March 5, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Acacia Capital Corporation
File Numbers 811-3591 and 2-80154
Ladies and Gentlemen:
Pursuant to Rule 30b2-1 of the Investment Company Act of 1940, attached is
the Annual Report to Shareholders for the year ended December 31, 1996, for the
above-referenced Registrant.
Sincerely,
Nana Juarbe
Administrative Assistant
<PAGE>
CALVERT RESPONSIBLY INVESTED CAPITAL ACCUMULATION PORTFOLIO
Dear Investor:
The economy continued to expand at a moderate pace in 1996, which paved the
way for strong stock market performance. Gross Domestic Product spiked at
mid-year, but fell back to modest levels for the last two quarters. While many
investors believed the Federal Reserve would intervene to tighten monetary
policy, the Fed took no action after cutting the federal funds rate by 25 basis
points in late January. Short-term rates fell in response to the January cut and
remained low throughout the year.
Calvert Responsibly Invested
Capital Accumulation Portfolio
Comparison of a change in value of a hypothetical $10,000 investment.
(Graph appears here)
12/31/96 12/31/95 12/31/94 12/31/93
CRI Capital Accumulation $17,758 $16,498 $11,818 $13,120
S & P 500 Rein $22,240 $18,089 $13,153 $12,919
Russell 2000 $22,454 $19,274 $15,271 $15,554
S & P 400 Midcap Reinv $28,808 $24,168 $18,456 $19,141
12/31/92 12/31/91 7/16/91
CRI Capital Accumulation $12,198 $10,725 $10,000
S & P 500 Rein $11,738 $10,908 $10,000
Russell 2000 $13,082 $11,048 $10,000
S & P 400 Midcap Reinv $16,798 $15,010 $10,000
Average Annual Total Return
(period ending 12/31/96)
1 Year 7.44% 5 Year 10.55%
Life of Fund 11.10% (7/91)
*New sub-advisors assumed management of the
Portfolio effective December 1994.
Performance information is for the Portfolio only and does not
reflect charges and expenses of the variable annuity.
Past performance does not indicate future results.
Fund Performance
The stock market continued to reward investors with big gains for the
second year in a row. In general, small- and mid-capitalization stocks turned in
good 12-month gains; however these stocks experienced a high degree of
volatility and did not move in-step with the broad market averages.
For the first half of the year, the Standard & Poor's 500 Stock Index,
which is comprised mainly of larger companies, lagged measures of small- and
mid-cap stock performance. This situation reversed in the second half of the
year, when the S&P 500 soared almost 12%, and small- and mid-cap stocks did not
keep pace.
The Capital Accumulation Portfolio lagged its benchmarks for the six-month
period because we had a higher commitment to companies with very small market
capitalizations. Prices of these stocks tend to fluctuate the most of all of the
companies within the small- and mid-cap universe, and in this case their
volatility affected performance relative to our benchmarks.
Fund Managers' Approach
The CRI Capital Accumulation Portfolio uses a multi-manager strategy to
invest primarily in stocks of small-and mid-capitalization companies. In
October, one management company, Apodaca Investment Management, notified Calvert
Group that one of its primary money managers was resigning. We are evaluating
how this will affect our allocation of assets among investment managers.
Apodaca Investment Management
Throughout 1996, Apodaca maintained sizable positions in the client/server
software, networking and telecommunications equipment industries. They also held
a large position in the healthcare sector but dramatically reduced exposure to
this group at mid-year, when valuations appeared stretched and performance began
to lag the market. Assets were redeployed into the energy service, energy
exploration and production, semiconductor manufacturing and semiconductor
equipment industries.
The manager is now closely monitoring the client/server software group.
Analysts are forecasting very aggressive earnings growth of over 100% for the
next two years for several of these companies. Apodaca will be looking to take
profits as expectations for this degree of earnings growth become more
widespread and as companies reach their price/valuation targets. Assets will
likely be reinvested in healthcare stocks.
Brown Capital Management, Inc.
Brown Capital continued to focus on two key investment themes: "The Graying
of America" and "The Information Age." They maintained sizable positions in
stocks of companies that help businesses operate more efficiently, including
computer software and other technology stocks, and companies that play a role in
peoples' lives as they age, such as financial services and select health care
stocks.
This approach served investors well, as technology and financial services
stocks were the biggest contributors to this portion of the Portfolio's return.
Top performers in the technology arena were EMC, Compuware and Microsoft. In
financial services, T. Rowe Price and Green Tree Financial Services turned in
strong gains.
Fortaleza Asset Management
Fortaleza remained focused on companies in the technology, health care and
retail industries. Technology holdings generated good gains for the year, with
software company, Hyperion, and systems integration consultant, Vanstar helping
to boost returns. Although strong performers in the first half of the year,
health care stocks came under pressure during the third quarter and did not
contribute positively to the Portfolio's one-year performance. Retail stocks
held up well until year-end, when investors worried that Christmas sales would
be weak. Most retailers reported good holiday sales, and stock prices began to
come back in the first quarter of 1997.
During the fourth quarter, the manager built a position in ESS Technology,
a chip manufacturer for multimedia applications. This is a fairly new company
that is experiencing stronger overseas demand for its product and getting
increased analyst attention. Fortaleza also took advantage of a decline in the
stock price of Physician Support Systems, a company that provides systems and
software for health care professionals, and significantly increased their
holdings.
Outlook
After two back-to-back years of very strong stock market performance,
investors' nervousness about the direction of the market in the coming year is
understandable. Still, the economic climate remains favorable and each of the
Capital Accumulation Portfolio managers continue to spot promising investment
opportunities among small- and mid-cap stocks.
Apodaca notes that, on a year-to-year basis, small-cap stocks have lagged
large-cap issues for three years. This trend began to reverse late in 1996, and
they believe small-cap stocks will maintain this performance edge. However, the
markets will likely continue to exhibit a high degree of volatility, and, in
their opinion, their ability to identify the most promising stocks and
industries will be the crucial factor.
While acknowledging that the stock market is not cheap, Brown Capital's
outlook for the coming year is also positive. They expect continued modest
economic growth, modest inflation, stable or slightly declining interest rates
and moderately increasing corporate profits. Under this scenario, stocks should
generate positive returns, but probably not the double-digit gains of 1995 and
1996. Importantly, their strategy of selecting superior companies in terms of
management and potential for earnings growth and buying at attractive valuations
offer an additional comfort.
Fortaleza is optimistic based on small-cap stocks' lower prices relative to
large-cap issues and the favorable earnings outlook for small-cap companies.
However, any earnings disappointments in the large-cap universe could jolt the
market, and the correction would likely trickle down to the small-cap universe.
Thus, strong fundamental analysis will be essential in capturing market
opportunities.
Managers continue to employ the same rigorous stock selection criteria that
have worked well for investors since the Portfolio's inception. In evaluating
your investment decisions, we encourage you to focus on your long-term
objectives. Thank you for your continued confidence.
Sincerely,
Clifton S. Sorrell
President
January 17, 1997
Report of Independent Accountants
To the Board of Directors of Acacia Capital Corporation and Shareholders of
Calvert Responsibly Invested Capital Accumulation Portfolio:
We have audited the accompanying statement of assets and liabilities of
Calvert Responsibly Invested Capital Accumulation Portfolio (one of the
portfolios comprising the Acacia Capital Corporation), including the portfolio
of investments, as of December 31, 1996, and the related statement of operations
for the year then ended, statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Calvert Responsibly Invested Capital Accumulation Portfolio as of December 31,
1996, the results of its operations, the changes in its net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 31, 1997
Equity Securities - 95.6% Shares Value
Agriculture - 0.9%
Northland Cranberries, Inc., Class A 8,000 $184,000
184,000
Airlines - 0.3%
Atlantic Coast Airlines, Inc. * 5,000 61,250
61,250
Biotechnology - 1.3%
Amgen, Inc. * 2,200 119,625
Ibah, Inc. * 8,200 55,350
Neurex Corp. * 4,700 79,900
254,875
Business Equipment and Services - 5.8%
Employee Solutions, Inc. * 3,000 61,500
Equifax, Inc. 8,600 263,375
Hewlett Packard Co 2,500 125,625
May & Speh, Inc. * 10,000 125,000
MDSI Mobile Data Solutions, Inc. * 30,000 476,250
Staffmark, Inc. * 7,500 93,750
1,145,500
Communications - 3.8%
Amati Communications Corp. * 4,300 56,437
Cisco Systems, Inc. * 3,950 251,319
LCC International, Inc. * 4,200 77,700
Periphonics Corp. * 5,300 155,025
Tekelec, Inc. * 6,300 99,225
Videoserver, Inc. * 2,400 102,000
Voxware, Inc. * 2,500 18,750
760,456
Computer - Equipment and Services - 1.3%
BRC Holdings, Inc. * 2,300 102,925
Digital Link Corp. * 2,700 65,475
Raster Graphics, Inc. * 7,800 92,625
261,025
Computer - Networks - 4.7%
Act Networks, Inc. * 5,800 211,700
Bay Networks, Inc. * 6,600 137,775
Larscom, Inc., Class A * 10,000 113,750
Netvantage, Inc., Class A * 6,200 55,800
Network Appliance, Inc. * 3,200 162,800
Equity Securities (Cont'd) Shares Value
Computer - Networks (Cont'd)
Network General Corp. * 6,000 $181,500
Proxim, Inc. * 2,900 66,700
930,025
Computer - Software - 9.3%
Aspen Technology, Inc. * 3,000 240,750
Axent Technologies, Inc. * 4,800 72,000
Concentra Corp. * 9,600 86,400
Hyperion Software Corp. * 8,600 182,750
IDX Systems Corp. * 4,300 123,087
Legato Systems, Inc. * 5,200 169,650
