Page 1 of __
SEC Registration Nos.
811-3591 and 2-80154
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 31 XX
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
Amendment No. 31 XX
Acacia Capital Corporation
(Exact Name of Registrant as Specified in Charter)
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
Registrant's Telephone Number: (301) 951-4800
William M. Tartikoff
4550 Montgomery Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
__ Immediately upon filing XX on May 1, 1995
pursuant to paragraph (b) pursuant to paragraph (b)
__ 60 days after filing __ on (date)
pursuant to paragraph (a) pursuant to paragraph (a)
(Acceleration request enclosed)
of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of shares of common stock is being
registered by this Registration Statement. On February 28, 1995,
Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1994.
<PAGE>
PROSPECTUS May 1, 1996
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814 (800) 368-2748
The Calvert Responsibly Invested Balanced Portfolio (formerly
the Calvert Responsibly Invested Managed Growth Portfolio or Calvert
Socially Responsible Series) (the "Portfolio") is a series of Acacia
Capital Corporation (the "Fund"), an open-end management investment
company whose investment advisor is Calvert Asset Management Company,
Inc. (the "Investment Advisor").
The investment objective of the Portfolio is to achieve a total
return above the rate of inflation through an actively managed,
nondiversified portfolio of common and preferred stocks, bonds, and
money market instruments which offer income and capital growth
opportunity and which satisfy the social concern criteria established
for the Portfolio. There can be no assurance that the objective of the
Portfolio will be realized. See "Investment Objective and Policies."
This Prospectus sets forth the information that a prospective
policyholder should know before directing investment in the Portfolio
and it should be read and kept for future reference. A Statement of
Additional Information dated May 1, 1996, which contains further
information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling the Fund at the numbers above, or by
writing the Fund at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
Shares of the Fund are offered only to insurance companies for
allocation to certain of their variable separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. WHEN INVESTORS SELL SHARES
OF THE FUND, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY
PAID.
<PAGE>
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TABLE OF CONTENTS
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Page
Financial Highlights..........................................2
Investment Objective and ...................................5
The Fund and Its Management...................................8
Purchase and Red..............................................11
Dividends and Distribution....................................12
Total Return Information......................................12
Taxes.................. ................................12
Transfer and Dividend Disbursing Agent........................13
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<PAGE>
FINANCIAL HIGHLIGHTS
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The following table provides information about the Portfolio's financial
history. It expresses the information in terms of a single share
outstanding throughout each period. The table has been audited by those
independent accountants whose reports are included in the Fund's Annual
Report to Shareholders for each of the respective periods presented. The
table 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>
Year Ended December 31,
1995
-----------------------
<S> <C>
Net asset value, beginning $1.440
Income from investment operations
Net investment income .050
Net realized and unrealized gain (loss)
.380
Total from investment operations
.430
Distributions from
Net investment income (.040)
Net realized gains (.127)
Total distributions (.167)
Total increase (decrease) in net asset value
.263
Net asset value, ending $1.703
Total return<F1> 29.87%
Ratio to average net assets:
Net investment income 3.08%
Total expenses<F2> .83%
Net expenses .81%
Portfolio turnover 163%
Net assets, ending (in thousands) $110,237
Number of shares outstanding, ending (in
thousands) 64,728
<FN>
<F1> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F2> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1994 1993
----------------------------
----------------------------
<S> <C> <C>
Net asset value, beginning $1.537 $1.465
Income from investment operations
Net investment income .046 .045
Net realized and unrealized gain (loss)
(.097) .072
Total from investment operations
(.051) .117
Distributions from
Net investment income (.046) (.045)
Net realized gains -- --
Total distributions (.046) (.045)
Total increase (decrease) in net asset value
(.097) .072
Net asset value, ending $1.440 $ 1.537
Total return<F3> (3.30)% 8.00%
Ratio to average net assets:
Net investment income 3.39% 3.69%
Total expenses<F4> -- --
Net expenses .80% .81%
Portfolio turnover 43% 14%
Net assets, ending (in thousands) $66,593 $54,000
Number of shares outstanding, ending (in
thousands) $46,244 $35,14
<FN>
<F3> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F4> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992
---------------------------
---------------------------
<S> <C>
Net asset value, beginning $1.403
Income from investment operations
Net investment income .044
Net realized and unrealized gain (loss)
.062
Total from investment operations
.106
Distributions from
Net investment income (.044)
Net realized gains --
Total distributions (.044)
Total increase (decrease) in net asset value
.062
Net asset value, ending $1.465
Total return<F5> 7.61%
Ratio to average net assets:
Net investment income 4.05%
Total expenses<F6> --
Net expenses .85%
Portfolio turnover 15%
Net assets, ending (in thousands) $28,471
Number of shares outstanding, ending (in
thousands) 19,433
<FN>
<F5> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F6> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
1991 1990
------------------------------
------------------------------
<S> <C> <C>
Net asset value, beginning $1.249 $1.247
Income from investment operations
Net investment income .050 .050
Net realized and unrealized gain (loss)
.154 .002
Total from investment operations
.204 .052
Distributions from
Net investment income (.050) (.050)
Net realized gains -- --
Total distributions (.050) (.050)
Total increase (decrease) in net asset value
.154 .002
Net asset value, ending $1.403 $1.249
Total return<F7> 16.40% 4.18%
Ratio to average net assets:
Net investment income 4.49% 5.69%
Total expenses<F8> -- --
Net expenses .85% .77%
Portfolio turnover 12% 11%
Net assets, ending (in thousands) $14,946 $6,760
Number of shares outstanding, ending (in
thousands) 10,656 5,410
<FN>
<F7> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F8> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1989 1988
------------------------------
------------------------------
<S> <C> <C>
Net asset value, beginning $1.068 $1.004
Income from investment operations
Net investment income .042 .054
Net realized and unrealized gain (loss)
.179 .064
Total from investment operations
.221 .118
Distributions from
Net investment income (.042) (.054)
Net realized gains -- --
Total distributions (.042) (.054)
Total increase (decrease) in net asset value
.179 .064
Net asset value, ending $1.247 $1.068
Total return<F9> 20.69% 11.75%
Ratios to average net assets:
Net investment income 4.85% 4.95%
Total expense<F10> .96% .80%
Net expenses .50% .50%
Portfolio turnover 28% 40%
Net assets, ending (in thousands) $2,573 $1,294
Number of shares outstanding, ending (in
thousands) 2,064 1,211
(a) = Annualized
<FN>
<F9> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F10> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From inception
(Sept. 2, 1986)
to Dec. 31,
Year Ended December 31,
1987 1986
-----------------------------
-----------------------------
<S> <C> <C>
Net asset value, beginning 0.958 $1.000
Income from investment operation
Net investment income .019 .010
Net realized and unrealized gain (loss) .046 (.042)
Total from investment operations .065 (.03)
Distributions from
Net investment income (.019) (.010)
Net realized gains -- --
Total distributions (.019) (.010)
Total increase (decrease) in net asset value .046 (.042)
Net asset value, ending 1.004 $0.958
Total return<F11> 6.78% 3.31%
Ratios to average net assets:
Net investment income 3.72% 1.59%(a)
Total expenses<F12> 1.32% 1.51%(a)
Net expenses .50% .10%(a)
Portfolio turnover 17% --
(Net assets, ending (in thousands) $1,022 $144
Number of shares outstanding, ending (in 1,018 150
thousands)
a)= Annualized
<FN>
<F11> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F12> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Portfolio discussed below is
not fundamental and may be changed upon 60 days' written notice to
shareholders without a shareholder vote. There can be no assurance that
the investment objective of the Portfolio will be realized.
The investment objective of the Portfolio is to seek growth of
capital through investment in enterprises that make a significant
contribution to society through their products and services and through
the way they do business. The Portfolio is designed for long-term
investment and seeks to achieve a total return above the rate of
inflation through an actively managed portfolio of stocks, bonds and
money market instruments (including repurchase agreements secured by
such instruments) selected with a concern for the social impact of each
investment. It is not the policy of the Portfolio to take great risks to
obtain speculatively or aggressively high returns. There is
predetermined percentage of assets allocated to either stocks or bonds
or money market instruments, although, as an operating policy, the
Portfolio will have at least 25% of its assets in fixed income senior
securities. Equity investments are selected by the Sub-Advisor, NCM
Capital Management Group, Inc., subject to direction and control by the
Fund's Advisor and Board of Directors. Fixed-income investments are
selected by the Advisor. The Investment Advisors determine the mix for
the Portfolio depending upon their view of market conditions and the
economic outlook.
To implement its investment objectives, the Portfolio follows the
following policies which, unless otherwise specified as a
fundamental policy, are operating policies and may be changed without
shareholder vote. The Portfolio may purchase both common and preferred
stock. For its fixed-income investments, the Portfolio normally invests
in bonds which are considered investment grade, including bonds which
are direct or indirect obligations of the U.S. Government, or which at
the date of investment are rated AAA, AA, A, or BBB by Standard & Poor's
Corporation or Aaa, Aa, A, or Baa by Moody's Investors Service, Inc.
Bonds rated Baa or BBB are considered medium grade obligations and
possess speculative characteristics. The Portfolio may purchase
lower-rated obligations but no more than 20% of its assets may be
invested in obligations rated lower than B. The Portfolio may purchase
without limitation bonds which are unrated but of comparable quality to
bonds rated B or better, as determined by the Advisors under the
supervision of the Board of Directors. See Additional Risk
Factors--Non-Investment Grade Securities, and the Statement of
Additional Information for additional information concerning bond
ratings.
The Portfolio may purchase money market instruments, including
repurchase agreements with recognized securities dealers and banks
secured by such instruments, selected in accordance with the Portfolio's
social criteria. Such money market instruments may include: obligations
issued or guaranteed as to principal by the U.S. Government, its
agencies and instrumentalities; U.S. dollar-denominated certificates of
deposit, time deposits and bankers' acceptances of U.S. banks, generally
banks with assets in excess of $1 billion; and commercial paper which at
the date of investment is rated A-1 by Standard and Poor's Corporation
or Prime-1 by Moody's Investors Service, Inc., or if not rated, is of
comparable quality.
Due to the particular social objective of the Portfolio,
opportunities may exist to promote promising approaches to social goals
through privately placed instruments. Since private placement
investments are restricted securities and have no readily available
market, the Portfolio has a fundamental policy that such investments in
the Portfolio are limited to no more than 10% of the Portfolio's assets.
All investments for the Portfolio are selected with a concern
for the social impact of each investment. The Portfolio has developed
the following criteria for the selection of organizations in which the
Portfolio invests. The Portfolio seeks to invest in a producer or
service provider which:
1. Delivers safe products and services in ways that
sustain our natural environment.
2. Is managed with participation throughout the
organization in defining and achieving objectives.
3. Negotiates fairly with its workers, provides an
environment supportive of their wellness, does not
discriminate on the basis of race, gender, religion,
age, disability, ethnic origin or sexual orientation,
does not consistently violate regulations of the Equal
Employment Opportunity Commission, and provides
opportunities for women, disadvantaged minorities and
others from whom equal opportunities have often been
denied.
4. Fosters awareness of a commitment to human goals, such
as creativity, productivity, self-respect, and
responsibility, within the organization and the world,
and continually recreates a context within which these
goals can be realized.
The Portfolio will not invest in an issuer primarily engaged in
the production of nuclear energy or in the manufacture of equipment to
produce nuclear energy, business activities in support of repressive
regimes, or the manufacture of weapons systems.
Each investment is selected on the basis of its abilities to
contribute to the dual objective of the Portfolio. All potential
investments are first screened for financial soundness and then
evaluated according to the Portfolio's social criteria. To the greatest
extent possible, investments are made in companies exhibiting unusual,
positive accomplishment with respect to one or more of the criteria. All
companies must meet the Portfolio's minimum standards for all the
criteria. It should be noted that the Portfolio's social criteria tend
to limit the availability of investment opportunities more than is
customary with other investment companies.
The selection of an organization for investment by the Series
does not constitute endorsement or validation by the Fund, nor does the
exclusion of an organization necessarily reflect failure to satisfy the
Series' social criteria. Policyholders directing investment in the
Series are invited to send brief descriptions of companies they believe
might be suitable for investment by the Series.
Risks of Foreign Securities
The Portfolio may invest up to 10% of its assets in the
securities of foreign issuers. There are substantial and different risks
involved in investing in foreign securities. You should consider these
risks carefully. For example, there is generally less publicly available
information about foreign companies than is available about companies in
the U.S. Foreign companies are generally not subject to uniform audit
and financial reporting standards, practices and requirements comparable
to those in the U.S.
Foreign securities involve currency risks. The U.S. dollar
value of a foreign security tends to decrease when the value of the
dollar rises against the foreign currency in which the security is
denominated and tends to increase when the value of the dollar falls
against such currency. Fluctuations in exchange rates may also affect
the earning power and asset value of the foreign entity issuing the
security. Dividend and interest payments may be returned to the country
of origin, based on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and other expenses
may be incurred in converting between various currencies in connections
with purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or
efficient as those in the U.S. In most foreign markets volume and
liquidity are less than in the U.S. and, at times, volatility of price
can be greater than that in the U.S. Fixed commissions on foreign stock
exchanges are generally higher than the negotiated commissions on U.S.
exchanges. There is generally less government supervision and regulation
of foreign stock exchanges, brokers and companies than in the U.S.
There is also the possibility of adverse changes in investment
or exchange control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, political or social
instability, or diplomatic developments which could adversely affect
investments, assets or securities transactions of the Portfolio in some
foreign countries. The Portfolio is not aware of any investment or
exchange control regulations which might substantially impair the
operations of the Portfolio as described, although this could change at
any time.
Investing in emerging markets in particular, those countries
whose economies and capital markets are not as developed as those of
more industrialized nations, carries its own special risks. Among other
risks, the economies of such countries may be affected to a greater
extent than in other countries by price fluctuations of a single
commodity, by severe cyclical climatic conditions, lack of significant
history in operating under a market-oriented economy, or by political
instability, including risk of expropriation.
For many foreign securities, there are U.S. dollar-denominated
American Depositary Receipts ("ADRs"), which are traded in the U.S. on
exchanges or over the counter and are generally sponsored and issued by
domestic banks. ADRs represent the right to receive securities of
foreign issuers deposited in a domestic bank or a correspondent bank.
ADRs do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in foreign issuers' stock, the Portfolio may avoid currency
risks during the settlement period for either purchases or sales. In
general, there is a large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the accounting, auditing
and financial reporting standards of the domestic market or exchange on
which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject. The
Portfolio may also invest in European Depositary Receipts "EDRs"),
which are receipts evidencing an arrangement with a European bank
similar to that for ADRs and are designed for use in the European
securities markets. EDRs are not necessarily denominated in the currency
of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign withholding
taxes, thus reducing the net amount available for distribution to the
Portfolio's shareholders. You should understand that the expense ratio
of the Portfolio can be expected to be higher than those of investment
companies investing only in domestic securities since the costs of
operations are higher.
Additional Risk Factors
Nondiversified Portfolio
There may be risks associated with the Portfolio being
nondiversified. Specifically, since a relatively high percentage of the
assets of the Portfolio may be invested in the obligations of a limited
number of issuers, the value of the shares of a nondiversified Portfolio
may be more susceptible to any single economic, political or regulatory
event than the shares of a diversified Portfolio would be.
Interest Rate Risk
All fixed income instruments are subject to interest-rate risk:
that is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
Non-Investment Grade Securities
Non-investment grade securities tend to be less sensitive to
interest rate changes than higher-rated investments, but are more
sensitive to adverse economic changes and individual corporate
developments. This may affect the issuer's ability to make principal and
interest payments on the debt obligation. There is also a greater risk
of price declines due to changes in the issuer's creditworthiness.
Because the market for lower-rated securities may be less active
("thinner") than for higher-rated securities, it may be difficult for
the Portfolio to sell the securities. Because of a lack of objective
data, a thinly-traded market may make it difficult to value the
securities, so that the Board of Directors may have to exercise its
judgment in assigning a value. See the Appendix in the Statement of
Additional Information for more information on bond ratings.
Repurchase Agreements
A repurchase agreement is a transaction where the Portfolio
buys a security at one price and simultaneously agrees to sell that same
security back to the original owner at a higher price. Under the
direction and supervision of the Fund's Board of Directors, the
Investment Advisor and Sub-Advisor review the creditworthiness of the
other party to the agreement and must find it satisfactory before
engaging in a repurchase agreement. In all instances the Portfolio holds
underlying securities with a value equal to the total repurchase price
the other party has agreed to pay. However, in the event of the
bankruptcy of the other party, the Portfolio could experience delays in
recovering its money, may realize only a partial recovery or even no
recovery, and may also incur disposition costs. The Portfolio is not
expected generally to invest more than a very small portion of its
assets in repurchase agreements.
Other Information
In addition to the investment policies described above, the
investment program is subject to further policies and restrictions which
are described in the Statement of Additional Information. The Portfolio
may, to a limited extent, lend its portfolio securities and engage in
reverse repurchase agreements. Unless otherwise specified, the policies
and restrictions for the Portfolio are not fundamental and may be
changed without shareholder approval. Policyholder inquiries should be
directed to the Portfolio at (800) 368-2745, 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814.
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THE FUND AND ITS MANAGEMENT
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Acacia Capital Corporation (the "Fund") is an open-end
investment company. The Fund was incorporated under the laws of the
State of Maryland on September 27, 1982. The Fund is a series fund which
issues classes of stock, one for each Portfolio. The shares of the Fund
currently are sold only to insurance companies (collectively, the
"Insurance Companies") for allocation to their separate accounts
(collectively, the "Variable Accounts") to fund the benefits under
certain variable annuity and variable life insurance policies
(collectively, the "Policies") issued by such companies. Accordingly,
the interest of a policy owner in the shares is subject to the terms of
the particular annuity or life insurance policy and is described in the
attached prospectus for one of the Policies, which should be reviewed
carefully by a person considering the purchase of a Policy. The rights
of the Insurance Companies as shareholders should be distinguished from
the rights of a policy owner which are described in the Policies. Policy
owners should consider that the investment return experience of the
Portfolio will affect the value of the policy and the amount of annuity
payments or life insurance benefits received under a policy. See the
attached prospectus(es) for the Policies for a description of the
relationship between increases or decreases in the net asset value of
Portfolio shares (and any distributions on such shares) and the benefits
provided under a policy.
Investment Advisor
The Fund's investment advisor is Calvert Asset Management
Company, Inc. (the "Investment Advisor"), which is located at 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Calvert Asset
Management is a wholly-owned subsidiary of Calvert Group, Ltd., which is
in turn an indirect wholly-owned subsidiary of Acacia Mutual Life
Insurance Company. As of December 31, 1995, Calvert Group, Ltd. had
assets in excess of $4.8 billion under management and administration.
Pursuant to its investment advisory agreement with the Fund, the
Investment Advisor manages the fixed-income investments of the Portfolio
and is responsible for the overall management of the business affairs of
each Portfolio, subject to the direction and authority of the Fund's
Board of Directors.
The Sub-Advisor to the Portfolio is NCM Capital Management
Group, Inc. ("NCM"). Pursuant to its Investment Sub-Advisory Agreement
with the Investment Advisor, NCM manages the equity portion of the
Portfolio selections for the Portfolio. NCM was founded by Maceo K.
Sloan in 1986 as a subsidiary of North Carolina Mutual Life Insurance
Company, which was established by Mr. Sloan's ancestors in 1898 and is
one of the oldest and largest minority-owned financial institutions in
the country. NCM has been an employee-owned subsidiary of Sloan
Financial Group since 1991. Sloan Financial Group is controlled by Mr.
Sloan and Justin F. Beckett, Executive Vice President and a Director of
NCM. NCM is one of the largest minority-owned investment management
firms in the country, and provides products in equity, fixed-income and
balanced portfolio management. It is also one of the industry leaders in
the employment and training of minority and women investment
professionals. NCM has served as sub-advisor to the Portfolio since
February 1995. Sloan Holdings, also controlled by Messrs. Sloan and
Beckett, receives a 0.05% consultation fee, paid by the Advisor (not the
Fund) for non-investment advice, such as marketing assistance.
Wendell E. Mackey, Vice President of NCM, is the portfolio
manager with respect to the Portfolio's equity investments. Mr. Mackey
earned his B.B.A. degree from Howard University, and his M.M. degree
from Kellogg Graduate School of Management at Northwestern University.
He subsequently worked with several securities firms before joining NCM
as an equity portfolio manager in 1993. He has managed the Portfolio
since February 1995.
Investment selections for the fixed-income portion of the
Portfolio are made by Stephen N. Van Order. Mr. Van Order joined Calvert
Group in October 1992 as the head of the trading desk. He oversees the
day-to-day investments and operations of the department and participates
in setting market and portfolio strategy. Previously, Mr. Van Order was
Director of Long Term Funding at Federal National Mortgage Association
(Fannie Mae). In his former capacity, Mr. Van Order was responsible for
Fannie Mae's long term borrowing programs, hedging programs and debt
marketing program.
Advisory Fee
The Investment Advisor is entitled to and in 1995 did receive
from the Portfolio a monthly base fee, computed on a daily basis at an
annual rate of 0.70% of the average daily net assets of the Portfolio.
The Advisor pays the Sub-advisor a base fee of 0.25% of
one-half of the Portfolio's average net assets. In addition, under the
circumstances described below, the Advisor and Sub-advisor may earn (or
have their fees reduced by) performance fee adjustments based on the
extent to which performance of the Portfolio exceeds or trails the
Lipper Balanced Funds Index. Payment of the performance fee adjustment
will begin July 1, 1996. The specific adjustments are as follows:
Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
Sub-advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Lipper Balanced Funds Index Adjustment
6% to less than 12% 0.05%
12% to less than 18% 0.10%
18% or more 0.15%
The performance fee adjustment to the Sub-advisor is paid out of the fee
the Advisor receives from the Portfolio. The initial performance period
is the twelve month period from July 1, 1995, and July 1, 1996. Each
month an additional month's performance will be factored into the
calculation until a total of 36 months comprises the performance
computation period. Payment by the Portfolio of the performance
adjustment will be conditioned on: (1) the performance of the Portfolio
as a whole having exceeded the Lipper Balanced Funds Index; and (2)
payment of the performance adjustment not causing the Portfolio's
performance to fall below the Lipper Balanced Funds Index.
Expenses
The Portfolio's expenses, which are accrued daily, include: the
fee of the Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian and transfer
agent fees; legal and auditing fees; bookkeeping and dividend disbursing
expenses; and certain other expenses relating to the Portfolio's
operations. The Fund's organizational expenses were paid by the
Investment Advisor, and other expenses that the investment advisory
agreement does not state are payable by the Fund will be assumed by the
Investment Advisor. Certain expenses are paid by the Portfolio that
incurs them, while other expenses are allocated among each Portfolio on
the basis of its relative size (that is, the amount of its net assets),
or by the Board of Directors as appropriate.
The Investment Advisor has agreed to reimburse the Fund for the
amount, if any, by which the aggregate expenses of the Portfolio
(including the investment advisory fee but excluding brokerage
commissions, interest, taxes, and extraordinary expenses) exceed the
limit of any state in which the Portfolio's shares are qualified for
sale. Expenses constituted 0.83% of the average net assets of the
Portfolio for 1995, including fees paid indirectly, and 0.81% net of
fees paid indirectly.
Capital Stock
The Fund issues separate shares of stock for each of its
Portfolios. Shares of each of the series have equal rights with regard
to voting, redemptions, dividends, distributions, and liquidations with
respect to that series. No series has preference over another series.
When issued, shares are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting rights. The Fund's
shareholders, the Insurance Companies, will vote Fund shares allocated
to the Variable Accounts in accordance with instructions received from
policy owners. Under certain circumstances, which are described in the
accompanying prospectus of the variable life policy, the voting
instructions received from variable life insurance policy owners may be
disregarded.
- --------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------
The Fund offers its shares, without sales charge, only for
purchase by the Insurance Companies for allocation to their Variable
Accounts. Shares are purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously offers its shares in
the Portfolio at a price equal to the net asset value per share. Initial
and subsequent payments allocated to the Fund are subject to the limits
applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts,
or for Variable Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither the Insurance
Companies nor the Fund foresee any such disadvantages to either variable
annuity or variable life insurance policy owners of any Insurance
Company. The Fund's Board of Directors intends to monitor events in
order to identify any material conflicts between such policy owners and
to determine what action, if any, should be taken in response thereto.
The Insurance Companies redeem shares of the Portfolio to make
benefit and surrender payments under the terms of Policies. Redemptions
are processed on any day on which the Fund is open for business (each
day the New York Stock Exchange is open), and are effected at the
Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, but in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the Rules
under the 1940 Act. The amount received upon redemption of the shares of
the Fund may be more or less than the amount paid for the shares,
depending upon the fluctuations in the market value of the assets owned
by the Fund. The Fund redeems all full and fractional shares of the
Portfolio for cash. The redemption price is the net asset value per
share. Payment for shares redeemed will generally be made within seven
days after receipt of a proper notice of redemption.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the New York Stock
Exchange, on days when the Exchange is open for business, or for any
other day when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its net asset value
per share (except on days when no orders to purchase or redeem shares of
the Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number of
outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days or
less, securities held by the Portfolio are valued at their market value
if market quotations are readily available. Otherwise, such securities
are valued at fair value as determined in good faith by the Board of
Directors, although the actual calculations may be made by persons
acting pursuant to the direction of the Board. All money market
instruments with a remaining maturity of 60 days or less are valued on
an amortized cost basis.
- --------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------
It is the Fund's intention to distribute substantially all of
the net investment income, if any, of the Portfolio. For dividend
purposes, net investment income of the Portfolio consists of all
payments of dividends or interest received by such Portfolio less
estimated expenses (including the investment advisory fee). All net
realized capital gains, if any, of each Portfolio are declared and
distributed periodically, no less frequently than annually. All
dividends and distributions are reinvested in additional shares of the
Portfolio at net asset value.
- --------------------------------------------------------------------------
TOTAL RETURN INFORMATION
- --------------------------------------------------------------------------
The Portfolio may advertise its "total return" from time to
time. Total return refers to the total change in value of an investment
in the Portfolio over a specified period. It differs from yield in that
yield figures measure only the income component of the Portfolio's
portfolio investments, while total return includes not only the effect
of income dividends but also any change in net asset value, or principal
amount, during the stated period. The total return of the Portfolio is
the ratio of the increase (or decrease) in value of a hypothetical
investment in the Portfolio at the end of a measuring period to the
amount initially invested in the Portfolio. 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 historical in nature and is not intended to
indicate future performance. Total return will be quoted for the most
recent one-year period, and the average annual total return will be
quoted for the most recent five- and ten-year periods, or the period
from the commencement of the public offering of the Portfolio, if
shorter.
Actual total return quotations may also be advertised for other
specified periods, such as calendar years and calendar quarters.
