<PAGE>
CALVERT RESPONSIBLY INVESTED
MONEY MARKET PORTFOLIO
MANAGED BY CALVERT ASSET MANAGEMENT COMPANY, INC.
Dear Investor:
Before we begin our discussion of the economy and markets, we want to let
investors know that on January 1, 1998, Acacia Capital Corporation was renamed
Calvert Variable Series, Inc. and the Calvert Responsibly Invested Money Market
Portfolio was renamed Calvert Social Money Market Portfolio.
REVIEW
Short-term rates trended higher early in the year on expectations that the
Federal Reserve would take steps to tighten monetary policy and slow the pace of
economic growth. The Fed did step in March, raising its target rate for the
federal funds rate, the rate banks charge each other for overnight loans to meet
reserve requirements, by 25 basis points, but then took no further action.
Short-term securities reversed course and yields trended downward for the
remainder of the year.
STRATEGY
The Portfolio's weighted average maturity was 24 days at the beginning of the
year. Expecting that rates would continue to rise, we adjusted to a slightly
shorter position so we would be able to quickly reinvest in higher yielding
securities. Our analysis of the economy's strength caused us to revise our
forecast around mid-year. At that point, we anticipated the pace of economic
growth and inflation would moderate and rates would not likely move dramatically
higher. Accordingly, we modified our strategy and lengthened maturity. At the
close of the year, the Portfolio's weighted average maturity was 23 days, just
about where we began.
The composition of the Portfolio has not changed greatly since our last report.
We continue to invest primarily in variable rate demand notes and US government
agency discount notes. Discount notes are issued below face value and redeemed
at face value.
The Money Market Portfolio's 5.20% 12-month total return was seven basis points
above the return on the Lipper Variable Insurance Money Market Instrument Funds
Average.*
OUTLOOK
Continued low inflation despite strong economic growth and real wage gains kept
the Fed on hold for the balance of 1997. In the fourth quarter, the Asian
financial crisis likely also impacted US monetary policy, as the Fed had to
consider the impact of a rise in rates on jittery global economies. Once the
situation in Asia stabilizes, rates could move a bit higher, but money market
investors should not expect dramatically higher yields.
Sincerely,
/s/Barbara J. Krumsiek
Barbara J. Krumsiek
President and CEO
January 21, 1998
*THE PORTFOLIO'S TOTAL RETURN DOES NOT REFLECT THE CHARGES AND EXPENSES OF THE
VARIABLE ANNUITY PRODUCT.
ANNUAL REPORT CRI MONEY MARKET PORTFOLIO - 1
<PAGE>
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, 1997, and the related statement of operations for the year then
ended, statements of changes in net assets for each of the two years in the
period then ended and financial highlights for each of the four 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 the year ended December 31, 1993 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, 1997, by correspondence with the custodian and brokers. 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, 1997, 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 30, 1998
2 - CRI MONEY MARKET PORTFOLIO ANNUAL REPORT
<PAGE>
MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
U.S. GOVERNMENT AGENCIES AND PRINCIPAL
INSTRUMENTALITIES - 29.1% AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank, 5.65%, 2/11/98 . . . . . . . . . . . . . . . $ 145,000 $ 144,067
Federal Farm Credit Bank, 5.62%, 3/3/98. . . . . . . . . . . . . . . . 420,000 416,000
Federal Home Loan Bank Board, 5.40%, 1/26/98 . . . . . . . . . . . . . 158,000 157,408
Federal Home Loan Bank Board, 5.48%, 2/27/98 . . . . . . . . . . . . . 125,000 123,915
Federal Home Loan Mortgage Corp., 5.72%, 1/15/98 . . . . . . . . . . . 200,000 199,555
Federal Home Loan Mortgage Corp., 5.52%, 3/6/98. . . . . . . . . . . . 650,000 643,621
Federal National Mortgage Assn., 5.65%, 2/18/98. . . . . . . . . . . . 132,000 131,006
----------
Total U.S. Government Agencies and Instrumentalities
(Cost $1,815,572) . . . . . . . . . . . . . . . . . . . . . . . 1,815,572
----------
CORPORATE OBLIGATIONS - 65.9%
- ----------------------------------------------------------------------------------------------------
Alabama State Industrial Development Authority, Mitchell
Grocery, VRDN, 6.00%, 5/1/10, LOC: Regions Bank * . . . . . . . . . 300,000 300,000
Alabama State Industrial Development Authority, Simcala, Inc.,
VRDN, 6.00%, 12/1/19, LOC: First Bank *. . . . . . . . . . . . . . . 240,000 240,000
Aspen Institute, Inc., VRDN, 5.91%, 12/1/04,
LOC: First National Bank of Maryland * . . . . . . . . . . . . . . . 240,000 240,000
Fed One Dayton VRDN, 6.80%, 8/1/09,
LOC: Bank One Ohio * . . . . . . . . . . . . . . . . . . . . . . . . 70,000 70,000
Health Midwest Ventures Group VRDN, 5.80%, 8/1/19,
LOC: Bank of America * . . . . . . . . . . . . . . . . . . . . . . . 230,000 230,000
Healthtrack Sports and Wellness VRDN, 5.80%, 2/15/27,
LOC: American National Bank & Trust *. . . . . . . . . . . . . . . . 250,000 250,000
IPC Industries, Inc. VRDN, 6.00%, 10/1/11, LOC: National
Bank of Canada * . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 150,000
Iowa Finance Authority Economic Development Authority
Revenue, Iowa Medical Assoc., VRDN, 5.95%, 3/1/11,
LOC: Rabobank Nederland *. . . . . . . . . . . . . . . . . . . . . . 200,000 200,000
La Mirada, California Industrial Development Authority,
Rykoff Sexton, VRDN, 5.80%, 12/1/26, LOC: First National
Bank of Chicago *. . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 150,000
Lexington Financial Services, LLC, VRDN, 5.80%, 3/1/27,
LOC: LaSalle Bank *. . . . . . . . . . . . . . . . . . . . . . . . . 200,000 200,000
Mahoning County, Ohio, International Towers, VRDN, 6.31%,
11/1/98, LOC: PNC Bank * . . . . . . . . . . . . . . . . . . . . . . 170,000 170,000
Montgomery County, Kentucky Industrial Development Revenue,
Fireblanking, VRDN, 6.00%, 8/1/06, LOC: Fleet Bank *. . . . . . . . 224,000 224,000
Montgomery County, Pennsylvania Industrial Development Revenue,
Horsham Assoc., VRDN,5.90%, 3/1/10, LOC: Corestates *. . . . . . . . 210,000 210,000
Mount Vernon, Indiana Economic Development, BB&M Plastics,
VRDN, 6.10%, 7/1/07, LOC: Citizens National Bank,
Confirming LOC: Suntrust Bank *. . . . . . . . . . . . . . . . . . . 135,000 135,000
Pleasant Hill California Redevelopment Agency VRDN, 6.10%,
8/1/26, LOC: Heller Financial, Confirming
LOC: Commerze Bank * . . . . . . . . . . . . . . . . . . . . . . . . 200,000 200,000
ANNUAL REPORT CRI MONEY MARKET PORTFOLIO - 3
<PAGE>
PRINCIPAL
CORPORATE OBLIGATIONS (CONT'D) AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
St. Paul, Minnesota Housing and Redevelopment Authority
VRDN, 5.90%, 6/1/15, LOC: Credit Local de France * . . . . . . . . . $300,000 $ 300,000
Sault Ste Marie, Michigan VRDN, 6.31%, 6/1/03,
LOC: First America Bank, MI *. . . . . . . . . . . . . . . . . . . . 150,000 150,000
W.L. Petrey Wholesale, Inc., Industrial Development Bond
VRDN, 6.00%, 3/1/11, LOC: Southtrust Bank, AL *. . . . . . . . . . . 145,000 145,000
Washington State Housing Finance Authority, Glenbrook
Apartments, VRDN, 6.10%, 7/1/29, LOC: Bank One, AZ * . . . . . . . . 250,000 250,000
Westminster Asset Corp. VRDN, 5.97%, 4/1/22,
LOC: Wells Fargo Bank *. . . . . . . . . . . . . . . . . . . . . . . 300,000 300,000
----------
Total Corporate Obligations (Cost $4,114,000) . . . . . . . . . . 4,114,000
----------
MUNICIPAL OBLIGATIONS - 4.3%
- ----------------------------------------------------------------------------------------------------
Texas State VRDN, 5.67%, 12/1/27, TOA: Citibank *. . . . . . . . . . . 266,000 266,000
----------
Total Municipal Obligations (Cost $266,000) . . . . . . . . . . . 266,000
----------
TOTAL INVESTMENTS (Cost $6,195,572) - 99.3% . . . . . . . . . . 6,195,572
Other assets and liabilities, net - 0.7%. . . . . . . . . . . . 46,312
----------
NET ASSETS - 100% . . . . . . . . . . . . . . . . . . . . . . . $6,241,884
----------
----------
* OPTIONAL TENDER FEATURES GIVE THESE SECURITIES A SHORTER EFFECTIVE MATURITY DATE.