Metatools, Inc. * 6,500 76,375
Microsoft Corp. * 1,000 82,625
Open Text Corp. * 5,000 34,375
Pegasystems, Inc. * 3,500 105,437
Segue Software, Inc. * 4,600 83,950
Siebel Systems, Inc. * 3,600 97,200
Sterling Software, Inc. 4,800 151,800
Vantive Corp. * 2,800 87,500
Veritas Software Co. * 2,750 136,812
Viasoft, Inc. * 1,400 66,150
Xionics Document Technologies * 4,700 58,750
1,855,611
Computer - Systems - 7.0%
Advanced Health Corp. * 4,200 52,500
Amisys Managed Care Systems, Inc. * 5,000 85,000
BTG, Inc. * 3,500 92,750
Cellular Technical Services, Inc. * 5,000 100,000
Dataworks Corp. * 2,700 68,175
Imnet Systems, Inc. * 4,000 97,000
Nuko Information Systems, Inc. * 6,700 74,537
Object Design, Inc. * 5,200 61,100
Oracle Corp. * 3,937 164,370
Physician Support Systems, Inc. * 13,300 256,025
S3, Inc. * 5,300 86,125
Vanstar Corp. * 8,600 210,700
Versant Object Technology Corp. * 2,900 54,013
1,402,295
Consumer Products and Services - 1.1%
Newell Co. 6,800 214,200
214,200
Dental - 0.4%
United Dental Care, Inc. * 2,500 75,937
75,937
Equity Securities (Cont'd) Shares Value
Education - 0.7%
Devry, Inc. * 6,000 $141,120
141,120
Electrical Equipment - 3.4%
Belden, Inc. 4,500 166,500
Checkpoint Systems, Inc. * 5,300 131,175
Fluke Corp. 1,500 66,321
Sterling Commerce, Inc. * 4,700 165,675
Ultrak, Inc. * 4,700 143,350
673,021
Electronics - Defense - 0.4%
Jacobs Engineering Group, Inc. * 3,000 70,875
70,875
Electronics - Instruments - 0.7%
Checkfree Corp. * 8,000 137,000
137,000
Electronics - Semiconductors - 10.5%
ADE Corp. * 6,000 102,000
Ariel Corp. * 7,500 77,813
Benchmarq Microelectronics, Inc. * 3,900 83,363
CFM Technologies, Inc. * 7,100 147,325
EMC Corp. * 7,700 255,063
ESS Technology, Inc. * 8,900 250,313
Micrion Corp. * 4,300 93,525
Novellus Systems, Inc. * 1,500 81,281
Sanmina Corp. * 2,800 158,200
Solectron Corp. * 4,400 234,850
Tencor Instruments * 4,100 108,137
Uniphase Corp. * 3,900 204,750
Vishay Intertechnology, Inc. * 9,586 224,073
Zoran Corp. * 4,000 72,000
2,092,693
Financial Services - 4.3%
Chase Manhattan Corp. 2,652 236,691
Glendale Federal Bank Federal Savings Bank * 3,100 72,075
Green Tree Financial Corp. 6,550 252,994
T. Rowe Price Associates, Inc. 6,900 300,150
861,910
Furniture - 1.5%
Ethan Allen Interiors, Inc. 3,500 134,750
Miller Herman, Inc. 2,900 164,213
298,963
Equity Securities (Cont'd) Shares Value
Health Care - 3.5%
American Homepatient, Inc. * 4,500 $122,625
American Oncology Research, Inc. * 10,000 102,500
Health Care & Retirement Corp. * 4,950 141,694
NCS Healthcare, Inc., Class A * 3,700 107,763
Pall Corp. (rights) 5,900 150,450
Renal Care Group, Inc. * 2,300 72,737
697,769
Industrial Products - 1.1%
Alyn Corp. * 1,600 17,400
Amcast Industrial Corp. 3,800 94,050
BE Aerospace, Inc. * 3,800 103,075
214,525
Insurance - 1.6%
AFLAC, Inc. 3,850 164,587
American Bankers Insurance Group, Inc. 3,000 153,375
317,962
Leisure - 1.2%
Carnival Corp., Class A 7,400 244,200
244,200
Lumber - 0.2%
T.J. International, Inc. 2,000 45,250
45,250
Manufacturing - 0.3%
Act Manufacturing, Inc. * 2,200 58,025
58,025
Medical - 6.1%
Acuson, (rights) * 4,000 97,500
ALZA Corp. * 2,600 67,275
Cardinal Health, Inc. 4,500 262,125
Cytyc Corp. * 6,000 162,000
Inhale Therapeutic Systems * 7,500 113,437
Medquist, Inc. * 6,900 170,775
Pediatrix Medical Group * 1,500 55,313
QLT Phototherapeutics * 5,200 104,650
Scherer (R.P.) Corp. * 3,700 185,925
1,219,000
Oil and Gas - 5.1%
3DX Technologies, Inc. * 2,800 30,800
American Oilfield Divers, Inc. * 4,800 57,000
Belden & Blake Corp. * 4,500 114,750
Dawson Production Services, Inc. * 5,300 82,150
HS Resources, Inc. * 4,500 74,250
Equity Securities (Contd) Shares Value
Oil and Gas (Cont'd)
Marine Drilling Cos., Inc. * 1,100 $21,656
MCN Corp. 6,600 190,575
Patterson Energy, Inc. * 2,300 59,225
Varco International, Inc. * 11,700 270,563
Veritas DGC, Inc. * 3,600 66,600
Wiser Oil Co. * 2,600 51,350
1,018,919
Pharmaceutical - 2.9%
Agouron Pharmaceuticals, Inc. * 2,500 169,375
Dura Pharmaceuticals, Inc. * 4,000 191,000
Immulogic Pharmaceutical Corp. * 9,500 60,563
Incyte Pharmaceuticals, Inc. * 1,700 87,550
Medicis Pharmaceutical Corp., Class A * 1,350 59,400
567,888
Property Management - 0.8%
Rouse Co. 5,000 158,750
158,750
Real Estate - 1.0%
Post Properties, Inc. 4,700 189,175
189,175
Research - 0.9%
Clintrials Research, Inc. * 3,500 79,625
Quintiles Transnational Corp. * 1,500 99,375
179,000
Restaurants - 2.9%
Applebees International, Inc. 4,300 118,250
Cheesecake Factory, Inc. * 8,000 145,000
Longhorn Steaks, Inc. * 5,000 94,375
Papa Johns International, Inc. * 3,150 106,313
Rainforest Cafe, Inc. * 4,900 116,416
580,354
Retail - Apparel and Shoe - 3.0%
Buckle, Inc. * 4,000 100,000
Cutter & Buck, Inc. * 9,500 112,312
Gadzooks, Inc. * 2,650 48,362
Pacific Sunwear of California * 3,500 90,125
St. John Knits, Inc. 3,000 130,500
Wet Seal, Inc., Class A 5,000 106,875
588,174
Retail - Department Stores - 0.6%
Nordstrom, Inc. 3,400 120,487
120,487
Equity Securities (Cont'd) Shares Value
Retail - Discount and Variety - 1.1%
Caseys General Stores, Inc. 3,800 $71,250
Dollar General Corp. 4,725 151,200
222,450
Retail - Special Line - 3.9%
Autozone, Inc. * 7,900 217,250
Eagle Hardware & Garden, Inc. * 3,600 74,700
Home Depot, Inc. 3,100 155,387
Revco D.S., Inc. * 5,300 196,100
West Marine, Inc. * 5,000 139,750
Specialized Services - 0.6%
Inacom Corp. * 2,800 112,000
112,000
Telecommunications - 1.1%
Brightpoint, Inc. * 4,400 130,900
Verilink Corp. * 2,700 89,775
220,675
Transportation - 0.3%
Hvide Marine, Inc., Class A * 2,900 63,075
63,075
Total Equity Securities (Cost $16,109,112) 19,021,621
TOTAL INVESTMENTS (Cost $16,109,112) - 95.6% 19,021,621
Other assets and liabilities, net - 4.4% 882,702
Net Assets - 100% $19,904,323
Assets
Investments in securities, at value $19,021,621
Cash 1,187,165
Receivable for securities sold 113,400
Interest and dividends receivable 4,750
Other assets 1,575
Total assets 20,328,511
Liabilities
Payable for securities purchased 404,509
Payable to Calvert Asset Management Company, Inc. 16,316
Payable to Calvert Administrative Services Company 1,636
Accrued expenses and other liabilities 1,727
Total liabilities 424,188
Net assets $19,904,323
Net Assets Consist of:
Par value and paid-in capital applicable to 827,683 shares of common
stock outstanding; $1 par value, 1,000,000 shares authorized $16,996,460
Accumulated net realized gains (losses) on investments (4,646)
Net unrealized appreciation (depreciation) on investments 2,912,509
Net Assets $19,904,323
Net Asset Value per Share $24.05
Net Investment Income
Investment Income
Interest income $6,535
Dividend income 55,973
Total investment income 62,508
Expenses
Investment advisory fee 126,374
Directors' fees and expenses 1,259
Administrative fees 15,797
Custodian fees 52,152
Reports to shareholders 2,221
Professional fees 11,217
Miscellaneous 1,173
Total expenses 210,193
Fees paid indirectly (52,152)
Net expenses 158,041
Net Investment Income (Loss) (95,533)
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) 7,603
Change in unrealized appreciation or depreciation 1,182,679
Net Realized and Unrealized Gain (Loss)
on Investments 1,190,282
Increase (Decrease) in Net Assets
Resulting From Operations $1,094,749
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) $(95,533) $(58,120)
Net realized gain (loss) 7,603 805,204
Change in unrealized appreciation or depreciation 1,182,679 1,398,962
Increase (Decrease) in Net Assets
Resulting From Operations 1,094,749 2,146,046
Distributions to shareholders from
Net investment income -- (3,628)
Net realized gain on investments (32,307) (466,861)
Total distributions (32,307) (470,489)
Capital share transactions
Shares sold 14,697,452 2,445,856
Shares issued from merger (Note A) 4,728,068
Reinvestment of distributions 32,310 470,489
Shares redeemed (9,551,228) (1,345,444)
Total capital share transactions 9,906,602 1,570,901
Total Increase (Decrease)
in Net Assets 10,969,044 3,246,458
Net Assets
Beginning of year 8,935,279 5,688,821
End of year $19,904,323 $8,935,279
Capital Share Activity
Shares sold 618,839 112,840
Shares issued from merger (Note A) 207,827
Reinvestment of distributions 1,343 20,976
Shares redeemed (398,789) (70,579)
Total capital share activity 429,220 63,237
Note A-Significant Accounting Policies
General: The Capital Accumulation Portfolio (the "Portfolio"), a series of
Acacia Capital Corporation's Calvert Responsibly Invested (CRI) Portfolios, is
registered under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. The operations of each series are
accounted for separately. The shares of the Portfolio are sold to affiliated and
unaffiliated insurance companies for allocation to certain of their variable
separate accounts.
On February 23, 1996, the net assets of CRIEquity Portfolio were merged
into the Portfolio. The acquisition was accomplished by a tax free exchange of
207,827 shares of the Portfolio (valued at $4,728,068) for the 259,797 shares of
CRIEquity Portfolio outstanding at February 23, 1996. CRIEquity Portfolio's net
assets at that date, including $249,296 of unrealized appreciation, were
combined with those of the Portfolio. The aggregate net assets of the Portfolio
and CRIEquity Portfolio immediately before the acquisition were $9,742,153 and
$4,727,159, respectively.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Unlisted securities and
listed securities for which the last sale price is not available are valued at
the most recent bid price or based on a yield equivalent obtained from the
securities' market maker. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good faith
under the direction of the Board of Directors.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income, accretion of discount and amortization of premium are recorded
on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles, accordingly,
periodic reclassifications are made within the Portfolio's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
The Fund designates $6,891 as capital gain dividends for taxable year ended
December 31, 1996.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolio's cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Directors of the
Portfolio. For its services, the Advisor receives a monthly fee based on an
annual rate of .80% of the Portfolio's average daily net assets.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Portfolio for an annual fee, payable
monthly, of .10% of the Portfolio's annual average daily net assets.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Portfolio.