Cumulative total return for periods of more than one year may also be
quoted. These figures will be accompanied by the standard, average
annual total return quotations. The total return of the Portfolio does
not include the effect of paying the sales charges on the particular
insurance policy or annuity contract for which the Portfolio serves as
the investment vehicle.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
As a "regulated investment company" under the provisions of
Subchapter M of the Internal Revenue Code, as amended, the Fund is not
subject to federal income tax, nor to the federal excise tax imposed by
the Tax Reform Act of 1986, to the extent that it distributes its net
investment income and realized capital gains. Since the only
shareholders of the Fund are the Insurance Companies, no discussion is
included herein as to the federal income tax consequences at the
shareholder level. For information concerning the federal tax
consequences to purchasers of the annuity or life insurance policies,
see the prospectuses for the Policies.
- --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place
of business at 4550 Montgomery Avenue, Bethesda, Maryland 20814, is the
Fund's transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - May 1, 1996
- --------------------------------------------------------------------------
ACACIA CAPITAL CORPORATION
- --------------------------------------------------------------------------
CALVERT RESPONSIBLY INVESTED STRATEGIC GROWTH PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814 (800) 368-2748
The Calvert Responsibly Invested Strategic Growth Portfolio
(the "Portfolio" or "CRI Strategic Growth") is a series of Acacia
Capital Corporation (the "Fund"), an open-end management investment
company whose investment advisor is Calvert Asset Management Company,
Inc. (the "Investment Advisor").
The Portfolio invests in a nondiversified portfolio of equity
securities while protecting against market declines using techniques
such as establishing short positions, writing covered calls, and
entering into index future or option contracts. There can be no
assurance that the Portfolio will be successful in meeting its
investment objectives. See "Investment Objective and Policies."
This Prospectus sets forth the information that a prospective
policyholder should know before directing investment in the Portfolio
and it should be read and kept for future reference. A Statement of
Additional Information dated May 1, 1996, which contains further
information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling the Fund at the number above, or by
writing the Fund at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
Shares of the Fund are offered only to insurance companies for
allocation to certain of their variable separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
<PAGE>
- --------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------
Page
Financial Highlights...................................................2
Investment Objective and Policies......................................3
Investment Screens.....................................................9
The Fund and Its Management............................................9
Purchase and Redemption of Shares......................................11
Dividends and Distributions............................................12
Total Return Information...............................................12
Taxes..................................................................12
Transfer and Dividend Disbursing Agent.................................12
- --------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------
The following table provides information about the Portfolio's
financial history. It expresses the information in terms of a single
share outstanding throughout each period. The table has been audited by
those independent accountants whose reports are included in the Fund's
Annual Report to Shareholders. The table 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>
From Inception
March 1, 1995
through December 31,
1995
--------------------
<S> <C>
Net asset value, beginning $10.00
Income from investment operations
Net investment income .25
Net realized and unrealized gain (loss) on
investments .93
Total from investment operations
1.18
Distributions from
Net investment income (.24)
Total distributions (.24)
Total increase in net asset value .94
Net asset value, ending $10.94
Total return<F1> 9.65%
Ratio to average net assets:
Net investment income .43%(a)
Total expenses<F2> 2.17%(a)
Net expenses 1.64%(a)
Expenses reimbursed .20%(a)
Portfolio turnover 223%
Net assets, ending (in thousands) $1,209
Number of shares outstanding, ending (in
thousands) 111
<FN>
<F1> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
is not annualized for periods of less than one year.
<F2> This ratio reflects total expenses before reduction for fees paid
indirectly; such reductions are included in the ratio of net expenses.
</FN>
(a) Annualized
</TABLE>
<PAGE>
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------
The investment objective described below is not fundamental and
may be changed upon 60 days' written notice to shareholders without a
shareholder vote. There is, of course, no assurance that the Portfolio
will be successful in meeting its objective.
The investment objective of the Portfolio is to seek maximum
long-term growth through investments primarily in the equity securities
of companies that have little or no debt, high relative strength and
substantial management ownership. The Portfolio is designed to provide
long-term growth of capital by investing in enterprises that make a
significant contribution to society through their products and services
and through the way they do business. The Portfolio considers issuers of
all sizes, industries, and geographic markets, and does not seek
interest income or dividends. In selecting equity investments, the
Portfolio focuses on individual companies by screening over seven
thousand stocks traded on all major U.S. stock exchanges in addition to
stocks traded on the NASDAQ National Market System. The Portfolio
invests primarily in common stocks traded in the U.S. securities
markets, including American Depositary Receipts (ADRs). While the
Portfolio does not presently invest in foreign securities, it may do so
in the future. By applying proprietary stock selection criteria, the
Portfolio identifies suitable investments to buy or sell short. The
Portfolio may invest in securities other than equities including, but
not limited to, convertible securities, preferred stocks, bonds, notes
and other debt securities. The Portfolio may hold cash or cash
equivalents for temporary defensive purposes or to enable it to take
advantage of buying opportunities. The Portfolio may engage in certain
options and futures transactions as part of a defensive strategy and may
invest in precious metals.
Among the companies identified for investment may be some small
cap issuers. The securities of small cap issuers may be less actively
traded than the securities of larger issuers, and they accordingly will
not usually participate in market rallies to the same extent as more
widely-known securities. There is also somewhat less readily available
information concerning these securities. The issuers of these securities
tend to have a relatively higher percentage of insider ownership.
Although the Portfolio invests primarily in equity securities,
it may invest up to 35% of its assets in debt securities, excluding
money market instruments. These debt securities may consist of
investment-grade and noninvestment-grade obligations. Investment-grade
obligations are those which, at the date of investment, are rated within
the four highest grades established by Moody's Investors Services, Inc.
(Aaa, Aa, A, or Baa) or by Standard and Poor's Corporation (AAA, AA, A,
or BBB). Noninvestment-grade (high-yield/high-risk, or junk bond)
securities are those rated below Baa or BBB, or unrated obligations that
the investment subadvisor has determined are not investment-grade; such
securities have speculative characteristics. The Portfolio will not buy
debt securities rated lower than C. See "Additional Risk Factors -
Non-Investment Grade Securities."
The Portfolio employs an econometric forecasting model called
the "Five Market Principles," developed by the Subadvisor. This model
consists of contrarian indicators, long- and short-term momentum
factors, fundamental value, monetary policy, and smart money activity.
The degree to which these principles are, on balance, positive or
negative, determines the extent to which the Portfolio would commit
funds to individual equity positions or initiate defensive strategies.
The contrarian principle contains "psychological" indicators
that track the level of optimism among traders. Elements include the
put/call ratio (gauging the sentiment of speculative option traders),
put/call premium spread (monitoring the spread between the relative time
premium of puts or calls), advisory sentiment (tracking the proportion
of bullish versus bearish stock market advisory services), mutual fund
cash ratio (cash and cash equivalents held in mutual funds divided by
total assets of the funds), individual investor sentiment (measured by
following the weekly poll by the American Association of Individual
Investors), and short interest ratio (an indication of existing
sentiment and potential buying power, calculated by dividing the total
short sales on the New York Stock Exchange ("NYSE") by the NYSE's
average daily trading volume for the relevant period).
Fundamental value measures the valuation of stock prices
relative to historical standards, as well as the supply of stock
outstanding. Its elements include stock offerings (excessive amounts of
new offerings can lead to oversupply and a market downturn), stock
buybacks (excessive amounts indicate a bullish market), dividend yields
(as compared with the S&P 500 Index), and price/earnings ratios (an
indicator of a stock's value, calculated by dividing a stock's current
price by earnings per share over the last twelve months).
Monetary policy examines behavior in credit markets for shifts
in the Federal Reserve Board's policy on interest rates, which influence
stock prices. Elements of this principle include the discount rate index
(what the Federal Reserve Board charges its member banks for direct
loans, a change in rate indicating a shift in monetary policy), discount
rate/Treasury-bill spread (a sensitive intermediate-term indicator,
computed by subtracting the current 90-day Treasury bill yield from the
Federal Reserve Board Discount Rate), M2 money supply (the total of all
money held by the public - indirectly controlled by the Federal Reserve
Board and a good indicator for the stock market), free reserves (the
measure of liquidity within the U.S. banking system, liquidity
indicating availability of money for financial growth), and yield curve
(a graphic representation of the different yields among debt instruments
of varying maturities).
Momentum measures the stock market's internal strength,
monitored on a real-time basis. Indicators include the weekly
advance/decline line (a measure of total market performance, calculated
by subtracting the total number of NYSE issues advancing in price for
the week versus those declining), absolute market strength (gauged by
following the relative strength of the NASDAQ Composite and the NYSE's
weekly advance/decline line versus the Dow Jones Industrials), the
McClellan oscillator (short-term market momentum indicator), the
summation index (to confirm intermediate-term moves in the market), the
moving average convergence/divergence (indicates swings in the market),
and the high low logic index (a forecaster of market tops and bottoms,
indicating bullishness when there is internal uniformity in the market).
Smart money trades measure the level of optimism among traders.
Pieces of this measure include the behavior of company insiders (heavy
insider buying generally demonstrating a stock that will outperform the
market), the member activity index (measuring trading activity by all
members of the NYSE other than specialists and floor traders, infrequent
massive buying indicating a bullish market), the specialist/public short
ratio (greater volume of shorting relative to the public short generally
indicating a decline in prices), and money flow (tracking "smart money"
trades in the last hour versus "irrational" trading in the first hour).
Many of the investment techniques used by the Portfolio are
aggressive, and may involve higher levels of risk than found in funds
not employing these techniques. Some of the techniques, such as short
sales, options and futures trading, and investment in
high-yield/high-risk securities may be considered speculative and could
result in higher operating expenses.
Under normal market conditions the Portfolio strives to be
fully invested in securities. However, for temporary defensive purposes
- -- which may include a lack of adequate purchase candidates or an
unfavorable market environment -- the Portfolio may invest up to 100% of
its assets in cash or cash equivalents. Cash equivalents include
instruments such as, but not limited to, U.S. government and agency
obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and
repurchase agreements.
Additional Fundamental Investment Policies
CRI Strategic Growth may, in pursuit of its investment
objectives, purchase put and call options and engage in the writing of
covered call options and secured put options on securities of issuers
that meet the Portfolio's social criteria, and employ a variety of other
investment techniques, including the purchase and sale of market index
futures contracts, financial futures contracts and options on such
futures. Investing in options may involve a greater degree of risk than
those inherent in more conservative investment approaches. The Portfolio
may engage in futures contracts and related options in the ordinary
course as part of an investment strategy. It is an operating policy of
the Fund that the Portfolio may invest in options and futures contracts
up to 50% of its assets.
The Portfolio may engage in repurchase agreements and reverse
repurchase agreements. In a repurchase agreement, the Portfolio buys a
security subject to the right and obligation to sell it back at a higher
price. In order to minimize any risk involved, the Portfolio engages in
such transactions only with recognized securities dealers and banks
determined by the Advisor to present a minimal credit risk. Repurchase
agreements are fully collateralized and always have a maturity of less
than one year. No more than 10 percent of the Portfolio's assets may be
invested in repurchase agreements not terminable within seven days. In a
reverse repurchase agreement, the Portfolio sells a security subject to
the right and obligation to buy it back at a higher price. The Portfolio
then invests the proceeds from the transaction in another obligation in
which it is authorized to invest. For reverse repurchase agreements, the
Portfolio maintains a segregated account with liquid assets equal in
value to the repurchase price.
The Portfolio may borrow money from banks (and pledge its
assets to secure such borrowing) for temporary or emergency purposes,
but not for leverage. This type of borrowing may not exceed one-third of
the value of the Portfolio's total assets. The Portfolio may also make
loans of the securities it holds. The advantage of loaning securities is
that the Portfolio continues to receive the equivalent of the interest
earned or dividends paid by the issuers while at the same time earning
interest on the cash or equivalent collateral that may be invested in
accordance with the Portfolio's investment objective, policies, and
restrictions. The purpose of the loans is usually to facilitate the
delivery of securities. As with any extension of credit, there may be
risks of delay in recovery and possible loss of rights in the loaned
security if the borrower fails financially. The Investment Advisor
attempts to reduce the risk by lending only to borrowers that it deems
creditworthy and only on terms that it believes compensates for any risk
inherent in the transaction.
The Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with assets of one billion
dollars or more. All loans must be secured continuously in the form of
cash or cash equivalents such as U.S. Treasury bills. In addition, the
amount of collateral must, on a current basis, equal or exceed the
market value of the loaned securities, and the Portfolio may only make
the loan if the value of the securities loaned does not exceed one-third
of the Portfolio's assets. The Portfolio must be able to terminate loans
at any time with appropriate notice. The Portfolio will exercise its
right to terminate a securities loan in order to preserve its right to
vote on matters of importance affecting holders of the securities. All
securities must be returned to the Portfolio when a loan terminates, and
the Portfolio absorbs any gain or loss in the market value of the
securities during the loan period.
CRI Strategic Growth may establish short positions in an
attempt to protect against market declines, and will choose from among
securities that are fully listed on a national securities exchange
(unless otherwise allowed by law). The Portfolio establishes a short
position by selling a security it does not own and makes delivery by
borrowing the security it sold. It then repays the lender of the
securities by covering its purchase in the marketplace, ideally at a
lower price than that for which it sold the securities, thereby taking
advantage of declining values. Conversely, if the price of the security
goes up after CRI Strategic Growth establishes its short position, it
will lose money. The Portfolio may hold up to 25% of its assets in short
positions, and will not normally sell short more than 2% of a class of
securities of any issuer or 2% of its Portfolio's net assets, whichever
is less. These restrictions may change to reflect amendments to the law.
Funds for short-sale transactions (other than those for which
CRI Strategic Growth already owns a long position, or "sales against the
box") are maintained in a segregated account with its custodian. In that
account CRI Strategic Growth attempts to maintain, on a daily basis,
liquid assets (such as cash, U.S. government securities or other
high-grade debt obligations) in an amount sufficient to cover the
current value of the securities to be replaced as well as any dividends,
interest and/or transaction costs due to the broker upon completion of
the transaction. In determining the amount to be held in the segregated
account, the securities that have been sold short are marked to market
daily. To the extent the market price of the security increases,
additional assets will be put into the segregated account to ensure
adequate reserves.
Risks of Foreign Securities
CRI Strategic Growth may invest all of its assets in foreign
securities, although the Portfolio does not presently intend to invest
in foreign securities. There are substantial and different risks
involved in investing in foreign securities. You should consider these
risks carefully. For example, there is generally less publicly available
information about foreign companies than is available about companies in
the U.S. Foreign companies are generally not subject to uniform audit
and financial reporting standards, practices and requirements comparable
to those in the U.S.
Foreign securities involve currency risks. The U.S. dollar
value of a foreign security tends to decrease when the value of the
dollar rises against the foreign currency in which the security is
denominated and tends to increase when the value of the dollar falls
against such currency. Fluctuations in exchange rates may also affect
the earning power and asset value of the foreign entity issuing the
security. Dividend and interest payments may be returned to the country
of origin, based on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and other expenses
may be incurred in converting between various currencies in connections
with purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or
efficient as those in the U.S. In most foreign markets volume and
liquidity are less than in the U.S. and, at times, volatility of price
can be greater than that in the U.S. Fixed commissions on foreign stock
exchanges are generally higher than the negotiated commissions on U.S.
exchanges. There is generally less government supervision and regulation
of foreign stock exchanges, brokers and companies than in the U.S.
There is also the possibility of adverse changes in investment
or exchange control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, political or social
instability, or diplomatic developments which could adversely affect
investments, assets or securities transactions of the Portfolio in some
foreign countries. The Portfolio is not aware of any investment or
exchange control regulations which might substantially impair the
operations of the Portfolio as described, although this could change at
any time.
Investing in emerging markets in particular, those countries
whose economies and capital markets are not as developed as those of
more industrialized nations, carries its own special risks. Among other
risks, the economies of such countries may be affected to a greater
extent than in other countries by price fluctuations of a single
commodity, by severe cyclical climatic conditions, lack of significant
history in operating under a market-oriented economy, or by political
instability, including risk of expropriation.
For many foreign securities, there are U.S. dollar-denominated
American Depositary Receipts ("ADRs"), which are traded in the U.S. on
exchanges or over the counter and are generally sponsored and issued by
domestic banks. ADRs represent the right to receive securities of
foreign issuers deposited in a domestic bank or a correspondent bank.
ADRs do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in foreign issuers' stock, the Portfolio may avoid currency
risks during the settlement period for either purchases or sales. In
general, there is a large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the accounting, auditing
and financial reporting standards of the domestic market or exchange on
which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject. The
Portfolio may also invest in European Depositary Receipts ("EDRs"),
which are receipts evidencing an arrangement with a European bank
similar to that for ADRs and are designed for use in the European
securities markets. EDRs are not necessarily denominated in the currency
of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign withholding
taxes, thus reducing the net amount available for distribution to
shareholders. You should understand that the expense ratio of the
Portfolio can be expected to be higher than those of investment
companies investing only in domestic securities since the costs of
operations are higher.
Writing (Selling) Call and Put Options. A call option on a
security, security index or a foreign currency gives the purchaser of
the option, in return for the premium paid to the writer (seller), the
right to buy the underlying security, index or foreign currency at the
exercise price at any time during the option period. Upon exercise by
the purchaser, the writer of a call option on an individual security or
foreign currency has the obligation to sell the underlying security or
currency at the exercise price. A call option on a securities index is
similar to a call option on an individual security, except that the
value of the option depends on the weighted value of the group of
securities comprising the index and all settlements are made in cash. A
call option may be terminated by the writer (seller) by entering into a
closing purchase transaction in which it purchases an option of the same
series as the option previously written.
A put option on a security, security index, or foreign currency
gives the purchaser of the option, in return for the premium paid to the
writer (seller), the right to sell the underlying security, index, or
foreign currency at the exercise price at any time during the option
period.
Upon exercise by the purchaser, the writer of a put option has
the obligation to purchase the underlying security or foreign currency
at the exercise price. A put option on a securities index is similar to
a put option on an individual security, except that the value of the
option depends on the weighted value of the group of securities
comprising the index and all settlements are made in cash.
The Portfolio may write exchange-traded call options on its
securities. Call options may be written on portfolio securities,
securities indices, or foreign currencies. With respect to securities
and foreign currencies, the Portfolio may write call and put options on
an exchange or over-the-counter. Call options on portfolio securities
will be covered since the Portfolio will own the underlying securities
or other securities that are acceptable for escrow at all times during
the option period. Call options on securities indices will be written
only to hedge in an economically appropriate way portfolio securities
which are not otherwise hedged with options or financial futures
contracts and will be "covered" by identifying the specific portfolio
securities being hedged. Call options on foreign currencies and put
options on securities and foreign currencies will be covered by
securities acceptable for escrow. A Portfolio may not write options on
more than 50% of its total assets. Management presently intends to cease
writing options if and as long as 25% of such total assets are subject
to outstanding options contracts or if required under regulations of
state securities administrators.
The Portfolio will write call and put options in order to
obtain a return on its investments from the premiums received and will
retain the premiums whether or not the options are exercised. Any
decline in the market value of portfolio securities or foreign
currencies will be offset to the extent of the premiums received (net of
transaction costs). If an option is exercised, the premium received on
the option will effectively increase the exercise price or reduce the
difference between the exercise price and market value.
During the option period, the writer of a call option gives up
the opportunity for appreciation in the market value of the underlying
security or currency above the exercise price. It retains the risk of
loss should the price of the underlying security or foreign currency
decline. Writing call options also involves risks relating to the
Portfolio's ability to close out options it has written.
During the option period, the writer of a put option has
assumed the risk that the price of the underlying security or foreign
currency will decline below the exercise price. However, the writer of
the put option has retained the opportunity for appreciation above the
exercise price should the market price of the underlying security or
foreign currency increase. Writing put options also involves risks
relating to the Portfolio's ability to close out options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights. The
Portfolio may invest up to an aggregate of 50% of its total assets in
exchange-traded or over-the-counter call and put options on securities
and securities indices and foreign currencies. Purchases of such options
may be made for the purpose of hedging against changes in the market
value of the underlying securities or foreign currencies. The Portfolio
may invest in call and put options whenever, in the opinion of the
Advisor or Subadvisor, a hedging transaction is consistent with its
investment objectives. The Portfolio may sell a call option or a put
option which it has previously purchased prior to the purchase (in the
case of a call) or the sale (in the case of a put) of the underlying
security or foreign currency. Any such sale would result in a net gain
or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the call or
put which is sold. Purchasing a call or put option involves the risk
that the Portfolio may lose the premium it paid plus transaction costs.
Warrants and stock rights are almost identical to call options
in their nature, use and effect except that they are issued by the
issuer of the underlying security rather than an option writer, and they
generally have longer expiration dates than call options. A Portfolio
may invest up to 5% of its net assets in warrants and stock rights, but
no more than 2% of its net assets in warrants and stock rights not
listed on the New York Stock Exchange or the American Stock Exchange.
Financial Futures and Related Options. The Portfolio may enter
into financial futures contracts and related options as a hedge against
anticipated changes in the market value of their portfolio securities or
securities which they intend to purchase or in the exchange rate of
foreign currencies. Hedging is the initiation of an offsetting position
in the futures market which is intended to minimize the risk associated
with a position's underlying securities in the cash market. Investment
techniques related to financial futures and options are summarized below
and are described more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures
contracts, foreign currency futures contracts and securities index
futures contracts. An interest rate futures contract obligates the
seller of the contract to deliver, and the purchaser to take delivery
of, the interest rate securities called for in the contract at a
specified future time and at a specified price. A foreign currency
futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in
the contract at a specified future time and at a specified price. A
securities index assigns relative values to the securities included in
the index, and the index fluctuates with changes in the market values of
the securities so included. A securities index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of the last trading
day of the contract and the price at which the futures contract is
originally struck. An option on a financial futures contract gives the
purchaser the right to assume a position in the contract (a long
position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the
option.
The Portfolio may purchase and sell financial futures contracts
which are traded on a recognized exchange or board of trade and may
purchase exchange or board-traded put and call options on financial
futures contracts. It will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, the Portfolio will not purchase or sell any
financial futures contract or related option if, immediately thereafter,
the sum of the cash or U.S. Treasury bills committed with respect to its
existing futures and related options positions and the premiums paid for
related options would exceed 5% of the market value of its total assets.
At the time of purchase of a futures contract or a call option on a
futures contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Portfolio's initial margin deposit with
respect thereto, will be deposited in a segregated account with the
Fund's custodian bank to collateralize fully the position and thereby
ensure that it is not leveraged. The extent to which the Portfolio may
enter into financial futures contracts and related options may also be
limited by requirements of the Internal Revenue Code of 1986 for
qualification as a regulated investment company.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility of an imperfect
correlation between futures market prices and cash market prices and the
possibility that the Advisor or Subadvisor could be incorrect in its
expectations as to the direction or extent of various interest rate
movements or foreign currency exchange rates, in which case the
Portfolio's return might have been greater had hedging not taken place.
There is also the risk that a liquid secondary market may not exist. The
risk in purchasing an option on a financial futures contract is that the
Portfolio will lose the premium it paid. Also, there may be
circumstances when the purchase of an option on a financial futures
contract would result in a loss to the Portfolio while the purchase or
sale of the contract would not have resulted in a loss.
Foreign Currency Transactions
The value of the Portfolio's assets as measured in United
States dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and
the Portfolio may incur costs in connection with conversions between
various currencies. The Portfolio will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through
forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number
of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
When the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may want to
establish the United States dollar cost or proceeds, as the case may be.
By entering into a forward contract in United States dollars for the
purchase or sale of the amount of foreign currency involved in the
underlying security transaction, the Portfolio is able to protect itself
against a possible loss between trade and settlement dates resulting
from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential
gains which might result from a positive change in such currency
relationships. The Portfolio may also hedge its foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions.
When the Advisor or the Subadvisor believes that the currency
of a particular foreign country may suffer a substantial decline against
the United States dollar, it may enter into a forward contract to sell
an amount of foreign currency approximating the value of some or all of
the Portfolio's portfolio securities denominated in such foreign
currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will
be successful is highly uncertain.
It is impossible to forecast with precision the market values
of portfolio securities at the expiration of a contract. Accordingly, it
may be necessary for the Portfolio to purchase additional currency on
the spot market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the
Portfolio is obligated to deliver when a decision is made to sell the
security and make delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign
currency the Portfolio is obligated to deliver.
If the Portfolio retains the portfolio security and engages in
an offsetting transaction, it will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract
prices. If the Portfolio engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between the
Portfolio's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, it would realize gains to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
Portfolio would suffer a loss to the extent the price of the currency it
has agreed to purchase exceeds the price of the currency it has agreed
to sell. Although such contracts tend to minimize the risk of loss due
to a decline in the value of the hedged currency, they also tend to
limit any potential gain which might result should the value of such
currency increase. The Portfolio may have to convert its holdings of
foreign currencies into United States dollars from time to time.
Although foreign exchange dealers do not charge a fee for conversion,
they do realize a profit based on the difference (the "spread") between
the prices at which they are buying and selling various currencies.
Additional Nonfundamental Investment Policies
CRI Strategic Growth has adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed by the Board of
Directors without shareholder approval:
The Portfolio may invest up to three percent 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 Portfolio's social criteria. In applying this
restriction, the percentage of the Portfolio's assets in such securities
is based on the aggregate cumulative value at the time of the respective
acquisitions of such securities currently held by the Portfolio. These
securities are unrated and are generally considered non-investment grade
debt securities which involve a greater risk of default or price decline
than investment-grade securities. Through diversification and credit
analysis, investment risk can be reduced, although there can be no
assurance that losses will not occur.
The Portfolio may not purchase illiquid securities if more than
15% of the value of its net assets would be invested in such securities.
Further, the Portfolio may not acquire private placement investments
until the value of its assets exceeds $20 million.
For further information on the Portfolio's investment policies
and restrictions, as well as a description of the types of securities
that may be purchased, see the Statement of Additional Information.
Additional Risk Factors
Nondiversification
There may be risks associated with the Portfolio being
nondiversified. Specifically, since a relatively high percentage of the
assets of the Portfolio may be invested in the obligations of a limited
number of issuers, the value of the shares of a nondiversified Portfolio
may be more susceptible to any single economic, political or regulatory
event than the shares of a diversified Portfolio would be.
Interest Rate Risk
All fixed income instruments are subject to interest-rate risk:
that is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
Non-Investment Grade Securities
Non-investment grade securities tend to be less sensitive to
interest rate changes than higher-rated investments, but are more
sensitive to adverse economic changes and individual corporate
developments. This may affect the issuer's ability to make principal and
interest payments on the debt obligation. There is also a greater risk
of price declines due to changes in the issuer's creditworthiness.
Because the market for lower-rated securities may be less active
("thinner") than for higher-rated securities, it may be difficult for
the Portfolio to sell the securities. Because of a lack of objective
data, a thinly-traded market may make it difficult to value the
securities, so that the Board of Directors may have to exercise its
judgment in assigning a value. See the Appendix in the Statement of
Additional Information for more information on bond ratings.