EXPLANATION OF GUARANTEES: ABBREVIATIONS:
LOC: LETTER OF CREDIT VRDN: VARIABLE RATE DEMAND NOTES
TOA: TENDER OPTION AGREEMENT
SEE NOTES TO FINANCIAL STATEMENTS.
4 - CRI MONEY MARKET PORTFOLIO ANNUAL REPORT
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value. . . . . . . . . . . . . . . . . . . . . . . . . $6,195,572
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,683
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,846
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,246,234
----------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Payable to Calvert Asset Management Company, Inc.. . . . . . . . . . . . . . . . . . 2,909
Payable to Calvert Shareholder Services, Inc.. . . . . . . . . . . . . . . . . . . . 161
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 1,280
----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,350
----------
Net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,241,884
----------
----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Par value and paid-in capital applicable to 6,246,045 shares of common
stock outstanding; $1 par value, 10,000,000 shares authorized. . . . . . . . . . . $6,241,469
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . . . . 415
----------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,241,884
----------
----------
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.00
----------
----------
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI MONEY MARKET PORTFOLIO - 5
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 344,499
----------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344,499
----------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,309
Transfer agency fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . 1,446
Directors fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 638
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,389
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,948
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410
----------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,015
Fees paid indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,389)
----------
Net expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,626
----------
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . 308,873
----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . $ 308,873
----------
----------
SEE NOTES TO FINANCIAL STATEMENTS.
6 - CRI MONEY MARKET PORTFOLIO ANNUAL REPORT
<PAGE>
MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . $ 308,873 $ 234,641
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . -- 205
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . 308,873 234,846
----------- -----------
Distributions to shareholders from
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (308,800) (235,033)
----------- -----------
Capital share transactions
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,330,449 13,882,018
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . 308,800 235,032
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . (13,775,667) (14,867,168)
----------- -----------
Total capital share transactions. . . . . . . . . . . . . . . . . 1,863,582 (750,118)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . 1,863,655 (750,305)
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,378,229 5,128,534
----------- -----------
End of year (including undistributed net investment
income of $415 and $7, respectively) . . . . . . . . . . . . . . . . $ 6,241,884 $ 4,378,229
----------- -----------
----------- -----------
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,330,449 13,882,018
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . 308,800 235,032
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,775,667) (14,867,168)
----------- -----------
Total capital share activity . . . . . . . . . . . . . . . . . . . . 1,863,582 (750,118)
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI MONEY MARKET PORTFOLIO - 7
<PAGE>
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 amounts 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 Portfolios 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.
8 - CRI MONEY MARKET PORTFOLIO ANNUAL REPORT
<PAGE>
Each Director who is not affiliated with the Advisor received a fee of $750 for
each Board meeting attended plus an annual fee of $3,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served.
NOTE C -- INVESTMENT ACTIVITY
The cost of investments owned at December 31, 1997 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.
NOTE D -- LINE OF CREDIT
Effective July 1, 1997, a financing agreement is in place with all Calvert Group
Funds and State Street Bank and Trust Company ("the Bank"). Under the agreement,
the Bank is providing an unsecured line of credit facility, in the aggregate
amount of $50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings under
this facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused portion
of the committed facility which will be allocated to all participating funds.
This fee is paid quarterly in arrears. The Fund had no loans outstanding
pursuant to this line of credit at December 31, 1997.
NOTE E -- SUBSEQUENT EVENT
Effective January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Money Market
Portfolio was renamed Calvert Social Money Market Portfolio.
ANNUAL REPORT CRI MONEY MARKET PORTFOLIO - 9
<PAGE>
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00
------ ------ ------
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . .051 .048 .055
Net realized gain (loss) . . . . . . . . . . . . . . -- -- --
------ ------ ------
Total from investment operations. . . . . . . . . .051 .048 .055
------ ------ ------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . (.051) (.048) (.055)
------ ------ ------
Total increase (decrease) in net asset value . . . . . -- -- --
------ ------ ------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00
------ ------ ------
------ ------ ------
Total return . . . . . . . . . . . . . . . . . . . . . 5.20% 4.95% 5.37%
------ ------ ------
------ ------ ------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . 5.10% 4.82% 5.23%
------ ------ ------
------ ------ ------
Total expenses+ . . . . . . . . . . . . . . . . . . .69% .75% .66%
------ ------ ------
------ ------ ------
Net expenses . . . . . . . . . . . . . . . . . . . . .59% .62% .59%
------ ------ ------
------ ------ ------
Expenses reimbursed. . . . . . . . . . . . . . . . . -- -- --
------ ------ ------
------ ------ ------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . $6,242 $4,378 $5,129
------ ------ ------
------ ------ ------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . 6,246 4,382 5,133
------ ------ ------
------ ------ ------
YEARS ENDED
--------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $ 1.00 $ 1.00
------ ------
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .039 .031
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . -- --
------ ------
Total from investment operations. . . . . . . . . . . . . . . . . .039 .031
------ ------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.039) (.031)
------ ------
Total increase (decrease) in net asset value . . . . . . . . . . . . . -- --
------ ------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $ 1.00 $ 1.00
------ ------
------ ------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.96% 3.09%
------ ------
------ ------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . 3.91% 3.07%
------ ------
------ ------
Total expenses+ . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA
------ ------
------ ------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45%
------ ------
------ ------
Expenses reimbursed. . . . . . . . . . . . . . . . . . . . . . . . . .36% .11%
------ ------
------ ------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . . . . . . . . . $6,479 $4,032
------ ------
------ ------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . . . . . . . . . 6,484 4,032
------ ------
------ ------
</TABLE>
+ EFFECTIVE DECEMBER 31, 1995, THIS RATIO REFLECTS TOTAL EXPENSES BEFORE
REDUCTION FOR FEES PAID INDIRECTLY; SUCH REDUCTIONS ARE INCLUDED IN THE
RATIO OF NET EXPENSES.
NA DISCLOSURE NOT APPLICABLE TO PRIOR PERIODS.
10 - CRI MONEY MARKET PORTFOLIO ANNUAL REPORT
<PAGE>
CALVERT RESPONSIBLY INVESTED
STRATEGIC GROWTH PORTFOLIO
MANAGED BY AWAD & ASSOCIATES
Dear Investor:
Before we begin our discussion of the economy and markets, we want to call your
attention to four proposals that were approved at a shareholder meeting held on
December 2, 1997. One important result was changing the Portfolio's investment
strategy to focus on opportunities in the small-cap sector. Voting results
follow the Portfolio's Financial Highlights.
Also, on January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Strategic Growth
Portfolio was renamed Calvert Social Small Cap Portfolio.
REVIEW
Awad & Associates took over as investment manager of the Strategic Growth
Portfolio on October 1, 1997. They took the reins during what proved to be a
very difficult period for small-cap stocks, as the Asian crisis heated up and
sparked volatility in the domestic markets. Small-cap stocks were the hardest
hit, as investors sought liquidity in large-cap stocks. Additionally, they
inherited a very volatile portfolio of stocks from the Portfolio's former
manager. Consequently, the Portfolio's fourth quarter return was -5.74%,
compared to -3.35% for the Russell 2000 Index.*
STRATEGY
We took steps during the quarter to change the Portfolio's composition to
reflect our style of management which emphasizes growth stocks bought at
reasonable prices. The reallocation process resulted in periods of high cash
balances which provided some downside protection during the tumultuous fourth
quarter. In the near future, we expect to be and remain fully invested in small-
cap equity securities.
STRATEGIC GROWTH PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
(YEAR ENDED 12/31/97)
One year -9.86%
Since inception 10.61%
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
Bar chart here showing comparison from 3/31/95 to 12/97
CRI Strategic Growth Portfolio $13,267
Russell 2000 Index TR $17,502
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT. FOR
COMPARISON PURPOSES, PORTFOLIO AND INDEX PERFORMANCE IS SHOWN FROM 3/31/95.