Each Director who is not affiliated with the Advisor received a fee of $500
for each Board meeting attended plus an annual fee of $2,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served. Effective August 1, 1996, annual fees and meeting fees
were increased to $3,000 and $750, respectively.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $27,029,176 and $17,513,139, respectively. Such transactions
are exclusive of the effects of the merger of CRI Equity
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $2,912,509, of which $3,638,769 related to appreciated
securities and $726,260 related to depreciated securities.
Net realized capital loss carryforward, for federal income tax purposes, of
$1,598 at December 31, 1996 may be utilized to offset future capital gains until
expiration in 2004.
Years Ended December 31,
1996 1995 1994
Net asset value, beginning $22.42 $16.97 $18.95
Income from investment operations
Net investment income (.12) (.15) .10
Net realized and unrealized gain (loss) 1.79 6.85 (1.98)
Total from investment operations 1.67 6.70 (1.88)
Distributions from
Net investment income -- (.01) (.10)
Net realized gains (.04) (1.24) --
Total distributions (.04) (1.25) (.10)
Total increase (decrease) in net asset value 1.63 5.45 (1.98)
Net asset value, ending $24.05 $22.42 $16.97
Total return 7.44% 39.46% (9.92%)
Ratios to average net assets:
Net investment income (.60%) (.84%) .68%
Total expenses 1.33% 1.56% --
Net expenses 1.00% 1.25% .79%
Expenses reimbursed -- .10% --
Portfolio turnover** 124% 135% 79%
Average commission rate paid $.0563 -- --
Net assets, ending (in thousands) $19,904 $8,935 $5,689
Number of shares outstanding,
ending (in thousands) 828 398 335
Years Ended December 31
1993 1992
Net asset value, beginning $17.87 $15.82
Income from investment operations
Net investment income .08 .09
Net realized and unrealized gain (loss) 1.27 2.09
Total from investment operations 1.35 2.18
Distributions from
Net investment income (.08) (.09)
Net realized gains (.19) (.04)
Total distributions (.27) (.13)
Total increase (decrease) in net asset value 1.08 2.05
Net asset value, ending $18.95 $17.87
Total return 7.56% 13.73%
Ratios to average net assets:
Net investment income .66% 1.19%
Total expenses -- --
Net expenses .80% .39%
Expenses reimbursed -- .87%
Portfolio turnover 26% 2%
Net assets, ending (in thousands) $4,986 $870
Number of shares outstanding,
ending (in thousands) 263 49
<PAGE>
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Dear Investor:
Changing expectations for the strength of the economy and direction of
interest rates made for very volatile financial markets during 1996. Stock
market investors emerged with strong gains; the Standard & Poor's 500 Stock
Index gained almost 23% for the year. The bond market see-sawed, with the yield
on the benchmark 30-year Treasury bond closing the year just three-quarters of a
percent above where it began. While many investors believed the Federal Reserve
would intervene to tighten monetary policy, the Fed took no action after cutting
the federal funds rate by 25 basis points in late January.
Calvert Responsibly Invested
Balanced Portfolio
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91
CRI BALANCED $28,872 $25,458 $19,617 $20,273 $18,772 $17,444
S & P 500 Rein $41,395 $33,668 $24,480 $24,164 $21,955 $20,402
Lehman Aggregate Bd $21,023 $20,286 $17,271 $18,212 $16,220 $14,906
90-DAY $17,223 $16,386 $15,511 $14,870 $14,431 $13,946
12/31/90 12/31/89 12/31/88 12/31/87 1/1/87
CRI BALANCED $14,997 $14,395 $11,924 $10,681 $10,000
S & P 500 Rein $15,646 $16,148 $12,268 $10,525 $10,000
Lehman Aggregate Bd $13,292 $12,389 $11,182 $10,151 $10,000
90-DAY $13,221 $12,272 $11,318 $10,591 $10,000
</TABLE>
Average Annual Total Return
(period ending 12/31/96)
1 Year 12.62% 5 Year 10.45%
10 Year 11.11% Life of Fund 10.41% (9/86)*
*New sub-advisors assumed management of the
Portfolio effective February 1995.
Performance information is for the Portfolio only and does not
reflect charges and expenses of the variable annuity.
Past performance does not indicate future results.
Fund Performance and Strategy
We maintained the Portfolio's target asset allocation of roughly 60%
equities and 40% fixed-income securities throughout 1996. Equity holdings were
the strongest contributors to the Fund's return, which is not surprising given
the strength of the stock market.
Equity Investments-NCM Capital Management
We continued to focus on companies in the technology and financial services
industries. The financial services group turned in good gains as profits were
strong due to continued low interest rates. Some of our technology
holdings-semiconductors, chips and equipment-were hurt by unfavorable supply and
demand conditions, but our technology position as a whole was positive for
performance for the year due to strong gains from EMC Corp and BMC Software.
Consumer staples companies (food, drugs and personal care items) also did
well as investors moved to these more defensive stocks. While we did not have a
large commitment to the consumer staples group, our holdings of Gillette and
Hershey contributed good gains. Energy services companies also advanced as
improved supply and demand conditions boosted profit potential. In this group,
Smith International was a strong performer.
The Portfolio invests a small portion of assets (slightly less than 3% at
year-end) in foreign securities. For this period, our holdings of Umbono
Investment Corp., a South African company, were hurt by the continued
devaluation of the currency. We are optimistic that the bulk of the currency
decline has passed, and we maintain a favorable opinion of this stock's
investment potential. We are also pleased to have an opportunity to participate
in Afric's economic growth.
Fixed-Income Investments-Calvert Asset Management Company
We kept the Portfolio's interest rate sensitivity in line with our
benchmark. The bond market was very volatile throughout 1996, and we did not
believe it was prudent to take a decidedly conservative or aggressive stance
until a clearer picture emerged regarding the strength of the economy. The
Portfoli's weighted average maturity was 13 years at the end of 1996, compared
to 14 years at the end of 1995.
Outlook
The markets will likely continue to exhibit a high degree of volatility.
Stocks' extended valuations and uncertainty about whether companies can meet
earnings estimates could dampen investors "exuberance." We expect the return on
stocks for 1997 will come closer to historical averages than the exceptional
returns of 1995 and 1996. The bond market is likely to remain skittish, at least
for the first half of the year, as investors still struggle to reconcile low
inflation numbers with strong labor reports. The Portfolio's blend of stocks and
bonds should help to smooth the ups and downs of specific markets, sectors and
securities.
We appreciate your investment.
Sincerely,
Clifton S. Sorrell
President
January 17, 1997
Report of Independent Accountants
To the Board of Directors of Acacia Capital Corporation and Shareholders of
Calvert Responsibly Invested Balanced Portfolio:
We have audited the accompanying statement of assets and liabilities of
Calvert Responsibly Invested Balanced Portfolio (one of the portfolios
comprising the Acacia Capital Corporation), including the portfolio of
investments, as of December 31, 1996, and the related statement of operations
for the year then ended, statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Calvert Responsibly Invested Balanced Portfolio as of December 31, 1996, the
results of its operations, the changes in its net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 31, 1997
Equity Securities - 57.1% Shares Value
Airlines - 0.6%
Comair Holdings, Inc. 41,400 $993,600
993,600
Biotechnology - 1.0%
Amgen, Inc. * 29,560 1,607,325
1,607,325
Building Materials and Construction - 0.6%
Oakwood Homes Corp. 3,700 999,637
999,637
Business Equipment and Services - 1.2%
Hewlett Packard Co. 22,300 1,120,575
Sun Microsystems, Inc. * 29,640 761,377
1,881,952
Communications - 2.0%
Ameritech Corp. 30,595 1,854,822
U.S. Robotics Corp. * 20,200 1,454,400
3,309,222
Computer - Hardware - 1.9%
Compaq Computer Corp. * 23,400 1,737,450
International Business Machines 9,300 1,404,300
3,141,750
Computer - Networks - 2.4%
3Com Corp. * 24,400 1,790,350
Cisco Systems, Inc. * 31,800 2,023,275
3,813,625
Computer - Software - 4.0%
BMC Software, Inc. * 17,500 724,063
Computer Associates International, Inc. 38,577 1,919,206
Microsoft Corp. * 20,820 1,720,253
Oracle Corp. * 48,757 2,035,605
6,399,127
Consumer Products and Services - 4.9%
Avon Products, Inc. 28,400 1,622,350
Colgate Palmolive Co. 27,400 2,527,650
CUC International, Inc. * 55,450 1,316,937
Gillet Co. 32,100 2,495,775
7,962,712
Equity Securities (Cont'd) Shares Value
Delivery - 0.7%
Federal Express Corp. * 23,800 $1,059,100
1,059,100
Electronics - 2.8%
Arrow Electronics, Inc. * 14,200 759,700
Atmel Corp. * 26,800 887,750
EMC Corp. * 38,450 1,273,656
Intel Corp. 11,700 1,531,969
4,453,075
Entertainment - 1.3%
Regal Cinemas, Inc. * 34,200 1,051,650
Walt Disney Co. 15,005 1,044,723
2,096,373
Financial Services - 9.4%
Banc One Corp. 21,700 933,100
Bank New York, Inc. 29,000 978,750
Bank of Boston Corp. 19,315 1,240,989
BankAmerica Corp. 23,200 2,314,200
Chase Manhattan Corp. 20,300 1,811,775
Federal National Mortgage Assn. 42,700 1,590,575
Green Tree Financial Corp. 48,530 1,874,471
SunAmerica, Inc. 39,300 1,743,937
Umbono Investment Corp., Ltd. * 1,156,540 2,719,235
15,207,032
Food Products - 3.0%
CPC International, Inc. 32,300 2,503,250
Hershey Foods Corp. 31,200 1,365,000
McCormick & Co., Inc. 41,900 987,269
4,855,519
Health Care - 2.4%
Cardinal Health, Inc. 25,500 1,485,375
Johnson & Johnson 46,500 2,313,375
3,798,750
Industrial Products - 0.9%
Praxair, Inc. 31,200 1,439,100
1,439,100
Insurance - 3.1%
AFLAC, Inc. 39,050 1,669,387
American International Group, Inc. 20,350 2,202,887
MGIC Investment Corp. 15,500 1,178,000
5,050,274
Equity Securities (Cont'd) Shares Value
Manufacturing - 0.9%
Dover Corp. 29,945 $1,504,736
1,504,736
Medical - 2.6%
Boston Scientific Corp. * 17,185 1,031,100
Guidant Corp. 26,900 1,533,300
Medtronic, Inc. 23,900 1,625,200
4,189,600
Office Equipment and Supplies - 1.6%
Officemax, Inc. * 104,800 1,113,500
Viking Office Products, Inc. * 55,000 1,467,813
2,581,313
Oil and Gas - 0.6%
Seitel, Inc. * 24,100 964,000
964,000
Paper and Packaging - 1.6%
Avery Dennison Corp. 43,100 1,524,663
