO AVERAGE NET ASSETS<F1> 0.98%
==== ===============
The proforma combined statement of operations presented above does not
necessarity reflect what the results of operations would have been if the
entities had been merged on January 1, 1995. In addition, the expenses do not
include the cost of merging the two funds. Investment advisory fees will be
based on 0.80% average net assets of the combined fund.
<FN>
<F1> Ratios of expenses to average net assets are annualized.
</FN>
</TABLE>
See Notes to Proforma Financial Statements.
<PAGE>
Notes to Proforma Financial Statements
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
August 31, 1995
(Unaudited)
- Note A - General -
The pro forma schedule of statements of assets and
liabilities gives the effect of the proposed combination of the Portfolios.
The combination is accounted for as a tax-free merger of investment
companies. The proforma statement of operations presents the operations of
the Portfolios on a combined basis and is presented for information
purposes only: however it is not necessarily representative of what the
combined result of the Portfolios would have been had the combination
occurred at the beginning of the fiscal year. The combination would be
accomplished by an exchange of shares of CRI Equity Portfolio for shares of
CRI Capital Accumulation Portfolio at net asset value. CRI Capital
Accumulation Portfolio and CRI Equity Portfolio are both series of Acacia
Capital Corporation (the "Fund"). The Fund is registered under the
Investment Company Act of 1940, as amended ("Act"), as an open-end
management investment company. The Fund operates as a series fund, each
issuing a separate class of common stock. Shares of the CRI Capital
Accumulation Portfolio and CRI Equity Portfolio are offered only to
separate accounts of insurance companies at a price equal to their
respective net asset values per share, without a sales charge.
- Note B -
Significant Accounting Policies - Portfolio Valuation:
Investments in the Portfolios are valued as follows: (a) securities for
which market quotations are readily available are valued at the most recent
closing price, mean between bid and asked price, or yield equivalent as
obtained from one or more market makers for such securities: (b) securities
maturing within 60 days are valued at cost, plus or minus any amortized
discount or premium, unless the Board of Directors determines such method
not to be appropriate under the circumstances: and (c) fair values for all
other securities and assets for which market quotations are not readily
available are determined by the Advisor in good faith under the supervision
of the Board of Directors. The Portfolios may enter into repurchase
agreements with recognized financial institutions and in all instances hold
the underlying securities with a value at least equal to the total
repurchase price such financial institutions have agreed to pay.
Securities Transactions and Investment Income: Securities transactions are
recorded on a trade basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recorded on the ex-dividend date and interest income, including, where
applicable, amortization of premium and discount on short-term investments,
is recorded on the accrual basis.
Federal Income Taxes: It is the policy of the Portfolios to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code available to certain investment companies, and to
make distributions of taxable income and capital gains sufficient to
relieve it from all, or substantially all, federal income and excise taxes.
- Note C -
Investment Advisory Fee And Other Transactions With Affiliates -
The combined Portfolio's Investment Advisor would be Calvert Asset
Management Company, Inc. For information on management fees and other
transactions with affiliates see the Prospectus/Proxy Statement.
<PAGE>
PROFORMA STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
December 31, 1994
<TABLE>
<CAPTION>
CRI
Capital CRI
Accumulation Equity
Portfolio Portfolio
--------------- -----------
<S> <C> <C>
ASSETS
-----------------------------------------------------------------------------
Investments in securities, at value - $2,492,148 $2,613,271
(Cost $2,410,576, $2,772,084
and $5,182,660, respectively).
Cash 4,968,242 336,358
Interest and dividends receivable 11,257 6,726
Receivable for securities sold 492,903 -
Other assets 95 -
--------------- -----------
Total assets 7,964,645 2,956,355
--------------- -----------
LIABILITIES
-----------------------------------------------------------------------------
Payable to Calvert Asset Management Co., Inc. 4,085 1,569
Payable for securities purchased 2,271,389 281,891
Accrued expenses and other liabilities 350 600
--------------- -----------
Total liabilities 2,275,824 284,060
--------------- -----------
Net assets $5,688,821 $2,672,295
=============== ===========
</TABLE>
<TABLE>
<CAPTION>
Proforma Proforma
Adjustments Combined
-- -------------------------
<S> <C> <C>
ASSETS
-----------------------------------------------------------------------------
Investments in securities, at value - - $5,105,419
(Cost $2,410,576, $2,772,084
and $5,182,660, respectively).