- --------------------------------------------------------------------------
INVESTMENT SCREENS
- --------------------------------------------------------------------------
Once equity and debt securities are determined to fall within
the investment objective of the Portfolio and are deemed financially
viable investments, they are screened according to the social criteria
described below. These social screens are applied to potential
investment candidates by the Advisor in consultation with the
Subadvisor. However, the Portfolio may purchase instruments used for
defensive purposes, such as short positions, options and futures
contracts, without regard to the social criteria.
The following criteria may be changed by the Fund's Board of
Directors without shareholder approval:
(1) The Portfolio avoids investing in companies
that, in the Advisor's opinion, have
significant or historical patterns of
violating environmental regulations, or
otherwise have an egregious environmental
record. Additionally, the Portfolio will avoid
investing in nuclear power plant operators and
owners, or manufacturers of key components in
the nuclear power process.
(2) The Portfolio will not invest in companies
that are listed among the top 100 weapons
systems contractors, or major nuclear weapons
systems contractors.
(3) The Portfolio will not invest in companies
that, in the Advisor's opinion, have
significant or historical patterns of
discrimination against employees on the basis
of race, gender, religion, age, disability or
sexual orientation, or in companies that have
major labor-management disputes.
(4) The Portfolio will not invest in companies
that are significantly involved in the
manufacture of tobacco or alcohol products.
The Portfolio will not invest in companies
that make products or offer services that,
under proper use, in the Advisor's opinion,
are considered harmful.
While the Portfolio may invest in companies that exhibit
positive social characteristics, it makes no explicit claims to seek out
companies with such practices.
- --------------------------------------------------------------------------
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------
Acacia Capital Corporation (the "Fund"), a Maryland
corporation, is an open-end investment company, which was incorporated
under the laws of the State of Maryland on September 27, 1982. The Board
of Directors supervises the business affairs and investments of the
Fund, which are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios, each issuing one
class of stock. The shares of the Fund currently are sold only to
insurance companies (collectively, the "Insurance Companies") for
allocation to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable annuity and
variable life insurance policies (collectively, the "Policies") issued
by such companies. Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity or life
insurance policy and is described in the attached prospectus for one of
the Policies, which should be reviewed carefully by a person considering
the purchase of a Policy. The rights of the Insurance Companies as
shareholders should be distinguished from the rights of a policy owner
which are described in the Policies. Policy owners should consider that
the investment return experience of the Portfolio will affect the value
of the policy and the amount of annuity payments or life insurance
benefits received under a policy. See the attached prospectus(es) for
the Policies for a description of the relationship between increases or
decreases in the net asset value of Portfolio shares (and any
distributions on such shares) and the benefits provided under a policy.
Investment Advisor and Subadvisors
Calvert Asset Management Company, Inc. ("CAMCO"), which is
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to all of the Fund's Portfolios. CAMCO
is a wholly-owned subsidiary of Calvert Group, Ltd., which is in turn an
indirect wholly-owned subsidiary of Acacia Mutual Life Insurance
Company. As of December 31, 1995, Calvert Group, Ltd. had assets under
management and administration in excess of $4.8 billion. Pursuant to its
investment advisory agreement with the Fund, the Investment Advisor
manages the investment and reinvestment of the assets of each Portfolio
and is responsible for the overall management of the business affairs of
each Portfolio, subject to the direction and authority of the Fund's
Board of Directors. CAMCO also serves as Investment Advisor to seven
other registered investment companies in the Calvert Group of Funds:
First Variable Rate Fund for Government Income, Calvert Cash Reserves
(doing business as Money Management Plus), Calvert Social Investment
Fund, Calvert Tax-Free Reserves, The Calvert Fund, Calvert Municipal
Fund, Inc., and Calvert World Values Fund, Inc. CAMCO has retained an
investment subadvisor ("Subadvisor") for CRI Strategic Growth. The
Advisor will continuously monitor and evaluate the performance and
investment style of the Subadvisor.
The Subadvisor to the Portfolio is Portfolio Advisory Services,
Inc. ("PASI"). PASI's principal business office is 811 Wilshire
Boulevard, Suite 810, Los Angeles, California, 90017. The Subadvisor
manages the investment and reinvestment of the assets of the Portfolio,
although the Advisor may screen potential investments for compatibility
with the Portfolio's social criteria.
The Portfolio manager for CRI Strategic Growth is Cedd Moses,
Director and Chief Executive Officer of PASI, and PASI's principal
shareholder. Mr. Moses earned a Bachelor of Science in Mechanical
Engineering from UCLA in 1982, and subsequently worked with several
securities firms before joining PASI in 1988. Mr. Moses also manages the
Calvert Strategic Growth Fund series of The Calvert Fund, an open-end
investment company sponsored by Calvert Group, Ltd.
Advisory Fee
For its services, CAMCO is entitled to receive an annual fee of
1.50%, based on a percentage of the average daily net assets of the
Portfolio. During 1995, CAMCO received a fee of 1.45%. CAMCO will pay
the Subadvisor a base fee of 0.90%. In addition, under the circumstances
described below, the Subadvisor may earn (or have their fees reduced by)
performance fee adjustments based on the extent to which performance of
the Portfolio exceeds or trails the index against which the Subadvisor
is measured. Payment consistent with the performance fee adjustment
begins the 13th month after the Subadvisor assumed a management role for
the Portfolio as follows:
CRI Strategic Growth: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
30% to less than 60% 0.05%
60% to less than 90% 0.10%
90% or more 0.15%
CRI Strategic Growth: Subadvisor's Performance Fee Adjustment
Performance versus the Performance Fee
Russell 2000 Index Adjustment
30% to less than 60% 0.025%
60% to less than 90% 0.050%
90% or more 0.075%
The performance fee adjustment to the Subadvisor is paid out of the fee
the Advisor receives from the Portfolio.
Administrative Services
Calvert Administrative Services Company ("CASC"), an affiliate
of the Advisor, has been retained by CRI Strategic Growth 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 0.20% of net assets per year.
Expenses
The Portfolio's expenses, which are accrued daily, include: the
fee of the Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian and transfer
agent fees; legal and auditing fees; bookkeeping and dividend disbursing
expenses; and certain other expenses relating to the Fund's operations.
The Fund's organizational expenses were paid by CAMCO, and other
expenses that the Investment Advisory Agreement does not state are
payable by the Fund will be assumed by CAMCO. Certain expenses are paid
by the particular Portfolio that incurs them, while other expenses are
allocated among each Portfolio on the basis of their relative size
(based on net assets), or as designated by the Board of Directors, as
appropriate. CAMCO has agreed to reimburse the Fund for the amount, if
any, by which the aggregate expenses of any Portfolio (including the
investment advisory fee but excluding brokerage commission, interest,
taxes, and extraordinary expenses) exceed the maximum percentage of
average daily net assets allowed by law. Expenses constituted 2.17%,
annualized, of the average net assets of the Portfolio for 1995,
including fees paid indirectly, and 1.64%, annualized, net of fees paid
indirectly and reimbursements.
Capital Stock
The Fund issues separate stock for each of its Portfolios.
Shares of each of the Portfolios have equal rights with regard to
voting, redemptions, dividends, distributions, and liquidations. No
Portfolio has preference over another Portfolio. When issued, shares are
fully paid and nonassessable and do not have preemptive or conversion
rights or cumulative voting rights. The Insurance Companies and the
Fund's shareholders will vote Fund shares allocated to registered
separate accounts in accordance with instructions received from
policyholders. National Home Life Assurance Company owns 25% or more of
the outstanding stock of the Portfolio. Under certain circumstances,
which are described in the accompanying prospectus of the variable life
or annuity policy, the voting instructions received from variable life
or annuity policyholders may be disregarded.
Each Portfolio has distinct investment objectives and policies
and issues separate stock. While the Fund is treated as one entity for
some purposes, each Portfolio is treated separately for other purposes.
An interest in the Fund is limited to the assets of the Portfolio in
which shares are held, and shareholders of each Portfolio are entitled
to a pro rata share of all dividends and distributions arising from the
net income and capital gains on the investment of that Portfolio.
- --------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------
The Fund offers its shares, without sales charge, only for
purchase by various Insurance Companies for allocation to their Variable
Accounts. Shares are purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously offers its shares in
the Portfolio at a price equal to the net asset value per share. Initial
and subsequent payments allocated to the Portfolio are subject to the
limits applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts,
or for Variable Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither the Insurance
Companies nor the Fund foresee any such disadvantages to either variable
annuity or variable life insurance policyholders of any Insurance
Company. The Fund's Board of Directors intends to monitor events in
order to identify any material conflict between such policyholders and
to determine what action, if any, should be taken in response to the
problem.
The Insurance Companies redeem shares of the Fund to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Fund is open for
business (each day the New York Stock Exchange is open), and are made at
the Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, and in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the Rules
under the Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or less than the
amount paid for the shares, depending on the fluctuations in the market
value of the assets owned by the Portfolio. The Fund redeems all full
and fractional shares of each Portfolio for cash.
The net asset value of the shares of each Portfolio of the Fund
is determined once daily as of the close of business of the New York
Stock Exchange, on days when the Exchange is open for business, or for
any other day when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its net asset value
per share (except on days when no orders to purchase or redeem shares of
the Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number of
outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days or
less, securities held by the Portfolio 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. Money market instruments
with a remaining maturity of 60 days or less held by the Portfolio are
valued on an amortized cost basis.
- --------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------
It is the Portfolio's intention to distribute substantially all
of its net investment income, if any. For dividend purposes, net
investment income consists of all payments of dividends or interest
received by the Portfolio less estimated expenses, including the
investment advisory fee. All net realized capital gains, if any, are
declared and distributed periodically, at least annually. All dividends
and distributions are reinvested in additional shares of the Portfolio
at net asset value.
- --------------------------------------------------------------------------
TOTAL RETURN INFORMATION
- --------------------------------------------------------------------------
Total Return and Other Quotations
CRI Strategic Growth may advertise ''total return." Total
return refers to the total change in value of an investment in the
Portfolio over a specified period. It differs from yield in that yield
figures measure only the income component of the Portfolio's
investments, while total return includes not only the effect of income
dividends but also any change in net asset value, or principal amount,
during the stated period. Total return shows its overall change in
value, including changes in share price and assuming all of the
Portfolio's dividends and capital gain distributions are reinvested. A
cumulative total return reflects the Portfolio's performance over a
stated period of time. An average annual total return reflects the
hypothetical annual compounded return that would have produced the same
cumulative total return if the Portfolio's performance had been constant
over the entire period. Because average annual returns tend to smooth
out variations in the Portfolio's returns, you should recognize that
they are not the same as actual year-by-year results. The total return
of the Portfolio generally does not include the effect of paying the
sales charges on the particular insurance policy or annuity contract for
which the Portfolio serves as the investment vehicle.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
As a "regulated investment company" under the Internal Revenue
Code of 1986, as amended, the Fund is not subject to federal income or
excise tax to the extent that it distributes its net investment income
and net capital gains. Each Portfolio is treated as a separate entity
for federal income tax purposes. Since the sole shareholders of the Fund
are Insurance Companies, no discussion is included here as to the
federal income tax consequences at the shareholder level. For
information concerning the federal tax consequences to purchasers of the
annuity or life insurance policies, see the prospectuses for the
Policies.
- --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place
of business at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - May 1, 1996
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED GLOBAL EQUITY PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814 (800) 368-2748
The Calvert Responsibly Invested Global Equity Portfolio (the
"Portfolio" or "CRI Global") is a series of Acacia Capital Corporation
(the "Fund"), an open-end management investment company whose investment
advisor is Calvert Asset Management Company, Inc. (the "Investment
Advisor").
The investment objective of the Portfolio is to achieve a high
total return consistent with reasonable risk by investing primarily in a
globally diversified portfolio. There can be no assurance that the
objective of the Portfolio will be realized. See "Investment Objective
and Policies."
This Prospectus sets forth the information that a prospective
policyholder should know before directing investment in the Portfolio
and it should be read and kept for future reference. A Statement of
Additional Information dated May 1, 1996, which contains further
information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling the Fund at the numbers above, or by
writing the Fund at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
Shares of the Fund are offered only to insurance companies for
allocation to certain of their variable separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. WHEN INVESTORS SELL SHARES OF THE FUND, THE VALUE MAY BE HIGHER
OR LOWER THAN THE AMOUNT ORIGINALLY PAID.
<PAGE>
- --------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------
Page
Financial Highlights..................................................3
Investment Objective and Policies.....................................6
The Fund and Its Management...........................................10
Purchase and Redemption of Shares.....................................12
Dividends and Distributions...........................................13
Total Return Information......... .................................. 13
Taxes.................................................................14
Transfer and Dividend Disbursing Agent................................14
- --------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------
The following table provides information about the Portfolio's
financial history. It expresses the information in terms of a single
share outstanding throughout each period. The table has been audited by
those independent accountants whose reports are included in the Fund's
Annual Report to Shareholders, for each of the respective periods
presented. The table 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>
Year Ended December Year Ended December
31, 1995 31, 1994
----------------------------------
----------------------------------
<S> <C> <C>
Net asset value, beginning $15.89 $17.72
Income from investment operations
Net investment income .27 .11
Net realized and unrealized gain (loss)
1.69 (.49)
Total from investment operations
1.96 (.38)
Distributions from
Net investment income (.25) (.13)
Net realized gains (.45) (1.32)
Total distributions (.70) (1.45)
Total increase (decrease) in net asset value
1.26 (1.83)
Net asset value, ending $17.15 $15.89
Total return<F1> 12.35% (2.13)%
Ratio to average net assets:
Net investment income 1.48% .59%
Total expenses<F2> 1.51% --
Net expenses 1.12% 1.24%
Expenses reimbursed .39% .29%
Portfolio turnover 90% 84%
Net assets, ending (in thousands) $9,831 $7,765
Number of shares outstanding, ending (in
thousands) 573 489
<FN>
<F1> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F2> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
Year Ended June 30, 1992 through
December 31, December 31,
1993 1992
-----------------------------------------
<S> <C> <C>
Net asset value, beginning $14.57 $15.00
Income from investment operations
Net investment income .11 (.02)
Net realized and unrealized gain (loss)
4.07 (.41)
Total from investment operations
4.18 (.43)
Distributions from
Net investment income (.08) --
Net realized gains (.95) --
Total distributions (1.03) --
Total increase (decrease) in net asset value
3.15 (.43)
Net asset value, ending $17.72 $14.57
Total return<F3> 29.72% (3.27)%
Ratio to average net assets:
Net investment income 1.00% (.98%)(a)
Total expenses<F4> -- --
Net expenses .94% .98%(a)
Expenses reimbursed .10% 1.07%(a)
Portfolio turnover 64% --
Net assets, ending (in thousands) $4,529 $236
Number of shares outstanding, ending (in
thousands) 256 16
<FN>
<F3> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies. Total return
has not been audited prior to 1989.
<F4> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------
The investment objective described below is fundamental and may
not be changed without the approval of the holders of a majority of the
outstanding shares of the Portfolio. As a Policyholder, you may be given
an opportunity to indicate how you believe the Insurance Company should
vote the shares which underlie your Policy.
The investment objective of CRI Global is to provide a high
total return consistent with reasonable risk by investing primarily in a
globally diversified portfolio of equity securities. The Portfolio seeks
total return through a globally diversified investment portfolio. It is
designed to provide growth of capital or current income by investing in
enterprises that make a significant contribution to society through
their products and services and through the way they do business. All
investments are screened for financial and social criteria. The
Portfolio may engage in hedging transactions involving options, futures
contracts and foreign currency transactions to reduce its risk exposure
(see "Investment Techniques").
Under normal circumstances, CRI Global will invest at least 65%
of its assets in equity securities. The Portfolio will invest primarily
in common stocks of established foreign and U.S. companies believed to
have potential for capital growth, income or both. However, it may
invest in any other type of security including, but not limited, to
convertible securities, preferred stocks, bonds, notes and other debt
securities of companies (including Euro-currency instruments and
securities), or of any international agency (such as the Asian
Development Bank or Inter-American Development Bank) or obligations of
domestic or foreign governments and their political subdivisions, and in
foreign currency transactions. The Portfolio may establish and maintain
reserves for temporary defensive purposes or to enable it to take
advantage of buying opportunities. CRI Global's reserves may be invested
in domestic as well as foreign short-term money market instruments
including, but not limited to, government obligations, certificates of
deposit, bankers' acceptances, time deposits, commercial paper,
short-term corporate debt securities and repurchase and reverse
repurchase agreements. The Portfolio may also engage in certain options
transactions, and enter into futures contracts and related options for
hedging purposes and lend portfolio securities. See "Additional
Fundamental Investment Policies, Risks of Foreign Securities, Foreign
Currency Transactions, and Additional Non-Fundamental Investment
Policies."
Under normal circumstances, CRI Global will invest at least 65%
of its assets in the securities of issuers in no less than three
countries, one of which may be the USA. Under normal circumstances,
business activities in a number of different foreign countries will be
represented in the Portfolio's investments. The Portfolio may, from time
to time, have more than 25% of its assets invested in any major
industrial or developed country which in the view of the Subadvisor
poses no unique investment risk. Under exceptional economic or market
conditions, CRI Global may invest substantially all of its assets in
only one or two countries, or in U.S. government obligations or
securities of companies incorporated in and having their principal
activities in the U.S.
In determining the appropriate distribution of investments
among various countries and geographic regions, the Subadvisor
ordinarily will consider the following factors: prospects for relative
economic growth among foreign countries; expected levels of inflation;
relative price levels of the various capital markets; government
policies influencing business conditions; the outlook for currency
relationships and the range of individual investment opportunities
available to the global investor. The Portfolio may make investments in
developing countries, which involve exposure to economic structures that
are generally less diverse and mature than in the United States, and to
political systems which may be less stable. A developing country can be
considered to be a country which is in the initial stages of its
industrialization cycle. In the past, markets of developing countries
have been more volatile than the markets of developed countries;
however, such markets often have provided higher long-term rates of
return to investors. The Subadvisor believes that these characteristics
can be expected to continue in the future.
Generally, CRI Global will not trade in securities for
short-term profits, but, when circumstances warrant, securities may be
sold without regard to the length of time held. The Portfolio may write
covered call options and purchase call and put options on securities and
security indices, and may write secured put options and enter into
option transactions on foreign currency. It may also engage in
transactions in financial futures contracts and related options for
hedging purposes, and invest in repurchase agreements. These investment
techniques and the related risks are summarized below and are described
in more detail in the Statement of Additional Information.
CRI Global may purchase unrated debt instruments, if the
Advisor or Subadvisor determines they are of comparable quality to
permissible rated instruments. Although the Portfolio may invest up to
5% of its assets in non-investment grade bonds (those rated below BBB by
Standard & Poor's or equivalent), it does not intend to purchase any
such bonds unless the instrument provides an opportunity to invest in an
attractive company in which an equity investment is not currently
available or desirable. Non-investment grade bonds are commonly referred
to as "junk bonds." (See "Non-Investment Grade Debt Securities.")
Additional Fundamental Investment Policies
CRI Global may, in pursuit of its investment objectives,
purchase put and call options and engage in the writing of covered call
options and secured put options on securities of issuers that meet its
social criteria, and employ a variety of other investment techniques,
including the purchase and sale of market index futures contracts,
financial futures contracts and options on such futures. Investing in
options may involve a greater degree of risk than those inherent in more
conservative investment approaches. The Portfolio will engage in futures
contracts and related options only to protect against market declines.
The Portfolio will not engage in such transactions for speculation or
leverage. It is an operating policy of the Fund that no Portfolio may
invest in options and futures contracts if as a result more than 5% of
its assets would be so invested.
The Portfolio may engage in repurchase agreements and reverse
repurchase agreements. In a repurchase agreement, the Portfolio buys a
security subject to the right and obligation to sell it back at a higher
price. In order to minimize any risk involved, the Portfolio engages in
such transactions only with recognized securities dealers and banks
determined by the Advisor to present a minimal credit risk. Repurchase
agreements are fully collateralized and always have a maturity of less
than one year. No more than 10 percent of the Portfolio's assets may be
invested in repurchase agreements not terminable within seven days. In a
reverse repurchase agreement, the Portfolio sells a security subject to
the right and obligation to buy it back at a higher price. The Portfolio
then invests the proceeds from the transaction in another obligation in
which it is authorized to invest. For reverse repurchase agreements, the
Portfolio maintains a segregated account with liquid assets equal in
value to the repurchase price.
The Portfolio may borrow money from banks (and pledge its
assets to secure such borrowing) for temporary or emergency purposes,
but not for leverage. This type of borrowing may not exceed 10% of the
value of the Portfolio's total assets. The Portfolio may also make loans
of the securities it holds. The advantage of loaning securities is that
the Portfolio continues to receive the equivalent of the interest earned
or dividends paid by the issuers while at the same time earning interest
on the cash or equivalent collateral that may be invested in accordance
with the Portfolio's investment objective, policies, and restrictions.
The purpose of the loans is usually to facilitate the delivery of
securities. As with any extension of credit, there may be risks of delay
in recovery and possible loss of rights in the loaned security if the
borrower fails financially. The Investment Advisor attempts to reduce
the risk by lending only to borrowers that it deems creditworthy and
only on terms that it believes compensates for any risk inherent in the
transaction.
The Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with assets of one billion
dollars or more. All loans must be secured continuously in the form of
cash or cash equivalents such as U.S. Treasury bills. In addition, the
amount of collateral must, on a current basis, equal or exceed the
market value of the loaned securities, and the Portfolio may only make
the loan if the value of the securities loaned does not exceed 10% of
its assets. The Portfolio must be able to terminate loans at any time
with appropriate notice. The Portfolio will exercise its right to
terminate a securities loan in order to preserve its right to vote on
matters of importance affecting holders of the securities. All
securities must be returned to the Portfolio when a loan terminates, and
the Portfolio absorbs any gain or loss in the market value of the
securities during the loan period.
Risks of Foreign Securities
CRI Global may invest all of its assets in foreign securities,
although the Portfolio intends to invest part of its assets in
securities of U.S. issuers. There are substantial and different risks
involved in investing in foreign securities. You should consider these
risks carefully. For example, there is generally less publicly available
information about foreign companies than is available about companies in
the U.S. Foreign companies are generally not subject to uniform audit
and financial reporting standards, practices and requirements comparable
to those in the U.S.
Foreign securities involve currency risks. The U.S. dollar
value of a foreign security tends to decrease when the value of the
dollar rises against the foreign currency in which the security is
denominated and tends to increase when the value of the dollar falls
against such currency. Fluctuations in exchange rates may also affect
the earning power and asset value of the foreign entity issuing the
security. Dividend and interest payments may be returned to the country
of origin, based on the exchange rate at the time of disbursement, and
restrictions on capital flows may be imposed. Losses and other expenses
may be incurred in converting between various currencies in connections
with purchases and sales of foreign securities.
Foreign stock markets are generally not as developed or
efficient as those in the U.S. In most foreign markets volume and
liquidity are less than in the U.S. and, at times, volatility of price
can be greater than that in the U.S. Fixed commissions on foreign stock
exchanges are generally higher than the negotiated commissions on U.S.
exchanges. There is generally less government supervision and regulation
of foreign stock exchanges, brokers and companies than in the U.S.
There is also the possibility of adverse changes in investment
or exchange control regulations, expropriation or confiscatory taxation,
limitations on the removal of funds or other assets, political or social
instability, or diplomatic developments which could adversely affect
investments, assets or securities transactions of the Fund in some
foreign countries. The Fund is not aware of any investment or exchange
control regulations which might substantially impair the operations of
the Fund as described, although this could change at any time.
Investing in emerging markets in particular, those countries
whose economies and capital markets are not as developed as those of
more industrialized nations, carries its own special risks. Among other
risks, the economies of such countries may be affected to a greater
extent than in other countries by price fluctuations of a single
commodity, by severe cyclical climatic conditions, lack of significant
history in operating under a market-oriented economy, or by political
instability, including risk of expropriation.
For many foreign securities, there are U.S. dollar-denominated
American Depositary Receipts ("ADRs"), which are traded in the U.S. on
exchanges or over the counter and are generally sponsored and issued by
domestic banks. ADRs represent the right to receive securities of
foreign issuers deposited in a domestic bank or a correspondent bank.
ADRs do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in foreign issuers' stock, the Portfolio may avoid currency
risks during the settlement period for either purchases or sales. In
general, there is a large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the accounting, auditing
and financial reporting standards of the domestic market or exchange on
which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject. The
Portfolio may also invest in European Depositary Receipts ("EDRs"),
which are receipts evidencing an arrangement with a European bank
similar to that for ADRs and are designed for use in the European
securities markets. EDRs are not necessarily denominated in the currency
of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign withholding
taxes, thus reducing the net amount available for distribution to
shareholders. You should understand that the expense ratio of the
Portfolio can be expected to be higher than those of investment
companies investing only in domestic securities since the costs of
operations are higher.
Writing (Selling) Call and Put Options. A call option on a
security, security index or a foreign currency gives the purchaser of
the option, in return for the premium paid to the writer (seller), the
right to buy the underlying security, index or foreign currency at the
exercise price at any time during the option period. Upon exercise by
the purchaser, the writer of a call option on an individual security or
foreign currency has the obligation to sell the underlying security or
currency at the exercise price. A call option on a securities index is
similar to a call option on an individual security, except that the
value of the option depends on the weighted value of the group of
securities comprising the index and all settlements are made in cash. A
call option may be terminated by the writer (seller) by entering into a
closing purchase transaction in which it purchases an option of the same
series as the option previously written.
A put option on a security, security index, or foreign currency
gives the purchaser of the option, in return for the premium paid to the
writer (seller), the right to sell the underlying security, index, or
foreign currency at the exercise price at any time during the option
period.
Upon exercise by the purchaser, the writer of a put option has
the obligation to purchase the underlying security or foreign currency
at the exercise price. A put option on a securities index is similar to
a put option on an individual security, except that the value of the
option depends on the weighted value of the group of securities
comprising the index and all settlements are made in cash.
The Portfolio may write exchange-traded call options on its
securities. Call options may be written on portfolio securities,
securities indices, or foreign currencies. With respect to securities
and foreign currencies, the Portfolio may write call and put options on
an exchange or over-the-counter. Call options on portfolio securities
will be covered since the Portfolio will own the underlying securities
or other securities that are acceptable for escrow at all times during
the option period. Call options on securities indices will be written
only to hedge in an economically appropriate way portfolio securities
which are not otherwise hedged with options or financial futures
contracts and will be "covered" by identifying the specific portfolio
securities being hedged. Call options on foreign currencies and put
options on securities and foreign currencies will be covered by
securities acceptable for escrow. The Portfolio may not write options on
more than 50% of its total assets. Management presently intends to cease
writing options if and as long as 25% of such total assets are subject
to outstanding options contracts or if required under regulations of
state securities administrators.
The Portfolio will write call and put options in order to
obtain a return on its investments from the premiums received and will
retain the premiums whether or not the options are exercised. Any
decline in the market value of portfolio securities or foreign
currencies will be offset to the extent of the premiums received (net of
transaction costs). If an option is exercised, the premium received on
the option will effectively increase the exercise price or reduce the
difference between the exercise price and market value.