Sealed Air Corp. * 24,800 1,032,300
2,556,963
Pharmaceutical - 1.4%
Merck & Co., Inc. 28,800 2,282,400
2,282,400
Retail - 2.6%
Barnes & Noble, Inc. * 41,600 1,123,200
Consolidated Stores Corp. * 32,313 1,038,039
Jones Apparel Group, Inc. * 30,600 1,143,675
Penney (J.C.), Inc. 18,000 877,500
4,182,414
Telecommunications - 3.6%
360 Communications Co. * 58,500 1,352,813
Century Telephone Enterprises, Inc. 47,465 1,465,482
Ericsson (L. M.) Telephone, Co., Class B, ADR 51,405 1,551,788
SBC Communications, Inc. 27,400 1,417,950
5,788,033
Total Equity Securities (Cost $77,958,662) 92,117,632
Principal
Mortgage Backed Securities - 10.8% Amount
Advanta Corp., 5.50%, 3/25/10 $1,729,639 1,646,941
Federal Home Loan Mortgage Corp., 5.125%, 8/15/06 1,790,349 1,752,035
Federal Home Loan Mortgage Corp., 5.50%, 5/1/11 3,656,123 3,440,883
Federal Home Loan Mortgage Corp., 6.00%, 12/15/19 1,000,000 971,310
Federal Home Loan Mortgage Corp., 6.50%, 8/15/21 1,000,000 991,730
Principal
Mortgage Backed Securities (Cont'd) Amount Value
Federal National Mortgage Assn., 6.00%, 5/1/06 $2,498,439 $2,430,878
Federal National Mortgage Assn., 6.50%, 12/25/23 1,000,000 960,480
Federal National Mortgage Assn., 7.00%, 8/1/25 943,971 923,789
Government National Mortgage Assn., 6.50%, 12/15/23 1,311,000 1,258,560
Vendee Mortgage Trust, 6.75%, 9/15/09 1,163,000 1,164,772
Vendee Mortgage Trust, 8.00%, 7/15/18 1,000,000 1,043,220
Vendee Mortgage Trust, 6.75%, 4/15/22 1,000,000 916,160
Total Mortgage Backed Securities (Cost $17,448,342) 17,500,758
Municipal Obligations - 9.0%
Illinois Housing Development Authority, 8.35%, 8/1/26 1,130,000 1,163,222
La Miranda, California Industrial Development Authority
VRDN,
5.70%, 12/1/26, LOC: First National
Bank of Chicago ** 7,500,000 7,500,000
Maryland State Economic Development Corp., 8.00%,
10/1/05 1,000,000 1,004,790
Maryland State Economic Development Corp., 8.625%,
10/1/19 750,000 767,468
Miami Beach, Florida Redevelopment Agency, 8.80%,
12/1/15 2,585,000 2,750,182
Texas State, College Student Loan, 7.35%, 12/1/21 600,000 588,534
Virginia State Housing Development Authority, 7.55%,
7/1/11 740,000 753,313
Total Municipal Obligations (Cost $14,306,777) 14,527,509
Corporate Obligations - 8.4%
Albertsons, Inc., 6.18%, 3/22/00 25,000 24,925
AMR Corp., 9.82%, 3/7/01 25,000 27,525
BellSouth Savings, 9.19%, 7/1/03 366,807 401,537
Continental Valorem Corp. VRDN, 6.45%, 6/1/13,
LOC: Tokai Bank Ltd. ** 700,000 700,000
Dayton Hudson Corp., 9.00%, 10/1/21 60,000 67,762
Dean Witter Discover & Co., 6.30%, 1/15/06 1,000,000 946,040
Discover Card Master Trust, 6.05%, 8/18/08 1,500,000 1,420,395
First Union Corp., 6.55%, 10/15/35 1,000,000 972,620
International Business Machines, 7.00%, 10/30/25 2,000,000 1,907,420
MedPartners, Inc., 7.375%, 10/1/06 2,000,000 2,007,260
Puget Power Consv., 6.45%, 4/11/05 1,596,737 1,594,834
SunAmerica, Inc., 8.125%, 4/28/23 2,000,000 2,102,140
United Dominion Realty Trust, Inc., 8.50%, 9/15/24 1,200,000 1,318,056
Total Corporate Obligations (Cost $13,439,121) 13,490,514
U.S. Government and
Instrumentalities - 7.5%
Federal Farm Credit Bank, 6.75%, 5/14/99 3,000,000 3,014,340
Federal Home Loan Mortgage Corp., 6.80%, 5/14/99 2,000,000 2,009,920
Federal National Mortgage Assn., 5.49%, 10/2/03 1,075,000 1,015,950
Financing Corp., 9.80%, 11/30/17 50,000 64,808
U.S. Government and Principal
Instrumentalities (Cont'd) Amount Value
Financing Corp., 9.80%, 4/6/18 $50,000 $64,964
Resolution Funding Corp., 8.625%, 1/15/21 1,000,000 1,202,720
Silver Spring Metro Center, 6.875%, 5/15/13 50,000 46,993
Small Business Administration, 8.05%, 6/1/12 786,268 808,473
Small Business Administration, 7.70%, 7/1/16 3,000,000 3,099,450
WNH Ltd. Partnership, 9.40%, 10/1/99 705,000 747,258
Total U.S. Government Agencies and Instrumentalities
(Cost $11,950,760) 12,074,876
U.S. Treasury - 6.0%
U.S. Treasury Bonds, 6.875%, 8/15/25 1,500,000 1,528,785
U.S. Treasury Notes, 5.875%, 11/15/05 1,000,000 964,090
U.S. Treasury Notes, 5.625%, 2/15/06 1,000,000 945,770
U.S. Treasury Notes, 7.00%, 7/15/06 6,000,000 6,232,860
Total U.S. Treasury (Cost $9,701,626) 9,671,505
Other Debt - 0.6%
Chickasaw Nation, Oklahoma, 10.00%, 8/1/03 1,000,000 1,033,240
South Africa Rep., 9.625%, 12/15/99 15,000 15,956
Total Other Debt (Cost $1,014,785) 1,049,196
TOTAL INVESTMENTS (Cost $145,820,073) - 99.4% 160,431,990
Other assets and liabilities, net - 0.6% 1,041,004
Net Assets - 100% $161,472,994
Assets
Investments in securities, at value $160,431,990
Cash 447,742
Receivable for securities sold 373,591
Interest and dividends receivable 1,098,455
Other assets 14,446
Total assets 162,366,224
Liabilities
Payable for securities purchased 764,856
Payable to Calvert Asset Management Company, Inc. 101,314
Accrued expenses and other liabilities 27,060
Total liabilities 893,230
Net assets $161,472,994
Net Assets Consist of:
Par value and paid-in capital applicable to 91,045,481 shares of common
stock outstanding; $1 par value, 92,000,000 shares authorized $145,095,219
Undistributed net investment income (loss) 380,193
Accumulated net realized gains (losses) on investments
and foreign currencies 1,385,665
Net unrealized appreciation (depreciation) on
investments and assets and liabilities in foreign currencies 14,611,917
Net Assets $161,472,994
Net Asset Value per Share $1.774
Net Investment Income
Investment Income
Interest income $3,929,028
Dividend income (net of foreign taxes of $11,929) 767,242
Total investment income 4,696,270
Expenses
Investment advisory fee 963,829
Directors' fees and expenses 11,108
Custodian fees 47,112
Reports to shareholders 6,172
Professional fees 57,536
Miscellaneous 7,972
Total expenses 1,093,729
Fees paid indirectly (47,112)
Net expenses 1,046,617
Net Investment Income 3,649,653
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Securities 9,074,404
Foreign currencies (16,554)
9,057,850
Change in unrealized appreciation or depreciation on:
Securities 3,628,653
Assets and liabilities in foreign currencies 24
3,628,677
Net Realized and Unrealized Gain (Loss)
on Investments 12,686,527
Increase (Decrease) in Net Assets
Resulting From Operations $16,336,180
(Decrease) in Net Assets
Operations
Net investment income $3,649,653 $2,688,213
Net realized gain (loss) 9,057,850 9,131,406
Change in unrealized appreciation or depreciation 3,628,677 10,212,473
Increase (Decrease) in Net Assets
Resulting From Operations 16,336,180 22,032,092
Distributions to shareholders from
Net investment income (3,502,338) (2,379,651)
Net realized gain on investments (8,620,000) (7,467,802)
Total distributions (12,122,338) (9,847,453)
Capital share transactions
Shares sold 38,725,037 27,827,854
Shares issued from merger (Note A) 3,670,827
Reinvestment of distributions 12,122,338 9,847,453
Shares redeemed (7,496,263) (6,215,413)
Total capital share transactions 47,021,939 31,459,894
Total Increase (Decrease)
in Net Assets 51,235,781 43,644,533
Net Assets
Beginning of year 110,237,213 66,592,680
End of year (including undistributed net investment
income of $380,193 and $270,941, respectively) $161,472,994 $110,237,213
Capital Share Activity
Shares sold 21,664,978 16,449,557
Shares issued from merger (Note A) 2,061,104
Reinvestment of distributions 6,833,336 5,782,412
Shares redeemed (4,241,957) (3,747,516)
Total capital share activity 26,317,461 18,484,453
Note-A Significant Accounting Policies General: The Balanced Portfolio (the
"Portfolio"), a series of Acacia Capital Corporation's Calvert Responsibly
Invested (CRI) Portfolios, is registered under the Investment Company Act of
1940 as a non-diversified, open-end management investment company. The
operations of each series are accounted for separately. The shares of the
Portfolio are sold to affiliated and unaffiliated insurance companies for
allocation to certain of their variable separate accounts.
On February 23, 1996, the net assets of CRI Bond Portfolio were merged into
the Portfolio. The acquisition was accomplished by a tax free exchange of
2,061,104 shares of the Portfolio (valued at $3,670,827) for the 230,738 shares
of CRIBond Portfolio outstanding at February 23, 1996. CRIBond Portfoli's net
assets at that date, including $1,419 of unrealized appreciation, were combined
with those of the Portfolio. The aggregate net assets of the Portfolio and
CRIBond Portfolio immediately before the acquisition were $121,161,865 and
$3,670,445, respectively.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sale price. Foreign security prices,
furnished by quotation services in the security's local currency, are translated
using the current U.S. dollar exchange rate. Unlisted securities and listed
securities for which the last sale price is not available are valued at the most
recent bid price or based on a yield equivalent obtained from the securities'
market maker. Municipal securities are valued utilizing the average of bid
prices or at bid prices based on a matrix system (which considers such factors
as security prices, yields, maturities and ratings) furnished by dealers through
an independent pricing service. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good faith
under the direction of the Board of Directors.
Repurchase Agreements: The Portfolio may enter into repurchase agreements
with recognized financial institutions or registered broker/dealers and, in all
instances, holds underlying securities with a value exceeding the total
repurchase price, including accrued interest.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date or,
in the case of dividends on certain foreign securities, as soon as the Portfolio
is informed of the ex-dividend date. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Foreign Currency Transactions: The Portfolio's accounting records are
maintained in U. S. dollars. For valuation of assets and liabilities on each
date of net asset value determination, foreign denominations are translated into
U. S. dollars using the current exchange rate. Security transactions, income and
expenses are converted at the prevailing rate of exchange on the date of the
event. The effect of changes in foreign exchange rates on foreign denominated
securities is included with the net realized and unrealized gain or loss on
securities. Other foreign currency gains or losses are reported separately.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles,
accordingly, periodic reclassifications are made within the Portfolio's capital
accounts to reflect income and gains available for distribution under income tax
regulations.