Cash - 5,304,600
Interest and dividends receivable - 17,983
Receivable for securities sold - 492,903
Other assets - 95
-- ------------- ----------
Total assets - 10,921,000
-- ------------- ----------
LIABILITIES
-----------------------------------------------------------------------------
Payable to Calvert Asset Management Co., Inc. - 5,654
Payable for securities purchased - 2,553,280
Accrued expenses and other liabilities - 950
-- ------------- ----------
Total liabilities - 2,559,884
-- ------------- ----------
Net assets - $8,361,116
== ============= ==========
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS
----------------------------------------------------------------------------
<S> <C> <C>
Paid-in capital applicable to 335,226 outstanding
shares of common stock, for the CRI Capital Accumu-
lation Portfolio, $1.00 par value, (4,000,000 shares
authorized) and for 175,508 outstanding shares,
for the CRI Equity Portfolio, $1.00 par value,
(2,000,000 shares authorized) 5,863,775 2,899,562
Accumulated net investment income -
net of distributions 3,628 502
Accumulated realized gains/(losses) on investments -
net of distributions (260,154) (68,957)
Net unrealized appreciation (depreciation) on
investments 81,572 (158,812)
--------------- -----------
Net assets $5,688,821 $2,672,295
=============== ===========
NET ASSETS $5,688,821 $2,672,295
=============== ===========
SHARES OUTSTANDING 335,226 175,508
=============== ===========
NET ASSET VALUE $16.97 $15.23
=============== ===========
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS
----------------------------------------------------------------------------
<S> <C> <C>
Paid-in capital applicable to 335,226 outstanding
shares of common stock, for the CRI Capital Accumu-
lation Portfolio, $1.00 par value, (4,000,000 shares
authorized) and for 175,508 outstanding shares,
for the CRI Equity Portfolio, $1.00 par value,
(2,000,000 shares authorized) - 8,763,337
Accumulated net investment income -
net of distributions - 4,130
Accumulated realized gains/(losses) on investments
net of distributions - (329,111)
Net unrealized appreciation (depreciation) on
investments - (77,240)
---- ------------- --------
Net assets $8,361,116
==== ============= =========
NET ASSETS $8,361,116
==== ============
SHARES OUTSTANDING 492,738 (1)
==== ===========
NET ASSET VALUE $16.97
==== ===========
</TABLE>
(1) The proforma combined shares outstanding consists of 335,226 shares of
CRI Capital Accumulation Portfolio and 157,512 shares of CRI Equity
Portfolio.
See Notes to Proforma Financial Statements.