PAST PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
NEW SUBADVISOR ASSUMED MANAGEMENT OF THE PORTFOLIO EFFECTIVE OCTOBER 1997.
In addition to providing opportunities for capital appreciation, we believe we
have a responsibility to protect the value of your investment. For this reason,
we spend a great deal of time researching companies prior to their inclusion in
the Portfolio. This level of involvement and the lines of communication we form
with management is designed to
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 11
<PAGE>
reduce the likelihood of unpleasant surprises. Additionally, once the Portfolio
is fully invested, we expect to hold between 70 to 100 positions.
Diversification reduces the impact any single position has on the Portfolio's
overall performance.
We focus our research efforts on companies that have dominant market positions,
good balance sheets, excess cash flows and high insider stock ownership, yet are
selling at low price/earnings ratios and below strategic acquisition values.
OUTLOOK
Looking ahead, we believe the stars are aligned for a reasonably good year for
the stock market. We note especially that...
- Domestic economic growth remains sound and balanced and should allow
highly productive corporations to deliver profits' growth in the 7% to
10% range.
- Continued low inflation and disappearing federal budget deficits
should lead to a continued decline in long-term interest rates, which,
in turn, implies a further increase in valuation levels for equities.
- Baby boomers saving for retirement will likely keep funds flowing into
equities. At the same time, corporations' strategic acquisitions
should lead to a reduced supply of common stock and an extension of
the past year's favorable supply/demand balance.
- A strong US currency should continue to drive foreign investors into
dollar-denominated assets.
In terms of risk, the issue for the overall stock market remains Southeast Asia.
Reduced economic activity in that area will somewhat dampen US corporate
profits, and the emergency funds being provided to that region will diminish
worldwide liquidity. The Strategic Growth Portfolio is less exposed to
developments in Southeast Asia than the market as a whole, since the companies
represented in the Portfolio do business primarily in the US. However, the
Portfolio could be impacted as liquidity concerns cause investors to favor
large-cap stocks over small-caps. As investors become comfortable that the steps
being taken to mitigate the crisis are working, we believe they will re-focus on
small-caps.
The Portfolio is also well positioned because small-cap companies in general are
trading at better prices relative to the 100 or so large-cap stocks that
dominate the Standard & Poor's 500 Stock Index and typically retain earnings;
therefore, they stand to benefit more from the reduction in the capital gains
tax rate than companies that pay dividends. Small-cap companies are also
susceptible to takeovers and acquisitions which can boost share prices. Thus our
outlook for the market in general and the small-cap entrepreneurial sector in
particular is favorable. We look forward to serving your investment needs.
Sincerely,
/s/ Barbara J. Krumsiek
Barbara J. Krumsiek
President and CEO
January 21, 1998
12 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
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, 1997, and the related statement of operations for the year
then ended, and statements of changes in net assets for each of the two years in
the period then ended and financial highlights for each of the two years in the
period 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 based
on our audits.
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, 1997, by correspondence with the custodian and brokers. 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, 1997,
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 30, 1998
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 13
<PAGE>
STRATEGIC GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SECURITIES - 91.5% SHARES VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTO / TRUCK - 1.9%
Miller Industries, Inc. *. . . . . . . . . . . . . . . . . . . . . . . 7,500 $80,625
----------
80,625
----------
COMPUTER SERVICES - 5.2%
Information Resources, Inc. *. . . . . . . . . . . . . . . . . . . . . 8,500 113,688
Scansource, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 100,000
----------
213,688
----------
COMPUTER TECHNOLOGY - 2.4%
Transact Technologies, Inc. *. . . . . . . . . . . . . . . . . . . . . 9,000 100,125
----------
100,125
----------
CONSULTING SERVICES - 4.4%
Comdisco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,500 183,906
----------
183,906
----------
DATA PROCESSING - 3.8%
National Data Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 4,300 155,338
----------
155,338
----------
DRUGS AND PHARMACEUTICALS - 5.6%
Sano Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 198,750
Dynamic Healthcare Technologies *. . . . . . . . . . . . . . . . . . . 11,000 33,688
----------
232,438
----------
ELECTRICAL EQUIPMENT AND COMPONENTS - 1.4%
WPI Group, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000 59,000
----------
59,000
----------
ENTERTAINMENT - 2.7%
Ascent Entertainment Group, Inc. * . . . . . . . . . . . . . . . . . . 5,000 51,875
Cinar Films, Inc., Class B * . . . . . . . . . . . . . . . . . . . . . 1,500 58,312
----------
110,187
----------
HEALTH CARE - MANAGEMENT SERVICES - 3.8%
Health Management Systems, Inc. *. . . . . . . . . . . . . . . . . . . 13,000 77,188
American Retirement Corp. *. . . . . . . . . . . . . . . . . . . . . . 4,000 80,000
----------
157,188
----------
HOUSEHOLD FURNISHING - 6.6%
Furniture Brands International, Inc. * . . . . . . . . . . . . . . . . 4,000 82,000
Heilig Meyers Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 120,000
Falcon Products, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 5,000 70,938
----------
272,938
----------
14 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
LEISURE - 2.2%
K2, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 $91,000
----------
91,000
----------
MACHINERY - 0.3%
JLG Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 14,125
----------
14,125
----------
MEDICAL PRODUCTS - 1.9%
ATS Medical, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 77,812
----------
77,812
----------
OIL AND GAS - 1.7%
Comstock Resources, Inc. * . . . . . . . . . . . . . . . . . . . . . . 6,000 71,625
----------
71,625
----------
PHOTOGRAPHY - 2.4%
Polaroid Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 97,375
----------
97,375
----------
PRODUCTION TECHNOLOGY EQUIPMENT - 3.8%
Fluke Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 156,375
----------
156,375
----------
PUBLISHING - 4.6%
Wiley (John) & Sons, Inc., Class A . . . . . . . . . . . . . . . . . . 3,550 192,587
----------
192,587
----------
RAILROADS - 2.0%
Genesee & Wyoming, Inc., Class A * . . . . . . . . . . . . . . . . . . 3,500 81,812
----------
81,812
----------
REAL ESTATE INVESTMENT TRUSTS - 10.9%
Excel Realty Trust, Inc. . . . . . . . . . . . . . . . . . . . . . . . 2,000 63,000
Innkeepers USA Trust . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 77,500
LTC Properties, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 83,000
Meridan Industrial Trust, Inc. . . . . . . . . . . . . . . . . . . . . 6,000 153,000
Mid Atlantic Realty Trust. . . . . . . . . . . . . . . . . . . . . . . 5,000 73,438
----------
449,938
----------
RETAIL - 6.4%
Syms Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 178,125
U.S. Vision, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 88,750
----------
266,875
----------
RETIREMENT / AGED CARE - 3.7%
Sun Healthcare Group, Inc. * . . . . . . . . . . . . . . . . . . . . . 8,000 155,000
----------
155,000
----------
RUBBER - 3.2%
Cooper Tire & Rubber Co. . . . . . . . . . . . . . . . . . . . . . . . 5,500 134,062
----------
134,062
----------
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 15
<PAGE>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICE ORGANIZATIONS - 7.8%
Startek, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,850 $100,669
Iteq, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500 120,750
New Horizons Worldwide, Inc. * . . . . . . . . . . . . . . . . . . . . 7,000 100,625
----------
322,044
----------
TELECOMMUNICATIONS - 1.8%
Network Long Distance, Inc. *. . . . . . . . . . . . . . . . . . . . . 9,000 76,500
Sourcecom Corp., Series B, Preferred *+ . . . . . . . . . . . . . . . 1,500 0
----------
76,500
----------
UTILITIES - 1.0%
Nextlink Communications, Inc., Class A * . . . . . . . . . . . . . . . 2,000 42,625
----------
42,625
----------
Total Equity Securities (Cost $3,891,107). . . . . . . . . . . . . . . 3,795,188
----------
TOTAL INVESTMENTS (Cost $3,891,107) - 91.5% . . . . . . . . . . . 3,795,188
Other assets and liabilities, net - 8.5%. . . . . . . . . . . . . 351,231
----------
NET ASSETS - 100% . . . . . . . . . . . . . . . . . . . . . . . . $4,146,419
----------
----------
</TABLE>
+ RESTRICTED SECURITIES.