The Fund designates $6,500,000 as capital gain dividends for taxable year
ended December 31, 1996.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolio's cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note-B Related Party Transactions Calvert Asset Management Company, Inc.
(the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Acacia Mutual Life Insurance Company. The Advisor
provides investment advisory services and pays the salaries and fees of officers
and affiliated Directors of the Portfolio. For its services, the Advisor
receives a monthly fee based on an annual rate of .70% of the Portfolio's
average daily net assets. Effective July, 1996, the Portfolio began paying a
monthly performance fee of plus or minus up to .15%, on an annual basis, of
average daily net assets of the performance period depending on the Portfolio's
performance compared to the Lipper Balanced Funds Index.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Portfolio.
Each Director who is not affiliated with the Advisor received a fee of $500
for each Board meeting attended plus an annual fee of $2,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served. Effective August 1, 1996, annual fees and meeting fees
were increased to $3,000 and $750, respectively.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $161,454,850 and $121,803,926, respectively. U.S. government
security purchases were $56,865,794 and sales were $37,342,926.
Such transactions are exclusive of the effects of the merger of CRI Bond.
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax purposes and financial reporting purposes. Net
unrealized appreciation aggregated $14,611,917, of which $16,800,589 related to
appreciated securities and $2,188,672 related to depreciated securities.
As a cash management practice, the Portfolio may sell or purchase
short-term variable rate notes from other Portfolios managed by the Advisor. All
transactions are executed at independently dervied prices.
Net asset value, beginning $1.703 $1.440 $1.537
Income from investment operations
Net investment income .040 .050 .046
Net realized and unrealized gain (loss) .175 .380 (.097)
Total from investment operations .215 .430 (.051)
Distributions from
Net investment income (.042) (.040) (.046)
Net realized gains (.102) (.127) --
Total distributions (.144) (.167) (.046)
Total increase (decrease) in net asset value .071 .263 (.097)
Net asset value, ending $1.774 $1.703 $1.440
Total return 12.62% 29.87% (3.30%)
Ratios to average net assets:
Net investment income 2.71% 3.08% 3.39%
Total expenses .81% .83% --
Net expenses .78% .81% .80%
Portfolio turnover 99% 163% 43%
Average commission rate paid $.0481 -- --
Net assets, ending (in thousands) $161,473 $110,237 $66,593
Number of shares outstanding,
ending (in thousands) 91,045 64,728 46,244
Net asset value, beginning $1.465 $1.403
Income from investment operations
Net investment income .045 .044
Net realized and unrealized gain (loss) .072 .062
Total from investment operations .117 .106
Distributions from
Net investment income (.045) (.044)
Net realized gains -- --
Total distributions (.045) (.044)
Total increase (decrease) in net asset value .072 .062
Net asset value, ending $1.537 $1.465
Total return 8.00% 7.61%
Ratios to average net assets:
Net investment income 3.69% 4.05%
Total expenses -- --
Net expenses .81% .85%
Portfolio turnover 14% 15%
Net assets, ending (in thousands) $54,000 $28,471
Number of shares outstanding,
ending (in thousands) 35,142 19,433
<PAGE>
CALVERT RESPONSIBLY INVESTED GLOBAL EQUITY PORTFOLIO
Dear Investor:
Nineteen ninety-six was a good year for the world's stock markets. The U.S.
put in a solid performance, but importantly, other global markets also
contributed strong gains. Top performers included Spain, which benefited from a
rising currency as well as a strong equity market, Hong Kong, which managed to
shrug off the uncertainties of the reversion to Chinese rule in 1997, the U.K.,
the Netherlands and Ireland. The weakest performer was Japan, where the
economy's recovery continued to be dogged by the weakness of the financial
system. In dollar terms, the market ended down 15.4% for the year, which put a
severe drag on performance measures of the global stock market.
Calvert Responsibly Invested
Global Equity Portfolio
Change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 6/30/92
CRI GLOBAL EQUITY $15,800 $13,797 $12,281 $12,548 $9,673 $10,000
MSCI WORLD INDEX $17,492 $15,344 $12,548 $11,979 $9,729 $10,000
</TABLE>
Average Annual Total Return
(period ending 12/31/96)
1 Year 14.99% Life of Fund 10.71% (6/92)
Performance information is for the Portfolio only and does not
reflect charges and expenses of the variable annuity.
Past performance does not indicate future results.
Performance
The CRI Global Equity Portfolio generated a strongly positive return for
the 12-month period. The Fund's return was in-line with the Morgan Stanley
Capital International World Index (an unmanaged Index of the world's stock
markets).
Investment Strategy
Our strategy for the year was to underweight the U.S. market on the basis
of the maturity of the economic cycle and the potential for a deterioration in
earnings and valuations and to overweight the markets of the Far East,
particularly Hong Kong, where we were optimistic on both valuations and the
colony's ability to steer a steady course through the changeover of sovereignty.
We maintained a market weighting in Europe as a whole, but focused on the
peripheral countries.
During the first quarter, we added to our position in Japan to take
advantage of seasonal market weakness. After the market's 7.2% rise in April, we
began to steadily reduce exposure through the year, switching assets to the core
European markets of Germany and Switzerland. Late in the year, we began to
lessen our commitment to the U.K. We think we experienced the bulk of this
market's advance in 1996, and the U.K. now poses greater political risk, due to
the coming general election. Outlook
As we enter 1997, we look forward to a period of synchronized growth
through many economies. While the U.S. and the U.K. lead the business cycle and
should be the first to see interest rates raised and growth slow, elsewhere the
expansion is still proceeding and at a moderate and sustainable pace. We
therefore anticipate some switching of assets from the U.S. to the international
markets which have lagged in this cycle.
Sincerely,
Clifton S. Sorrell
President
January 17, 1997
Report of Independent Accountants
To the Board of Directors of Acacia Capital Corporation and Shareholders of
Calvert Responsibly Invested Global Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of
Calvert Responsibly Invested Global Equity Portfolio (one of the portfolios
comprising the Acacia Capital Corporation), including the portfolio of
investments, as of December 31, 1996, and the related statement of operations
for the year then ended, statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Calvert Responsibly Invested Global Equity Portfolio as of December 31, 1996,
the results of its operations, the changes in its net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P
Baltimore, Maryland
January 31, 1997
Global Equity Portfolio
Portfolio of Investments
December 31, 1996
Equity Securities - 95.1% Shares Value
Australia - 4.4%
Australian & New Zealand Bank Group 25,000 $157,579
Brambles Industries, Ltd. 10,000 195,136
National Australia Bank 23,000 270,567
623,282
France - 6.2%
Assur Gen de France 3,105 100,239
Canal Plus 650 143,568
Pinault Printemps Redoute, S.A. 800 317,317
SGS Thomas Micro * 4,300 304,153
865,277
Germany - 5.0%
Douglas Holdings 6,790 266,958
Linde 350 213,803
Volkswagen 520 216,272
697,033
Hong Kong - 8.0%
Amoy Properties 100,000 144,159
Cheung Kong Holdings 20,000 177,775
Hong Kong Land Holdings 100,000 278,000
Hysan Development 55,000 219,019
Hysan Development (warrants)* 2,750 2,489
Sun Hung Kai Properties 25,000 306,258
1,127,700
Italy - 2.5%
Parmalat Finanz 84,000 128,464
STET 19,500 88,695
Telecom Italia Mobile 53,600 135,502
352,661
Japan - 15.7%
Canon Sales Co., Inc. 8,800 194,526
Eisai Co. 11,000 216,562
Fuji Machine Manufacturing 7,000 185,563
Hitachi Zosen Corp. 20,000 77,714
Itochu Corp. 28,000 150,384
Keyence Corp. 1,000 123,478
Nikko Securities 12,000 89,526
Nippon Sanso Corp. 40,000 141,266
Nitto Denko Corp. 5,000 73,396
Sanwa Bank 12,000 163,716
Equity Securities (Cont'd) Shares Value
Japan (Cont'd)
Shinmaywa Industries 18,000 $132,579
Shiseido Co. 17,000 196,702
Sumitomo Electric Industries 13,000 181,850
Takasago Thermal Engineering 12,000 152,318
Tokyo Style Co. 9,000 125,896
2,205,476
Malaysia - 3.7%
AMMB Holdings Berhad 30,000 251,831
Malayan Bank Berhad 24,000 266,086
517,917
Mexico - 6.3%
Banco Frances Del Rio La Plata, ADR 4,600 126,500
Banpais, S.A., ADR * 10,000 0
Cifra, S.A. de C.V., ADR * 159,000 194,298
Grupo Industrial Durango, S.A., ADR * 11,000 116,875
Telefonos de Mexico, S.A., ADR 5,800 191,400
Transportadora de Gas, ADR 21,000 257,250
886,323
Netherlands - 5.7%
Elsevier, N.V. 11,600 196,189
ING Groep, N.V. 8,200 295,418
Vendex International 1,960 83,895
Ver Ned Uitgevers 10,550 220,594
796,096
New Zealand - 2.7%
Independent News 35,000 175,680
Wilson & Horton 25,000 203,252
378,932
Singapore - 3.4%
Keppel Corp. 17,000 132,423
City Developments 20,000 180,090
Straits Steamship Land 50,000 160,080
472,593
Spain - 4.9%
Aguas de Barcelona 4,937 205,352
Prosegur Seguridad 15,325 141,652
Telefonica de Esp 8,810 204,600
Vallehermoso, S.A. 6,340 137,470
689,074
Sweden - 0.3%
Scania AB, Series A 930 23,182
Scania AB, Series B 930 23,250
46,432
Equity Securities (Cont'd) Shares Value
Switzerland - 3.8%
Winterthur 440 $254,434
Zurich Versicherun 1,000 277,923
532,357
Thailand - 0.1%
Bangkok Bank 1,000 9,670
9,670
United Kingdom - 13.2%
Allied Irish Banks 32,334 217,148
Anglian Water 10,100 101,744
Argyll Group 10,000 36,834
Azlan Group 4,000 38,976
Bellway 9,300 48,277
Cadbury Schweppes 11,200 94,596
Carlton Communications 11,200 98,165
Commercial Union 6,700 78,628
Firstbus 11,900 41,998
Glynwed International 6,600 37,992
Johnson Matthey 8,400 79,438
Kingfisher 9,100 98,218