<PAGE>
PROFORMA STATEMENT OF OPERATIONS (UNAUDITED)
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
Year Ended December 31, 1994
CRI
<TABLE>
<CAPTION>
Capital CRI
Accumulation Equity
Portfolio Portfolio
-------------- ---------------
<S> <C> <C>
INVESTMENT INCOME
----------------------------------------------------------------------------
Interest Income - $88
Dividend Income $79,613 48,906
-------------- ---------------
Total investment income 79,613 48,994
-------------- ---------------
EXPENSES
Investment advisory fee 39,358 9,773
Contract services - 431
Custodian fee - 388
Directors' fees and expense 1,441 992
Federal and state registration fees 72 18
Insurance 163 -
Postage and delivery 61 140
Printing and stationery 157 4,176
Professional fees 1,466 1,086
Miscellaneous expenses 27 205
Less: Reimbursement from Advisor - (2,723)
-------------- ---------------
Total expenses 42,745 14,486
-------------- ---------------
NET INVESTMENT INCOME 36,868 34,508
-------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Proforma Proforma
Adjustments Combined
------------------------------
INVESTMENT INCOME
---------------------------------------------------------------------------
<S> <C> <C>
Interest Income - $88
Dividend Income - 128,519
------------- ---------------
Total investment income - 128,607
------------- ---------------
EXPENSES
Investment advisory fee 14,534 63,665
Contract services - 431
Custodian fee - 388
Directors' fees and expense - 2,433
Federal and state registration fees - 90
Insurance - 163
Postage and delivery - 201
Printing and stationery - 4,333
Professional fees - 2,552
Miscellaneous expenses - 232
Less: Reimbursement from Advisor 2,723 0
------------- ---------------
Total expenses 17,257 74,488
------------- ---------------
NET INVESTMENT INCOME (17,257) 54,119
------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
----------------------------------------------------------------------------
<S> <C> <C>
Net realized gain (loss) on investments (260,154) (51,195)
Change in unrealized appreciation
or depreciation of investments (358,629) (242,697)
-------------- ---------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (618,783) (293,892)
-------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($581,915) ($259,384)
============== ===============
AVERAGE NET ASSETS 5,418,204 2,539,944
============== ===============
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.79% 0.57%
</TABLE>
============== ===============
<TABLE>
<CAPTION>
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
----------------------------------------------------------------------------
<S> <C> <C>
Net realized gain (loss) on investments - (311,349)
Change in unrealized appreciation
or depreciation of investments - (601,326)
------------- ---------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS - (912,675)
------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($17,257) ($858,556)
============= ===============
AVERAGE NET ASSETS 7,958,148
===============
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.94%
===============
</TABLE>
The proforma combined statement of operations presented above does not
necessarity reflect what the results of operations would have been if the
entities had been merged on January 1, 1994. In addition, the expenses do
not include the cost of merging the two funds. Investment advisory fees
will be based on 0.80% average net assets of the combined fund.
See Notes to Proforma Financial Statements.
<PAGE>
Notes to Proforma Financial Statements
CRI Capital Accumulation Portfolio
CRI Equity Portfolio
December 31, 1994
(Unaudited)
- Note A -
General - The pro forma schedule of statements of assets and
liabilities gives the effect of the proposed combination of the Portfolios.
The combination is accounted for as a tax-free merger of investment
companies. The proforma statement of operations presents the operations of
the Portfolios on a combined basis and is presented for information
purposes only: however it is not necessarily representative of what the
combined result of the Portfolios would have been had the combination
occurred at the beginning of the fiscal year. The combination would be
accomplished by an exchange of shares of CRI Equity Portfolio for shares of
CRI Capital Accumulation Portfolio at net asset value. CRI Capital
Accumulation Portfolio and CRI Equity Portfolio are both series of Acacia
Capital Corporation (the "Fund"). The Fund is registered under the
Investment Company Act of 1940, as amended ("Act"), as an open-end
management investment company. The Fund operates as a series fund, each
issuing a separate class of common stock. Shares of the CRI Capital
Accumulation Portfolio and CRI Equity Portfolio are offered only to
separate accounts of insurance companies at a price equal to their
respective net asset values per share, without a sales charge.
- Note B -
Significant Accounting Policies - Portfolio Valuation:
Investments in the Portfolios are valued as follows: (a) securities for
which market quotations are readily available are valued at the most recent
closing price, mean between bid and asked price, or yield equivalent as
obtained from one or more market makers for such securities: (b) securities
maturing within 60 days are valued at cost, plus or minus any amortized
discount or premium, unless the Board of Directors determines such method
not to be appropriate under the circumstances: and (c) fair values for all
other securities and assets for which market quotations are not readily
available are determined by the Advisor in good faith under the supervision
of the Board of Directors. The Portfolios may enter into repurchase
agreements with recognized financial institutions and in all instances hold
the underlying securities with a value at least equal to the total
repurchase price such financial institutions have agreed to pay.