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
16 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
STRATEGIC GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS
- ----------------------------------------------------------------------------------------------------
Investments in securities, at value. . . . . . . . . . . . . . . . . . . . . . . . . $3,795,188
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,954
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,084
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,151,313
----------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Payable to Calvert Asset Management Company, Inc.. . . . . . . . . . . . . . . . . . 3,514
Payable to Calvert Administrative Services Company . . . . . . . . . . . . . . . . . 346
Payable to Calvert Shareholder Services, Inc.. . . . . . . . . . . . . . . . . . . . 104
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 930
----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,894
----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,146,419
----------
----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Par value and paid-in capital applicable to 345,026 shares of common
stock outstanding; $1 par value, 5,000,000 shares authorized. . . . . . . . . . . . $4,197,859
Accumulated net realized gain (loss) on investments. . . . . . . . . . . . . . . . . 44,479
Net unrealized appreciation (depreciation) on investments. . . . . . . . . . . . . . (95,919)
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,146,419
----------
----------
NET ASSET VALUE PER SHARE. . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.02
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 17
<PAGE>
STRATEGIC GROWTH PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
Investment Income
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,167
Dividend income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,364
----------
Total investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,531
----------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,611
Transfer agent fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . 815
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 358
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,554
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,637
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,288
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750
Reimbursement from Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,208)
----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,302
Fees paid indirectly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,637)
----------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,665
----------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . . . . . (41,134)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464,860
Change in unrealized appreciation or depreciation. . . . . . . . . . . . . . . . . . (689,272)
----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . (224,412)
----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . ($265,546)
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
STRATEGIC GROWTH PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . $(41,134) $(30,374)
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . 464,860 43,628
Change in unrealized appreciation or depreciation. . . . . . . . . . (689,272) 486,428
---------- ----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . (265,546) 499,682
---------- ----------
Distributions to shareholders from
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . -- (533)
Net realized gain on investments . . . . . . . . . . . . . . . . . . (372,337) (9,000)
---------- ----------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . (372,337) (9,533)
---------- ----------
Capital share transactions
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,108,435 1,765,749
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . 372,337 9,532
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . (727,112) (444,228)
---------- ----------
Total capital share transactions . . . . . . . . . . . . . . . . . 1,753,660 1,331,053
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . 1,115,777 1,821,202
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,030,642 1,209,440
---------- ----------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,146,419 $3,030,642
---------- ----------
---------- ----------
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,387 128,377
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . 31,002 651
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,203) (32,774)
---------- ----------
Total capital share activity . . . . . . . . . . . . . . . . . . . . 138,186 96,254
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 19
<PAGE>
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 diversified, 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.
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.
The Portfolio hereby designates $100,026 as capital gain dividends paid during
the taxable year ended December 31, 1997.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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
20 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
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 received a monthly fee based on an annual rate of 1.5%
of the Portfolio's average daily net assets. Effective December 1, 1997, the
monthly fee is based on an annual rate of .90%. 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. The
performance fee was terminated December 1997.
Calvert Administrative Services Company, an affiliate of the Advisor, provides
administrative services to the Portfolio for an annual fee, payable monthly. For
the period January through November 1997, the fee was based on .20% of the
Portfolio's annual average net assets. Effective December 1997, the annual fee
was changed to .10%. The Advisor voluntarily reimbursed the Portfolio $6,208 for
administrative service fees.
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 $750 for
each Board meeting attended plus an annual fee of $3,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served.
NOTE C -- INVESTMENT ACTIVITY
During the year, purchases and sales of investments, other than short-term
securities, were $9,746,434 and $8,412,044, respectively.
The cost of investments owned at December 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
depreciation aggregated $95,919, of which $205,611 related to appreciated
securities and $301,530 related to depreciated securities.
NOTE D -- LINE OF CREDIT
Effective July 1, 1997, a financing agreement is in place with all Calvert Group
Funds and State Street Bank and Trust Company ("the Bank"). Under the agreement,
the Bank is providing an unsecured line of credit facility, in the aggregate
amount of $50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings under
this facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused portion
of the committed facility which will be allocated to all participating funds.
This fee is paid quarterly in arrears. The Fund had no loans outstanding
pursuant to this line of credit at December 31, 1997.
NOTE E -- SUBSEQUENT EVENT
Effective January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Strategic Growth
Portfolio was renamed Calvert Social Small Cap Portfolio.
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 21
<PAGE>
STRATEGIC GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
PERIODS ENDED
------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995*
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $14.65 $10.94 $10.00
------ ------ ------
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.12) (.15) .25
Net realized and unrealized gain (loss). . . . . . . . . . . . . . . (1.32) 3.90 .93
------ ------ ------
Total from investment operations . . . . . . . . . . . . . . . . . (1.44) 3.75 1.18
------ ------ ------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . -- -- (.24)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . (1.19) (.04) --
------ ------ ------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . (1.19) (.04) (.24)
------ ------ ------
Total increase (decrease) in net asset value . . . . . . . . . . . . . (2.63) 3.71 .94
------ ------ ------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $12.02 $14.65 $10.94
------ ------ ------
------ ------ ------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.86%) 34.33% 9.65%
------ ------ ------
------ ------ ------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (1.19%) (1.60%) .43%(a)
------ ------ ------
------ ------ ------
Total expenses + . . . . . . . . . . . . . . . . . . . . . . . . . . 1.92% 2.27% 2.17%(a)
------ ------ ------
------ ------ ------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.61% 1.81% 1.64%(a)
------ ------ ------
------ ------ ------
Expenses reimbursed. . . . . . . . . . . . . . . . . . . . . . . . . .18% .20% .20%(a)
------ ------ ------
------ ------ ------
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . 292% 120% 223%
------ ------ ------
------ ------ ------
Average commission rate paid . . . . . . . . . . . . . . . . . . . . . $.0502 $.0499 NA
------ ------ ------
------ ------ ------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . . . . . . . . . $4,146 $3,031 $1,209
------ ------ ------
------ ------ ------
Number of shares outstanding,
ending (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . 345 207 111
------ ------ ------
------ ------ ------
</TABLE>
(a) ANNUALIZED
+ THIS RATIO REFLECTS TOTAL EXPENSES BEFORE REDUCTION FOR FEES PAID
INDIRECTLY; SUCH REDUCTIONS ARE INCLUDED IN THE RATIO OF NET EXPENSES.
* FROM MARCH 1, 1995 INCEPTION.
NA DISCLOSURE NOT APPLICABLE TO PRIOR PERIODS.
22 - CRI STRATEGIC GROWTH PORTFOLIO ANNUAL REPORT
<PAGE>
STRATEGIC GROWTH PORTFOLIO
VOTING RESULTS
Below are the voting results approved at the shareholder meeting on December 2,
1997.
1. To approve a new investment advisory agreement with the investment advisor,
Calvert Asset Management Company, Inc., identical to the existing agreement
in all material respects, except that it: a) reflects a new fee structure
and b) does not provide for a performance fee.
For 93% (94,477.55) Against 2% (2,609.91) Abstain 4% (4,191.03)
2. To approve a new investment subadvisory agreement with the investment
subadvisor, Awad and Associates, identical to the existing agreement in all
material respects, except that it: a) reflects a new fee structure and b)
does not provide for a performance fee:
For 93% (94,477.56) Against 1% (1,660.95) Abstain 2% (2,426.74)
3. To approve new investment objective, policies and restrictions for the
Portfolio.
For 87% (88,924.13) Against 7% (7,465.44) Abstain 4% (4,709.34)
4. To approve Acacia Capital Corporation and Calvert Asset Management Company,
Inc. entering into and materially amending the investment subadvisory
agreement in the future without shareholder approval.
For 66% (67,738.83) Against 26% (26,989.70) Abstain 6% (6,379.85)
ANNUAL REPORT CRI STRATEGIC GROWTH PORTFOLIO - 23
<PAGE>
CALVERT RESPONSIBLY INVESTED
CAPITAL ACCUMULATION PORTFOLIO
MANAGED BY BROWN CAPITAL MANAGEMENT, INC.
Dear Investor:
Before we begin our discussion of the economy and markets, we want to let
investors know that on January 1, 1998, Acacia Capital Corporation was renamed
Calvert Variable Series, Inc. and the Calvert Responsibly Invested Capital
Accumulation Portfolio was renamed Calvert Social Mid Cap Portfolio.
REVIEW
The investment climate for stocks during the 12-month period ended December 31,
1997 was generally strong, as evidenced by modest inflation, stable to declining
interest rates and sustained growth in corporate profits. This was a favorable
backdrop for stocks and the market posted an unprecedented third consecutive
year of upwards of 20% gains, as measured by the Standard & Poor's 500(S&P 500)
Stock Index.