Lloyds TSB Group 15,700 115,928
Low & Bonar 7,000 48,809
Marks & Spencer 10,700 90,190
National Westminster 9,000 105,773
Powerscreen International 4,000 38,718
Safeway 11,700 80,779
SIG 9,100 37,572
Smith & Nephew 32,200 100,125
Smurfit Jefferson 28,810 83,167
Somerfield * 14,700 41,554
Vitec Group 3,200 38,924
Wolseley 12,800 100,983
1,854,536
United States - 9.2%
Brady, (W.H.) Co., Class A 4,900 120,662
Cardinal Health, Inc. 2,250 131,063
Fort Howard Corp. * 4,300 119,056
Great Western Financial Corp. 4,000 116,000
Household International, Inc. 1,300 119,925
Interim Services, Inc. * 2,600 92,300
La Quinta Inns, Inc. 5,500 105,188
Lear Corp. * 3,400 116,025
Molex, Inc., Class A 3,200 114,000
Equity Securities (Cont'd) Shares Value
United States (Cont'd)
Quorum Health Group, Inc. * 4,000 $119,000
Worldcom, Inc. * 5,000 130,313
1,283,532
Total Equity Securities (Cost $12,194,881) 13,338,891
Prinicipal
Time Deposit - 4.7% Amount
State Street Bank, London, 5.40%, 1/3/97 $656,470 656,470
Total Time Deposit (Cost $656,470) 656,470
TOTAL INVESTMENTS (Cost $12,851,351) - 99.8% 13,995,361
Other assets and liabilities, net - 0.2% 31,456
Net Assets - 100% $14,026,817
Global Equity Portfolio
Statement of Assets and Liabilities
December 31, 1996
Assets
Investments in securities, at value $13,995,361
Cash 19,919
Interest and dividends receivable 28,348
Other assets 1,493
Total assets 14,045,121
Liabilities
Payable to Calvert Asset Management Company, Inc. 11,683
Payable to Calvert Administrative Services Company 1,167
Accrued expenses and other liabilities 5,454
Total liabilities 18,304
Net assets $14,026,817
Net Assets Consist of:
Par value and paid-in capital applicable to 748,445 shares of common
stock outstanding; $1 par value, 1,000,000 shares authorized $12,775,344
Undistributed net investment income (loss) 14,340
Accumulated net realized gain (loss) on investments and
foreign currencies 92,805
Net unrealized appreciation (depreciation) on investments and assets
and liabilitiesin foreign currencies 1,144,328
Net Assets $14,026,817
Net Asset Value per Share $18.74
Global Equity Portfolio
Statement of Operations
December 31, 1996
Net Investment Income
Investment Income
Interest income $53,884
Dividend income (net of foreign taxes of $20,785) 215,762
Total investment income 269,646
Expenses
Investment advisory fee 122,600
Directors' fees and expenses 1,002
Administrative fees 40,000
Custodian fees 50,124
Reports to shareholders 4,791
Professional fees 3,324
Miscellaneous 638
Reimbursement from Advisor (27,740)
Total expenses 194,739
Fees paid indirectly (50,124)
Net expenses 144,615
Net Investment Income (Loss) 125,031
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Securities 666,540
Foreign currencies (23,160)
643,380
Change in unrealized appreciation or depreciation on:
Securities 899,012
Assets and liabilities in foreign currencies (2,422)
896,590
Net Realized and Unrealized Gain (Loss)
on Investments 1,539,970
Increase (Decrease) in Net Assets
Resulting From Operations $1,665,001
Global Equity Portfolio
Statement of Changes in Net Assets
December 31, 1996
Year Ended Year Ended
Increase (Decrease) in Net Assets December 31, 1996 December 31, 1995
Operations
Net investment income $125,031 $138,570
Net realized gain (loss) 643,380 285,214
Change in unrealized appreciation
or depreciation 896,590 722,317
Increase (Decrease) in Net Assets
Resulting From Operations 1,665,001 1,146,101
Distributions to shareholders from
Net investment income (100,000) (137,673)
Net realized gain on investments (597,000) (249,074)
Total distributions (697,000) (386,747)
Capital share transactions
Shares sold 4,709,791 3,017,493
Reinvestment of distributions 697,005 386,745
Shares redeemed (2,178,927) (2,097,365)
Total capital share transactions 3,227,869 1,306,873
Total Increase (Decrease)
in Net Assets 4,195,870 2,066,227
Net Assets
Beginning of year 9,830,947 7,764,720
End of year (including undistributed
net investment income of $14,340 and
$12,469, respectively) $14,026,817 $9,830,947
Capital Share Activity
Shares sold 258,532 186,095
Reinvestment of distributions 37,193 22,551
Shares redeemed (120,463) (123,999)
Total capital share activity 175,262 84,647
Notes to Financial Statement
Note A-Significant Accounting Policies
General: The Global Equity Portfolio (the "Portfolio"), a series of Acacia
Capital Corporation's Calvert Responsibly Invested (CRI) Portfolios, is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The operations of each series are accounted for
separately. The shares of the Portfolio are sold to affiliated and unaffiliated
insurance companies for allocation to certain of their variable separate
accounts.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sales price. Foreign security prices,
furnished by quotation services in the security's local currency, are translated
using the current U. S. dollar exchange rate. Unlisted securities and listed
securities for which the last sale price is not available are valued at the most
recent bid price or based on a yield equivalent obtained from the securities'
market maker. Other securities and assets for which market quotations are not
available or deemed inappropriate are valued in good faith under the direction
of the Board of Directors.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date or,
in the case of dividends on certain foreign securities, as soon as the Portfolio
is informed of the ex-dividend date. Interest income, accretion of discount and
amortization of premium are recorded on an accrual basis.
Foreign Currency Transactions: The Portfolio's accounting records are
maintained in U. S. dollars. For valuation of assets and liabilities on each
date of net asset value determination, foreign denominations are translated into
U. S. dollars using the current exchange rate. Security transactions, income and
expenses are converted at the prevailing rate of exchange on the date of the
event. The effect of changes in foreign exchange rates on foreign denominated
securities is included with the net realized and unrealized gain or loss on
securities. Other foreign currency gains or losses are reported separately.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles, accordingly,
periodic reclassifications are made within the Portfolio's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
The Fund designates $400,000 as capital gain dividends for taxable year
ended December 31, 1996.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolio's cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions Calvert Asset Management Company, Inc.
(the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is
indirectly wholly-owned by Acacia Mutual Life Insurance Company. The Advisor
provides investment advisory services and pays the salaries and fees of officers
and affiliated Directors of the Portfolio. For its services, the Advisor
receives a monthly fee based on an annual rate of 1% of the Portfolio's average
daily net assets.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Portfolio for an annual fee, payable
monthly, of the greater of $40,000 or .10% of the Portfolio's annual average
daily net assets.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Portfolio.
Each Director who is not affiliated with the Advisor received a fee of $500
for each Board meeting attended plus an annual fee of $2,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served. Effective August 1, 1996, annual fees and meeting fees
were increased to $3,000 and $750, respectively.
NOTE C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $11,960,074 and $9,391,388, respectively.
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $1,144,010, of which $1,978,991 related to appreciated
securities and $834,981 related to depreciated securities.
Global Equity Portfolio
Financial Highlights
Years Ended December 31
1996 1995 1994
Net asset value, beginning $17.15 $15.89 $17.72
Income from investment operations
Net investment income .17 .27 .11
Net realized and unrealized
gain (loss) 2.40 1.69 (.49)
Total from investment operations 2.57 1.96 (.38)
Distributions from
Net investment income (.14) (.25) (.13)
Net realized gains (.84) (.45) (1.32)
Total distributions (.98) (.70) (1.45)
Total increase (decrease) in net asset value 1.59 1.26 (1.83)
Net asset value, ending $18.74 $17.15 $15.89
Total return 14.99% 12.35% (2.13%)
Ratios to average net assets:
Net investment income 1.02% 1.48% .59%
Total expenses 1.59% 1.51% --
Net expenses 1.18% 1.12% 1.24%
Expenses reimbursed .23% .39% .29%
Portfolio turnover 85% 90% 84%
Average commission rate paid $.0352 -- --
Net assets, ending (in thousands) $14,027 $9,831 $7,765
Number of shares outstanding,
ending (in thousands) 748 573 489
Periods Ending December 31,
1993 1992**
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 29.72% (3.27%)
Ratios to average net assets:
Net investment income 1.00% (.98%)(a)
Total expenses -- --
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
<PAGE>
CALVERT RESPONSIBLY INVESTED MONEY MARKET PORTFOLIO
Dear Investor:
Interest rates remained low and the economy continued to expand modestly
during 1996. Longer-term bonds exhibited a great deal of volatility, but yields
on money market securities hardly moved from their position at the beginning of
the year.
It was widely expected that the Federal Reserve would intervene to tighten
monetary policy when the economy appeared to gather momentum in the second
quarter, but the Fed took no action after cutting the federal funds rate by 25
basis points in late January.
Performance
The CRI Money Market Portfolio's yield was in line with an average of
similar funds. This is lower than the dividend yield earned over the course of
1995, reflecting the current low interest rate environment.
Outlook
The economy looks to be expanding at a moderate pace, but any sign of a
strengthening could prompt the Federal Reserve to raise their targets for key
short-term rates in order to temper the pace of economic growth. Of course,
money market investors' primary objective is stability of principal, and this
Portfolio continues to provide a safe harbor. We appreciate your investment.