Securities Transactions and Investment Income: Securities transactions are
recorded on a trade basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recorded on the ex-dividend date and interest income, including, where
applicable, amortization of premium and discount on short-term investments,
is recorded on the accrual basis.
Federal Income Taxes: It is the policy of the Portfolios to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code available to certain investment companies, and to
make distributions of taxable income and capital gains sufficient to
relieve it from all, or substantially all, federal income and excise taxes.
- Note C -
Investment Advisory Fee And Other Transactions With Affiliates -
The combined Portfolio's Investment Advisor would be Calvert Asset
Management Company, Inc. For information on management fees and other
transactions with affiliates see the Prospectus/Proxy Statement.
<PAGE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (94.9%) Shares Value net assets
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Airline (1.0%)
Atlantic Coast Airlines, Inc. (1) 2,000 $15,250
AMR Corp. 700 49,350
Comair Hldgs, Inc. 1,500 37,875
------------
102,475 0.99%
------------
Auto (0.8%)
Federal Mogul Corp. 3,750 83,438
------------
83,438 0.80%
------------
Biotechnology (0.7%)
Amgen, Inc. (1) 1,600 76,600
------------
76,600 0.74%
------------
Business Equipment and Services (0.6%)
Corporate Express, Inc. (1) 1,500 35,063
U.S. Office Products Co. 1,400 24,150
------------
59,213 0.57%
------------
Capital Goods (0.6%)
Hubbell, Inc., Class B 1,100 64,488
------------
64,488 0.62%
------------
Chemicals (2.2%)
Minerals Technologies, Inc. (1) 600 21,750
Morton International, Inc. 2,100 68,250
Praxair, Inc. 3,700 96,200
Sigma Aldrich Corp. 900 43,200
------------
229,400 2.21%
------------
Communication Equipment (3.8%)
Cisco Systems, Inc. (1) 1,700 111,563
Colonial Data Technologies 2,500 45,313
DSC Communications Corp. 600 31,500
Itron, Inc. (1) 2,500 62,500
Spectran Corp. (1) 500 23,125
Teltrend, Inc. 3,000 70,500
Vtel Corp. (1) 2,500 51,250
------------
395,750 3.82%
------------
Computers - Equipment and Services (0.6%)
Digital Equipment Corp. (1) 1,500 62,625
------------
62,625 0.60%
------------
------------
Computers - Software (10.5%)
Cheyenne Software, Inc. (1) 1,600 33,000
Computer Associates International, Inc. 1,600 111,200
Compuware Corp. 1,400 32,249
Datalogix International, Inc. (1) 2,500 58,750
Excalibur Technologies Corp. (1) 3,000 49,500
Imnet Systems, Inc. 7,000 129,500
Legato Systems, Inc. 2,000 47,000
</TABLE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (CON'T) Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Computers - Software Continued
Macromedia, Inc. (1) 1,100 $54,725
Mercury Interactive Corp. 2,000 45,250
Microsoft Corp. (1) 900 83,250
Network Gen Corp. 1,500 52,781
Number Nine Visual Technology 800 14,756
Oracle Sys Corp. (1) 1,650 66,206
Softkey International, Inc. (1) 1,500 59,813
Sterling Software, Inc. (1) 1,100 49,088
Symantec Corp. (1) 1,500 43,313
Syncronys Softcorp 1,100 28,600
Touchstone Software Corp. 2,000 31,000
Veritas Software Co. 2,000 51,000
Viasoft, Inc. 4,500 47,250
------------
10.50%
------------
Computers - Systems (6.0%)
3d Sys Corp. 566 9,268
Adaptive Solutions, Inc. 5,500 37,125