Performance in the first half was driven by large-capitalization companies.
(Market capitalization = share price 5 number of shares outstanding.) The S&P
500 Stock Index, an index comprised mainly of large-caps, outperformed the S&P
Midcap 400 Index by 761 basis points. (A basis point is .01%.) In the third
quarter, small and mid-sized companies rebounded and the S&P Midcap 400 Index
outperformed the S&P 500 by 860 basis points. Then in the final quarter, as the
Asian financial crisis unfolded, investors sought safety in large, well
established companies, allowing the S&P 500 to soar ahead of small- and mid-cap
performance measures. For the year, the S&P 500 outperformed the S&P Midcap 400
Index by 112 basis points.
CAPITAL ACCUMULATION PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
(YEAR ENDED 12/31/97)
One year 23.53%
Five year 12.41%
Since inception (7/16/91) 12.92%
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
Bar Chart here showing comparison from 7/31/91 to 12/97
CRI Capital Accumulation Portfolio $22,009
S&P Midcap 400 Index TR $29,444
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT. FOR
COMPARISON PURPOSES, PORTFOLIO AND INDEX PERFORMANCE IS SHOWN FROM 7/31/91. PAST
PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
NEW SUBADVISORS ASSUMED MANAGEMENT OF THE PORTFOLIO EFFECTIVE DECEMBER 1994.
STRATEGY
For a number of reasons, this was a challenging year for bottom-up stock
pickers with a growth orientation. First, the market's best performers were
from a narrow universe of primarily large companies. Second, the market was
quick and severe in punishing companies for any unfavorable news. We came to
think of this phenomenon as a "bomb
24 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
going off."
With respect to the first item, the Portfolio did not share in the returns
generated by some of last year's stellar performers -- like Coca-Cola, Gillette
and Procter & Gamble -- because these stocks are too expensive based on our
valuation criteria. With respect to the second item, we were fortunate to escape
a number of "bombs" for the first nine months of the year, but experienced three
critical setbacks in the final three months that were almost entirely
responsible for the Portfolio's weak fourth quarter showing. These three stocks
were down the following amounts from the date of a specific news announcement to
year-end: Green Tree Financial, down 35%; Oracle, down 31%; Fastenal, down 24%.
Our job, of course, is to determine whether anything has changed fundamentally
with these or any other Portfolio holdings and make necessary adjustments to our
exposure. We are hard at work making this assessment and evaluating new
opportunities.
While strongly positive, the Portfolio's 23.53% annual return lagged the 32.25%
return for the Midcap 400 Stock Index.*
OUTLOOK
Asia's financial crisis and its implications are serious but, in our opinion,
not fatal. It is highly likely this will cause US GDP (a measure of the
economy's output) to be lower by an estimated .5% to 1%. The good news is that
our economic forecast calls for continued modest domestic real GDP growth
accompanied by a benign level of inflation (not deflation, in our opinion) and
low interest rates. The Portfolio also stands to benefit as investors broaden
their focus beyond large-cap stocks. We have a great deal of confidence in this
portfolio of attractively priced companies with superior characteristics
relative to the S&P Midcap 400 Index. Over time, this has been a winning
combination that translates into superior performance. Thank you for your
investment in the Capital Accumulation Portfolio.
Sincerely,
/s/ Barbara J. Krumsiek
Barbara J. Krumsiek
President and CEO
January 21, 1998
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 25
<PAGE>
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, 1997, and the related statement of operations
for the year then ended, statements of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the four
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 the year ended December 31,
1993 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, 1997, by correspondence with the custodian and brokers. 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,
1997, 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 30, 1998
26 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
CAPITAL ACCUMULATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SECURITIES - 98.7% SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
BANKS - MONEY CENTER - 3.7%
Chase Manhattan Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 8,752 $958,344
-----------
958,344
-----------
BIOTECHNOLOGY - 2.4%
Amgen, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,400 617,025
-----------
617,025
-----------
COMMUNICATION EQUIPMENT - 0.9%
ADC Telecommunications, Inc. * . . . . . . . . . . . . . . . . . . . . 5,800 243,985
-----------
243,985
-----------
COMPUTER - HARDWARE - 1.9%
Hewlett Packard Co.. . . . . . . . . . . . . . . . . . . . . . . . . . 7,900 493,750
-----------
493,750
-----------
COMPUTER - NETWORKING - 3.0%
Cisco Systems, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . 13,875 773,531
-----------
773,531
-----------
COMPUTER - PERIPHERALS - 2.1%
EMC Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,478 561,865
-----------
561,865
-----------
COMPUTER - SOFTWARE AND SERVICES - 14.8%
BMC Software, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . 8,800 577,500
Choicepoint, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . 1,250 59,688
Microsoft Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,700 607,475
Networks Associates, Inc. *. . . . . . . . . . . . . . . . . . . . . . 13,209 698,426
Oracle Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,005 424,049
Sterling Commerce, Inc. *. . . . . . . . . . . . . . . . . . . . . . . 23,800 914,812
Sterling Software, Inc. *. . . . . . . . . . . . . . . . . . . . . . . 14,400 590,400
-----------
3,872,350
-----------
CONSUMER FINANCE - 2.1%
Green Tree Financial Corp. . . . . . . . . . . . . . . . . . . . . . . 20,550 538,153
-----------
538,153
-----------
DISTRIBUTORS - FOOD AND HEALTH - 3.8%
Cardinal Health, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 13,200 991,650
-----------
991,650
-----------
ELECTRICAL EQUIPMENT - 7.4%
Belden, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,900 630,975
Solectron Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,900 702,406
Vishay Intertechnology, Inc. * . . . . . . . . . . . . . . . . . . . . 25,290 597,476
-----------
1,930,857
-----------
</TABLE>
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 27
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - SEMICONDUCTORS - 3.1%
Altera Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,700 $354,438
Intel Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400 449,600
-----------
804,038
-----------
HEALTH CARE - DIVERSIFIED - 2.2%
Johnson & Johnson. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,700 573,112
-----------
573,112
-----------
HEALTH CARE - DRUG SYSTEMS - 3.1%
Scherer (R.P.) Corp. * . . . . . . . . . . . . . . . . . . . . . . . . 13,100 799,100
-----------
799,100
-----------
HEALTH CARE - HOSPITAL MANAGEMENT - 1.5%
Health Management Associates, Inc., Class A *. . . . . . . . . . . . . 15,100 381,275
-----------
381,275
-----------
HEALTH CARE - LONG TERM CARE - 2.5%
Health Care & Retirement Corp. * . . . . . . . . . . . . . . . . . . . 16,150 650,038
-----------
650,038
-----------
HEALTH CARE - MANAGED CARE - 2.0%
United Healthcare Corp.. . . . . . . . . . . . . . . . . . . . . . . . 10,600 526,688
-----------
526,68
-----------
HEALTH CARE - SPECIAL SERVICES - 2.3%
ALZA Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,200 610,800
-----------
610,800
-----------
HOME BUILDING - 2.5%
Rouse Co.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,800 648,450
-----------
648,450
-----------
HOUSEWARES - 3.4%
Newell Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,900 888,250
-----------
888,250
-----------
INSURANCE - LIFE AND HEALTH - 1.6%
AFLAC, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,250 421,781
-----------
421,781
-----------
INVESTMENT MANAGEMENT - 3.1%
T. Rowe Price Associates, Inc. . . . . . . . . . . . . . . . . . . . . 13,100 823,662
-----------
823,662
-----------
LEISURE - 2.0%
Carnival Corp., Class A. . . . . . . . . . . . . . . . . . . . . . . . 9,600 531,600
-----------
531,600
-----------
MANUFACTURING - DIVERSIFIED - 2.4%
Illinois Tool Works, Inc.. . . . . . . . . . . . . . . . . . . . . . . 10,400 625,300
-----------
625,300
-----------
NATURAL GAS - 3.5%
MCN Energy Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 22,800 920,550
-----------
920,550
-----------
</TABLE>
28 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
RESTAURANTS - 1.3%
Cheesecake Factory, Inc. * . . . . . . . . . . . . . . . . . . . . . . 11,200 $341,600
-----------
341,600
-----------
RETAIL - BUILDING SUPPLIES - 4.9%
Fastenal Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800 489,600
Home Depot, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,250 780,094
-----------
1,269,694
-----------
RETAIL - DEPARTMENT STORES - 1.5%
Kohls Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,700 388,313
-----------
388,313
-----------
RETAIL - DISCOUNTERS - 2.2%
Dollar General Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 16,001 580,036
-----------
580,036
-----------
RETAIL - SPECIALTY - 5.0%
Autozone, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,800 748,200
Caseys General Stores, Inc.. . . . . . . . . . . . . . . . . . . . . . 22,100 560,788
-----------
1,308,988
-----------
SERVICES - ADVERTISING AND MARKETING - 1.7%
Acxiom Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,400 431,200
-----------
431,200
-----------
SERVICES - DATA PROCESSING - 4.8%
Equifax, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,600 588,262
Paychex, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,300 673,312
-----------
1,261,574
-----------
Total Equity Securities (Cost $21,149,904) . . . . . . . . . . . . . . 25,767,559
-----------
TOTAL INVESTMENTS (Cost $21,149,904) - 98.7%. . . . . . . . . . . 25,767,559
Other assets and liabilities, net - 1.3%. . . . . . . . . . . . . 348,951
-----------
NET ASSETS - 100% . . . . . . . . . . . . . . . . . . . . . . . . $26,116,510
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING.