During the option period, the writer of a call option gives up
the opportunity for appreciation in the market value of the underlying
security or currency above the exercise price. It retains the risk of
loss should the price of the underlying security or foreign currency
decline. Writing call options also involves risks relating to the
Portfolio's ability to close out options it has written.
During the option period, the writer of a put option has
assumed the risk that the price of the underlying security or foreign
currency will decline below the exercise price. However, the writer of
the put option has retained the opportunity for appreciation above the
exercise price should the market price of the underlying security or
foreign currency increase. Writing put options also involves risks
relating to the Portfolio's ability to close out options it has written.
Purchasing Call and Put Options, Warrants and Stock Rights. The
Portfolio may invest up to an aggregate of 5% of its total assets in
exchange-traded or over-the-counter call and put options on securities
and securities indices and foreign currencies. Purchases of such options
may be made for the purpose of hedging against changes in the market
value of the underlying securities or foreign currencies. The Portfolio
may invest in call and put options whenever, in the opinion of the
Advisor or Subadvisor, a hedging transaction is consistent with its
investment objectives. The Portfolio may sell a call option or a put
option which it has previously purchased prior to the purchase (in the
case of a call) or the sale (in the case of a put) of the underlying
security or foreign currency. Any such sale would result in a net gain
or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the call or
put which is sold. Purchasing a call or put option involves the risk
that the Portfolio may lose the premium it paid plus transaction costs.
Warrants and stock rights are almost identical to call options
in their nature, use and effect except that they are issued by the
issuer of the underlying security rather than an option writer, and they
generally have longer expiration dates than call options. The Portfolio
may invest up to 5% of its net assets in warrants and stock rights, but
no more than 2% of its net assets in warrants and stock rights not
listed on the New York Stock Exchange or the American Stock Exchange.
Financial Futures and Related Options. The Portfolio may enter
into financial futures contracts and related options as a hedge against
anticipated changes in the market value of its securities or securities
which it intends to purchase or in the exchange rate of foreign
currencies. Hedging is the initiation of an offsetting position in the
futures market which is intended to minimize the risk associated with a
position's underlying securities in the cash market. Investment
techniques related to financial futures and options are summarized below
and are described more fully in the Statement of Additional Information.
Financial futures contracts consist of interest rate futures
contracts, foreign currency futures contracts and securities index
futures contracts. An interest rate futures contract obligates the
seller of the contract to deliver, and the purchaser to take delivery
of, the interest rate securities called for in the contract at a
specified future time and at a specified price. A foreign currency
futures contract obligates the seller of the contract to deliver, and
the purchaser to take delivery of, the foreign currency called for in
the contract at a specified future time and at a specified price. A
securities index assigns relative values to the securities included in
the index, and the index fluctuates with changes in the market values of
the securities so included. A securities index futures contract is a
bilateral agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times
the difference between the index value at the close of the last trading
day of the contract and the price at which the futures contract is
originally struck. An option on a financial futures contract gives the
purchaser the right to assume a position in the contract (a long
position if the option is a call and a short position if the option is a
put) at a specified exercise price at any time during the period of the
option.
The Portfolio may purchase and sell financial futures contracts
which are traded on a recognized exchange or board of trade and may
purchase exchange or board-traded put and call options on financial
futures contracts. It will engage in transactions in financial futures
contracts and related options only for hedging purposes and not for
speculation. In addition, the Portfolio will not purchase or sell any
financial futures contract or related option if, immediately thereafter,
the sum of the cash or U.S. Treasury bills committed with respect to its
existing futures and related options positions and the premiums paid for
related options would exceed 5% of the market value of its total assets.
At the time of purchase of a futures contract or a call option on a
futures contract, an amount of cash, U.S. Government securities or other
appropriate high-grade debt obligations equal to the market value of the
futures contract minus the Portfolio's initial margin deposit with
respect thereto, will be deposited in a segregated account with the
Fund's custodian bank to collateralize fully the position and thereby
ensure that it is not leveraged. The extent to which the Portfolio may
enter into financial futures contracts and related options may also be
limited by requirements of the Internal Revenue Code of 1986 for
qualification as a regulated investment company.
Engaging in transactions in financial futures contracts
involves certain risks, such as the possibility of an imperfect
correlation between futures market prices and cash market prices and the
possibility that the Advisor or Subadvisor could be incorrect in its
expectations as to the direction or extent of various interest rate
movements or foreign currency exchange rates, in which case the
Portfolio's return might have been greater had hedging not taken place.
There is also the risk that a liquid secondary market may not exist. The
risk in purchasing an option on a financial futures contract is that the
Portfolio will lose the premium it paid. Also, there may be
circumstances when the purchase of an option on a financial futures
contract would result in a loss to the Portfolio while the purchase or
sale of the contract would not have resulted in a loss.
Foreign Currency Transactions
The value of the Portfolio's assets as measured in United
States dollars may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and
the Portfolio may incur costs in connection with conversions between
various currencies. The Portfolio will conduct its foreign currency
exchange transactions either on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market, or through
forward contracts to purchase or sell foreign currencies. A forward
foreign currency exchange contract involves an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number
of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. These contracts are traded
directly between currency traders (usually large commercial banks) and
their customers.
When the Portfolio enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may want to
establish the United States dollar cost or proceeds, as the case may be.
By entering into a forward contract in United States dollars for the
purchase or sale of the amount of foreign currency involved in the
underlying security transaction, the Portfolio is able to protect itself
against a possible loss between trade and settlement dates resulting
from an adverse change in the relationship between the United States
dollar and such foreign currency. However, this tends to limit potential
gains which might result from a positive change in such currency
relationships. The Portfolio may also hedge its foreign currency
exchange rate risk by engaging in currency financial futures and options
transactions.
When the Advisor or the Subadvisor believes that the currency
of a particular foreign country may suffer a substantial decline against
the United States dollar, it may enter into a forward contract to sell
an amount of foreign currency approximating the value of some or all of
the Portfolio's portfolio securities denominated in such foreign
currency. The forecasting of short-term currency market movement is
extremely difficult and whether such a short-term hedging strategy will
be successful is highly uncertain.
It is impossible to forecast with precision the market values
of portfolio securities at the expiration of a contract. Accordingly, it
may be necessary for the Portfolio to purchase additional currency on
the spot market (and bear the expense of such purchase) if the market
value of the security is less than the amount of foreign currency the
Portfolio is obligated to deliver when a decision is made to sell the
security and make delivery of the foreign currency in settlement of a
forward contract. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign
currency the Portfolio is obligated to deliver.
If the Portfolio retains the portfolio security and engages in
an offsetting transaction, it will incur a gain or a loss (as described
below) to the extent that there has been movement in forward contract
prices. If the Portfolio engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the foreign
currency. Should forward prices decline during the period between the
Portfolio's entering into a forward contract for the sale of a foreign
currency and the date it enters into an offsetting contract for the
purchase of the foreign currency, it would realize gains to the extent
the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the
Portfolio would suffer a loss to the extent the price of the currency it
has agreed to purchase exceeds the price of the currency it has agreed
to sell. Although such contracts tend to minimize the risk of loss due
to a decline in the value of the hedged currency, they also tend to
limit any potential gain which might result should the value of such
currency increase. The Portfolio may have to convert its holdings of
foreign currencies into United States dollars from time to time.
Although foreign exchange dealers do not charge a fee for conversion,
they do realize a profit based on the difference (the "spread") between
the prices at which they are buying and selling various currencies.
Additional Nonfundamental Investment Policies
CRI Global has adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed by the Board of
Directors without shareholder approval:
The Portfolio may not purchase illiquid securities if more than
15% of the value of its net assets would be invested in such securities.
Further, the Portfolio may not acquire private placement investments
until the value of its assets exceeds $20 million.
For further information on the Portfolio's investment policies
and restrictions, as well as a description of the types of securities
that may be purchased, see the Statement of Additional Information.
Additional Risk Factors
Interest Rate Risk
All fixed income instruments are subject to interest-rate risk:
that is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
Non-Investment Grade Securities
Non-investment grade securities tend to be less sensitive to
interest rate changes than higher-rated investments, but are more
sensitive to adverse economic changes and individual corporate
developments. This may affect the issuer's ability to make principal and
interest payments on the debt obligation. There is also a greater risk
of price declines due to changes in the issuer's creditworthiness.
Because the market for lower-rated securities may be less active
("thinner") than for higher-rated securities, it may be difficult for
the Portfolio to sell the securities. Because of a lack of objective
data, a thinly-traded market may make it difficult to value the
securities, so that the Board of Directors may have to exercise its
judgment in assigning a value. See the Appendix in the Statement of
Additional Information for more information on bond ratings.
- --------------------------------------------------------------------------
INVESTMENT SCREENS
- --------------------------------------------------------------------------
The Portfolio carefully reviews a company's policies and
behavior in the following social issues: environment, nuclear energy,
weapons systems, health care, human rights, and alcohol/tobacco. The
Portfolio currently observes the following operating policies which may
be changed by the Portfolio's Board of Directors without shareholder
approval: (1) the Portfolio actively seeks to invest in companies that
achieve excellence in both financial return and environmental soundness,
selecting issuers that take positive steps toward preserving our
environment and avoiding companies with poor environmental records; (2)
the Portfolio will not invest in issuers primarily engaged in the
manufacture of weapons systems, the production of nuclear energy, or the
manufacture of equipment to produce nuclear energy; and (3) the
Portfolio actively seeks to invest in companies whose products or
services improve the quality of or access to health care, including
public health and preventative medicine.
The Portfolio believes that there are long-term benefits
inherent in an investment philosophy that demonstrates concern for the
environment, human rights, economic priorities, and international
relations. Those enterprises which exhibit a social awareness measured
in terms of the above attributes and considerations should be better
prepared to meet future societal needs for goods and services. By
responding to social concerns, these enterprises should not only avoid
the liability that may be incurred when a product or services is
determined to have a negative social impact or has outlived its
usefulness, but also be better positioned to develop opportunities to
make a profitable contribution to society. These enterprises should be
ready to respond to external demands and ensure that over the longer
term they will be viable to provide a positive return to both investors
and society as a whole.
- --------------------------------------------------------------------------
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------
Acacia Capital Corporation (the "Fund"), a Maryland
corporation, is an open-end investment company, which was incorporated
under the laws of the State of Maryland on September 27, 1982. The Board
of Directors supervises the business affairs and investments of the
Fund, which are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios, each issuing one
class of stock. The shares of the Fund currently are sold only to
insurance companies (collectively, the "Insurance Companies") for
allocation to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable annuity and
variable life insurance policies (collectively, the "Policies") issued
by such companies. Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity or life
insurance policy and is described in the attached prospectus for one of
the Policies, which should be reviewed carefully by a person considering
the purchase of a Policy. The rights of the Insurance Companies as
shareholders should be distinguished from the rights of a policy owner
which are described in the Policies. Policy owners should consider that
the investment return experience of the Portfolio will affect the value
of the policy and the amount of annuity payments or life insurance
benefits received under a policy. See the attached prospectus(es) for
the Policies for a description of the relationship between increases or
decreases in the net asset value of Portfolio shares (and any
distributions on such shares) and the benefits provided under a policy.
Investment Advisor and Subadvisor
Calvert Asset Management Company, Inc. ("CAMCO"), which is
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to all of the Fund's Portfolios. CAMCO
is a wholly-owned subsidiary of Calvert Group, Ltd., which is in turn an
indirect wholly-owned subsidiary of Acacia Mutual Life Insurance
Company. As of December 31, 1995, Calvert Group, Ltd. had assets under
management and administration in excess of $4.8 billion. Pursuant to its
investment advisory agreement with the Fund, the Investment Advisor
manages the investment and reinvestment of the assets of each Portfolio
and is responsible for the overall management of the business affairs of
each Portfolio, subject to the direction and authority of the Fund's
Board of Directors. CAMCO also serves as Investment Advisor to seven
other registered investment companies in the Calvert Group of Funds:
First Variable Rate Fund for Government Income, Calvert Cash Reserves
(doing business as Money Management Plus), Calvert Social Investment
Fund, Calvert Tax-Free Reserves, The Calvert Fund, Calvert Municipal
Fund, Inc., and Calvert World Values Fund, Inc. CAMCO has retained an
investment subadvisor ("Subadvisor") for CRI Global. The Advisor will
continuously monitor and evaluate the performance and investment style
of the Subadvisor.
The Subadvisor to CRI Global is Murray Johnstone International,
Ltd. of Glasgow, Scotland, which has its principal U.S. office in
Chicago, Illinois, and is a wholly-owned subsidiary of United Asset
Management Company. Murray Johnstone manages the investment and
reinvestment of the assets of CRI Global, although the Advisor may
manage part of CRI Global's cash reserves required for liquidity
purposes. Andrew Preston, CRI Global Portfolio Manager, studied at
Melbourne University in Australia and Ritsumeikan University in Japan
prior to working for the Australian Department of Foreign Affairs. He
joined Murray Johnstone in 1985 as an analyst in the U.K. and U.S.
departments, became Fund Manager in the Japanese Department, and played
a prominent role in the establishment and operation of Yamaichi-Murray
Johnstone.
Advisory Fee
For its services, CAMCO is entitled to receive a fee based on a
percentage of the average daily net assets of the Portfolio. CAMCO is
currently entitled to receive a maximum fee of 1.00% of net assets of
CRI Global, and from this will pay a maximum fee of 0.45% of the net
assets of CRI Global to Murray Johnstone International, Ltd. as a
subadvisory fee.
Calvert Administrative Services Company ("CASC"), an affiliate
of the Advisor, has been retained by CRI Global to provide certain
administrative services necessary to the conduct of their affairs,
including the preparation of regulatory filings and shareholder reports,
the daily determination of net asset value per share and dividends, and
the maintenance of 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 with a minimum fee of $40,000
for CRI Global. During 1995, CASC received a fee of 0.035% and waived
the remainder of the administrative service fee.
Expenses
The Portfolio's expenses, which are accrued daily, include: the
fee of the Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian and transfer
agent fees; legal and auditing fees; bookkeeping and dividend disbursing
expenses; and certain other expenses relating to the Portfolio's
operations. The Fund's organizational expenses were paid by CAMCO, and
other expenses that the Investment Advisory Agreement does not state are
payable by the Fund will be assumed by CAMCO. Certain expenses are paid
by the particular Portfolio that incurs them, while other expenses are
allocated among each Portfolio on the basis of their relative size
(based on net assets), or as designated by the Board of Directors, as
appropriate. CAMCO has agreed to reimburse the Fund for the amount, if
any, by which the aggregate expenses of any Portfolio (including the
investment advisory fee but excluding brokerage commission, interest,
taxes, and extraordinary expenses) exceed the maximum percentage of
average daily net assets allowed by law. Expenses constituted 1.51% of
the average net assets of the Portfolio for 1995, including fees paid
indirectly, and 1.12% net of fees paid indirectly and reimbursements.
Capital Stock
The Fund issues separate stock for each of its Portfolios.
Shares of each of the Portfolios have equal rights with regard to
voting, redemptions, dividends, distributions, and liquidations. No
Portfolio has preference over another Portfolio. When issued, shares are
fully paid and nonassessable and do not have preemptive or conversion
rights or cumulative voting rights. The Insurance Companies and the
Fund's shareholders will vote Fund shares allocated to registered
separate accounts in accordance with instructions received from
policyholders. National Home Life Assurance Company owns 25% or more of
the outstanding stock of the Portfolio. Under certain circumstances,
which are described in the accompanying prospectus of the variable life
or annuity policy, the voting instructions received from variable life
or annuity policyholders may be disregarded.
Each Portfolio has distinct investment objectives and policies
and issues separate stock. While the Fund is treated as one entity for
some purposes, each Portfolio is treated separately for other purposes.
An interest in the Fund is limited to the assets of the Portfolio in
which shares are held, and shareholders of each Portfolio are entitled
to a pro rata share of all dividends and distributions arising from the
net income and capital gains on the investment of that Portfolio.
- --------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------
The Fund offers its shares, without sales charge, only for
purchase by various Insurance Companies for allocation to their Variable
Accounts. Shares are purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously offers its shares in
the Portfolio at a price equal to the net asset value per share. Initial
and subsequent payments allocated to a Portfolio are subject to the
limits applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts,
or for Variable Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither the Insurance
Companies nor the Fund foresee any such disadvantages to either variable
annuity or variable life insurance policyholders of any Insurance
Company. The Fund's Board of Directors intends to monitor events in
order to identify any material conflict between such policyholders and
to determine what action, if any, should be taken in response to the
problem.
The Insurance Companies redeem shares of the Fund to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Fund is open for
business (each day the New York Stock Exchange is open), and are made at
the Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, and in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the Rules
under the Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or less than the
amount paid for the shares, depending on the fluctuations in the market
value of the assets owned by the Portfolio. The Fund redeems all full
and fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the New York Stock
Exchange, on days when the Exchange is open for business, or for any
other day when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its net asset value
per share (except on days when no orders to purchase or redeem shares of
the Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number of
outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days or
less, securities held by the Portfolio are valued at market value if
market quotations are readily available. Otherwise, securities are
valued at fair value as determined in good faith by the Board of
Directors, although the actual calculations may be made by persons
acting pursuant to the direction of the Board. All money market
instruments with a remaining maturity of 60 days or less held by any
Portfolio, are valued on an amortized cost basis.
- --------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------
It is the Portfolio's intention to distribute substantially all
of the net investment income, if any. The net investment income consists
of all payments of dividends or interest received by the Portfolio less
estimated expenses, including the investment advisory fee. All net
realized capital gains, if any, are declared and distributed
periodically, at least annually. All dividends and distributions are
reinvested in additional shares of the Portfolio at net asset value.
- --------------------------------------------------------------------------
TOTAL RETURN INFORMATION
- --------------------------------------------------------------------------
Total Return and Other Quotations
CRI Global may advertise ''total return." Total return refers
to the total change in value of an investment in the Portfolio over a
specified period. Total return shows its overall change in value,
including changes in share price and assuming all of the Portfolio's
dividends and capital gain distributions are reinvested. A cumulative
total return reflects the Portfolio's performance over a stated period
of time. An average annual total return reflects the hypothetical annual
compounded return that would have produced the same cumulative total
return if the Portfolio's performance had been constant over the entire
period. Because average annual returns tend to smooth out variations in
the Portfolio's returns, you should recognize that they are not the same
as actual year-by-year results. The total return of a Portfolio
generally does not include the effect of paying the sales charges on the
particular insurance policy or annuity contract for which the Portfolio
serves as the investment vehicle.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
As a "regulated investment company" under the Internal Revenue
Code of 1986, as amended, the Fund is not subject to federal income or
excise tax to the extent that it distributes its net investment income
and net capital gains. Each Portfolio is treated as a separate entity
for federal income tax purposes. Since the sole shareholders of the Fund
are Insurance Companies, no discussion is included here as to the
federal income tax consequences at the shareholder level. For
information concerning the federal tax consequences to purchasers of the
annuity or life insurance policies, see the prospectuses for the
Policies.
- --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place
of business at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS - MAY 1, 1996
ACACIA CAPITAL CORPORATION
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
(800) 368-2748
Acacia Capital Corporation (the "Fund") is a diversified
open-end management investment company with a series of portfolios
designed to meet a wide range of investment objectives. This prospectus
provides information about one of the Fund's series, Calvert Responsibly
Invested Capital Accumulation Portfolio (the "Portfolio") (formerly
Calvert-Ariel Appreciation II), which seeks long-term capital
appreciation by investing primarily in a nondiversified portfolio of the
equity securities of small- to medium-sized companies. Of course, there
can be no assurance that the Portfolio will be successful in meeting its
investment objective.
This Prospectus sets forth basic information about the
Portfolio that a prospective investor should know before investing and
should be read and retained for future reference. A Statement of
Additional Information, dated May 1, 1996 and incorporated by reference
into this Prospectus, has been filed with the Securities and Exchange
Commission and may be obtained free of charge by writing or calling the
Fund at the address or telephone number listed above. Shares of the
Portfolio are offered only to insurance companies for allocation to
certain of their variable separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS ANY FEDERAL OR STATE SECURITIES COMMISSION PASSED ON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
<PAGE>
- --------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------
Page
Financial Highlights...................................................2
Investment Objective and Policies......................................4
Investment Screens.................. ..................................6
The Fund and Its Management......... .................................6
Purchase and Redemption of Shares..... ................................10
Dividends and Distributions............................................10
Total Return Information...............................................10
Taxes ...............................................................11
Transfer and Dividend Disbursing Agent.................................11
- --------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------
The following table provides information about the Portfolio's financial
history. It expresses the information in terms of a single share
outstanding throughout each period. The table has been audited by those
independent accountants whose report is included in the Portfolio's
Annual Report to Shareholders, for each of the respective periods
presented. The table should be read in conjunction with the financial
statements and their related notes. The Annual Report to Shareholders is
incorporated by reference into the Statement of Additional Information.
<TABLE>
<CAPTION>
Year Ended December 31,
1995 1994 1993
--------------------------------
--------------------------------
<S> <C> <C> <C>
Net asset value, beginning $16.97 $18.95 $17.87
Income from investment operations
Net investment income (.15) .10 .08
Net realized and unrealized gain (loss)
6.85 (1.98) 1.27
Total from investment operations
6.70 (1.88) 1.35
Distributions from
Net investment income (.01) (.10) (.08)
Net realized gains 1.24) -- (.19)
Total distributions (1.25) (.10) (.27)
Total increase (decrease) in net asset value
5.45 (1.98) 1.08
Net asset value, ending $22.42 $16.97 $18.95
Total return<F1> 39.46% (9.92)% 7.56%
Ratio to average net assets:
Net investment income (.84%) .68% .66%
Total expenses<F2> 1.56% -- --
Net expenses 1.25% .79% .80%
Expenses reimbursed .10% -- --
Portfolio turnover 135% 79% 26%
Net assets, ending (in thousands) $8,935 $5,689 $4,986
Number of shares outstanding, ending (in
thousands) 398 335 263
<FN>
<F1> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
<F2> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception July
Year Ended 16, 1991 through
December 31, 1992 Dec. 31, 1991
---------------------------------------
---------------------------------------
<S> <C> <C>
Net asset value, beginning $15.82 $15.00
Income from investment operations
Net investment income .09 .26
Net realized and unrealized gain (loss)
2.09 .82
Total from investment operations
2.18 1.08
Distributions from
Net investment income (.09) (.26)
Net realized gains (.04) --
Total distributions (.13) (.26)
Total increase (decrease) in net asset value
2.05 .82
Net asset value, ending $17.87 $15.82
Total return<F3> 13.73% 7.25%
Ratio to average net assets:
Net investment income 1.19% .84%(a)
Total expenses<F4> -- --
Net expenses .39% --
Expenses reimbursed .87% 4.23%(a)
Portfolio turnover 2% 5%
Net assets, ending (in thousands) $870 $268
Number of shares outstanding, ending (in
thousands) 49 17
<FN>
<F3> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
<F4> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
(a) Annualized
</TABLE>
<PAGE>
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------
CRI CAPITAL ACCUMULATION seeks to provide long-term capital
appreciation by investing primarily in a nondiversified portfolio of the
equity securities of small- to mid-sized companies that are undervalued
but demonstrate a potential for growth. The Portfolio will rely on its
proprietary research to identify stocks that may have been overlooked by
analysts, investors, and the media, and which generally have a market
value between $100 million and $5 billion, but which may be larger or
smaller as deemed appropriate. Investments may also include, but are not
limited to, preferred stocks, foreign securities, convertible
securities, bonds, notes and other debt securities. The Portfolio may
use certain futures and options, invest in repurchase agreements, and
lend its portfolio securities. The Portfolio will take reasonable risks
in seeking to achieve its investment objective. There is, of course, no
assurance that the Portfolio will be successful in meeting its objective
since there is risk involved in the ownership of all equity securities.
The Portfolio's investment objective is not fundamental and may be
changed without shareholder approval. The Portfolio will notify
shareholders at least thirty days in advance of a change in the
investment objective of the Portfolio so that shareholders may determine
whether the Portfolio's goals continue to meet their own.
The Portfolio will use the services of several investment
subadvisors as portfolio managers in selecting companies in which to
invest. The portfolio managers will select investments by examining such
factors as company growth prospects, industry economic outlook, new
product development, management, security value, risk, and financial
characteristics. Because of this multi-manager approach, the Portfolio
may benefit from more than one investment strategy in seeking to achieve
its goals. The Portfolio may employ "growth managers," who generally
concentrate on stocks that have demonstrated, or are expected to
produce, earnings growth rates significantly greater than the market as
a whole, as well as "value managers," who tend to make stock selections
on the basis of perceived relative value as determined by a defined
model in a bottom-up approach. The Advisor will use the services of a
consultant to help it determine the appropriate mix of management styles
to be employed at any given time in an attempt to take advantage of
changing market conditions by allocating asset management among the
selection of talent in the Portfolio's management pool.
The securities of small-cap issuers tend to be less actively
traded than the securities of larger issuers, may trade in a more
limited volume, and may change in value more abruptly than securities of
larger companies. Information concerning these securities may not be
readily available so that the companies may be less actively followed by
stock analysts. Small-cap issuers do not usually participate in market
rallies to the same extent as more widely-known securities, and they
tend to have a relatively higher percentage of insider ownership. The
portfolio turnover rate of advisors investing in small-cap stocks tends
to range between 100-200%. There is no limit on the percentage of assets
that may be invested in small-cap issuers.
Under normal market conditions the Portfolio strives to be
fully invested in securities. However, for temporary defensive purposes
- -- which may include a lack of adequate purchase candidates or an
unfavorable market environment -- the Portfolio may invest up to 100% of
its assets in cash or cash equivalents. Cash equivalents include
instruments such as, but not limited to, U.S. government and agency
obligations, certificates of deposit, bankers' acceptances, time
deposits, commercial paper, short-term corporate debt securities and
repurchase agreements.
Although the Portfolio invests primarily in equity securities,
it may invest in debt securities. These debt securities may consist of
investment-grade and noninvestment-grade obligations. Investment-grade
obligations are those which, at the date of investment, are rated within
the four highest grades established by Moody's Investors Services, Inc.
(Aaa, Aa, A, or Baa) or by Standard and Poor's Corporation (AAA, AA, A,
or BBB). Noninvestment-grade (high-yield/high-risk, or junk bond)
securities are those rated below Baa or BBB, or unrated obligations that
the investment subadvisor has determined are not investment-grade; such
securities are speculative, and the Portfolio currently intends to limit
such investments to 5% of its assets. The Portfolio will not buy debt
securities rated lower than C. See "Additional Risk Factors -
Non-Investment Grade Securities."