Asyst Technologies, Inc. (1) 1,000 45,250
Bay Networks, Inc. (1) 1,800 85,500
Data Race, Inc. (1) 5,000 32,188
Discreet Logic (1) 2,000 81,000
Gandalf Technologies, Inc. 8,000 61,500
Mentor Graphics Corp. (1) 1,300 25,025
Meridian Data, Inc. 3,600 31,050
Microcom, Inc. 2,000 40,000
Networth, Inc. 3,000 45,750
Optical Data Sys, Inc. (1) 1,300 42,575
Rasterops 3,500 34,563
Verifone, Inc. (1) 2,000 56,750
------------
627,543 6.05%
------------
------------
Consumer Products (2.4%)
Black and Decker Corp. 4,000 129,500
Masco Corp. 2,200 61,600
Whirlpool Corp. 1,100 59,950
------------
251,050 2.42%
------------
Cosmetics (0.5%)
Guest Supply, Inc. (1) 1,500 49,500
------------
49,500 0.48%
------------
------------
Delivery (0.8%)
Federal Express Corp. (1) 1,200 86,100
------------
86,100 0.83%
------------
Electrical Equipment (2.0%)
AFC Cable Sys, Inc. (1) 2,900 58,000
Checkpoint Sys, Inc. (1) 3,000 72,000
Kulicke & Soffa Inds, Inc. (1) 2,000 77,750
------------
</TABLE>
207,750 2.00%
------------
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (CON'T) Shares Value
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronics - Defense (1.3%)
Alpha Inds, Inc. (1) 4,000 $68,500
Trimble Navigation Ltd. 2,000 64,250
------------
132,750 1.28%
------------
Electronics - Instruments (3.2%)
Intermagnetics Gen Corp. 2,575 43,453
Sensormatic Electronics Corp. (1) 2,800 58,800
Ultratech Stepper, Inc. 2,500 98,750
U.S. Order, Inc. 3,000 66,750
Veeco Instrs, Inc. 3,000 67,500
------------
335,253 3.23%
------------
Electronics - Semiconductors (11.4%)
Adaptec, Inc. (1) 2,200 93,500
Anadigics, Inc. (1) 1,000 30,000
Brooktree Corp. 1,500 29,813
Chips & Technologies, Inc. (1) 4,000 55,000
E M C Corp. (1) 5,300 108,650
Flextronics International 1,200 26,100
GaSonics International, Inc. (1) 1,400 48,650
Input/Output, Inc. (1) 1,600 59,600
Intel Corp. 1,800 110,475
OEA, Inc. 1,100 33,000
Ontrak Sys, Inc. 1,800 48,375
Photronic, Inc. (1) 1,750 61,223
PRI Automation, Inc. (1) 1,000 37,750
Quality Semiconductor, Inc. 2,000 34,500
Sanmina Corp. (1) 500 22,750
Seeq Technology, Inc. 15,000 53,438
Semiconductor Pkg Materials, Inc. 4,800 60,000
Sierra Semi Conductor Corp. (1) 1,000 49,375
Solectron Corp. (1) 1,500 53,250
Uniphase Corp. (1) 1,500 47,438
Vishay Intertechnology, Inc. 1,730 70,065
Zilog, Inc. (1) 1,000 44,500
------------
11.36%
------------
Entertainment (0.6%)
Sanctuary Woods Multimedia Corp. 9,000 59,625
------------
59,625 0.58%
------------
Freight Transportation (1.3%)
Ryder System, Inc. 3,000 72,750
TNT Freightways Corp. (1) 3,000 62,250
------------
135,000 1.30%
------------
Financial Services (8.0%)
BankAmerica Corp. 1,500 84,750
Chemical Bkg Corp. 1,900 110,675
Citicorp 400 26,550
</TABLE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (CON'T) Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Financial Services Continued
Dean Witter Discover & Co. 1,500 $76,500
Federal Home Loan Mortgage Corp. 1,400 89,950
First USA, Inc. 1,100 50,600
Glendale Federal Bank Federal
Savings Bank (1) 4,800 75,600
Green Tree Finl Corp. 1,900 110,675
Grupo Financiero Serfin, S.A. (1) 3,300 16,500
ISB Financial Corp. (1) 4,500 69,750
Price T. Rowe & Associates, Inc. 1,800 85,500
Roosevelt Finl Group, Inc. 1,800 32,625
------------
829,675 8.00%
------------
Health Care (4.5%)
American Homepatient, Inc. (1) 1,000 29,000