Sincerely,
Clifton S. Sorrell
President
January 17, 1997
Report of Independent Accountants
To the Board of Directors of Acacia Capital Corporation and Shareholders of
Calvert Responsibly Invested Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of
Calvert Responsibly Invested Money Market Portfolio (one of the portfolios
comprising the Acacia Capital Corporation), including the portfolio of
investments, as of December 31, 1996, and the related statement of operations
for the year then ended, statement of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the three
years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund;s management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The financial highlights for each of the preceding years
were audited by other auditors whose report dated January 31, 1994 expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Calvert Responsibly Invested Money Market Portfolio as of December 31, 1996, the
results of its operations, the changes in its net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 31, 1997
Money Market Portfolio
Portfolio of Investments
December 31, 1996
U.S. Government Agencies and Principal
Instrumentalities - 45.3% Amount Value
Federal Farm Credit Bank, 5.22%, 1/3/97 $155,000 $154,955
Federal Farm Credit Bank, 5.21%, 2/6/97 200,000 198,958
Federal Farm Credit Bank, 5.27%, 3/19/97 250,000 247,182
Federal Home Loan Bank Board, 5.21%, 2/13/97 200,000 198,755
Federal Home Loan Mortgage Corp., 5.22%, 1/16/97 300,000 299,348
Federal Home Loan Mortgage Corp., 5.40%, 1/23/97 75,000 74,753
Federal Home Loan Mortgage Corp., 5.21%, 2/11/97 198,000 196,825
Federal National Mortgage Assn., 5.22%, 1/28/97 615,000 612,592
Total U.S. Government Agencies and Instrumentalities
(Cost $1,983,368) 1,983,368
Corporate Obligations - 40.3%
Alabama State Industrial Development Authority VRDN,
5.80%, 5/1/10, LOC: Regions Bank * 100,000 100,000
Alabama State Industrial Development Authority VRDN,
5.90%, 12/1/19, LOC: Chemical Bank * 140,000 140,000
Arbor Properties, Inc. VRDN, 6.20%, 11/1/21,
LOC: Amsouth Bank * 100,000 100,000
Aspen Institute, Inc. VRDN, 5.74%, 12/1/04, LOC:
First National Bank of Maryland * 140,000 140,000
Barton Healthcare, LLC. VRDN, 5.70%, 2/15/25, LOC:
American National Bank & Trust * 150,000 150,000
Chapel Oaks, Inc. VRDN, 6.05%, 10/1/26, LOC:
Allied Irish Bank * 100,000 100,000
Fed One Dayton VRDN, 6.83%, 8/1/09, LOC:
Bank One Ohio * 140,000 140,000
Iowa Financial Authority Economic Development
Authority Revenue VRDN, 5.90%, 3/1/11,
LOC: Rabobank Nederland * 150,000 150,000
Mahoning County, Ohio VRDN, 6.10%, 11/1/98, LOC:
PNC Bank * 155,000 155,000
Mississippi Business Financial Corp. VRDN, 5.90%,
6/1/10, LOC: National Bank of Detroit * 140,000 140,000
Montgomery County, Pennsylvania Industrial
Development Revenue VRDN, 5.75%, 3/1/10,
LOC: Corestates * 150,000 150,000
TLC Holdings, LLC. VRDN, 5.90%, 6/1/26, LOC:
Columbus Bank & Trust * 150,000 150,000
W.L. Petrey Wholesale, Inc. Industrial Development
Bond VRDN, 5.90%, 3/1/11, LOC:
Southtrust Bank * 150,000 150,000
Total Corporate Obligations (Cost $1,765,000) 1,765,000
Principal
Municipal Obligations - 14.6% Amount Value
Chicago, Illinois General Obligation VRDN, Series
A, 5.65%, 1/1/02, LOC: Canadian
Imperial * $100,000 $100,000
Gardena, California Certificates of Participation
VRDN, 5.95%, 7/1/25, LOC: Dai-Ichi
Kangyo Bank * 140,000 140,000
City of Mt. Vernon Industrial Solid Waste
Disposal VRDN, 6.00%, 11/1/11,
LOC: Suntrust Bank * 150,000 150,000
Village of Schaumberg, Illinois VRDN, 5.80%,
12/1/20, Bond Purchase Agreement:
Credit Suisse * 150,000 150,000
Virginia State Housing Development Authority
VRDN, 5.60%, 3/1/02 * 100,000 100,000
Total Municipal Obligations (Cost $640,000) 640,000
TOTAL INVESTMENTS (Cost $4,388,368) - 100.2% 4,388,368
Other assets and liabilities, net - (0.2)% (10,139)
Net Assets - 100% $4,378,229
Money Market Portfolio
Statement of Assets and Liabilities
December 31, 1996
Assets
Investments in securities, at value $4,388,368
Interest receivable 11,217
Other assets 738
Total assets 4,400,323
Liabilities
Payable to Bank 17,437
Payable to Calvert Asset Management Company, Inc. 1,877
Accrued expenses and other liabilities 2,780
Total liabilities 22,094
Net assets $4,378,229
Net Assets Consist of:
Par value and paid-in capital applicable to 4,382,463 shares
of common stock outstanding; $1 par value,
5,000,000 shares authorized $4,377,887
Undistributed net investment income (loss) 7
Accumulated net realized gains (losses) on investments 335
Net Assets $4,378,229
Net Asset Value per Share $1.00
Money Market Portfolio
Statement of Operations
Year Ended December 31, 1996
Net Investment Income
Investment Income
Interest income $264,827
Total investment income 264,827
Expenses
Investment advisory fee 24,348
Directors' fees and expenses 435
Custodian fees 6,165
Reports to shareholders 4,192
Professional fees 578
Miscellaneous 633
Total expenses 36,351
Fees paid indirectly (6,165)
Net expenses 30,186
Net Investment Income 234,641
Realized Gain (Loss) on Investments
Net realized gain (loss) 205
Increase (Decrease) in Net Assets
Resulting From Operations $234,846
Money Market Portfolio
Statement of Changes in Net Assets
Year Ended Year Ended
December 31, December 31,
Increase (Decrease) in Net Assets 1996 1995
Operations
Net investment income $234,641 $288,653
Net realized gain (loss) 205 150
Increase (Decrease) in Net Assets
Resulting From Operations 234,846 288,803
Distributions to shareholders from
Net investment income (235,033) (288,254)
Capital share transactions
Shares sold 13,882,018 10,858,696
Reinvestment of distributions 235,032 266,798
Shares redeemed (14,867,168) (12,476,524)
Total capital share transactions (750,118) (1,351,030)
Total Increase (Decrease)
in Net Assets (750,305) (1,350,481)
Net Assets
Beginning of year 5,128,534 6,479,015
End of year (including undistributed net investment
income of $7 and $399, respectively) $4,378,229 $5,128,534
Capital Share Activity
Shares sold 13,882,018 10,858,696
Reinvestment of distributions 235,032 266,798
Shares redeemed (14,867,168) (12,476,524)
Total capital share activity (750,118) (1,351,030)
Notes to Financial Statements
Note A-Significant Accounting Policies
General: The Money Market Portfolio (the "Portfolio"), a series of Acacia
Capital Corporation's Calvert Responsibly Invested (CRI) Portfolios, is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The operations of each series are accounted for
separately. The shares of the Portfolio are sold to affiliated and unaffiliated
insurance companies for allocation to certain of their variable separate
accounts.
Security Valuation: All securities are valued at amortized cost, which
approximates market.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Interest income, accretion of discount and amortization
of premium are recorded on an accrual basis.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends are accrued daily and paid
monthly. Distributions from net realized capital gains, if any, are paid at
least annually. Distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles,
accordingly, periodic reclassifications are made within the Portfolio's capital
accounts to reflect income and gains available for distribution under income tax
regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolio's cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Directors of the
Portfolio. For its services, the Advisor receives a monthly fee based on an
annual rate of .50% of the Portfolio's average daily net assets.
Calvert Shareholder Services, Inc., an affiliate of the Advisor, acts as
transfer, dividend disbursing and shareholder servicing agent for the Portfolio.
Each Director who is not affiliated with the Advisor received a fee of $500
for each Board meeting attended plus an annual fee of $2,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served. Effective August 1, 1996, annual fees and meeting fees
were increased to $3,000 and $750, respectively.
Note C-Investment Activity
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes.
As a cash management practice, the Portfolio may sell or purchase
short-term variable rate notes from other Portfolios managed by the Advisor. All
transactions are executed at independently derived prices.
Money Market Portfolio
Financial Highlights
Year Ended December 31,
1996 1995 1994
Net asset value, beginning $1.00 $1.00 $1.00
Income from investment operations
Net investment income .048 .055 .039
Net realized gain (loss) -- -- --
Total from investment operations .048 .055 .039
Distributions from
Net investment income (.048) (.055) (.039)
Total increase (decrease) in net asset value -- -- --
Net asset value, ending $1.00 $1.00 $1.00
Total return 4.95% 5.37% 3.96%
Ratios to average net assets:
Net investment income 4.82% 5.23% 3.91%
Total expenses .75% .66% --
Net expenses .62% .59% .45%
Expenses reimbursed -- -- .36%
Net assets, ending (in thousands) $4,378 $5,129 $6,479
Number of shares outstanding,
ending (in thousands) 4,382 5,133 6,484
Period Ended December 31,
1993 1993**
Net asset value, beginning $1.00 $1.00
Income from investment operations
Net investment income .031 .009
Net realized gain (loss) -- --
Total from investment operations .031 .009
Distributions from
Net investment income (.031) (.009)
Total increase (decrease) in net asset value -- --
Net asset value, ending $1.00 $1.00
Total return 3.09% 2.11%
Ratios to average net assets:
Net investment income 3.07% 3.02%(a)
Total expenses -- --
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
<PAGE>
CALVERT RESPONSIBLY INVESTED STRATEGIC GROWTH PORTFOLIO
Dear Investor:
The Calvert Responsibly Invested Strategic Growth Portfolio reported
outstanding performance results for 1996 and significantly outperformed its
benchmarks.
Calvert Responsibly Invested
Strategic Growth Portfolio
Comparison of change in value of a hypothetical $10,000 investment.
(Graph appears here)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
12/31/96 12/31/95 9/30/95 6/30/95 3/15/95
CRI Strategic Growth $14,729 $10,954 $10,190 $9,900 $10,000
S & P 500 Reinv $15,415 $12,538 $11,836 $10,955 $10,000
Russell 2000 $14,306 $12,279 $12,019 $10,938 $10,000
</TABLE>
Average Annual Total Return
(period ending 12/31/96)
1 Year 34.33% Life of Fund 24.04% (3/95)
Performance information is for the Portfolio only and does not
reflect charges and expenses of the variable annuity.
Past performance does not indicate future results.
Market Summary
Nineteen ninety-six was a great year for the stock market, but investors
needed nerves of steel to withstand the high degree of volatility. Small-cap
stocks accomplished most of their gains in the first half. A mid-year market
correction caused prices to decline about 20% on average, before the market
started to recover in August. In general, large-cap stocks outperformed
small-caps, as investors sought out companies that typically provide more
predictable earnings and less volatile prices.
Investor sentiment was positive, judging by mutual fund cash inflows. The
average monthly inflow to stock funds was over $24 billion during the first five
months and slowed to just over $14 billion during the last seven months.
Performance and Strategy
Even though we focus on small- and mid-cap stocks, the return on the
Strategic Growth Portfolio was well-above measures of the large-cap universe due
to good stock selection. During the year, we continued to seek out stocks of
companies with solid underlying fundamentals and strong earnings growth rates
that are trading at a discount. Strict sell guidelines kept the Portfolio
concentrated in those stocks we are most confident about.
One of our top-performers for the year, and a good example of our stock
selection process, is the software company, Clarify. We identified the stock's
tremendous growth potential, made our first investment in May at a
split-adjusted share price of $22.25 and, by year-end, the share price had
approximately doubled to $48.00 per share.
Throughout the year, we maintained sizable commitments to the technology,
medical/pharmaceutical, oil and gas services, retail and telecommunications
equipment industries.
Outlook
While we are optimistic about opportunities in the small- and mid-cap
sector, investors should be prepared for above-average volatility in 1997.
Studies point to a pattern of market corrections typically following two
back-to-back years when the Dow Jones Industrial Average gains more than 20%.
The Dow gained 33.5% in 1995 and 26% in 1996. In addition, years following
Presidential elections have tended to be more volatile.
While we continue to identify promising investment opportunities, we
believe continued strong stock selection will be the key to performance in 1997.
We appreciate your investment in the CRI Strategic Growth Portfolio.