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 29
<PAGE>
CAPITAL ACCUMULATION PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
ASSETS
- -----------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value. . . . . . . . . . . . . . . . . . . . . . . . . $25,767,559
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,189,920
Interest and dividends receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 5,806
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,963,818
-----------
LIABILITIES
- -----------------------------------------------------------------------------------------------------
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 823,730
Payable to Calvert Asset Management Company, Inc.. . . . . . . . . . . . . . . . . . 17,488
Payable to Calvert Administrative Services Company . . . . . . . . . . . . . . . . . 2,123
Payable to Calvert Shareholder Services, Inc.. . . . . . . . . . . . . . . . . . . . 637
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 3,330
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 847,308
-----------
Net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,116,510
-----------
-----------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------
Par value and paid-in capital applicable to 980,884 shares of common
stock outstanding; $1 par value, 5,000,000 shares authorized . . . . . . . . . . . $21,211,773
Accumulated net realized gains (losses) on investments . . . . . . . . . . . . . . . 287,082
Net unrealized appreciation (depreciation) on investments. . . . . . . . . . . . . . 4,617,655
-----------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,116,510
-----------
-----------
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . $26.63
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
CAPITAL ACCUMULATION PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,051
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,708
----------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,759
----------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179,053
Transfer agency fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . 5,252
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,156
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,493
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,552
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,137
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,285
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,112
----------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,040
Fees paid indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,552)
----------
Net expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216,488
----------
NET INVESTMENT INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . (37,729)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,036,419
Change in unrealized appreciation or depreciation. . . . . . . . . . . . . . . . . . 1,705,146
----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,741,565
----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . $4,703,836
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 31
<PAGE>
CAPITAL ACCUMULATION PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . $(37,729) $(95,533)
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . 3,036,419 7,603
Change in unrealized appreciation or depreciation. . . . . . . . . . 1,705,146 1,182,679
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . 4,703,836 1,094,749
------------ ------------
Distributions to shareholders from
Net realized gain on investments . . . . . . . . . . . . . . . . . . (2,706,962) (32,307)
------------ ------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (2,706,962) (32,307)
------------ ------------
Capital share transactions
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,334,843 14,697,452
Shares issued from merger (Note A) . . . . . . . . . . . . . . . . . -- 4,728,068
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . 2,706,962 32,310
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . (7,826,492) (9,551,228)
------------ ------------
Total capital share transactions. . . . . . . . . . . . . . . . . 4,215,313 9,906,602
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . 6,212,187 10,969,044
NET ASSETS
- -----------------------------------------------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,904,323 8,935,279
------------ ------------
End of year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,116,510 $19,904,323
------------ ------------
------------ ------------
CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,300 618,839
Shares issued from merger (Note A) . . . . . . . . . . . . . . . . . . -- 207,827
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . 101,575 1,343
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . (301,674) (398,789)
------------ ------------
Total capital share activity . . . . . . . . . . . . . . . . . . . . 153,201 429,220
------------ ------------
------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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. 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 Portfolio hereby designates $1,266,073 as capital gain dividends paid during
the taxable year ended December 31, 1997.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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.
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 33
<PAGE>
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. Effective
January, 1997, the Portfolio began paying a monthly performance fee of plus or
minus up to .05%, on an annual basis, of average daily net assets of the
performance period depending on the Portfolio's performance compared to the S&P
Mid-Cap 400 Index.
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 $750 for
each Board meeting attended plus an annual fee of $3,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served.
NOTE C -- INVESTMENT ACTIVITY
During the year, purchases and sales of investments, other than short-term
securities, were $22,285,111 and $20,280,737, respectively.
The cost of investments owned at December 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $4,617,655, of which $4,928,470 related to appreciated
securities and $310,815 related to depreciated securities.
NOTE D -- LINE OF CREDIT
Effective July 1, 1997, a financing agreement is in place with all Calvert Group
Funds and State Street Bank and Trust Company ("the Bank"). Under the agreement,
the Bank is providing an unsecured line of credit facility, in the aggregate
amount of $50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings under
this facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused portion
of the committed facility which will be allocated to all participating funds.
This fee is paid quarterly in arrears. The Fund had no loans outstanding
pursuant to this line of credit at December 31, 1997.
NOTE E -- SUBSEQUENT EVENT
Effective January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Capital Accumulation
Portfolio was renamed Calvert Social Mid Cap Portfolio.
34 - CRI CAPITAL ACCUMULATION PORTFOLIO ANNUAL REPORT
<PAGE>
CAPITAL ACCUMULATION PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
-------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . $24.05 $22.42 $16.97
------------ ------------ ------------
------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . (.04) (.12) (.15)
Net realized and unrealized gain (loss) . . . . . . 5.70 1.79 6.85
------------ ------------ ------------
Total from investment operations. . . . . . . . . 5.66 1.67 6.70
------------ ------------ ------------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . -- -- (.01)
Net realized gains . . . . . . . . . . . . . . . . . (3.08) (.04) (1.24)
------------ ------------ ------------
Total distributions . . . . . . . . . . . . . . . (3.08) (.04) (1.25)
------------ ------------ ------------
Total increase (decrease) in net asset value . . . . . 2.58 1.63 5.45
------------ ------------ ------------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . $26.63 $24.05 $22.42
------------ ------------ ------------
------------ ------------ ------------
Total return . . . . . . . . . . . . . . . . . . . . . 23.53% 7.44% 39.46%
------------ ------------ ------------
------------ ------------ ------------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . (.17%) (.60%) (.84%)
------------ ------------ ------------
------------ ------------ ------------
Total expenses + . . . . . . . . . . . . . . . . . . 1.04% 1.33% 1.56%
------------ ------------ ------------
------------ ------------ ------------
Net expenses . . . . . . . . . . . . . . . . . . . . .96% 1.00% 1.25%
------------ ------------ ------------
------------ ------------ ------------
Expenses reimbursed. . . . . . . . . . . . . . . . . -- -- .10%
------------ ------------ ------------
------------ ------------ ------------
Portfolio turnover * . . . . . . . . . . . . . . . . . 96% 124% 135%
------------ ------------ ------------
------------ ------------ ------------
Average commission rate paid . . . . . . . . . . . . . $.0516 $.0563 NA
------------ ------------ ------------
------------ ------------ ------------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . $26,117 $19,904 $8,935
------------ ------------ ------------
------------ ------------ ------------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . 981 828 398
------------------------------------------
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED
----------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $18.95 $17.87
------------ ------------
------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .10 .08
Net realized and unrealized gain (loss) . . . . . . . . . . . . . . (1.98) 1.27
------------ ------------
Total from investment operations. . . . . . . . . . . . . . . . . (1.88) 1.35
------------ ------------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.10) (.08)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . -- (.19)
------------ ------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (.10) (.27)
------------ ------------
Total increase (decrease) in net asset value . . . . . . . . . . . . . (1.98) 1.08
------------ ------------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $16.97 $18.95
------------ ------------
------------ ------------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.92%) 7.56%
------------ ------------
------------ ------------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .68% .66%
------------ ------------
------------ ------------
Total expenses + . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA
------------ ------------
------------ ------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79% .80%
------------ ------------
------------ ------------
Expenses reimbursed. . . . . . . . . . . . . . . . . . . . . . . . . -- --
------------ ------------
------------ ------------
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . 79% 26%
------------ ------------
------------ ------------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . . . . . . . . . $5,689 $4,986
------------ ------------
------------ ------------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . . . . . . . . . 335 263
------------ ------------
------------ ------------
</TABLE>
+ EFFECTIVE DECEMBER 31, 1995, THIS RATIO REFLECTS TOTAL EXPENSES BEFORE
REDUCTION FOR FEES PAID INDIRECTLY; SUCH REDUCTIONS ARE INCLUDED IN THE
RATIO OF NET EXPENSES.