CRA Managed Care, Inc. (1) 2,000 41,000
Health Care & Retirement Corp. (1) 1,600 50,400
Healthcare Compare Corp. (1) 1,300 48,913
Healthsource, Inc. (1) 1,000 40,000
Healthsouth Corp. (1) 3,500 82,688
Manor Care, Inc. 2,300 74,463
OccuSystems, Inc. (1) 2,000 42,000
United Healthcare Corp. (1) 1,500 63,375
------------
471,838 4.55%
------------
Industrial Products (1.2%)
Applied Materials, Inc. (1) 1,200 124,800
------------
124,800 1.20%
------------
Insurance (2.3%)
AFLAC, Inc. 1,100 44,963
American Bankers Ins Group, Inc. 700 24,325
Chubb Corp. 1,000 91,250
USF&G Corp. 4,200 76,179
------------
236,717 2.28%
------------
Leisure (0.5%)
Carnival Corp., Class A 2,100 45,675
Challenger International Ltd. 1,000 5,438
------------
51,113 0.49%
------------
Machinery (1.5%)
Consorcio G Grupo Dina, S.A. 8,200 27,675
Deere & Co. 800 68,400
Giddings & Lewis, Inc. 3,700 60,588
------------
156,663 1.51%
------------
Machine Tools (0.7%)
FSI Intl, Inc. (1) 2,000 70,500
------------
70,500 0.68%
------------
</TABLE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (CON'T) Shares Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Manufacturing (0.4%)
Wabash National Corp. 1,000 $36,500
------------
36,500 0.35%
------------
Medical Devices & Supplies (5.6%) 1,900 45,125
ALZA Corp. (1) 1,200 64,200
Cardinal Health, Inc. 4,000 44,625
Diametrics Med, Inc. 1,250 34,063
Heart Technology, Inc. (1) 3,000 36,375
Inhale Therapeutic Sys 2,500 25,313
North American Vaccine, Inc. (1) 3,000 79,875
Research Inds Corp. (1) 500 7,500
Resmed, Inc. (1) 3,000 53,250
Respironics, Inc. (1) 1,000 24,750
Sofamor/Danek Group, Inc. (1) 2,000 58,750
Steris Corp. (1) 5,100 103,275
Ventritex, Inc. (1) ------------
577,100
------------ 5.57%
Oil & Gas (0.4%) 2,500 40,625
Belden & Blake Corp. (1) ------------
40,625
------------ 0.39%
Pharmaceutical (1.3%) 6,500 56,469
Columbia Labs, Inc. 1,500 74,813
Merck & Co., Inc. ------------
131,281
------------ 1.27%
Real Estate (0.8%) 2,000 40,250
General Growth Properties, Inc. 1,200 37,800
Post Properties, Inc. ------------
78,050
------------ 0.75%
Recycling (0.5%) 2,500 50,625
Imco Recycling, Inc. ------------
50,625
------------ 0.49%
Restaurants (1.6%) 2,800 36,750
Buffets, Inc. (1) 1,800 51,525
Cheesecake Factory, Inc. (1) 3,000 79,875
Daka Intl, Inc. (1) ------------
168,150
------------ 1.62%
Retail (7.5%) 1,600 43,000
Autozone, Inc. (1) 2,000 78,250
Barnes & Noble, Inc. (1) 3,200 26,800
Bombay, Inc. (1) 1,900 51,300
Federated Department Stores, Inc. (1) 1,900 61,038
Gap, Inc. 2,000 59,500
Gymboree Corp. (1) 1,500 15,750
Lechters, Inc. (1) 4,200 95,775
Liz Claiborne, Inc. 2,100 65,888
Mens Wearhouse, Inc. (1) 2,500 118,125
Movie Gallery, Inc. (1)
</TABLE>
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
CALVERT RESPONSIBLY INVESTED EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SECURITIES (CON'T) Shares Value
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail Continued
Revco D.S., Inc. (1) 2,100 $41,475
Sunglass Hut International, Inc. (1) 1,000 42,500
Toys R' Us, Inc. (1) 2,000 52,000
Whole Foods Mkt, Inc. (1) 2,500 30,469
------------
781,869 7.54%
------------
Specialized Services (3.0%)
Ambassadors International, Inc. 5,000 57,500
Devry, Inc. 2,000 44,250
Equifax, Inc. 1,175 45,678
Gartner Group, Inc., Class A (1) 1,000 28,375