CRI Capital Accumulation may, in pursuit of its investment
objectives, purchase put and call options and engage in the writing of
covered call options and secured put options on securities of issuers
that meet the Portfolio's social criteria, and employ a variety of other
investment techniques, including the purchase and sale of market index
futures contracts, financial futures contracts and options on such
futures. Investing in options may involve a greater degree of risk than
those inherent in more conservative investment approaches. The Portfolio
will engage in futures contracts and related options only to protect
against market declines. The Portfolio will not engage in such
transactions for speculation or leverage. It is an operating policy of
the Fund that no Portfolio may invest in options and futures contracts
if as a result more than 5% of its assets would be so invested.
The Portfolio may invest up to 25% of its assets in foreign
securities. There are substantial and different risks involved in
investing in foreign securities. You should consider these risks
carefully. For example, there is generally less publicly available
information about foreign companies than is available about companies in
the U.S. Foreign companies are generally not subject to uniform audit
and financial reporting standards, practices, and requirements
comparable to those in the U.S.
For many foreign securities, there are U.S. dollar-denominated
American Depositary Receipts ("ADRs"), which are traded in the U.S. on
exchanges or over the counter and are generally sponsored and issued by
domestic banks. ADRs represent the right to receive securities of
foreign issuers deposited in a domestic bank or a correspondent bank.
ADRs do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs rather than
directly in foreign issuers' stock, the Portfolio may avoid currency
risks during the settlement period for either purchases or sales. In
general, there is a large, liquid market in the U.S. for many ADRs. The
information available for ADRs is subject to the accounting, auditing
and financial reporting standards of the domestic market or exchange on
which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject. The
Portfolio may also invest in European Depositary Receipts ("EDRs"),
which are receipts evidencing an arrangement with a European bank
similar to that for ADRs and are designed for use in the European
securities markets. EDRs are not necessarily denominated in the currency
of the underlying security.
The dividends and interest payable on certain of the
Portfolio's foreign securities may be subject to foreign withholding
taxes, thus reducing the net amount available for distribution to the
Portfolio's shareholders. You should understand that the expense ratio
of the Portfolio can be expected to be higher than those of investment
companies investing only in domestic securities since the costs of
operations are higher.
Repurchase agreements are arrangements under which the
Portfolio buys securities and the seller simultaneously agrees to
repurchase the securities at a specified time and price. The Portfolio
may engage in repurchase agreements 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. In order to minimize the risk of investing
in repurchase agreements, the Portfolio may engage in such transactions
only with recognized securities dealers and banks and in all instances
holds underlying securities with a value equal to the total repurchase
price the dealer or bank has agreed to pay. Repurchase agreements are
always for periods of less than one year, and no more than 10% of the
Portfolio's assets may be invested in repurchase agreements not
terminable within seven days.
The Portfolio may lend its portfolio securities to member firms
of the New York Stock Exchange and commercial banks with assets of one
billion dollars or more, provided the value of the securities loaned
from the Portfolio will not exceed 10% of the Portfolio's assets. Any
such loans must be secured continuously in the form of cash or cash
equivalents such as U.S. Treasury bills; the amount of the collateral
must on a current basis equal or exceed the market value of the loaned
securities, and the Portfolio must be able to terminate such loans upon
notice at any time. The Portfolio will exercise its right to terminate a
securities loan in order to preserve its right to vote on matters of
importance affecting holders of the securities.
The advantage of such loans is that the Portfolio continues to
receive the equivalent of the interest earned or dividends paid by the
issuers on the loaned securities while at the same time earning interest
on the cash or equivalent collateral which may be invested in accordance
with the Portfolio's investment objective, policies and restrictions.
Securities loans are usually made to broker-dealers and other
financial institutions to facilitate their delivery of such securities.
As with any extension of credit, there may be risks of delay in recovery
and possible loss of rights in the loaned securities should the borrower
of the loaned securities fail financially. However, the Portfolio will
make loans of its portfolio securities only to those firms the Advisor
deems creditworthy and only on such terms the Advisor believes should
compensate for such risk. On termination of the loan the borrower is
obligated to return the securities to the Portfolio. The Portfolio will
realize any gain or loss in the market value of the securities during
the loan period. The Portfolio may pay reasonable custodial fees in
connection with the loan.
The Portfolio seeks to achieve its stated objectives by
following the investment policies established for that purpose. The
investment returns and degrees of market and financial risk depend on
the types of investments the Portfolio undertakes to make as established
by its policies. These objectives may not be changed without the
approval of the holders of a majority of the outstanding shares of each
portfolio affected by the proposed change. As a Policyholder, you may be
given an opportunity to indicate how you believe the Insurance Company
should vote the shares underlying your Policy.
Additional Risk Factors
Nondiversified Portfolio
There may be risks associated with the Portfolio being
nondiversified. Specifically, since a relatively high percentage of the
assets of the Portfolio may be invested in the obligations of a limited
number of issuers, the value of the shares of a nondiversified Portfolio
may be more susceptible to any single economic, political or regulatory
event than the shares of a diversified Portfolio would be.
Interest Rate Risk
All fixed income instruments are subject to interest-rate risk:
that is, if market interest rates rise, the current principal value of a
bond will decline. In general, the longer the maturity of the bond, the
greater the decline in value will be.
Noninvestment-Grade Securities
Noninvestment-grade securities tend to be less sensitive to
interest rate changes than higher-rated investments, but are more
sensitive to adverse economic changes and individual corporate
developments. This may affect the issuer's ability to make principal and
interest payments on the debt obligation. There is also a greater risk
of price declines due to changes in the issuer's creditworthiness.
Because the market for lower-rated securities may be less active
("thinner") than for higher-rated securities, it may be difficult for
the Portfolio to sell the securities. Because of a lack of objective
data, a thinly-traded market may make it difficult to value the
securities, so that the Board of Directors may have to exercise its
judgment in assigning a value. See the Appendix in the Statement of
Additional Information for more information on bond ratings.
- --------------------------------------------------------------------------
INVESTMENT SCREENS
- --------------------------------------------------------------------------
Once securities are determined to fall within the investment
objective of the Portfolio and are deemed financially viable
investments, they are screened according to the social criteria
described below. These social screens are applied to potential
investment candidates by the Advisor in consultation with the
Subadvisors.
The following criteria may be changed by the Portfolio's Board
of Directors without shareholder approval:
(1) The Portfolio avoids investing in companies that, in the
Advisor's opinion, have significant or historical patterns of
violating environmental regulations, or otherwise have an
egregious environmental record. Additionally, the Portfolio
will avoid investing in nuclear power plant operators and
owners, or manufacturers of key components in the nuclear power
process.
(2) The Portfolio will not invest in companies that are
significantly engaged in weapons production. This includes
weapons systems contractors and major nuclear weapons systems
contractors.
(3) The Portfolio will not invest in companies that, in the
Advisor's opinion, have significant or historical patterns of
discrimination against employees on the basis of race, gender,
religion, age, disability or sexual orientation, or that have
major labor-management disputes.
(4) The Portfolio will not invest in companies that are
significantly involved in the manufacture of tobacco or alcohol
products. The 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 Advisor will seek to review companies' overseas operations
consistent with the social criteria stated above. While the Portfolio
may invest in companies that exhibit positive social characteristics, it
makes no explicit claims to seek out companies with such practices.
- --------------------------------------------------------------------------
THE FUND AND ITS MANAGEMENT
- --------------------------------------------------------------------------
Acacia Capital Corporation (the "Fund") is an open-end
management investment company registered under the Investment Company
Act of 1940, as amended. The Fund was incorporated under the laws of the
State of Maryland on September 27, 1982. Capital Accumulation is one of
the Fund's portfolios, and is 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. Shares of the Portfolio are sold only to insurance companies
(collectively, the "Insurance Companies") for allocation to their
separate accounts to fund the benefits under certain variable annuity
and variable life insurance policies (collectively, the "Policies").
Shares of the Portfolio may only be sold to Insurance Companies
for their separate accounts, and not to individual investors. As such,
the "shareholders" referred to in this prospectus are the Insurance
Companies. The Insurance Companies' prospectuses explain the
relationship between changes in the net asset value of the Portfolio's
shares and the benefits provided under a policy. The prospectuses also
detail your interests as a policyholder in the shares of the separate
account and your ability to determine the type of investment underlying
the Policy. You should carefully review the appropriate prospectus when
you consider buying a Policy.
The Fund has several other portfolios or series, which are sold
to other insurance companies to fund the benefits under certain variable
annuity and variable life insurance policies issued by the insurance
companies. The Board of Directors supervises the business affairs and
investments of the Portfolio, which is managed on a daily basis by the
Investment Advisor.
Investment Advisor
Calvert Asset Management Company, Inc. ("CAMCO"), which is
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to all of the Portfolios. CAMCO is a
wholly-owned subsidiary of Calvert Group, Ltd., which is in turn an
indirect wholly-owned subsidiary of Acacia Mutual Life Insurance
Company. As of December 31, 1995, Calvert Group, Ltd. had assets under
management and administration in excess of $4.8 billion. Pursuant to its
investment advisory agreement with the Fund, the Investment Advisor
manages the investment and reinvestment of the assets of each Portfolio
and is responsible for the overall management of the business affairs of
each Portfolio, subject to the direction and authority of the Fund's
Board of Directors. CAMCO also serves as Investment Advisor to seven
other registered investment companies in the Calvert Group of Funds:
First Variable Rate Fund for Government Income, Calvert Cash Reserves
(doing business as Money Management Plus), Calvert Social Investment
Fund, Calvert Tax-Free Reserves, The Calvert Fund, Calvert Municipal
Fund, Inc., and Calvert World Values Fund, Inc. CAMCO has retained
investment subadvisors ("Subadvisors") for several of the Portfolios.
CRI Capital Accumulation Subadvisors
CRI Capital Accumulation has a pool of investment subadvisors
ready to manage the Portfolio's assets. The Subadvisors are listed
below, the asterisks indicating those comprising the current portfolio
management team.
Subadvisor Ownership
*Apodaca Johnston Hispanic American
*Brown Capital African American
*Fortaleza Asset Management Hispanic/Women
New Amsterdam Women
Seneca, Inc. Women
Sturdivant African American
The Advisor will select which Subadvisors will manage the Portfolio's
assets at any given time and the allocation of assets among the
managers. The Advisor has retained a consultant, Progress Investment
Management Company, to aid it in making these determinations. Progress
is a California state-certified minority business enterprise, registered
as an investment advisor with the Securities and Exchange Commission,
that evaluates and monitors emerging minority/women-owned investment
management firms. Each firm has selected a performance index against
which it will be measured with respect to payment of a performance fee,
as explained in the next section.
Apodaca-Johnston Capital Management, Inc.: Apodaca-Johnston Capital
Management, Inc. of San Francisco, California is a small-cap growth
manager that seeks to discover compelling investment ideas by focusing
on those entrepreneurial companies that identify and capitalize on
positive trends. It looks for companies that are experiencing a powerful
acceleration in earnings, exhibit a strong, high quality balance sheet
or decidedly improving financial statements and demonstrate strong
relative price strength. Its performance index is the Russell 2000.
Mr. Johnston is President and Chief Investment Officer of
Apodaca-Johnston. He earned a B.A. from the University of California at
Berkeley, and an M.B.A. from the University of Southern California. In
1985 Mr. Johnston founded Sterling Financial Group, an independent
SEC-registered investment advisory firm, which was merged into
Apodaca-Johnston Capital Management.
Mr. Apodaca is Vice President of Apodaca-Johnston. He earned a
B.A. from the University of New Mexico in 1983, and has had active
business experience since that time.
Brown Capital Management, Inc.: Brown Capital Management, Inc. of
Baltimore, Maryland believes that capital can be enhanced in times of
opportunity and preserved in times of adversity without timing the
market. The firm uses a bottom-up approach that incorporates
growth-adjusted price earnings. Stocks purchased are generally
undervalued and have momentum, have EPS growth rates greater than the
market, are more profitable than the market, and have relatively low
price-earnings ratios. Its performance index is a blend: 60% Russell
1000 Growth and 40% Russell 2000.
Mr. Brown is founder and President of Brown Capital Management.
He has over 22 years of investment experience, having served as a Vice
President and Portfolio Manager for 10 years at T. Rowe Price Associates
immediately prior to starting his own firm. Mr. Brown holds an M.S. in
Business Administration from the Indiana University School of Business.
Additionally, he is a professionally-designated Chartered Financial
Analyst ("CFA") and Chartered Investment Counselor.
Mr. Oppenheim has had 25 years' investment experience for
institutions, including the State of Maryland, T. Rowe Price Associates,
Inc., the National Rural Electric Pension and Brown Capital Management.
He holds a B.S. in Economics and Juris Doctor from the University of
Wisconsin, and is a CFA.
Mr. Hall has over 30 years' investment experience including 18
years with T. Rowe Price Associates, Inc., seven years with Emerging
Growth Partners, Inc., and four years with The Investment Center, prior
to joining Brown Capital Management. Mr. Hall is a former Trustee of the
Peabody Institute of Johns Hopkins University.
Fortaleza Asset Management, Inc.: Fortaleza Asset Management, Inc., of
Chicago, Illinois, is a small-cap growth manager that bases its
investment principles on three key elements: (1) a proprietary stock
valuation system that incorporates technical and market sentiment
indicators to determine optimal buy points; (2) an emphasis on the
preservation of capital through the implementation of a strict selling
discipline to lock in capital gains and reduce losses; and (3) a
discipline that does not force equity commitment in overvalued markets.
The investment approach is based on a bottom-up stock selection process.
Its performance index is the Russell 2000.
Ms. Perez is the founder, President and Portfolio Manager of
Fortaleza, and has over 14 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 totaling in excess of $100 million.
Ms. Perez is a native of Puerto Rico. She earned an MBA from
DePaul University School of Commerce. Ms. Perez is a member of various
professional organizations including the American Institute of CPAs,
National Society of Hispanic MBAs, Association for Investment Management
and Research, and the National Association of Securities Professionals.
She is also a trustee of the Chicago Historical Society.
Mr. Boves brings over 25 years of investment management and
research experience to Fortaleza. He has a master's degree in Economics
from Northern Illinois University and is a member of the Investment
Analysts Society in Chicago.
New Amsterdam Partners, L.P.: New Amsterdam Partners, L.P. is a mid-cap
value investment manager in New York, New York. New Amsterdam Partners
is a quantitative investment firm, evaluating investment opportunities
by comparing expected investment returns. The firm believes that the
disciplined use of their valuation techniques, in conjunction with
fundamental analysis of companies, is the key to understanding and
maximizing investment returns.
Michelle Clayman, General Partner of New Amsterdam, was a
founding partner of the company, which was started in 1986. Prior to
co-founding New Amsterdam, Ms. Clayman was a Vice President of Salomon
Brothers in charge of STOCKFACTS, an on-line computer system that
combines analytical tools for equity analysis and databases and was
designed and developed by Ms. Clayman. Ms. Clayman received her Bachelor
of Arts from Oxford University and an MBA from Stanford University. She
is a CFA and is past President of the Society of Quantitative Analysts.
Keith Graham is Vice President and Special Limited Partner of
New Amsterdam. Before joining the company in 1987, Mr. Graham was an
Assistant Treasurer at the Bankers Trust Company, first in the Trust
Administration Group and later in the Investment Management Consulting
Group.
Seneca, Inc.: Seneca, Inc., of Basking Ridge, New Jersey, is a
value-oriented, medium-to-large capitalization equity manager with a
twelve-year performance record. The firm is majority-owned by six women
employees and a female director. The company employs a traditional low
P/E value approach enhanced by portfolio risk controls and selection of
only those securities experiencing upward revisions in analysts'
earnings estimates.
Susan Saltus and Sandi Sweeney direct the investment effort,
drawing on more than 28 years of investment experience. Ms. Saltus, CFA,
is Chief Investment Officer and has over 15 years' investment
experience. Ms. Sweeney is a Portfolio Manager and has over 10 years'
investment experience.
Sturdivant & Co., Inc.: Sturdivant & Co., Inc., of Clementon, New
Jersey, seeks to identify undervalued companies or companies undergoing
significant changes that will enhance shareholder value. The company
utilizes a conservative, disciplined and consistently-applied decision
making process designed to achieve lower risk than the market.
Ralph Sturdivant is Chairman and CEO who, prior to founding the
firm, was a Vice President at Prudential-Bache Securities and an Account
Executive with Merrill Lynch. Mr. Sturdivant holds a Bachelor of Arts
from Morgan State University and is a member of the Financial Analysts
of Philadelphia.
Albert Sturdivant is President and CIO, and was a principal and
manager of the capital markets division of Grigsby, Brandford & Company
prior to co-founding Sturdivant & Co. Mr. Sturdivant earned an MBA from
the Wharton Business School of the University of Pennsylvania.
Advisory Fee
For its services, CAMCO is entitled to receive a fee based on a
percentage of the average daily net assets of the Portfolio. CAMCO is
currently entitled to and during 1995 did receive a maximum fee of 0.80%
of net assets. From this base fee, CAMCO will pay the Subadvisors a base
fee of 0.25% of average net assets. In addition, under the circumstances
described below, CAMCO and the Subadvisors may earn (or have their fees
reduced by) performance fee adjustments based on the extent to which
performance of the Portfolio exceeds or trails the index against which
it is measured. The performance fee adjustment begins the 25th month
after the investment subadvisors assume a management role for the
Portfolio. The specific adjustments are as follows:
CRI Capital Accumulation: Advisor's Performance Fee Adjustment
Performance versus the Performance Fee
S&P 400 Mid-Cap Index Adjustment
10% to less than 25% 0.01%
25% to less than 40% 0.03%
40% or more 0.05%
CRI Capital Accumulation: Subadvisor's Performance Fee Adjustment
Performance versus Performance Fee
the Index Adjustment
10% to less than 25% 0.02%
25% to less than 40% 0.05%
40% or more 0.10%
Payment of an upward performance fee adjustment will be from the
Portfolio to the Advisor, and the Advisor will pass on the appropriate
amount to the Subadvisor; fees adjusted downward from the base fee as a
result of 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 the Advisor, has been retained by the 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.
Expenses
The Portfolio's expenses, which are accrued daily, include: the
fee of the Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian and transfer
agent fees; legal and auditing fees; bookkeeping and dividend disbursing
expenses; and certain other expenses relating to operations. The
Portfolio's organizational expenses were paid by the Investment Advisor,
and other expenses that the Investment Management Agreement does not
state are payable by the Fund will be assumed by the Investment Advisor.
Certain expenses are paid by the Portfolio, while other expenses are
allocated among the various portfolios of the Fund on the basis of their
relative size (based on net assets), or as designated by the Board of
Directors, as appropriate. The Investment Advisor has agreed to
reimburse the Fund for the amount, if any, by which the aggregate
expenses of any Portfolio (including the investment advisory fee but
excluding brokerage commission, interest, taxes, and extraordinary
expenses) exceed the maximum percentage of average daily net assets
allowed by law. Expenses constituted 1.56% of the average net assets of
the Portfolio for 1995, including fees paid indirectly, and 1.25% net of
fees paid indirectly and reimbursements.
Capital Stock
The Fund issues separate shares of stock for each of its
Portfolios. Shares of each of the series have equal rights with regard
to voting, redemptions, dividends, distributions, and liquidations. No
series has preference over another series. When issued, shares are fully
paid and nonassessable and do not have preemptive or conversion rights
or cumulative voting rights. The Insurance Companies will vote Portfolio
shares allocated to registered separate accounts in accordance with
instructions received from policyholders. Shares for which the Portfolio
does not receive voting instructions will be voted in proportion to
shares for which it has already received votes. Under certain
circumstances, which are described in the accompanying prospectus of the
variable life or annuity policy, the voting instructions received from
variable life or annuity policyholders may be disregarded.
Each Portfolio has distinct investment objectives and policies
and issues separate stock. While the Fund is treated as one entity for
some purposes, each Portfolio is treated separately for other purposes.
An interest in the Fund is limited to the assets of the Portfolio in
which shares are held, and shareholders of each Portfolio are entitled
to a pro rata share of all dividends and distributions arising from the
net income and capital gains on the investment of that Portfolio.
- --------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------
The Portfolio offers its shares, without sales charge, only for
purchase by various Insurance Companies for allocation to their Variable
Accounts. Shares are purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously offers its shares in
the Portfolio at a price equal to the net asset value per share. Initial
and subsequent payments allocated to the Portfolio are subject to the
limits applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts,
or for Variable Accounts of different Insurance Companies, to invest
simultaneously in the Portfolio, although currently neither the
Insurance Companies nor the Fund foresee any such disadvantages to
either variable annuity or variable life insurance policyholders of any
Insurance Company. The Fund's Board of Directors intends to monitor
events in order to identify any material conflict between such
policyholders and to determine what action, if any, should be taken in
response to the problem.
The Insurance Companies redeem shares of the Portfolio to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Fund is open for
business (each day the New York Stock Exchange is open), and are made at
the Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, and in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the Rules
under the Investment Company Act of 1940. The amount received on
redemption of the shares of the Portfolio may be more or less than the
amount paid for the shares, depending on the fluctuations in the market
value of the assets owned by the Portfolio. The Fund redeems all full
and fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the New York Stock
Exchange, on days when the Exchange is open for business, or for any
other day when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its net asset value
per share (except on days when no orders to purchase or redeem shares of
the Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number of
outstanding shares of the Portfolio.
Except for money market instruments maturing in 60 days or
less, securities held by the Portfolio 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.
- --------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------
It is the Fund's intention to distribute substantially all of
the net investment income, if any, of the Portfolio. The net investment
income consists of all payments of dividends or interest received by the
Portfolio less estimated expenses, including the investment advisory
fee. All net realized capital gains, if any, are declared and
distributed periodically, at least annually. All dividends and
distributions are reinvested in additional shares of the Portfolio at
net asset value.
- --------------------------------------------------------------------------
TOTAL RETURN INFORMATION
- --------------------------------------------------------------------------
The Portfolio may advertise "total return." Total return refers
to the total change in value of an investment in the Portfolio over a
specified period. It includes not only the effect of income dividends
but also any change in net asset value, or principal amount, during the
stated period. Total return shows the Portfolio's overall change in
value, including changes in share price and assuming all of the
Portfolio's dividends and capital gain distributions are reinvested. A
cumulative total return reflects the Portfolio's performance over a
stated period of time. An average annual total return reflects the
hypothetical annual compounded return that would have produced the same
cumulative total return if the Portfolio's performance had been constant
over the entire period. Because average annual returns tend to smooth
out variations in the Portfolio's returns, you should recognize that
they are not the same as actual year-by-year results.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
As a "regulated investment company" under the Internal Revenue
Code of 1986, as amended, the Fund is not subject to federal income or
excise tax to the extent that it distributes its net investment income
and net capital gains. The Portfolio is treated as a separate entity for
federal income tax purposes. Since the sole shareholders of the Fund are
Insurance Companies, no discussion is included here as to the federal
income tax consequences at the shareholder level. For information
concerning the federal tax consequences to purchasers of the annuity or
life insurance policies, see the prospectuses for the Policies.
- --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place
of business at 4550 Montgomery Avenue, Bethesda, Maryland 20814, is the
Fund's transfer agent and dividend disbursing agent.
<PAGE>
PROSPECTUS May 1, 1996
- --------------------------------------------------------------------------
ACACIA CAPITAL CORPORATION
- --------------------------------------------------------------------------
CALVERT RESPONSIBLY INVESTED MONEY MARKET PORTFOLIO
4550 Montgomery Avenue, Bethesda, Maryland 20814 (800) 368-2748
The Calvert Responsibly Invested Money Market Portfolio (the
"Portfolio" or "CRI Money Market") is a series of Acacia Capital
Corporation (the "Fund"), an open-end management investment company
whose investment advisor is Calvert Asset Management Company, Inc. (the
"Investment Advisor").
The Portfolio invests in money market instruments, including
repurchase agreements with banks and brokers secured by money market
instruments, and seeks to maintain a constant net asset value of $1.00
per share. An investment in the Portfolio is neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that
the Portfolio will be able to maintain a stable net asset value of $1.00
per share. See "Investment Objective and Policies."
This Prospectus sets forth the information that a prospective
policyholder should know before directing investment in the Portfolio
and it should be read and kept for future reference. A Statement of
Additional Information dated May 1, 1996, which contains further
information about the Fund, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this
Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling the Fund at the number above, or by
writing the Fund at 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
Shares of the Fund are offered only to insurance companies for
allocation to certain of their variable separate accounts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY.
<PAGE>
- --------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------
Page
Financial Highlights............................................2
Investment Objective and Policies...............................4
Investment Screens..............................................5
The Fund and Its Management.....................................6
Purchase and Redemption of Shares...............................7
Dividends and Distributions.....................................7
Yield Information...............................................7
Taxes...........................................................8
Transfer and Dividend Disbursing Agent..........................8
- --------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------
The following table provides information about the Portfolio's
financial history. It expresses the information in terms of a single
share outstanding throughout each period. The table has been audited by
those independent accountants whose reports are included in the Fund's
Annual Report to Shareholders, for each of the respective periods
presented. The table 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>
Year Ended Year Ended
December 31, 1995 December 31, 1994
---------------------------------------
---------------------------------------
<S> <C> <C>
Net asset value, beginning $1.000 $1.000
Income from investment operations
Net investment income .055 .039
Total from investment operations
.055 .039
Distributions from
Net investment income (.055) (.039)
Total distributions (.055) (.039)
Total increase in net asset value -- --
Net asset value, ending $1.000 $1.000
Total return<F1> 5.37% 3.96%
Ratio to average net assets:
Net investment income 5.23% 3.91%
Total expenses<F2> .66% --
Net expenses .59% .45%
Expenses reimbursed -- .36%
Net assets, ending (in thousands) $5,129 $6,479
Number of shares outstanding, ending (in
thousands) 5,133 6,484
<FN>
<F1> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
<F2> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
From Inception
Year Ended June 30, 1992
December 31, through Dec. 31,
1993 1992
---------------------------------------
---------------------------------------
<S> <C> <C>
Net asset value, beginning $1.000 $1.000
Income from investment operations
Net investment income .031 .009
Total from investment operations
.031 .009
Distributions from
Net investment income (.031) (.009)
Total distributions (.031) (.009)
Total increase in net asset value -- --
Net asset value, ending $1.000 $1.000
Total return<F3> 3.09% 2.11%(a)
Ratio to average net assets:
Net investment income 3.07% 3.02%(a)
Total expenses<F4> -- --
Net expenses -- --
Expenses reimbursed .11% .85%(a)
Net assets, ending (in thousands) $4,032 $1,795
Number of shares outstanding, ending (in
thousands) 4,032 1,795
<FN>
<F3> Total return is for the Portfolio only and does not reflect sales
charges and expenses deducted by the Insurance Companies.
<F4> Effective December 31, 1995, this ratio reflects total expenses before
reduction for fees paid indirectly; such reductions are included in the
ratio of net expenses.
</FN>
(a) = Annualized
</TABLE>
<PAGE>
- --------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------
The investment objective described below is fundamental and may
not be changed without the approval of the holders of a majority of the
outstanding shares of the Portfolio. As a Policyholder, you may be given
an opportunity to indicate how you believe the Insurance Company should
vote the shares which underlie your Policy.