* PORTFOLIO TURNOVER EXCLUDES TRANSACTIONS IN CONNECTION WITH THE FEBRUARY
1996 MERGER OF CRI EQUITY PORTFOLIO.
NA DISCLOSURE NOT APPLICABLE TO PRIOR PERIODS.
ANNUAL REPORT CRI CAPITAL ACCUMULATION PORTFOLIO - 35
<PAGE>
CALVERT RESPONSIBLY INVESTED
GLOBAL EQUITY PORTFOLIO
MANAGED BY MURRAY JOHNSTONE INTERNATIONAL, LTD.
Dear Investor:
Before we begin our discussion of the economy and markets, we want to let
investors know that on January 1, 1998, Acacia Capital Corporation was renamed
Calvert Variable Series, Inc. and the Calvert Responsibly Invested Global Equity
Portfolio was renamed Calvert Social International Equity Portfolio.
We also want to remind investors that the Portfolio's investment policy was
recently changed to limit investment in US securities to 5% of assets. Prior to
this change, US holdings represented approximately 15% of assets. This change is
intended to give investors the opportunity to benefit from a portfolio with more
of an international focus. The comparable market index became the Morgan Stanley
Capital International Europe, Australia, and Far East Index (MSCI EAFE), which
does not have a US component.
REVIEW
The background to markets was generally positive throughout the year but
performance varied greatly between regions. With the exception of the US, where
growth was strong, most economies experienced low growth, falling inflation
(even in the US) and declining interest rates. During the first half of the year
this proved to be a benign backdrop to markets, but in the second half lower
growth in the former "tiger" economies in the Far East led to deteriorating
current account balances and ultimately pressure on currencies. Equity markets
in the region fell, from Thailand to other emerging markets and eventually to
Singapore and Hong Kong. When lending to the region by Japanese financial
institutions was factored in, the pressure mounted on Japanese stocks and this
market also stumbled. By contrast, the US and European markets shook off
Asias' troubles and finished the year on a firm note.
GLOBAL EQUITY PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
(YEAR ENDED 12/31/97)
One year 13.23%
Five year 12.91%
Since inception (6/30/92) 11.06%
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
Bar chart here showing comparison from 6/30/92 to 12/97
CRI Global Equity Portfolio $17,824
MSCI EAFE Index QD $17,009
MSCI World Index QD $21,250
*PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT RELFECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT.
PAST PERFOMANCE DOES NOT INDICATE FUTURE RESULTS.
STRATEGY
Our approach was to focus investments on the European markets where in addition
to moderate growth and falling inflation, rationalization was a major feature.
The progress
36 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
toward a single currency in 1999 meant corporations had to improve
productivity to succeed in the more competitive environment. This trend affected
both manufacturing and financial groups and the enhanced earnings outlook
boosted stock prices. The other area to be overweighted at the beginning of the
year was Southeast Asia, on the basis of the upbeat growth estimates for the
region. The Portfolio was underweighted in Japan, where recovery from the
recession beginning in 1990 remained elusive, and also in the US, where stock
prices in general had been bid up well in excess of fair value due to the weight
of money in the market.
As the crisis in Southeast Asia deepened, we reduced exposure from 22.3% of
assets to 11.1%. When the turmoil which had engulfed Thailand shifted to
Malaysia, we first reduced exposure to a market weight and then sold all
remaining Malaysian investments prior to the market's final collapse. With the
exception of Singapore, where fundamentals remain strong and we added to
holdings (after the initial fall), we reduced the level of investment across the
region.
The Portfolio returned 13.23% for the year compared to 16.23% for the Morgan
Stanley Capital International World Index (MCSI World).* The difference was
largely due to limited exposure to the US market and a higher level of
investment in Southeast Asia. For the same time period, the Portfolio
outperformed its new index, the MSCI EAFE Index, which returned 2.06%.*
OUTLOOK
Uncertainty will be the key feature of 1998. The collapse of markets and
currencies in the Far East will lead to deflation in the region and lower prices
across world markets as countries from Korea to Indonesia attempt to export
their way out of recession. This trend will increase competition in the US and
Europe, impacting corporate profits.
Initially, our focus will remain on Europe where there are clear trends which
support continuing market performance. A major swing factor could be the markets
of the Far East. With sentiment at rock bottom, the perception that the worst
upheavals have been seen could lead to a turnaround. We have not seen this point
yet, but the problems are being addressed and the recovery is getting closer. We
appreciate your continued confidence.
Sincerely,
/s/ Barbara J. Krumsiek
Barbara J. Krumsiek
President and CEO
January 21, 1998
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 37
<PAGE>
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, 1997, and the related statement of operations for the year then
ended, statements of changes in net assets for each of the two years in the
period then ended and financial highlights for each of the four 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 the year ended December 31, 1993 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, 1997, by correspondence with the custodian and brokers. 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, 1997,
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 30, 1998
38 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
GLOBAL EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SECURITIES - 96.8% SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ARGENTINA - 2.2%
Banco Frances Del Rio La Plata, ADR. . . . . . . . 3,700 $ 101,288
Telecom Argentina Stet-France, Class B . . . . . . 6,000 214,500
----------
315,788
----------
AUSTRALIA - 4.3%
Brambles Industries, Ltd.. . . . . . . . . . . . . 10,000 198,458
Commonwealth Bank of Australia . . . . . . . . . . 10,000 114,708
Telstra Corp. (installment receipts) * # . . . . . 144,000 304,081
----------
617,247
----------
BELGIUM - 2.4%
Fortis AG. . . . . . . . . . . . . . . . . . . . . 1,700 354,673
----------
354,673
----------
CHILE - 2.1%
Compania de Telecom de Chile, ADR. . . . . . . . . 10,000 298,750
----------
298,750
----------
FRANCE - 10.4%
AXA-UAP. . . . . . . . . . . . . . . . . . . . . . 2,844 220,063
Banque Nationale de Paris. . . . . . . . . . . . . 6,537 347,460
Cap Gemini . . . . . . . . . . . . . . . . . . . . 3,809 312,327
Pinault Printemps. . . . . . . . . . . . . . . . . 670 357,460
SGS-Thomas Microelectronics *. . . . . . . . . . . 4,300 266,138
----------
1,503,448
----------
GERMANY - 6.0%
Allianz. . . . . . . . . . . . . . . . . . . . . . 930 240,907
Commerzbank. . . . . . . . . . . . . . . . . . . . 7,620 299,895
Douglas Holdings . . . . . . . . . . . . . . . . . 6,790 204,951
Linde. . . . . . . . . . . . . . . . . . . . . . . 210 128,175
----------
873,928
----------
HONG KONG - 3.5%
Cheung Kong Holdings . . . . . . . . . . . . . . . 20,000 130,985
Hong Kong Land Holdings. . . . . . . . . . . . . . 100,000 192,000
Hysan Development. . . . . . . . . . . . . . . . . 55,000 109,659
Hysan Development (warrants) * . . . . . . . . . . 2,750 18
Sun Hung Kai Properties. . . . . . . . . . . . . . 10,000 69,686
----------
502,348
----------
IRELAND - 2.9%
Allied Irish Banks . . . . . . . . . . . . . . . . 32,334 308,406
Bank of Ireland. . . . . . . . . . . . . . . . . . 7,270 111,649
----------
420,055
----------
</TABLE>
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 39
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
ITALY - 5.7%
Credito Italiano . . . . . . . . . . . . . . . . . 89,034 $ 274,551
Telecom Italia Mobile. . . . . . . . . . . . . . . 118,710 547,918
----------
822,469
----------
JAPAN - 13.8%
Canon Sales Co., Inc.. . . . . . . . . . . . . . . 4,800 54,775
East Japan Railway . . . . . . . . . . . . . . . . 42 189,462
Fuji Machine Manufacturing . . . . . . . . . . . . 3,000 72,375
Fuji Photo Film Co.. . . . . . . . . . . . . . . . 5,000 191,468
Fujitsu. . . . . . . . . . . . . . . . . . . . . . 17,000 182,278
Keyence Corp.. . . . . . . . . . . . . . . . . . . 600 88,688
Murata Manufactoring Co. . . . . . . . . . . . . . 2,000 50,701
Namco. . . . . . . . . . . . . . . . . . . . . . . 6,000 174,159
Nippon Hodo Co.. . . . . . . . . . . . . . . . . . 55,000 176,917
Nitto Denko Corp.. . . . . . . . . . . . . . . . . 5,000 86,161