Lo Jack Corp. 4,000 52,000
VSI Enterprises, Inc. 14,900 58,669
Webb Del Corp. 1,200 22,350
------------
308,822 2.98%
------------
Telecommunications (2.7%)
Compania de Telefonos de Chile, S.A. 1,200 87,600
Mobile Telecommunication Technologies
Corp. (1) 2,000 61,500
Telefonica de Argentina, S.A., Class B 2,800 69,300
Telefonos de Mexico, S.A. 2,000 65,500
------------
283,900 2.74%
------------
Textiles (2.1%)
Quiksilver, Inc. (1) 2,000 59,500
St. John Knits, Inc. 1,700 75,225
Lydall, Inc. 2,000 47,750
Marisa Christina, Inc. 2,000 34,000
------------
216,475 2.09%
------------
Total Equity Securities (Cost $8,244,770) 9,838,939 94.906%
------------
TOTAL INVESTMENTS (94.9%) (3)
(Cost $8,244,770) (2) 9,838,839 94.906%
============
</TABLE>
Notes to Portfolio of Investments:
(1) These equity securities have not declared dividends in the past twelve
months.
(2) Cost of investments is substantially the same for federal income tax
purposes.
(3) The percentages shown represent the percentage of the investments to net
assets.
<PAGE>
<PAGE>
Ex-99.17
Acacia Capital Corporation
PART C. OTHER INFORMATION
Item 15. Indemnification
Registrant's Bylaws, Exhibit 2 to this Registration Statement, provide
that officers and directors will be indemnified by the Fund against
liabilities and expenses incurred by such persons in connection with
actions, suits, or proceedings arising out of their offices or duties of
employment, except that no indemnification can be made to a person who has
been adjudged liable of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties. In the absence of such an adjudication,
the determination of eligibility for indemnification shall be made by
independent counsel in a written opinion or by the vote of a majority of a
quorum of directors who are neither "interested persons" of Registrant, as
that term is defined in Section 2(a)(19) of the Investment Company Act of
1940, nor parties to the proceeding.
Registrant's Articles of Incorporation also provide that Registrant
may purchase and maintain liability insurance on behalf of any officer,
director, employee or agent against any liabilities arising from such
status. In this regard, Registrant maintains a Directors & Officers
(Partners) Liability Insurance Policy with Chubb Group of Insurance
Companies, 15 Mountain View Road, Warren, New Jersey 07061, providing
Registrant with $5 million in directors and officers liability coverage,
plus $3 million in excess directors and officers liability coverage for the
independent trustees/directors only. Registrant also maintains a $9 million
Investment Company Blanket Bond issued by ICI Mutual Insurance Company, P.
O. Box 730, Burlington, Vermont 05402, and an additional $5 million in
excess of $9 million blanket bond with Chubb Group of Insurance Companies,
15 Mountain View Road, Warren, New Jersey 07061.
Insofar as indeminification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 16. Exhibits
(1) Restated Articles of Incorporation of Acacia Capital
Corporation incorporated by reference to initial N-14
filing dated November 9, 1995, and form of Amendment
to the Restated Articles --
Exhibit B to the N-14 prospectus (herewith)
(2) By-laws of Acacia Capital Corporation, incorporated by
reference to Registrant's Form N-1A Pre-Effective
Amendment No. 1, dated 8/10/83.