The investment objective of the Portfolio is to provide current
income by investing in enterprises that make a significant contribution
to society through their products and services and through the way they
do business. The Portfolio aims for short-term cash management and
stability of principal. The Portfolio seeks to provide the highest level
of current income, consistent with liquidity, safety and security of
capital, by investing in money market instruments, including repurchase
agreements with recognized securities dealers and banks secured by such
instruments, selected in accordance with its investment and social
criteria. The Portfolio attempts to maintain a constant net asset value
of $1.00 per share.
The Portfolio invests only in high grade, short-term money
market instruments which may include: obligations issued or guaranteed
as to principal by the United States Government, its agencies and
instrumentalities; U.S. dollar-denominated certificates of deposit, time
deposits and bankers' acceptances of U.S. banks, generally banks with
assets in excess of $1 billion; and commercial paper (including
participation interests in loans extended by banks to issuers of
commercial paper) that at the date of investment is rated A-1 by
Standard & Poor's Corporation or Prime-1 by Moody's Investors Service,
Inc., or, if not rated, is of comparable quality.
Additional Fundamental Investment Policies
The Portfolio may engage in repurchase agreements and reverse
repurchase agreements. In a repurchase agreement, the Portfolio buys a
security subject to the right and obligation to sell it back at a higher
price. In order to minimize any risk involved, the Portfolio engages in
such transactions only with recognized securities dealers and banks
determined by the Advisor to present a minimal credit risk. Repurchase
agreements are fully collateralized and always have a maturity of less
than one year. No more than 10 percent of Portfolio assets may be
invested in repurchase agreements not terminable within seven days. In a
reverse repurchase agreement, the Portfolio sells a security subject to
the right and obligation to buy it back at a higher price. The Portfolio
then invests the proceeds from the transaction in another obligation in
which it is authorized to invest. For reverse repurchase agreements, the
Portfolio maintains a segregated account with liquid assets equal in
value to the repurchase price.
The Portfolio may borrow money from banks (and pledge its
assets to secure such borrowing) for temporary or emergency purposes,
but not for leverage. This type of borrowing may not exceed 10% of the
value of the Portfolio's total assets. The Portfolio may also make loans
of the securities it holds. The advantage of loaning securities is that
the Portfolio continues to receive the equivalent of the interest earned
or dividends paid by the issuers while at the same time earning interest
on the cash or equivalent collateral that may be invested in accordance
with the Portfolio's investment objective, policies, and restrictions.
The purpose of the loans is usually to facilitate the delivery of
securities. As with any extension of credit, there may be risks of delay
in recovery and possible loss of rights in the loaned security if the
borrower fails financially. The Investment Advisor attempts to reduce
the risk by lending only to borrowers that it deems creditworthy and
only on terms that it believes compensates for any risk inherent in the
transaction.
The Portfolio may lend its securities to New York Stock
Exchange member firms and to commercial banks with assets of one billion
dollars or more. All loans must be secured continuously in the form of
cash or cash equivalents such as U.S. Treasury bills. In addition, the
amount of collateral must, on a current basis, equal or exceed the
market value of the loaned securities, and the Portfolio may only make
the loan if the value of the securities loaned does not exceed 10% of
its assets. The Portfolio must be able to terminate loans at any time
with appropriate notice. The Portfolio will exercise its right to
terminate a securities loan in order to preserve its right to vote on
matters of importance affecting holders of the securities. All
securities must be returned to the Portfolio when a loan terminates, and
the Portfolio absorbs any gain or loss in the market value of the
securities during the loan period.
Risks of Foreign Securities
CRI Money Market may invest up to 25% of its assets in the
securities of foreign issuers, provided it purchases only high quality,
U.S. dollar-denominated instruments.
Additional Nonfundamental Investment Policies
CRI Money Market has adopted the following operating (i.e.,
nonfundamental) investment policies which may be changed by the Board of
Directors without shareholder approval:
The Portfolio may invest up to less than one percent 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 Portfolio's social criteria. In
applying this restriction, the percentage of the Portfolio's assets in
such securities is based on the aggregate cumulative value at the time
of the respective acquisitions of such securities currently held by the
Portfolio. These securities are unrated and are generally considered
non-investment grade debt securities which involve a greater risk of
default or price decline than investment-grade securities. Through
diversification and credit analysis, investment risk can be reduced,
although there can be no assurance that losses will not occur.
The Portfolio may not purchase illiquid securities if more than
10% of the value of its net assets would be invested in such securities.
Further, the Portfolio may not acquire private placement investments
until the value of the Portfolio's assets exceeds $20 million.
For further information on the Portfolio's investment policies
and restrictions, as well as a description of the types of securities
that may be purchased, see the Statement of Additional Information.
- --------------------------------------------------------------------------
INVESTMENT SCREENS
- --------------------------------------------------------------------------
Each investment is selected with a concern for its social
impact. The Portfolio invests in accordance with its philosophy that
long-term rewards to investors will come from those organizations whose
products, services, and methods enhance the human condition and the
traditional American values of individual initiative, equality of
opportunity and cooperative effort.
The Portfolio has developed the following criteria for the
selection of organizations in which they invest. The Portfolio
recognizes, however, that these criteria represent standards of behavior
which few, if any, organizations totally satisfy and that, as a matter
of practice, evaluation of a particular organization in the context of
these criteria will involve subjective judgment by the Portfolio's
Investment Advisor.
Given these considerations, the 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 participation throughout the
organization in defining and achieving
objectives.
3. Negotiate fairly with their workers, provide
an environment supportive of their wellness,
do not discriminate on the basis of race,
gender, religion, age, disability, ethnic
origin, or sexual orientation, do not
consistently violate regulations of the Equal
Employment Opportunity Commission, and provide
opportunities for women, disadvantaged
minorities, and others for whom equal
opportunities have often been denied.
4. Foster awareness of a commitment to human
goals, such as creativity, productivity,
self-respect and responsibility, within the
organization and the world, and continually
recreate a context within which these goals
can be realized.
The 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 Portfolio believes that social and technological change
will continue to transform America and the world for the balance of this
century. Those enterprises that exhibit a social awareness measured in
terms of the above attributes and considerations should be better
prepared to meet future societal needs for goods and services. By
responding to social concerns, these enterprises should maintain
flexibility and further social goals. In so doing they may not only
avoid the liability that may be incurred when a product or service is
determined to have a negative social impact or has outlived its
usefulness, but should also be better positioned to develop
opportunities to make a profitable contribution to society. The
Portfolio believes that these enterprises will be ready to respond to
external demands and ensure that over the longer term they will be able
to provide a positive return to both investors and society as a whole.
In selecting investments under the four positive and three
negative factors outlined above, the Advisor will consider the
investments' ability to contribute to the dual objective of the
Portfolio. Potential investments are first screened for financial
soundness and then evaluated according to social criteria. To the
greatest extent possible investments are made in companies exhibiting
unusual, positive accomplishments with respect to one or more of the
criteria. Companies must meet the Portfolio's minimum standards for all
the criteria. It should be noted that the Portfolio's social criteria
tend to limit the availability of investment opportunities more than is
customary with other investment portfolios.
The selection of an organization for investment by the
Portfolio does not constitute endorsement or validation, nor does the
exclusion of an organization necessarily reflect failure to satisfy the
Portfolio's social criteria. Investors in the Portfolio are invited to
send brief descriptions of companies they believe might be suitable
investments.
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THE FUND AND ITS MANAGEMENT
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Acacia Capital Corporation (the "Fund"), a Maryland
corporation, is an open-end investment company, which was incorporated
under the laws of the State of Maryland on September 27, 1982. The Board
of Directors supervises the business affairs and investments of the
Fund, which are managed on a daily basis by the Fund's Investment
Advisor. The Fund has several investment Portfolios, each issuing one
class of stock. The shares of the Fund currently are sold only to
insurance companies (collectively, the "Insurance Companies") for
allocation to their separate accounts (collectively, the "Variable
Accounts") to fund the benefits under certain variable annuity and
variable life insurance policies (collectively, the "Policies") issued
by such companies. Accordingly, the interest of a policy owner in the
shares is subject to the terms of the particular annuity or life
insurance policy and is described in the attached prospectus for one of
the Policies, which should be reviewed carefully by a person considering
the purchase of a Policy. The rights of the Insurance Companies as
shareholders should be distinguished from the rights of a policy owner
which are described in the Policies. Policy owners should consider that
the investment return experience of the Portfolio will affect the value
of the policy and the amount of annuity payments or life insurance
benefits received under a policy. See the attached prospectus(es) for
the Policies for a description of the relationship between increases or
decreases in the net asset value of Portfolio shares (and any
distributions on such shares) and the benefits provided under a policy.
Investment Advisor
Calvert Asset Management Company, Inc. ("CAMCO"), which is
located at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the Investment Advisor to the Portfolio. Calvert Asset
Management is a wholly-owned subsidiary of Calvert Group, Ltd., which is
in turn an indirect wholly-owned subsidiary of Acacia Mutual Life
Insurance Company. As of December 31, 1995, Calvert Group, Ltd. had
assets under management and administration in excess of $4.8 billion.
Pursuant to its investment advisory agreement with the Fund, the
Investment Advisor manages the investment and reinvestment of the assets
of each Portfolio and is responsible for the overall management of the
business affairs of each Portfolio, subject to the direction and
authority of the Fund's Board of Directors. Calvert Asset Management
also serves as Investment Advisor to seven other registered investment
companies in the Calvert Group of Funds: First Variable Rate Fund for
Government Income, Calvert Cash Reserves (doing business as Money
Management Plus), Calvert Social Investment Fund, Calvert Tax-Free
Reserves, The Calvert Fund, Calvert Municipal Fund, Inc., and Calvert
World Values Fund, Inc.
Advisory Fee
For its services, CAMCO is entitled to and during 1995 did
receive a maximum annual fee of 0.50% of net assets based on a
percentage of the average daily net assets of the Portfolio.
Expenses
The Portfolio's expenses, which are accrued daily, include: the
fee of the Investment Advisor; costs of executing portfolio
transactions; pricing costs; interest; taxes; custodian and transfer
agent fees; legal and auditing fees; bookkeeping and dividend disbursing
expenses; and certain other expenses relating to the Portfolio's
operations. The Portfolio's organizational expenses were paid by CAMCO,
and other expenses that the Investment Advisory Agreement does not state
are payable by the Portfolio will be assumed by CAMCO. Certain expenses
are paid by the particular Portfolio that incurs them, while other
expenses are allocated among each Portfolio on the basis of their
relative size (based on net assets), or as designated by the Board of
Directors, as appropriate. CAMCO has agreed to reimburse the Fund for
the amount, if any, by which the aggregate expenses of the Portfolio
(including the investment advisory fee but excluding brokerage
commission, interest, taxes, and extraordinary expenses) exceed the
maximum percentage of average daily net assets allowed by law. Expenses
constituted 0.66% of the average net assets of the Portfolio for 1995,
including fees paid indirectly, and 0.59% net of fees paid indirectly.
Capital Stock
The Fund issues separate stock for each of its Portfolios.
Shares of each of the Portfolios have equal rights with regard to
voting, redemptions, dividends, distributions, and liquidations. No
Portfolio has preference over another Portfolio. When issued, shares are
fully paid and nonassessable and do not have preemptive or conversion
rights or cumulative voting rights. The Insurance Companies and the
Fund's shareholders will vote Fund shares allocated to registered
separate accounts in accordance with instructions received from
policyholders. National Home Life Assurance Company owns 25% or more of
the outstanding stock of the Portfolio. Under certain circumstances,
which are described in the accompanying prospectus of the variable life
or annuity policy, the voting instructions received from variable life
or annuity policyholders may be disregarded.
Each Portfolio has distinct investment objectives and policies
and issues separate stock. While the Fund is treated as one entity for
some purposes, each Portfolio is treated separately for other purposes.
An interest in the Fund is limited to the assets of the Portfolio in
which shares are held, and shareholders of each Portfolio are entitled
to a pro rata share of all dividends and distributions arising from the
net income and capital gains on the investment of that Portfolio.
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PURCHASE AND REDEMPTION OF SHARES
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The Fund offers its shares, without sales charge, only for
purchase by various Insurance Companies for allocation to their Variable
Accounts. Shares are purchased by the Variable Accounts at the net asset
value of the Portfolio next determined after the Insurance Company
receives the premium payment. The Fund continuously offers its shares in
the Portfolio at a price equal to the net asset value per share. Initial
and subsequent payments allocated to a Portfolio are subject to the
limits applicable in the Policies issued by the Insurance Companies.
It is conceivable that in the future it may be disadvantageous
for both annuity Variable Accounts and life insurance Variable Accounts,
or for Variable Accounts of different Insurance Companies, to invest
simultaneously in the Fund, although currently neither the Insurance
Companies nor the Fund foresee any such disadvantages to either variable
annuity or variable life insurance policyholders of any Insurance
Company. The Fund's Board of Directors intends to monitor events in
order to identify any material conflict between such policyholders and
to determine what action, if any, should be taken in response to the
problem.
The Insurance Companies redeem shares of the Fund to make
benefit and surrender payments under the terms of their Policies.
Redemptions are processed on any day on which the Fund is open for
business (each day the New York Stock Exchange is open), and are made at
the Portfolio's net asset value next determined after the appropriate
Insurance Company receives a surrender request in acceptable form.
Payment for redeemed shares will be made promptly, and in no
event later than seven days. However, the right of redemption may be
suspended or the date of payment postponed in accordance with the Rules
under the Investment Company Act of 1940. The Fund redeems all full and
fractional shares of the Portfolio for cash.
The net asset value of the shares of the Portfolio is
determined once daily as of the close of business of the New York Stock
Exchange, on days when the Exchange is open for business, or for any
other day when there is a sufficient degree of trading in the
investments of the Portfolio to affect materially its net asset value
per share (except on days when no orders to purchase or redeem shares of
the Portfolio have been received). The net asset value is determined by
adding the values of all securities and other assets of the Portfolio,
subtracting liabilities and expenses, and dividing by the number of
outstanding shares of the Portfolio. All instruments held by CRI Money
Market are valued on an amortized cost basis.
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DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------
It is the Portfolio's intention to distribute substantially all
of its net investment income, if any. For dividend purposes, net
investment income consists of the interest income earned on investments,
plus or minus amortized purchase discount or premium, plus or minus
realized and unrealized gains and loss, less estimated expenses. 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.
- --------------------------------------------------------------------------
YIELD INFORMATION
- --------------------------------------------------------------------------
From time to time CRI Money Market advertises its "yield" and
"effective yield." The "yield" of the Portfolio refers to the actual
income generated by an investment in the Portfolio over a particular
base period of time, which will be stated in the advertisement. If the
base period is less than one year, the yield is then "annualized." That
is, the amount of income generated by the investment during the base
period is assumed to be generated over a one-year period and is shown as
a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in
the Portfolio is assumed to be reinvested. The "effective yield" will be
slightly higher than the "yield'' because of the compounding effect of
this assumed reinvestment.
- --------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------
As a "regulated investment company" under the Internal Revenue
Code of 1986, as amended, the Fund is not subject to federal income or
excise tax to the extent that it distributes its net investment income
and net capital gains. Each Portfolio is treated as a separate entity
for federal income tax purposes. Since the sole shareholders of the Fund
are Insurance Companies, no discussion is included here as to the
federal income tax consequences at the shareholder level. For
information concerning the federal tax consequences to purchasers of the
annuity or life insurance policies, see the prospectuses for the
Policies.
- --------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------
Calvert Shareholder Services, Inc., having its principal place
of business at 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814, is the transfer agent and dividend disbursing agent.
<PAGE>
ACACIA CAPITAL CORPORATION'S
CALVERT RESPONSIBLY INVESTED PORTFOLIOS
Statement of Additional Information
May 1, 1996
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This Statement of Additional Information is not a prospectus.
Investors should read the Statement of Additional Information in
conjunction with each of the separate Calvert Responsibly Invested
Portfolio Prospectuses, dated May 1, 1996, which may be obtained free of
charge by calling (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 9
Investment Selection Process 16
Portfolio Turnover 17
Purchase and Redemption of Shares 18
Determination of Net Asset Value 18
Taxes 19
Calculation of Yield and Total Return 20
Investment Advisory Agreement 21
Directors and Officers 23
Method of Distribution 25
General Information 25
Reports to Shareholders and Policyholders 26
Additional Information 26
Financial Statements 26
Independent Accountants and Custodians 26
Appendix 26
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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 five
separate portfolios selected with a concern for the social impact of
each investment: CRI Money Market, Balanced, 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,
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 Depositary 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.e., cash) basis at the spot rate
prevailing in the foreign exchange market, or through entering into
forward contracts to purchase or sell foreign currencies. A forward
foreign currency contract involves an obligation to purchase or sell a
specific currency at a future date which may be any fixed number of days
from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are traded in the interbank
market conducted directly between currency traders (usually large,
commercial banks) and their customers. A forward foreign currency
contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
A Portfolio may enter into forward foreign currency contracts
for two reasons. First, the Portfolio may desire to preserve the United
States dollar price of a security when it enters into a contract for the
purchase or sale of a security denominated in a foreign currency. 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 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 Portfolio's 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 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. 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 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).
The Portfolios may not:
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 duplication
of advisory fees.
Nonfundamental Investment Restrictions
CRI Money Market 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.
For the fiscal years 1993, 1994, and 1995, the portfolio
turnover rates for CRI Balanced were 14%, 43%, and 163%, respectively.
For the same time periods, the portfolio turnover rates for CRI Capital
Accumulation were 26%, 79%, and 135%, respectively. For the same time
periods, the portfolio turnover rates for the Global Equity series were
64%, 84%, and 90%, 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
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, Global, 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 Exchange (generally 4:00 p.m. Eastern time), and at such other
times as may be necessary or appropriate. The Portfolios do not
determine net asset value on certain national holidays or other days on
which the New York Stock Exchange is closed: New Year's Day, Presidents'
Day, 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, Global Equity, 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 1995 the Portfolios qualified, and in 1996 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 - 1
For the seven-day period ended December 29, 1995, CRI Money
Market's yield was 5.50% and its effective yield was 5.65%.
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 Balanced, Global, Capital Accumulation and Strategic Growth: Total
Return and Other Quotations
CRI Balanced, 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, 1995 SEC Average Annual Return
============================================================================
<S> <C>
CRI Balanced
One Year 29.87%
Five Years 11.16%
From Inception<F1> 10.15%
CRI Global Equity
One Year 12.35%
From Inception<F2> 9.50%
CRI Capital Accumulation (formerly
known as CRI Ariel)
One Year 39.46%
From Inception<F3> 11.93%
<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 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 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, 1993, 1994 and
1995, respectively, CRI Balanced paid CAM fees of $292,412, $425,429,
and $610,216. CAM waived its entire fee for 1993 for CRI Money Market.
For 1994 and 1995, respectively, CRI Money Market paid investment
adviser fees of $14,484, and $27,591, 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. In 1995, CRI Global paid CAM $93,418, and received expense
reimbursements from CAM of $36,720. For 1993, 1994, and 1995, CRI
Capital Accumulation (formerly CRI Ariel) paid investment advisory fees
of $22,809, $39,358, and $55,003. In 1995 CAI Capital Accumulation
received expense reimbursements from CAM of $6,905.
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.
- --------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------
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.
1 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. Age: 54.
1 CHARLES E. DIEHL, Director. Mr. Diehl is Vice President and
Treasurer Emeritus of the George Washington University, and has retired
from University Support Services, Inc. of Herndon, Virginia. He is also
a Director of Acacia Mutual Life Insurance Company. Address: 1658 Quail
Hollow Court, McLean, Virginia 22101. Age: 73.
ARTHUR J. PUGH, Director. Mr. Pugh also serves as a Director of
Acacia Federal Savings Bank. Address: 4823 Prestwick Drive, Fairfax,
Virginia 22030. Age: 58.
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. Age: .
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. Age: 59.
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. Age: 43.
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.
Age: 48
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.
Age: 46.
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. Age: 45.
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. Age: 37
___________
1 Directors or Officers deemed to be "interested persons" of the Fund,
as defined in the Investment Company Act of 1940.
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 1995, directors of the Fund not affiliated with
the Fund's Advisor were paid $242 by CRI Money Market, $11,987 by CRI
Balanced, $419 by CRI Global Equity, and $930 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.
<TABLE>
<CAPTION>
Director Compensation Table - Fiscal Year 1995
Aggregate Pension or Total Compensation
Compensation Retirement Benefits from Registrant
from Fund Accrued as part and Fund Complex
for service of Fund paid to
as Director Expenses<F4> Directors<F5>
Name of Director
<S> <C> <C> <C>
Frank H. Blatz, Jr. $3000.00 $3000.00 $36,801.00
Charles E. Diehl $3000.00 $3000.00 $35,101.00
Arthur J. Pugh $3000.00 $3000.00 $36,801.00
South Trimble, III $5000.00 $5000.00 $5000.00
<FN>
<F4> Messrs. Blatz, Diehl, Pugh, and Trimble have chosen to defer a portion
of their compensation. As of December 31, 1995, total deferred
compensation, including dividends and capital appreciation, was
$415,719, $337,395, $150,841, and $32,608, for each director,
respectively.
<F5> As of December 31, 1995. The Fund Complex consists of eight (8)
registered investment companies.
</FN>
</TABLE>
- --------------------------------------------------------------------------
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, 1995, 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 1996. State Street
Bank and Trust Company of Boston, Massachusetts is custodian of the
Fund's assets. First National Bank of Maryland acts as custodian of
certain of the Fund's cash assets.
- --------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------
Corporate Bond Ratings
Description of Moody's Investors Service Inc.'s/Standard & Poor's
municipal bond ratings:
Aaa/AAA: Best quality. These bonds carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. This rating indicates an extremely strong
capacity to pay principal and interest.
Aa/AA: Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present which make long-term risks appear somewhat larger than
in Aaa securities.
A/A: Upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be
present which make the bond somewhat more susceptible to the adverse
effects of circumstances and economic conditions.
Baa/BBB: Medium grade obligations; adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than for bonds in the
A category.
Ba/BB, B/B, Caa/CCC, Ca/CC: Debt rated in these categories is
regarded as predominantly speculative with respect to capacity to pay
interest and repay principal. There may be some large uncertainties and
major risk exposure to adverse conditions. The higher the degree of
speculation, the lower the rating.
C/C: This rating is only for no-interest income bonds.
D: Debt in default; payment of interest and/or principal is in
arrears.
Commercial Paper Ratings
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned
by Moody's Investors Service, Inc. Issuers rated Prime are further
referred to by use of numbers 1, 2, and 3 to denote relative strength
within this highest classification. Among the factors considered by
Moody's in assigning ratings for an issuer are the following: (1)
management; (2) economic evaluation of the inherent uncertain areas; (3)
competition and customer acceptance of products; (4) liquidity; (5)
amount and quality of long-term debt; (6) ten year earnings trends; (7)
financial strength of a parent company and the relationships which exist
with the issuer; and (8) recognition by management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations.
Standard & Poor's Corporation
Commercial paper rated A by Standard & Poor's Corporation has
the following characteristics: Liquidity ratios are better than the
industry average. Long term senior debt rating is "A" or better. In some
cases BBB credits may be acceptable. The issuer has access to at least
two additional channels of borrowing. Basic earnings and cash flow have
an upward trend with allowance made for unusual circumstances.
Typically, the issuer's industry is well established, the issuer has a
strong position within its industry and the reliability and quality of
management is unquestioned. Issuers rated A are further referred to by
use of numbers 1, 2, and 3 to denote relative strength within this
classification.
<PAGE>
Acacia Capital Corporation
Form N-1A Cross Reference Sheet
Item number Prospectus
Caption
1. Cover Page
2. *
3. Financial Highlights
4. The Fund
Investment Objectives and Policies
of the Series
5. The Fund and Its Management
Transfer and Dividend Disbursing Agent
6. The Fund and Its Management
Dividends and Distributions
Total Return and Yield Information
Taxes
7. Purchase and Redemption of Shares
8. Purchase and Redemption of Shares
9. *
Statement of Additional
Information Caption
10. Cover Page
11. Table of Contents
12. General Information
13. Investment Objectives and Policies
Investment Restrictions
Investment Selection Process
Portfolio Turnover
14. Management of the Fund
15. General Information
16. Investment Advisor
Independent Accountants and Custodians
17. Investment Advisor
Securities Transactions and Brokerage
18. General Information
19. Determination of Net Asset Value
Purchase and Redemption of Shares
20. Taxes
21. *
22. Calculation of Yield and Total Return
23. Financial Statements
* Inapplicable or negative answer
<PAGE>
ACACIA CAPITAL CORPORATION
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Financial statements incorporated by reference
to:
All financial statements for Acacia Capital Corporation
are incorporated by reference to Registrant's Annual
Report to Shareholders dated December 31, 1995, and
filed March 11, 1996.
Schedules II-VII, inclusive, for which provision is
made in the applicable accounting regulation of the
Securities and Exchange Commission, are omitted because
they are not required under the related instructions,
or they are inapplicable, or the required information
is presented in the financial statements or notes
thereto.
(b) Exhibits
(1) Articles of Incorporation of Acacia Capital
Corporation (filed herewith).
(2) By-laws of Acacia Capital Corporation
(filed herewith).
(4) Specimen Stock Certificate, incorporated by
reference to Pre-Effective Amendment No. 1,
dated 8/10/83.
(5) Investment Advisory Agreement and
Sub-Investment Advisory Agreements, incorporated
by reference to Post-Effective Amendment No. 30.
(6) Underwriting Agreement, incorporated by reference
to Post-Effective Amendment No. 30.
(7) Trustees' Deferred Compensation Agreement (filed
herewith).
(8) Custody Agreement incorporated by reference to
Pre-Effective Amendment No. 1, dated 8/10/83.
(9) Shared Funding Agreement, incorporated by
reference to Post-Effective Amendment No. 10,
dated 3/2/89.
(10) Opinion and Consent of Counsel (filed herewith).
(11) Consent of Independent Auditors to Use of
Report (filed herewith).
(13) Letter Regarding Initial Capital, incorporated
by reference to Pre-Effective Amendment No. 1,
dated 8/10/83.
(16) Schedule for Computation of Performance
Quotation incorporated by reference to
Registrant's Post-Effective Amendment No. 9,
dated 5/2/88, and Post-Effective Amendment No.
11, 4/20/90.
(17)(i) Financial Data Schedules (Filed herewith)
Exhibits 3, 12, 14, and 15 are omitted because they are
inapplicable.
Item 25. Persons Controlled by or Under Common Control With Registrant
Registrant is controlled by its Board of Directors. Members of
the Board may also serve on a Board of Trustees/Directors with other
registered investment companies, including First Variable Rate Fund,
Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves (doing business as Money Management Plus), The Calvert Fund,
Calvert Municipal Fund, Inc., Calvert New World Fund, Inc., and Calvert
World Values Fund, Inc.
Insurance Companies that invest in the Fund will vote Fund
shares they hold in accordance with instructions received from variable
annuity contractholders and variable life insurance policyowners.