Sincerely,
Clifton S. Sorrell Cedd Moses
President Portfolio Manager, Portfolio Advisory Services
January 17, 1997
Report of Independent Accountants
To the Board of Directors of Acacia Capital Corporation, and Shareholders
of Calvert Responsibly Invested Strategic Growth Portfolio:
We have audited the accompanying statement of assets and liabilities of
Calvert Responsibly Invested Strategic Growth Portfolio (one of the portfolios
comprising Acacia Capital Corporation), including the portfolio of investments,
as of December 31, 1996, and the related statement of operations for the year
then ended, and statement of changes in net assets and financial highlights for
the year then ended and the period from March 1, 1995 (commencement of
operations) through December 31, 1995. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Calvert Responsibly Invested Strategic Growth Portfolio as of December 31, 1996,
the results of its operations, the changes in its net assets and financial
highlights for the respective periods stated in the first paragraph in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
January 31, 1997
Strategic Growth Portfolio
Portfolio of Investments
December 31, 1996
Equity Securities - 88.7% Shares Value
Computer - Services - 9.7%
Harbinger Corp. * 3,500 $91,875
Sapient Corp. * 3,350 141,119
Technology Solutions Co. * 1,500 62,250
295,244
Electronic Products - Miscellaneous - 3.5%
Uniphase Corp. * 2,000 105,000
105,000
Electronics - Semiconductor Equipment - 1.8%
PRI Automation, Inc. * 1,200 54,600
54,600
Electronics - Semiconductor Manufacturing - 10.8%
DSP Communications, Inc. * 2,800 54,250
Sanmina Corp. * 2,600 146,900
Vitesse Semiconductor Corp. * 2,800 127,400
328,550
Finance - Mortgage - 5.1%
Cityscape Financial Corp. * 5,900 154,875
154,875
Medical - Ethical Drugs - 6.5%
Dura Pharmaceuticals, Inc. * 2,000 95,500
Jones Medical Industries, Inc. 2,775 101,634
197,134
Medical - Information Technology - 1.0%
Enterprise Systems, Inc. * 1,300 30,550
30,550
Medical - Services - 4.6%
Access Health, Inc. * 3,100 138,725
138,725
Oil and Gas - Field Services - 0.9%
Trico Marine Services, Inc. * 600 28,800
28,800
Retail - Apparel and Shoe - 1.5%
Gadzooks, Inc. * 2,450 44,712
44,712
Equity Securities (Cont'd) Shares Value
Retail - Discount and Variety - 4.5%
Dollar Tree Stores, Inc. * 3,600 $137,700
137,700
Software - Applications - 22.5%
Clarify, Inc.* 3,200 153,600
Documentum, Inc. * 2,260 76,275
Objective Systems Integrators, Inc. * 1,400 33,425
Pegasystems, Inc. * 3,100 93,388
Remedy Corp. * 900 48,375
Siebel Systems, Inc. * 5,400 145,800
Vantive Corp. * 4,200 131,250
682,113
Software - Database and Development Tools - 7.2%
Cognos, Inc. * 1,500 42,188
Pure Atrai Corp. * 1,800 44,550
Rational Software Corp. * 3,300 130,556
217,294
Software - Education and Entertainment - 2.9%
CBT Group Publishing Ltd., ADR * 1,600 86,800
86,800
Software - Systems - 3.0%
Citrix Systems, Inc. * 2,300 89,844
89,844
Telecommunications - Equipment - 3.2%
SeaChange International, Inc. * 900 22,950
Sourcecom Corp., Series B, Preferred * 1,500 6,450
Verilink Corp. * 2,000 66,500
95,900
Total Equity Securities (Cost $2,094,488) 2,687,841
TOTAL INVESTMENTS (Cost $2,094,488) - 88.7% 2,687,841
Other assets and liabilities, net - 11.3% 342,801
Net Assets - 100% $3,030,642
Strategic Growth Portfolio
Statement of Assets and Liabilities
December 31, 1996
Assets
Investments in securities, at value $2,687,841
Cash 466,958
Dividends receivable 56
Other assets 146
Total assets 3,155,001
Liabilities
Payable for securities purchased 118,498
Payable to Calvert Asset Management Company, Inc. 3,730
Accrued expenses and other liabilities 2,131
Total liabilities 124,359
Net assets $3,030,642
Net Assets Consist of:
Par value and paid-in capital applicable to 206,840 shares of common
stock outstanding; $1 par value, 1,000,000 shares authorized $2,444,199
Accumulated net realized gain (loss) on investments (6,910)
Net unrealized appreciation (depreciation) on investments 593,353
Net Assets $3,030,642
Net Asset Value per Share $14.65
Strategic Growth Portfolio
Statement of Assets and Liabilities
December 31, 1996
Net Investment Income
Investment Income
Interest income $3,783
Dividend income 149
Total investment income 3,932
Expenses
Investment advisory fee 28,564
Directors' fees and expenses 150
Administrative fees 3,794
Custodian fees 8,821
Reports to shareholders 4,325
Professional fees 487
Miscellaneous 780
Reimbursement from Advisor (3,794)
Total expenses 43,127
Fees paid indirectly (8,821)
Net expenses 34,306
Net Investment Income (Loss) (30,374)
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Securities 39,089
Options written 1,369
Securities sold short 3,170
43,628
Change in unrealized appreciation or depreciation 486,428
Net Realized and Unrealized Gain (Loss)
on Investments 530,056
Increase (Decrease) in Net Assets
Resulting From Operations $499,682
Strategic Growth Portfolio
Statement of Changes in Net Assets
March 1, 1995
Year Ended Inception to
December 31, December 31,
Increase (Decrease) in Net Assets 1996 1995
Operations
Net investment income (loss) $(30,374) $3,237
Net realized gain (loss) 43,628 (11,166)
Change in unrealized appreciation or depreciation 486,428 106,925
Increase (Decrease) in Net Assets
Resulting From Operations 499,682 98,996
Distributions to shareholders from
Net investment income (533) (2,702)
Net realized gain on investments (9,000) --
Total distributions (9,533) (2,702)
Capital share transactions
Shares sold 1,765,749 1,272,662
Reinvestment of distributions 9,532 2,702
Shares redeemed (444,228) (162,218)
Total capital share transactions 1,331,053 1,113,146
Total Increase (Decrease)
in Net Assets 1,821,202 1,209,440
Net Assets
Beginning of period 1,209,440 --
End of period (including undistributed net investment
income of $0 and $535, respectively) $3,030,642 $1,209,440
Capital Share Activity
Shares sold 128,377 126,452
Reinvestment of distributions 651 247
Shares redeemed (32,774) (16,113)
Total capital share activity 96,254 110,586
Notes to Financial Statements
Note A-Significant Accounting Policies
General: The Strategic Growth Portfolio (the "Portfolio"), a series of
Acacia Capital Corporation's Calvert Responsibly Invested (CRI) Portfolios, is
registered under the Investment Company Act of 1940 as a nondiversified,
open-end management investment company. The operations of each series are
accounted for separately. The shares of the Portfolio, which were first offered
on March 1, 1995, are sold to affiliated and unaffiliated insurance companies
for allocation to certain of their variable separate accounts.
Security Valuation: Securities listed or traded on a national securities
exchange are valued at the last reported sales price. Unlisted securities and
listed securities for which the last sale price is not available are valued at
the most recent bid price or based on a yield equivalent obtained from the
securities' market maker. Other securities and assets for which market
quotations are not available or deemed inappropriate are valued in good faith
under the direction of the Board of Directors.
Options: The Portfolio may write or purchase option securities. The option
premium is the basis for recognition of unrealized or realized gain or loss on
the option. The cost of securities acquired or the proceeds from securities sold
through the exercise of the option is adjusted by the amount of the premium.
Securities Sold Short: The Portfolio may sell securities that it does not
own in anticipation of a decline in their market price. Gains or losses
represent the difference between the sale proceeds and the current market value
of the security.
Deposits with Brokers: The Portfolio maintains liquid assets (such as cash,
U.S. government securities or other high-grade debt obligations) sufficient to
cover, on a daily basis, the current values of written options and securities
sold short.
Security Transactions and Investment Income: Security transactions are
accounted for on trade date. Realized gains and losses are recorded on an
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income, accretion of discount and amortization of premium are recorded
on an accrual basis. Dividends declared on securities sold short are reported as
an expense.
Distributions to Shareholders: Distributions to shareholders are recorded
by the Portfolio on ex-dividend date. Dividends from net investment income and
distributions from net realized capital gains, if any, are paid at least
annually. Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles, accordingly,
periodic reclassifications are made within the Portfolio's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its
custodian bank whereby the custodian's fees are paid indirectly by credits
earned on the Portfolio's cash on deposit with the bank. Such deposit
arrangement is an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is
required since the Portfolio intends to continue to qualify as a regulated
investment company under the Internal Revenue Code and to distribute
substantially all of its earnings.
Note B-Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by
Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by Acacia
Mutual Life Insurance Company. The Advisor provides investment advisory services
and pays the salaries and fees of officers and affiliated Directors of the
Portfolio. For its services, the Advisor receives a monthly fee based on an
annual rate of 1.5% of the Portfolio's average daily net assets. Effective
April, 1996, the Portfolio began paying a monthly performance fee of plus or
minus up to .15%, on an annual basis, of average daily net assets of the
performance period depending on the Portfolio's performance compared to the
Russell 2000 Index.
Calvert Administrative Services Company, an affiliate of the Advisor,
provides administrative services to the Portfolio for an annual fee, payable
monthly, of .20% of the Portfolio's annual average daily net assets. The Advisor
voluntarily reimbursed the Portfolio for administrative fees.
Each Director who is not affiliated with the Advisor received a fee of $500
for each Board meeting attended plus an annual fee of $2,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served. Effective August 1, 1996, annual fees and meeting fees
were increased to $3,000 and $750, respectively.
Note C-Investment Activity
During the year, purchases and sales of investments, other than short-term
securities, were $3,436,098 and $1,973,142, respectively
The cost of investments owned at December 31, 1996 was substantially the
same for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $593,353, of which $673,907 related to appreciated
securities and $80,554 related to depreciated securities.
The Portfolio's only transaction in written call options was the expiration
of 2 contracts, premium value of $1,369, which had been open at December 31,
1995.
Strategic Growth Portfolio
Financial Highlights
Periods Ended December 31,
1996 1995**
Net asset value, beginning $10.94 $10.00
Income from investment operations
Net investment income (.15) .25
Net realized and unrealized gain (loss) 3.90 .93
Total from investment operations 3.75 1.18
Distributions from
Net investment income (.00) (.24)
Net realized gains (.04) --
Total distributions (.04) (.24)
Total increase (decrease) in net asset value 3.71 .94
Net asset value, ending $14.65 $10.94
Total return 34.33% 9.65%
Ratios to average net assets:
Net investment income (1.60%) .43%(a)
Total expenses 2.27% 2.17%(a)
Net expenses 1.81% 1.64%(a)
Expenses reimbursed .20% .20%(a)
Portfolio turnover 120% 223%
Average commission rate paid $.0499 --
Net assets, ending (in thousands) $3,031 $1,209
Number of shares outstanding, ending (in thousands) 207 111