(4) Plan of Reclassification (herewith) -- Exhibit A to the
N-14 prospectus
(6) Investment Advisory Agreement and Sub-Investment Advisory
Agreements, incorporated by reference to Registrant's Form
N-1A Pre-Effective Amendment No. 30, dated April 25, 1995
(7) Underwriting Agreement, incorporated by reference to
Registrant's Form N-1A Pre-Effective Amendment No. 30,
dated April 25, 1995
(8) Director's Deferred Compensation Agreement incorporated
by reference to initial N-14 filing dated November 9, 1995
(9) Custody Agreement, incorporated by reference to
Registrant's Form N-1A Pre-Effective Amendment No. 1,
dated 8/10/83
(11) Opinion and Consent of Counsel incorporated by reference
to initial N-14 filing dated November 9, 1995
(12) Tax Opinion incorporated by reference to initial N-14
filing dated November 9, 1995
(14) Consent of Independent Auditors to Use of Report (herewith)
(16) Powers of Attorney incorporated by reference to initial
N-14 filing dated November 9, 1995
(17a) Prospectus of Acquiring and Acquired Portfolios
incorporated by reference to initial N-14 filing dated
November 9, 1995
(17b) Declaration Pursuant to Rule 24f-2 incorporated by
reference to initial N-14 filing dated November 9, 1995
Exhibits 3, 5, 10, 13 and 15 are omitted because they are inapplicable.
Item 17. Undertakings
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of
a prospectus which is a part of this registration statement
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c) of the Securities Act,
the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings
by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that
is filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used
until the amendment is effective, and that, in determining any
liability under the 1933 Act, each post-effective amendment
shall be deemed to be a new registration statement for the
securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide
offering of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on behalf of the Registrant by the
undersigned, thereto duly authorized in the City of Bethesda, and the State of
Maryland on the 8th day of November, 1995.
ACACIA CAPITAL CORPORATION
By:
Clifton S. Sorrell, Jr.
Chairman of the Board
and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
Signature Title Date
________ Chairman and
President 12/21/95
Clifton S.
Sorrell, Jr. (Principal
Executive Officer)
Principal Accounting
_________ Officer 12/21/95
Ronald M. Wolfsheimer
_________ ** Director 12/21/95
Charles E. Diehl
_________ ** Director 12/21/95
Arthur James Pugh
_________ ** Director 12/21/95
South Trimble, III
_________ ** Director 12/21/95
Frank H. Blatz, Jr.
**Signed by Susan Walker Bender pursuant to power of attorney, attached hereto.
<PAGE>
Exhibit 14
Ex-99.14
COOPERS Coopers & Lybrand L.L.P.
& LYBRAND
a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the following with respect to the registration of
securities on Form N-14 (Pre-Effecitve Amendment No. 1 under the securities Act
of 1933, relative to the transfer of all the assets and liabilities of the
Acacia Capital Corporation Calvert Responsibly Invested ("CRI") Equity
Portfolio to the Acacia Capital Corporation CRI Capital Accumulation Portfolio
in exchange for shares of CRI Capital Accumulation Portfolio.
1. The incorporation by reference of our report dated February
17, 1995 on our audits of the financial statements and financial
highlights of Acacia Capital Corporation CRI Capital Accumulation and
Equity Portfolios which report is included in the Annual Report to
Shareholders for the year ended December 31, 1994, in the Statement of
Additional Information of Acacia Capital Corporation's Calvert
Responsibly Invested Portfolios, dated May 1, 1995.
2. The reference to our Firm under the heading "Financial
Statements and Experts".
3. the reference to our firm under the heading "Independent
Accountants and Custodians" in the Statement of Additional Information
of Acacia Capital Corporation's Calvert Responsibly Invested Portfolios,
dated May 1, 1995.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
December 22, 1995
Coopers & Lybrand L.L.P., a registered limited liability partnership, is
a member firm of Coopers & Lybrand International.