Item 26. Number of Holders of Securities
Number of Record-Holders
as of Title of Class
March 31, 1996
Calvert Responsibly Invested Balanced Series (formerly Calvert Socially
Responsible Series)...................................................2
Calvert Responsibly Invested Money Market Series......................2
Calvert Responsibly Invested Strategic Growth Series.. ...............2
Calvert Responsibly Invested Global Equity Series......... ...........2
Item 27. 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 $8 million Investment Company Blanket Bond issued by ICI
Mutual Insurance Company, P.O. Box 730, Burlington, Vermont, 05402.
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capaciy
Business and Address
Clifton S.
Sorrell, Jr. Acacia Capital Corporation Officer
Calvert Municipal Fund, Inc. and
Calvert World Values Fund, Inc. Director
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
Bethesda, MD 20814
----------------
Calvert Group, Ltd.
Holding Company Officer
4550 Montgomery Avenue and
Bethesda, MD 20814 Director
----------------
Calvert Shareholder
Services, Inc. Officer
Transfer Agent and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Administrative
Services Company Officer
Service Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund for Officer
Government Income and
Calvert Tax-Free Reserves Trustee
Calvert Social Investment Fund
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company
4550 Montgomery Avenue
Bethesda, Md. 20814
--------------
Item 28. Business and Other Connections of Investment Adviser
Name of Company, Principal Capacity
Name Business and Address
Ronald M. First Variable Rate Fund Officer
Wolfsheimer for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
--------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company and
Service Company Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Md. 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
David R. Rochat First Variable Rate Fund Officer
for Government Income and
Calvert Tax-Free Reserves Trustee
Money Management Plus
The Calvert Fund
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Municipal Fund, Inc. Officer
Investment Company and
4550 Montgomery Avenue Director
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc. and
Investment Advisor Director
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Chelsea Securities, Inc. Officer
Securities Firm and
Post Office Box 93 Director
Chelsea, Vermont 05038
---------------
Grady, Berwald & Co. Officer
Holding Company and
43A South Finley Avenue Director
Basking Ridge, NJ 07920
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Reno J. Martini Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert New World Fund, Inc. Director
Investment Company and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
---------------
Calvert-Sloan Advisers, LLC Director
Investment Advisor and
4550 Montgomery Avenue Officer
Bethesda, Md. 20814
---------------
Charles T. Nason Acacia Mutual Life Insurance Officer
Acacia National Life Insurance and
Insurance Companies Director
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
---------------
Gardner Montgomery Company Director
Tax Return Preparation Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Charles T. Nason Acacia Federal Savings Bank Director
(continued) Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
--------------
Calvert Group, Ltd. Director
Holding Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Social Investment Fund Trustee
Investment Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
The Advisors Group, Inc. Director
Broker-Dealer
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Acacia National Life Insurance Officer
Sands Insurance Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Mutual Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
Acacia Financial Corporation Officer
Holding Company and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
Acacia Federal Savings Bank Officer
Savings Bank
7600-B Leesburg Pike
Falls Church, Virginia 22043
---------------
Enterprise Resources, Inc. Director
Business Support Services
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Realty Corporation Officer
Real Estate Investments
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Acacia Insurance Management Officer
Services Corporation and
Service Corporation Director
51 Louisiana Avenue, N.W
Washington, D.C. 20001
---------------
Gardner Montgomery Company Officer
Tax Return Preparation Services and
51 Louisiana Avenue, NW Director
Washington, D.C. 20001
----------------
The Advisors Group, Inc. Director
Broker-Dealer
Investment Advisor
51 Louisiana Avenue, NW
Washington, D.C. 20001
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Robert-John H. Calvert Group, Ltd. Director
Sands Holding Company
(continued) 4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Administrative Director
Services, Co.
Service Company
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Asset Management Co., Inc. Director
Investment Advisor
4550 Montgomery Avenue
Bethesda, MD 20814
---------------
Calvert Shareholder Services, Inc. Director
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
William M. Tartikoff Acacia National Life Insurance Officer
Insurance Company
51 Louisiana Avenue, NW
Washington, D.C. 20001
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Group, Ltd. Officer
Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
William M. Calvert Administrative Officer
Tartikoff Services Company
(continue) Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Director
Broker-Dealer and
4550 Montgomery Avenue Officer
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Susan Walker Calvert Group, Ltd. Officer
Bender Holding Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Administrative Officer
Services Company
Service Company
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Shareholder Officer
Services, Inc.
Transfer Agent
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert Distributors, Inc. Officer
Broker-Dealer
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
Calvert-Sloan Advisers, L.L.C. Officer
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
----------------
First Variable Rate Fund for Officer
Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
---------------
Item 28. Business and Other Connections of Investment Adviser
Name Name of Company, Principal Capacity
Business and Address
Daniel K. Hayes Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
First Variable Rate Fund Officer
for Government Income
Calvert Tax-Free Reserves
Money Management Plus
Calvert Social Investment Fund
The Calvert Fund
Acacia Capital Corporation
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Investment Companies
4550 Montgomery Avenue
Bethesda, Maryland 20814
------------------
Steve Van Order Calvert Asset Management Officer
Company, Inc.
Investment Advisor
4550 Montgomery Avenue
Bethesda, Maryland 20814
-----------------
Item 29. Principal Underwriters
(a) Registrant's principal underwriter, Calvert Distributors,
Inc., underwrites the securities of each of Registrant's series, as well
as the securities of First Variable Rate Fund for Government Income,
Calvert Tax-Free Reserves, Calvert Social Investment Fund, Calvert Cash
Reserves (d/b/a Money Management Plus), Calvert Municipal Fund, Inc.,
Calvert World Values Fund, Inc., and Calvert New World Fund, Inc., and
Acacia Capital Corporation.
(b) Positions of Underwriter's Officers and Directors
Name and Principal Position(s) with Position(s) with
Business Address Underwriter Registrant
Clifton S. Sorrell, Jr. Director President, Chairman
and Director
Ronald M. Wolfsheimer Director, Treasurer
Senior Vice President
and Controller
William M. Tartikoff Director, Vice President
Senior Vice President, and Secretary
and Secretary
Steven J. Schueth President None
Karen Becker Vice President None
Robert Knaus Regional Vice President None
Lee Mahfouz Regional Vice President None
John Sorrell Regional Vice President None
Susan Walker Bender Assistant Secretary Assistant
Secretary
Katherine Stoner Assistant Secretary None
Lisa Crossley Compliance Officer None
The principal business address of the above individuals is 4550
Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814.
(c) Inapplicable.
Item 30. Location of Accounts and Records
Ronald M. Wolfsheimer, Treasurer
and
William M. Tartikoff, Secretary
4550 Montgomery Avenue, Suite 1000N
Bethesda, Maryland 20814
Item 31. Management Services
All management-related service contracts are discussed in Part
A or B of this Registration Statement.
Item 32. Undertakings
(a) Not Applicable
(b) Not Applicable
(c) The Registrant undertakes to furnish to each person to
whom a Prospectus is delivered, a copy of the
Registrant's latest Annual Report to Shareholders, upon
request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it
meets all of the requirements for effectiveness of this registration
statement pursuant to Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf
by the undersigned, thereto duly authorized in the City of Bethesda, and
State of Maryland, on the 17th day of April, 1996.
ACACIA CAPITAL CORPORATION
By:
/s/Clifton S. Sorrell, Jr.
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 04/25/96
Clifton S. Sorrell, Jr (Principal Executive
Officer)
____________________ Principal Accounting 04/25/96
Ronald M. Wolfsheimer Officer
________**__________ Director 04/25/96
Charles E. Diehl
________**__________ Director 04/25/96
Arthur James Pugh
________**__________ Director 04/25/96
South Trimble, III
________**__________ Director 04/25/96
Frank H. Blatz, Jr.
**Signed by Katherine Stoner pursuant to power of attorney, attached hereto.
/s/Katherine Stoner
<PAGE>
EXHIBIT INDEX
Form N-1A
Item No.
Ex03(a)
24(b)(1) Articles of Incorporation
Ex03(b)
24(b)(2) By-laws
Ex-23
24(b)(10) Form of Opinion and Consent of Counsel
Ex-23
24(b)(11) Independent Auditors' Consent
Ex-24 Power of Attorney
Ex-27
24(b)(17)(i) Financial Data Schedules
Ex99 Articles of Supplementary
Ex-99
24(b)(7) Deferred Compensation Plan
RESTATED
ARTICLES OF INCORPORATION
ACACIA CAPITAL CORPORATION
FIRST: The name of the Corporation is Acacia Capital
Corporation.
SECOND: The Corporation desires to restate its charter as
currently in effect.
THIRD: The provisions set forth in the Articles of Restatement
are all the provisions of the charter currently in effect.
FOURTH: These Articles of Restatement have been approved by a
majority of the entire Board of Directors.
FIFTH: The charter is not amended by the Articles of
Restatement.
SIXTH: The nature of the business or purposes to be conducted
or promoted are as follows:
(A) To conduct and carry on the business of an investment
trust or investment company of the general management
type.
(B) To invest and reinvest the property and assets of the
corporation in securities of different types and
classes, including, without in any way limiting the
generality thereof, stocks, bonds, notes, debentures,
and certificates of interest or participation, and in
other personal property without limitation or
restriction except for the specific restrictions
hereinafter set forth.
(C) To act as financial or fiscal agent for any person,
firm, or corporation and as such to manage, control,
and deal with, in any and every way whatsoever, the
property, holdings, investments, and business interests
thereof.
(D) To endorse, guarantee, or undertake the performance of
any obligation, contract, or engagement of any other
corporation, or other party, if the Corporation is
interested in such obligation, contract or engagement.
(E) To purchase, retire, redeem, hold, sell, reissue,
transfer, and otherwise deal in, shares of its own
capital stock; and to apply to such purchase,
retirement, or acquisition any funds or property of the
Corporation, whether capital or surplus or otherwise,
as may be permitted by law.
(F) To engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of Maryland.
(G) To do and all of the acts herein set forth or implied
and such other acts as are incidental or conducive to
the attainment of the objectives and purposes of the
Corporation; and to do any and all such acts either as
principal or in the capacity of agent, broker, factor,
contractor, or otherwise.
SEVENTH: The current address of the principal office of the
Corporation is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland
20814.
EIGHTH: The Corporation's current resident agent is William M.
Tartikoff, Calvert Group, 4550 Montgomery Avenue, Suite 1000N, Bethesda,
Maryland 20814.
NINTH: The total number of shares of stock of all classes
which the Corporation is authorized to issue is One Hundred Million
(100,000,000) shares of stock. The par value of each share shall be One
Dollar ($1.00). The shares shall be allocated as follows for each
series:
No. of Shares per Series
CRI Balanced Portfolio
75,000,000
CRI Money Market Portfolio
9,000,000
CRI Global Equity Portfolio
4,000,000
CRI Capital Accumulation Portfolio
4,000,000
CRI Equity Portfolio
2,000,000
CRI 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 21st day of November ,
1995.
Acknowledgement:
Clifton S. Sorrell, Jr.
Chairman of the Board
and Director
ATTEST:
William M. Tartikoff
Secretary
BYLAWS
OF
ACACIA CAPITAL CORPORATION
(as amended, February 7, 1996)
ACACIA CAPITAL CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I OFFICES
5
ARTICLE II STOCK OF THE CORPORATION
5
ARTICLE III SHAREHOLDERS
5
Section 1. Special Meetings
5
Section 2. Notice of Meetings
6
Section 3. Quorum
6
Section 4. Voting
6
Section 5. Action Without a Meeting
6
ARTICLE IV DIRECTORS
7
Section 1. Number, Term of Office, and
Eligibility 7
Section 2. Election of the Chairman of
the Board 7
Section 3. Meetings
7
Section 4. Notice of Meetings
7
Section 5. Quorum and Vote
8
Section 6. Action Without a Meeting
8
Section 7. Powers and Duties
8
Section 8. Compensation of Directors
8
Section 9. Removal of Directors
8
Section 10. Vacancies
9
ARTICLE V COMMITTEES 9
ARTICLE VI OFFICERS
9
Section 1. Elected Officers
9
Section 2. Duties
9
(a) President
9
(b) Vice Presidents
10
(c) Secretary
10
(d) Treasurer
10
Section 3. Compensation
10
Section 4. Removal
11
Section 5. Vacancies
11
ARTICLE VII BONDING AND INDEMNIFICATION
11
Section 1. Bonding
11
Section 2.1 Indemnification - Proceeding
Not 11
Brought By or on Behalf of
Corporation
Section 2.2 Proceeding Brought By or on
12
Behalf of Corporation
Section 2.3 Indemnification for
Successful Defense 12
Section 2.4 Authorization
12
Section 2.5 Advance Reimbursement
13
Section 2.6 Non-Exclusive Rights
13
Section 2.7 Insurance
13
Section 2.8 Report of Indemnification to
14
Stockholders
Section 2.9 Limitations Imposed By the
14
Investment Company Act of
1940
ARTICLE VIII CERTIFICATE FOR SHARES
14
Section 1. Shares Represented By
Certificates 14
Section 2. Signature of Former Officer
14
Section 3. Lost, Destroyed, or Stolen
Certificate 15
Section 4. Shareholder's Accounts
15
Section 5. Transfer of Shares
15
Section 6. Fixing a Record Date
15
Section 7. Registered Ownership
16
Section 8. Stock Regulations
16
ARTICLE IX DIVIDENDS
16
ARTICLE X REDEMPTION OF SHARES
16
Section 1. Redemption
16
Section 2. Status of selling Stockholder
17
ARTICLE XI NET ASSET VALUE 17
Section 1. Determination
17
Section 2. Valuation of Assets
17
ARTICLE XII CUSTODIAN 18
ARTICLE XIII EXECUTION OF CONTRACTS AND
18
OTHER DOCUMENTS
Section 1. Contracts
18
Section 2. Checks and Other Commercial
Papers 18
ARTICLE XIV FISCAL YEAR 18
ARTICLE XV NOTICES AND WAIVER OF NOTICES
19
ARTICLE XVI AMENDMENTS 19
<PAGE>
BY-LAWS
OF
ACACIA CAPITAL CORPORATION
ARTICLE I
OFFICES
The principal office of the Corporation shall be located in the City of
Bethesda, Maryland. The Corporation may also have offices at such other
places as the Board of Directors may from time to time determine or as
the business of the Corporation may require.
ARTICLE II
STOCK OF THE CORPORATION
The stock of the Corporation shall be issued in two or more classes,
referred to in the Articles of Incorporation and these By-Laws as
series. The Board of Directors from time to time may issue stock in new
series with a series designation and shall allocate the number of shares
to such series. The Board of Directors may increase or decrease the
number of shares of any series, provided that the aggregate number of
shares so allocated to all series does not exceed the total authorized
number of shares.
Shares, upon issuance and sale, shall be fully paid and non-assessable.
Certificates for shares be fully transferable and redeemable.
ARTICLE III
SHAREHOLDERS
Section 1. Special Meetings.
Meetings of the shareholders, for any purpose, may at any time be called
by the Chairman of the Board of Directors at the direction of the Board
of Directors, or by the Secretary upon written request of holders of not
less than 25% of all the outstanding shares entitled to vote at the
meeting, or as required by law or regulation. Special meetings of
shareholders may be held within or without the Maryland. The business
transacted at any special meeting of shareholders shall be limited to
the purpose stated in the notice of such special meeting.
Section 2. Notice of Meetings.
Written or printed notice of shareholders' meetings stating the place,
date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered
not less than ten (10) nor more than ninety (90) days before the date of
the meetings either personally or by mail, to each shareholder of record
entitled to vote at such meeting.
Section 3. Quorum.
The holders of a majority of the shares of stock issued and outstanding
and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the
transaction of business. At any meeting of shareholders at which a
quorum is present, the affirmative vote of the majority of the shares of
the stock represented at meeting shall be the act of the shareholders,
unless the vote of a greater or lesser number of shares of stock is
required by law. At any meeting of shareholders at which a quorum is not
present, the shareholders present or represented by proxy may adjourn
the meeting from time to time, without notice other than announcement at
the meeting until a quorum is present. At such adjourned meeting at
which a quorum is present any business may be transacted that may have
been transacted at the meeting as originally called.
Section 4. Voting.
Each outstanding share of stock, regardless of the series designation,
is entitled to one vote on each matter submitted to a vote at a meeting
of shareholders and shall have a fractional vote for each fraction of a
share held. Within each series, each share shall have equal voting
rights with each other. However, in accordance with the Investment
Company Act of 1940 and the rules and regulations of the Securities and
Exchange Commission, in some instances the vote of a majority of the
outstanding shares of any series on matters affecting such series shall
be effective for that series, notwithstanding that the matter does not
receive a majority of the outstanding shares of any other series or a
majority of the outstanding shares of the Corporation.
The shares of each series shall have non-cumulative voting rights. A
shareholder may vote in person or by proxy executed in writing by the
shareholder or by such shareholder's duly authorized attorney-in-fact.
Section 5. Action Without a Meeting.
Whenever shareholders are required or permitted to take any action by
vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all
outstanding shares entitled to vote. Such consent shall be filed in the
Minute Book of the Secretary and shall have the same force and effect as
a unanimous action of the shareholders.
ARTICLE IV
DIRECTORS
Section 1. Number, Term of Office, and Eligibility.
The number of Directors shall be five (5), which number may be increased
from time to time by amendment to the By-Laws but shall never be less
than three. The Directors shall be at least twenty-one (21) years of age
and need not be residents of Maryland nor shareholders of the
Corporation. Directors, other than the Directors of the first Board of
Directors, shall be elected at a meeting of the shareholders, except as
otherwise provided, to serve until their successors shall have been
elected and qualified.
Section 2. Election of the Chairman of the Board of Directors.
The Directors shall elect a Chairman of the Board of Directors to
preside at future meetings of the Executive Committee, the Board of
Directors and the shareholders.
Section 3. Meetings.
Meetings of the Board of Directors, regular or special, may be held
either within or without the State of Maryland. Unless otherwise stated
in the notice of such meeting, the meeting shall be held at the
principal office of the Corporation. Commencing with October 1983,
regular meetings of the Board of Directors shall be held quarterly,
unless otherwise stated in the notice of such meeting. If any such
meeting day falls on a legal holiday, the meeting shall occur on the
next work day.
Special meetings of the Board of Directors may be called by the Chairman
of the Board of Directors or by a majority of the Directors.
Section 4. Notice of Meetings.
Notice shall be given to each Director either personally, by telephone
or in writing. Attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting, except where such Director attends the
meeting for the express purpose of objecting to the transaction of any
business because the meeting was unlawfully called or convened. Neither
the business to be transacted, nor the purpose of any regular or special
meeting, need be specified in a notice or waiver of notice of such
meeting.
Section 5. Quorum and Vote.
A majority of the number of Directors then authorized by these By-Laws
shall constitute a quorum for the transaction of business. The vote of a
majority of the Directors present by person or telephone shall be the
act of the Board of Directors, unless the vote of a greater number is
required by these By-Laws or by statute. At any meeting of Directors at
which a quorum is not present, the Directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. At such adjourned meeting at
which a quorum is present, any business may be transacted that may have
been transacted at the meeting as originally called.
Section 6. Action Without A Meeting.
Whenever Directors are required or permitted to take any action at a
meeting, such action may be taken by the Board of Directors without a
meeting on the written consent of all of the members of the Board of
Directors, and such consent shall be filed in the minute Book of the
Secretary. Such action shall have the same force and effect as a
unanimous action of the Board of Directors.
Section 7. Powers and Duties.
The business affairs of the Corporation shall be managed by the Board of
Directors which shall exercise all such powers of the Corporation and do
all such lawful acts and things as are not by statute or by these
By-Laws directed or required to be exercised or done by the shareholders.
Section 8. Compensation of Directors.
The Board of Directors, pursuant to the affirmative vote of a majority
of the Directors then in office, and irrespective of any personal
interests of any of its members, may establish reasonable compensation
of all Directors for services rendered to the Corporation in their
capacity as Director, officer or otherwise.
Section 9. Removal of Directors.
Any or all of the Directors may be removed, with or without cause, at
any time by the vote of the shareholders at a special meeting called for
that purpose. Any Director may be removed for cause by the action of the
Directors at a special meeting of the Board of Directors called for that
purpose.
Section 10. Vacancies.
A newly created vacancy resulting from an increase in the number of
Directors shall be filled by the Board of Directors and such Director
shall serve until the next succeeding meeting of shareholders or until
such Director's successor shall have been qualified and elected. Any
other vacancy may be filled by the affirmative vote of a majority of the
remaining Directors, though the number of remaining Directors is less
than a quorum of the Board of Directors, and such Director shall serve
until such Director's successor shall have been qualified and elected.
ARTICLE V
COMMITTEES
The Board of Directors may from time to time create such committees as
it deems necessary for the conduct of the business of the Corporation
and may vest in the committee such power and authority as it deems
necessary to carry out the purposes for which the committees are created.
ARTICLE VI
OFFICERS
Section 1. Elected Officers.
The elected officers of the Corporation shall be a President, one or
more Vice Presidents, a Secretary, a Treasurer and such other officers
as the Board of Directors may from time to time deem necessary, each of
whom shall be elected by the Board of Directors at its initial meeting.
Such officers shall serve for one year until their successors are
elected. Any person may hold at one time more than one office, except
that no person shall hold at one time the offices of President and
Secretary.
The President of the Corporation shall have the authority to appoint
such officers as deemed necessary in carrying out the Corporation's
business.
An appointed officer may be removed at any time by the President.
Section 2. Duties.
(a) President.
The President shall be the Chief Executive Officer of the
Corporation and under the direction of the Board of
Directors, shall manage and conduct the Corporation's
business. In the absence of the Chairman of the Board of
Directors, the President shall preside at all meetings of
shareholders, the Board of Directors and the Executive
Committee.
(b) Vice Presidents.
Vice Presidents shall perform such duties as the Board of
Directors or the President may prescribe. In the absence
of the President, the Vice President, the Vice President
or, if there shall be more than one, the Vice President
designated by the Board of Directors, shall perform the
duties and exercise the powers of the President.
(c) Secretary.
The Secretary shall attend all meetings of the Board of
Directors, the Executive Committee and all meetings of
the shareholders and record all the proceedings of such
meetings in a Minute Book to be kept by the Secretary for
that purpose. The Secretary shall notify all shareholders
of the special meetings and keep records of elections and
votes. The Secretary shall give, or cause to be given,
notice of all meetings of the shareholders and of the
Board of Directors and shall perform such other duties as
may be prescribed by the Board of Directors or by the
President. The Secretary shall have custody of the
Corporate Seal and shall have authority to affix the same
to any instrument requiring it, and, when so affixed, it
may be attested by the Secretary's signature. The Board
of Directors may give authority to any other officer to
affix the seal of the Corporation and to attest the
affixing of such officer's signature.
(d) Treasurer.
The Treasurer shall have the custody of all of the
Corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all funds
and other valuable effects in the name and to the credit
Corporation in such depository as may be designated by
the Board of Directors. Under the direction of the Board
of Directors or the President, the Treasurer shall
disburse funds of the Corporation, taking proper voucher
for such disbursement. The Treasurer shall render to the
Board of Directors whenever the Board of Directors so
requires, an account of all transactions as Treasurer and
of the financial condition of the Corporation.
Section 3. Compensation.
Compensation of officers, if any, shall be fixed from time to time by
the Board of
Directors.
Section 4. Removal.
Any officer elected by the Board of Directors may be removed at any time
by the affirmative vote of a majority of the Board of Directors.
Section 5. Vacancies.
If any officer's position becomes vacant, it may be filled by the Board
of Directors.
ARTICLE VII
BONDING AND INDEMNIFICATION
Section 1. Bonding.
The President, any Vice Presidents, the Secretary and the Treasurer
shall be bonded for the faithful performance of their respective duties,
with sufficient sureties and in such amounts as shall be determined by
the Board of Directors. The Board of Directors may also require a bond
of any other officer or employee of the Corporation with such surety as
it may deem proper. Such bond shall be approved at least annually by the
Board.
Section 2.1 Indemnification - Proceeding Not Brought By or on
Behalf of Corporation.
Subject to the provisions of Section 2.4 of this Article, the
Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action brought by or on behalf of the
Corporation) by reason of the fact that he or she is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments,
penalties, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, creates a rebuttable presumption that the director did not
meet the requisite standard of conduct set forth in the subsection.
Section 2.2 Proceeding Brought by or on Behalf of Corporation.
Subject to provisions of Section 2.4 of this Article, the Corporation
shall indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit
brought by or on behalf of the Corporation to obtain a judgment or
decree on its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted in good faith and
in manner he or she reasonably believed to be in or not opposed to the
best interests of the Corporation. However, no indemnification shall be
provided in respect to any claim, issue or matter as to which such
person shall have been adjudged liable for negligence or misconduct in
performing his or her duty to the Corporation, except to the extent that
the court in which the action, suit or proceeding was brought or any
other court in which the action, suit or proceeding was brought or any
other court of equity in the county in which the Corporation has its
principal office, determines on application that, despite the
adjudication of liability but in view of all circumstances of the case,
the person is fairly and reasonably entitled to indemnify for those
expenses which the court shall deem proper. However, indemnification
with respect to any proceeding by or in the right of the corporation or
in which liability shall have been adjudged against a director in an
action, suit or proceeding charging improper personal benefit to the
director whether or not involving action in the director's official
capacity on the basis that personal benefit was improperly received
shall be limited to expenses.
Section 2.3 Indemnification for Successful Defense.
To the extent that a director, officer, employee or agent of the
Corporation successfully defends on the merits or otherwise any action,
suit or proceeding referred to in Sections 2.1 and 2.2 of this Article,
or in defense of any claim, issue or matter raised in the proceeding,
the Corporation shall indemnify him or her against expenses, including
attorney's fees, actually and reasonably incurred by him or her in
connection therewith.
Section 2.4 Authorization.
Any indemnification under Sections 2.1 and 2.2 of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized
in the specific case after determination that indemnification of the
director, officer, employee or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth
in said Sections 2.1 and 2.2. Such determination shall be made (a) by
the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(b) if the required quorum is not obtained, then by a majority vote of a
committee of the board consisting solely of two or more directors not,
at the time, parties to such proceeding and who were duly designated to
act in the matter by a majority vote of the full Board in which the
designated directors who are parties may participate, or (c) by a
special counsel selected by the Board of Directors or a committee of the
Board by vote as set forth in subpart (a) of this Section, or, if the
requisite quorum of the full Board cannot be obtained, therefore and the
committee cannot be established, by a majority vote of the full Board in
which directors who are parties may participate; or (d) by the
stockholders of the Corporation.
Shares held by directors who are parties to the proceeding may not be
voted on the subject matter under this Article.
Section 2.5 Advance Reimbursement.
Expenses, including attorneys' fees, incurred in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation
before the final disposition thereof if authorized in the specific case
by a preliminary determination following one of the procedures set forth
in Section 2.4 that there is a reasonable basis for a belief that the
director, officer, employee or agent met the applicable standard of
conduct set forth in Sections 2.1 and 2.2 above, and upon receipt by the
corporation of (a) written affirmation by the director of the director's
good faith belief that the standard of conduct necessary for
indemnification by the corporation as authorized in this section has
been met; and (b) an undertaking is given to the Corporation by or on
behalf of the director, officer, employee or agent reasonably assuring
that the advance will be repaid if it is not ultimately determined that
he or she is entitled to be indemnified by the Corporation as authorized
in this Article.
Section 2.6 Non-Exclusive Rights.
The indemnification provided by this Article continues as to a person
who has ceased to be a director, officer, employee or agent and insures
to the benefit of his or her heirs and personal representative, and does
not exclude any other rights to which a defendant or other person may be
entitled under any By-Laws, agreement, vote of stockholders or directors
who were not parties to such action, suit or proceeding, or otherwise
both as to (a) action in his or her official capacity, and (b) action in
another capacity while holding the office.
Section 2.7 Insurance.
The Corporation may, upon resolution of a majority of the Corporation's
Board of Directors, purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or who is or was serving at the request of the Corporation
as a director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan against any liability asserted against him or her
or incurred by him or her, or arising out of his or her position,
whether or not the Corporation would have the power to indemnify him or
her against such liability under the provisions of this Article VIII.
Section 2.8 Report of Indemnification to Stockholders.
Any indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by or in
the right of the corporation, shall be reported in writing to the
stockholders with the notice of the next stockholder's meeting or prior
to the meeting.
Section 2.9 Limitations Imposed By the Investment Company Act of
1940.
Notwithstanding anything to the contrary stated herein, nothing in this
Article protects or porports to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
ARTICLE VIII
CERTIFICATE FOR SHARES
Section 1. Shares Represented by Certificates.
The shares of the Corporation shall be represented by certificates
signed by the President and the Secretary of the Corporation and shall
contain the seal of the Corporation or a facsimile of the seal. Each
shareholder shall be entitled, upon request, to a certificate or
certificates for full shares of the Corporation owned by such
shareholder. Each certificate will indicate the series designation for
the shares purchased. If a certificate is countersigned by a transfer
agent or registrar other than the Corporation, the signature of the
officers set forth above upon such certificate may be a facsimile.
Section 2. Signature of Former Officer.
In case any officer who has signed any certificate ceases to be an
officer of the Corporation before such certificate is issued, the
certificate may nevertheless be issued by the Corporation with the same
effect as if the officer had not ceased to be such officer of the
Corporation as of the date of its issue.
Section 3. Lost, Destroyed, or Stolen Certificates.
The Board of Directors may direct new certificates to be issued in the
place of any certificates theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed upon such terms and conditions
and under such procedures as the Board may prescribe.
Section 4. Shareholder's Accounts.
The Corporation shall maintain or cause to be maintained an account for
every shareholder in which shall be recorded such shareholder's
ownership of shares of each series of stock of the Corporation and all
changes therein. Certificates will not be issued for shares so recorded
in a shareholder's account unless and until requested by the shareholder.
Section 5. Transfer of Shares.
Transfers of shares for which certificates have been issued will be made
only upon surrender to the Corporation or the transfer agent of a
certificate for shares duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, whereupon the
Corporation will issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction on its books.
Transfer of shares for which certificates have not been issued will be
made upon delivery to the Corporation or the transfer agent of the
Corporation of instructions for transfer or evidence of assignment or
succession, in each case executed in such manner and with such
supporting evidence as the Corporation or transfer agent may reasonably
require.
Section 6. Fixing a Record Date.
Shareholder of record means the holder of a share of outstanding stock
of the Corporation on the record date described below.
For the purpose of determining shareholders entitled to notice of, or to
vote at any meeting of shareholders, or for the purpose of determining
shareholders entitled to receive payment of any dividend or allotment of
rights, or in order to make a determination of shareholders for any
other proper purpose, the Board may fix in advance a date as the record
date for any other such determination of shareholders. Such date shall
not be more than ninety (90) days, nor less than ten (10) days before
the date of any such meeting or the date of the particular action to be
taken. When a determination of shareholders of record entitled to notice
of, or to vote at any meeting of shareholders has been made or provided
in this section, such determination shall apply to any adjourned meeting
unless the Board fixes a new record date for such adjourned meeting.
Only such shareholders as shall be shareholders of record as of the
close of business on the date fixed shall be entitled to such notice of,
and to vote at, such meeting, or any adjourned meeting, or to receive
payments of such dividend, or to receive such allotment of rights, or to
exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 7. Registered Ownership.
The Corporation shall be entitled to recognize the exclusive right of a
person registered to vote as the shareholder of record, and shall not be
bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person whether or not it shall
have express or other notice thereof, except as otherwise provided by
the laws of Maryland.
Section 8. Stock Regulations.
The Board of Directors shall have the authority to make rules and
regulations concerning the issue, transfer and registration of
certificates, representing shares of the Corporation.
ARTICLE IX
DIVIDENDS
Dividends may be declared by the Board of Directors at any regular or
special meeting, pursuant to law.
ARTICLE X
REDEMPTION OF SHARES
Section 1. Redemption.
The Corporation shall redeem such shares as are offered by any
shareholder for redemption, upon a written request therefor, duly
executed in the full name of the shareholder's account, with such
signature guarantee as required by the Corporation, to the principal
place of business of the Corporation. If the shareholder has received
certificates, the request must be accompanied by the certificates, duly
endorsed in the full name of the account. The redemption price shall be
the net asset value of the shares next determined following receipt of
the request, along with any other requirements.
Such redemption price will be paid by check within seven days after
receipt of the above requirements, except when further postponement of
payment is permissible under the Investment Company Act of 1940.
Section 2. Status of Selling Stockholder.
From and after the close of business on the date when the shares are
properly tendered for redemption, the owner shall, with respect to such
shares, cease to be a shareholder of the Corporation and shall have only
the right to receive the redemption price, in accordance with provisions
hereof.
ARTICLE XI
NET ASSET VALUE
Section 1. Determination.
(a) The net asset value of each series of the Corporation shall be
calculated once on each day the New York Stock Exchange is open
for trading, by deducting from the assigned assets of each
series (as described in the Articles of Incorporation), and
specific liabilities of each series (including brokerage fees,
reserves for contingencies and taxes on the unrealized
appreciation of the assigned assets of each series) and general
liabilities of the Corporation in proportion to the net asset
value of the respective series. The net asset value of assets
of each series so determined shall be final and conclusive.
(b) The net asset value of each series of the Corporation shall be
divided by the number of shares of such series then outstanding
(whether or not certificates therefor have been issued), and
adjusted to the nearest whole cent, to determine the net asset
value per share of that series.
Section 2. Valuation of Assets.
Any security listed on a national securities exchange will be vested at
its closing sales price on the exchange where it is principally traded
or, if there has been no such sale, at the mean between the last bid and
asked prices. All other securities for which market quotations are
readily available will be valued on the basis of the last bid price.
When market quotations are not readily available, securities are valued
at their fair value as determined in good faith by the Board of
Directors of the Corporation.
ARTICLE XII
CUSTODIAN
All securities and cash owned by the Corporation shall be held by or
deposited with a bank or trust company having (according to its last
published report) not less than two million dollars ($2,000,000)
aggregate capital, surplus and undivided profits. The Corporation shall
enter into a written contract with the Custodian regarding the powers,
duties and compensation of the Custodian with respect to the cash and
securities of the Corporation held by the Custodian. Said contract and
all amendments thereto shall be approved by the Board of Directors of
this Corporation. The Corporation, upon the resignation or inability of
its Custodian to serve, or upon change of the Custodian, shall:
(a) Use its best efforts to obtain a successor Custodian, and
(b) Require that the cash and securities owned by this Corporation
be delivered directly to the successor Custodian.
ARTICLE XIII
EXECUTION OF CONTRACTS AND OTHER DOCUMENTS
Section 1. Contracts.
The President, a Vice President, Treasurer or such other officers of the
Corporation as may be specified by the Board of Directors, are
authorized on behalf of the Corporation to sign all deeds, bonds,
contracts, mortgages and other instruments or documents.
Section 2. Checks and Other Commercial Paper.
All checks, drafts, notes, bonds, bills of exchange or other orders,
instruments or obligations for the receipt of or the payment of money
shall be endorsed by or signed by either the President, a Vice
President, the Treasurer, or such other person as may be designated by
the Board of Directors.
ARTICLE XIV
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE XV
NOTICE AND WAIVER OF NOTICES
Whenever any notice required by these By-Laws or by statute is given by
mail, such notice shall be good and sufficient if deposited in the
United States mail, addressed in the case of a shareholder, to the
shareholder's address as it appears on the record of the Corporation, or
in the case of a Director, to the Director at the address of the
Corporation.
Whenever any notice required to be given by these By-Laws or by statute,
a waiver of such notice given in writing signed by the person or persons
entitled to such notice, whether before or after the time stated in such
By-Law or statute, shall be deemed equivalent to the giving of such
notice.
ARTICLE XVI
AMENDMENTS
These By-Laws may be amended or repealed, or new By-Laws may be adopted,
by the affirmative vote of two-thirds of the Board of Directors present
at any meeting of the Board of Directors.
Exhibit 10
April 25, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Exhibit 10, Form N-1A
Acacia Capital Corporation
File numbers 811-3591, 2-80154
Ladies and Gentlemen:
As Counsel to Acacia Capital Corporation, it is my opinion,
based upon an examination of the Articles of Incorporation and By-Laws
and such other original or photostatic copies of Fund records,
certificates of public officials, documents, papers, statutes, and
authorities as I deemed necessary to form the basis of this opinion,
that the securities being registered by this Post-Effective Amendment
No. 31 will, when sold, be legally issued, fully paid and non-assessable.
Consent is hereby given to file this opinion of counsel with
the Securities and Exchange Commission as an Exhibit to the Fund's
Post-Effective Amendment No. 31 to its Registration Statement.
Sincerely,
/s/ Katherine Stoner
Katherine Stoner
Assistant Counsel
COOPERS Coopers & Lybrand L.L.P.
&LYBRAND a professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Calvert Tax-Free Reserves
We consent to the incorporation by reference in Post-Effective Amendment
No. 31 to the Registration Statement of Acacia Capital Corporation (comprised
of the Calvert Responsibly Invested Capital Accumulation, Strategic Growth,
Balanced, Global Equity, and Money Market Portfolios) on Form N-1A
(File Numbers 2-80154 and 811-3591) of our reports dated January 26, 1996
on our audits of the financial statements and financial highlights of the
Portfolios, which reports are included in the Annual Reports to Shareholders
for the year ended December 31, 1995, which are incorporated by reference in
the Registration Statement. We also consent to the reference to our Firm under
the caption "Independent Accountants and Custodians" in the Statement of
Additional Information.
COOPERS & LYBRAND, L.L.P.
/Coopers & Lybrand, L.L.P./
Baltimore, Maryland
April 17, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994 /s/South Trimble, III
Date Signature
/s/Arthur James Pugh South Trimble, III
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994 /s/Arthur James Pugh
Date Signature
/s/South Trimble III Arthur James Pugh
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994 /s/Charles E. Diehl
Date Signature
/s/Frank H. Blatz, Jr. Charles E. Diehl
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994 /s/Frank H. Blatz, Jr.
Date Signature
/s/Charles E. Diehl Frank H. Blatz, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
May 4, 1994 /s/Clifton S. Sorrell, Jr.
Date Signature
/s/William M. Tartikoff Clifton S. Sorrell, Jr.
Witness Name of Director
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director of Acacia Capital Corporation (the
"Fund"), hereby constitute Ronald M. Wolfsheimer, William M. Tartikoff,
Susan Walker Bender, Beth-ann Roth, and Katherine Stoner my true and
lawful attorneys, with full power to each of them, to sign for me and in
my name in the appropriate capacities, all registration statements and
amendments filed by the Fund with any federal or state agency, and to do
all such things in my name and behalf necessary for registering and
maintaining registration or exemptions from registration of the Fund
with any government agency in any jurisdiction, domestic or foreign.
The same persons are authorized generally to do all such things
in my name and behalf to comply with the provisions of all federal,
state and foreign laws, regulations, and policy pronouncements affecting
the Fund, including, but not limited to, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Internal Revenue Code of 1986, and
all state laws regulating the securities industry.
The same persons are further authorized to sign my name to any
document needed to maintain the lawful operation of the Fund in
connection with any transaction approved by the Board of Directors.
When any of the above-referenced attorneys signs my name to any
document in connection with maintaining the lawful operation of the
Fund, the signing is automatically ratified and confirmed by me by
virtue of this Power of Attorney.
WITNESS my hand on the date set forth below.
March 1, 1995 /s/Ronald M. Wolfsheimer
Date Signature
/s/Katherine Stoner Ronald M. Wolfsheimer
Witness Name of Director
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<SENIOR-LONG-TERM-DEBT> 0
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<ACCUMULATED-NII-CURRENT> 271
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 910
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10981
<NET-ASSETS> 110237
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</TABLE>
<TABLE> <S> <C>
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<CIK> 0000708950
<NAME> ACACIA CAPITAL CORPORATION
<SERIES>
<NUMBER> 030
<NAME> CALVERT RESPONSIBLY INVESTED MONEY MARKET
<MULTIPLIER> 1000
<S> <C>
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<INVESTMENTS-AT-VALUE> 5065
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 5128
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 321
<OTHER-INCOME> 0
<EXPENSES-NET> 32
<NET-INVESTMENT-INCOME> 289
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 289
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 288
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 10859
<NUMBER-OF-SHARES-REDEEMED> 12477
<SHARES-REINVESTED> 267
<NET-CHANGE-IN-ASSETS> (1351)
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<NAME> ACACIA CAPITAL CORPORATION
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</TABLE>
<TABLE> <S> <C>
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<ACCUMULATED-NET-GAINS> 0
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<GROSS-EXPENSE> 141
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<PER-SHARE-NAV-END> 17.15
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<CIK> 0000708950
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<NUMBER> 070
<NAME> CALVERT RESPONSIBLY INVESTED STRATEGIC GROWTH
<MULTIPLIER> 1000
<S> <C>
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<PERIOD-END> DEC-31-1995
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 107
<NET-ASSETS> 1209
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15
<OTHER-INCOME> 0
<EXPENSES-NET> 12
<NET-INVESTMENT-INCOME> (3)
<REALIZED-GAINS-CURRENT> (11)
<APPREC-INCREASE-CURRENT> 107
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 126
<NUMBER-OF-SHARES-REDEEMED> 16
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 110
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 16
<AVERAGE-NET-ASSETS> 898
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> .93
<PER-SHARE-DIVIDEND> .24
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 10.94
<EXPENSE-RATIO> 1.64
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</TABLE>
<PAGE>
DEFERRED COMPENSATION AGREEMENT
Agreement entered into this (date) day of January, 19(year), between
Acacia Capital Corporation, First Variable Rate Fund for Government
Income, Calvert Tax-Free Reserves, The Calvert Fund, Calvert Cash Reserves
(d/b/a Money Management Plus), Calvert Social Investment Fund, Calvert
Municipal Fund, Inc., Calvert New World Fund, Inc., and/or Calvert World
Values Fund, Inc.(hereinafter referred to as the Fund or Funds), and (name
of trustee)(hereinafter referred to as the Trustee).
WHEREAS, the Trustee will be rendering valuable services to the Fund or
Funds as a member of the Board of Trustees, and the Fund or Funds is
willing to accommodate the Trustee's desire to be compensated for such
services on a deferred basis;
NOW, THEREFORE, the parties hereto agree as follows:
1. With respect to services performed by the Trustee for
the Fund or Funds on and after the first day of
(date), 19(year),
the Trustee shall defer (% trustee wants to defer, e.g.,
50% of fees, etc.)% of the amounts otherwise payable to
the Trustee for serving as a Trustee. The deferred
compensation shall be credited to a book reserve
maintained by the Fund or Funds in the Trustee's name
together with credited amounts in the nature of earnings
("Account(s)"). The account maintained for the Trustee
shall be paid to the Trustee on a deferred basis in
accordance with the terms of this Agreement.
2. The Fund or Funds shall credit the Trustee's Account as
of the day such amount would have been paid to the
Trustee if this Agreement were not in effect. Such
Accounts shall be valued at fair market value as of the
last day of the calendar year and such other dates as
are necessary for the proper administration of this
Agreement, and each Trustee shall receive a written
accounting of his account balance(s) following such
valuation.
A Trustee may request that his/her deferred compensation
be allocated among the available Funds or placed in a
money market deposit account. The initial allocation
request may be made at the time of enrollment. Once
made, an investment allocation request shall remain in
effect for all subsequent deferred compensation until
changed by the Trustee. A Trustee may change his/her
investment allocation by submitting a written request to
the Administrator on such form as may be required by the
Administrator or by telephoning the Administrator (or
his/her delegate). Such changes shall become effective
as soon as administratively feasible after the
Administrator receives such request. Although the Funds
intend to invest the deferred compensation according to
the Trustee's requests, it reserves the right to invest
the deferred compensation without regard to such
requests. The Administrator is the Calvert Group, Ltd.
Controller.
3. As of January 31 of the calendar year following the
calendar year the Trustee dies, retires, resigns or
otherwise ceases to be a member of the Board of Trustees
of the Fund or Funds; the Fund or Funds shall: (check
one)
( ) pay the Trustee (or his or her beneficiary) a
lump sum amount equal to the balance in the
Trustee's account on that date or
( ) commence making annual payments to the Trustee
(or his or her beneficiary) for a period of (2
through 15) years.
If the second box is selected, such payments shall be
made on January 31st of each year in approximately equal
annual installments as adjusted and computed by the Fund
or Funds, with the final payment equaling the then
remaining balance in the Trustee's account. If the
balance in the Trustee's account as of the date of the
first scheduled payment is less than $2,000, the Fund or
Funds shall instead pay such amount in a lump sum as of
that date. The Trustee may not select a period of time
which will cause an annual payment to be less than
$1,000. Notwithstanding the foregoing, in the event that
the Trustee ceases to be a Trustee of the Fund or Funds
and becomes a proprietor, officer, partner, employee, or
otherwise becomes affiliated with any business or entity
that is in competition with the Fund or Funds, or
becomes employed by any governmental agency having
jurisdiction over the affairs of the Fund or Funds, the
Fund or Funds reserves the right at the sole discretion
of the Board of Trustees to make an immediate lump sum
payment to the Trustee in an amount equal to the balance
in the Trustee's account at that time.
Notwithstanding the preceding paragraph, the Fund or
Funds may at any time make a lump sum payment to the
Trustee (or surviving beneficiary) equal to a part or
all of the balance in the Trustee's account upon a
showing of a financial emergency caused by circumstances
beyond the control of the Trustee (or surviving
beneficiary) which would result in serious financial
hardship if such payments were not made. The
determination of whether such emergency exists shall be
made at the sole discretion of the Board of Trustees of
the Fund or Funds. The amount of the payment shall be
limited to the amount necessary to meet the financial
emergency, and any remaining balance in the Trustee's
account shall thereafter be paid at the time and in the
manner otherwise set forth in this section.
4. In the event that the Trustee dies before payments have
commenced or been completed under section 3 hereof, the
Fund or Funds shall make payment in accordance with
section 3 to the Trustee's designated beneficiary, who
shall be:
(trustee's designated beneficiary name)
In the event that both the Trustee and the designated
beneficiary have died before the commencement or
completion of payments under section 3, an amount equal
to the then remaining balance in the Trustee's account
(or the portion thereof that would have been payable to
the beneficiary) shall be paid in a lump sum. Such
payment shall be made to the estate of the Trustee
unless payments to the beneficiary have already
commenced, in which case the lump sum payment shall be
made to the estate of the beneficiary.
5. The Agreement shall remain in effect with respect to the
Trustee's compensation for services performed as a
Trustee of the Fund or Funds in all future years unless
terminated on a prospective basis in accordance with
this section. Either the Trustee or the Fund or Funds
may terminate this Agreement by written notice delivered
or mailed to the other party no later than December 31
of the calendar year preceding the calendar year in
which such termination is to take effect. In addition,
the Trustee may alter the amount of deferral for any
future calendar year if the Trustee and the Fund or
Funds enter into an amendment on or before December 31st
of the calendar year preceding the calendar year for
which the amendment is to take effect. The amendment
will be deemed to supersede the amount of deferral for
all future years unless otherwise amended or terminated.
Any termination or new amendment shall relate solely to
compensation for services performed after the
termination or amendment becomes effective and shall not
alter the terms of the agreement with respect to the
deferred payment of compensation for services performed
during any calendar year in which this agreement was in
effect. Notwithstanding the foregoing, the Trustee may
at any time amend the beneficiary designation hereunder
by written notice to the Fund or Funds.
6. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall
create or be construed to create a trust of any kind, or
a fiduciary relationship between the Fund or Funds and
the Trustee, any designated beneficiary or any other
person. Any compensation deferred under the provisions
of this Agreement shall continue for all purposes to be
a part of the general funds of the Fund or Funds. To the
extent that any person acquires a right to receive
payments from the Fund or Funds under this Agreement,
such right shall be no greater than the right of any
unsecured general creditor of the Fund or Funds.
7. The right of the Trustee or any other person to receive
payments under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by
the laws of descent and distribution.
8. If the Fund or Funds shall find that any person to whom
any payment is payable under this Agreement is unable to
care for his or her affairs because of illness or
accident, or is a minor, any payment due (unless a prior
claim therefor shall have been made by a duly appointed
guardian, committee or other legal representative) may
be paid to the spouse, a parent, or a brother or sister,
or to any person deemed by the Fund or Funds to have
incurred expense for the person who is otherwise
entitled to payment, in such manner and proportions as
the Fund or Funds may determine. Any such payment shall
serve to discharge the liability of the Fund or Funds
under this Agreement to make payment to the person who
is otherwise entitled to payment.
9. Any written notice to the Fund or Funds referred to in
this Agreement shall be made by mailing or delivering
such notice to the Fund or Funds at 4550 Montgomery
Avenue, Bethesda, MD 20814, to the attention of the
Controller, Calvert Group, Ltd. Any written notice to
the Trustee referred to in this Agreement shall be made
by delivery to the Trustee in person or by mailing such
notice to the Trustee at his or her place of residence
or business address.
10. To the extent required by law, the Fund or Funds shall
withhold federal or state income taxes from any payments
hereunder and shall furnish the Trustee (or beneficiary)
and the applicable governmental agency or agencies with
such reports, statements or information as may be
required in connection with such payments.
11. This Agreement shall be binding upon and inure to the
benefit of the Fund or Funds and its successors and
assigns and the Trustee and his or her heirs, executors,
administrators and legal representative.
12. This Agreement shall be construed in accordance with and
governed by the laws of Maryland.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
Acacia Capital Corporation
First Variable Rate Fund for Government Income
Calvert Tax-Free Reserves
The Calvert Fund
Calvert Cash Reserves (d/b/a Money Management Plus)
Calvert Social Investment Fund
Calvert Municipal Fund, Inc.
Calvert World Values Fund, Inc.
Calvert New World Fund, Inc.
By(Name of Trustee)
(Print Name of Trustee)
________________________
(Signature of Trustee)
ACKNOWLEDGMENT:
By (Calvert Officer Signature)
(Signature of Officer)
(Calvert Officer Title)
(Title)
<PAGE>
APPLICATION FOR CALVERT GROUP
TRUSTEE DEFERRED COMPENSATION PLAN
1. Instructions
Please complete Sections 2 through 4 below. This application
should be signed by the Trustee and returned to the Controller.
2. Trustee Information (PLEASE PRINT)
Name of Fund: (Name of Fund)
Name of Trustee: (Name of Trustee)
Address of Fund: 4550 Montgomery Ave., Ste. 1000N
Bethesda, MD 20814
3. Investment of Contributions
Contributions to the Calvert Group Trustee's Deferred
Compensation Plan shall be invested in the Calvert Group Funds:
Calvert First Government Money Market Fund %*
CSIF Money Market Portfolio %*
CSIF Managed Growth Portfolio %*
CSIF Equity Portfolio %*
Money Management Plus Prime Portfolio %*
Money Management Plus Government Portfolio %*
Calvert Income Fund %*
Calvert Strategic Growth Fund %*
Calvert U.S. Government Fund %*
Calvert World Values Fund,
Global Equity Portfolio %*
Calvert Capital Accumulation Fund %*
Insured Plus %*
Calvert New Africa Fund _______________%*
Total %
*(insert % up to 100%)
4. Acceptance
Trustee Acceptance: I hereby agree to the terms and conditions of
the Calvert Group Trustee Deferred Compensation Plan. I have read
the prospectus(es) of the chosen Fund(s).
________
Name Date
============================================================================
For office use only
Owner Code: 06 Fund Number: Group ID 284
2/22/96
ARTICLES SUPPLEMENTARY
ACACIA CAPITAL CORPORATION
FIRST: Acacia Capital Corporation (the "Corporation"), whose
mailing address is 4550 Montgomery Avenue, Suite 1000N, Bethesda, MD
20814, does hereby increase/decrease the number of authorized shares of
stock of the Corporation's various classes in accordance with Sections
2-105(c) and 2-208.1 of the Corporations and Associations Article of the
Laws of the State of Maryland.
SECOND: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
THIRD: 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 is One Dollar ($1.00).
The aggregate par of all the shares of all the classes is $100,000,000.
Immediately prior to the increase/decrease, the shares of stock were
authorized in seven classes, referred to in these Articles as "series."
Each series was allocated the following number of authorized shares:
CRI Balanced Portfolio 75,000,000
CRI Money Market Portfolio 9,000,000
CRI Global Equity Portfolio 4,000,000
CRI Capital Accumulation Portfolio 4,000,000
CRI Equity Portfolio 2,000,000
CRI Bond Portfolio 1,000,000
CRI Strategic Growth Portfolio 5,000,000
TOTAL SHARES AUTHORIZED 100,000,000
FOURTH: The Board of Directors has expressly authorized the
reallocation of shares among the Corporation's current series in
accordance with Section 2-105(c) and 2-208.1 of the Corporations and
Associations Article of the Laws of the State of Maryland. The par value
of each share is $1.00. After the respective increase/decrease of
shares, each of the series below has been allocated shares as follows:
CRI Balanced Portfolio 76,000,000
CRI Money Market Portfolio 9,000,000
CRI Global Equity Portfolio 4,000,000
CRI Capital Accumulation Portfolio 6,000,000
CRI Strategic Growth Portfolio 5,000,000
Total Shares Authorized 100,000,000
IN WITNESS WHEREOF, Acacia Capital Corporation has caused these
Articles Supplementary to be signed in its name and on its behalf by its
Chairman of the Board of Directors on this 22nd day of February, 1996.
Under penalties of perjury, the matters and facts set forth herein are
true in all material respects.
Acacia Capital Corporation
Acknowledgment:/s/Clifton S. Sorrell, Jr.
Clifton S. Sorrell, Jr.
Chairman of the Board
of Directors
ATTEST: /s/William M. Tartikoff
William M. Tartikoff
Secretary