Ricoh Co.. . . . . . . . . . . . . . . . . . . . . 14,000 173,700
Shiseido Co. . . . . . . . . . . . . . . . . . . . 13,000 177,223
Sumitomo Bank. . . . . . . . . . . . . . . . . . . 16,000 182,584
Sumitomo Electric Industries . . . . . . . . . . . 14,000 190,855
----------
1,991,346
----------
MEXICO - 3.7%
Banpais, S.A., ADR * . . . . . . . . . . . . . . . 10,000 0
Cifra, S.A. de C.V., ADR * . . . . . . . . . . . . 153,000 375,771
Grupo Industrial Durango, S.A., ADR *. . . . . . . 11,000 156,750
----------
532,521
----------
NETHERLANDS - 5.5%
Elsevier . . . . . . . . . . . . . . . . . . . . . 9,749 157,703
ING Groep. . . . . . . . . . . . . . . . . . . . . 1,886 79,434
Vendex International . . . . . . . . . . . . . . . 4,619 254,909
Ver Ned Uitgevers. . . . . . . . . . . . . . . . . 10,550 297,615
----------
789,661
----------
NEW ZEALAND - 1.7%
Independent Newspapers . . . . . . . . . . . . . . 30,000 149,808
Wilson & Horton. . . . . . . . . . . . . . . . . . 15,000 91,452
----------
241,260
----------
SINGAPORE - 1.9%
City Developments. . . . . . . . . . . . . . . . . 20,000 92,554
Creative Technology. . . . . . . . . . . . . . . . 2,000 40,581
Keppel Land Ltd. . . . . . . . . . . . . . . . . . 50,000 68,822
Wing Tai Holdings. . . . . . . . . . . . . . . . . 60,000 70,128
----------
272,085
----------
SOUTH AFRICA - 2.2%
Standard Bank Investment . . . . . . . . . . . . . 7,300 322,511
----------
322,511
----------
SPAIN - 4.2%
Banco Santander. . . . . . . . . . . . . . . . . . 4,267 142,560
Prosegur Compania Seguridad. . . . . . . . . . . . 12,545 125,985
Telefonica de Espana . . . . . . . . . . . . . . . 11,650 332,639
----------
601,184
----------
</TABLE>
40 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND - 6.6%
Credit Suisse Group. . . . . . . . . . . . . . . . 2,160 $ 334,082
Zurich Versicherungs . . . . . . . . . . . . . . . 1,313 625,409
----------
959,491
----------
UNITED KINGDOM - 17.7%
Anglian Group. . . . . . . . . . . . . . . . . . . 19,500 69,983
Anglian Water. . . . . . . . . . . . . . . . . . . 10,300 140,417
Azlan Group. . . . . . . . . . . . . . . . . . . . 4,800 4,494
Barclays . . . . . . . . . . . . . . . . . . . . . 6,500 173,040
Beazer Group . . . . . . . . . . . . . . . . . . . 17,000 44,955
Bellway. . . . . . . . . . . . . . . . . . . . . . 10,000 53,053
Burton Group . . . . . . . . . . . . . . . . . . . 59,100 132,018
Cadbury Schweppes. . . . . . . . . . . . . . . . . 13,100 132,216
Carlton Communications . . . . . . . . . . . . . . 16,500 127,376
Devro International. . . . . . . . . . . . . . . . 10,300 63,780
Firstbus Group PLC . . . . . . . . . . . . . . . . 18,500 67,761
Halifax *. . . . . . . . . . . . . . . . . . . . . 15,050 189,600
Johnson Matthey. . . . . . . . . . . . . . . . . . 8,400 75,194
Kingfisher . . . . . . . . . . . . . . . . . . . . 11,300 157,762
Lloyds TSB Group . . . . . . . . . . . . . . . . . 13,700 178,231
Mayflower Corp.. . . . . . . . . . . . . . . . . . 21,600 64,570
Misys. . . . . . . . . . . . . . . . . . . . . . . 2,300 69,511
Norwich Union *. . . . . . . . . . . . . . . . . . 22,700 143,546
Safeway. . . . . . . . . . . . . . . . . . . . . . 18,400 103,661
SIG. . . . . . . . . . . . . . . . . . . . . . . . 12,100 50,481
Smithline Beecham. . . . . . . . . . . . . . . . . 12,700 130,895
Somerfield . . . . . . . . . . . . . . . . . . . . 14,700 50,704
Unigate. . . . . . . . . . . . . . . . . . . . . . 13,600 134,251
Vitec Group. . . . . . . . . . . . . . . . . . . . 7,100 73,702
Wolseley . . . . . . . . . . . . . . . . . . . . . 16,700 132,735
----------
2,563,936
----------
UNITED STATES - 0.0%
Bellsouth Corp.. . . . . . . . . . . . . . . . . . 100 5,631
----------
5,631
----------
Total Equity Securities (Cost $12,685,882) . .
13,988,332
----------
----------
PRINCIPAL
TIME DEPOSIT - 4.6% AMOUNT VALUE
- --------------------------------------------------------------------------------
State Street Bank, London, 5.75%, 1/5/98 . . . . . $663,048 663,048
-----------
Total Time Deposit (Cost $663,048) . . . . . . . 663,048
-----------
TOTAL INVESTMENTS (Cost $13,348,930) - 101.4% 14,651,380
Other assets and liabilities, net - (1.4%). . (201,295)
-----------
NET ASSETS - 100% . . . . . . . . . . . . . . $14,450,085
-----------
-----------
</TABLE>
* NON-INCOME PRODUCING.
# ON NOVEMBER 11, 1998 THE HOLDER OF THE INSTALLMENT RECEIPTS IS REQUIRED TO PAY
$1.35 (AUSTRALIAN DOLLARS) PER SHARE TO CONVERT THE PARTIAL SHARES TO REGULAR
FULL SHARES.
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 41
<PAGE>
GLOBAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value. . . . . . . . . . . . . . . . . . . . . . . . . $14,651,380
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349,104
Interest and dividends receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 25,357
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,026,248
-----------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Payable to Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213,991
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 342,803
Payable to Calvert Asset Management Company, Inc.. . . . . . . . . . . . . . . . . . 13,024
Payable to Calvert Administrative Services Company . . . . . . . . . . . . . . . . . 1,257
Payable to Calvert Shareholder Services, Inc.. . . . . . . . . . . . . . . . . . . . 377
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 4,711
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,163
-----------
Net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,450,085
-----------
-----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Par value and paid-in capital applicable to 756,611 shares of common
stock outstanding; $1 par value, 5,000,000 shares authorized . . . . . . . . . . . $12,946,150
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . . . . . . 19,484
Accumulated net realized gain (loss) on investments and foreign currencies . . . . . 182,822
Net unrealized appreciation (depreciation) on investments and foreign currencies
and assets and liabilities in foreign currencies . . . . . . . . . . . . . . . . . 1,301,629
-----------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,450,085
-----------
-----------
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19.10
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
42 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
GLOBAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,395
Dividend income (net of foreign taxes of $28,590). . . . . . . . . . . . . . . . . 249,637
-----------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,032
-----------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,107
Transfer agency fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . 3,415
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,465
Administrative fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,495
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,873
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,182
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,184
Reimbursement from Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,189)
-----------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231,532
Fees paid indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,495)
-----------
Net expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,037
-----------
NET INVESTMENT INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . 125,995
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,389,114
Foreign currencies 17,771
-----------
1,406,885
-----------
Change in unrealized appreciation or depreciation on:
Investments and foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . 153,566
Assets and liabilities in foreign currencies . . . . . . . . . . . . . . . . . . . 3,735
-----------
157,301
-----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,564,186
-----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . $1,690,181
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 43
<PAGE>
GLOBAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . $ 125,995 $ 125,031
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . 1,406,885 643,380
Change in unrealized appreciation or depreciation. . . . . . . . . . 157,301 896,590
----------- -----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . 1,690,181 1,665,001
----------- -----------
Distributions to shareholders from
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (138,622) (100,000)
Net realized gain on investments . . . . . . . . . . . . . . . . . . (1,299,097) (597,000)
----------- -----------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (1,437,719) (697,000)
----------- -----------
Capital share transactions
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,776,933 4,709,791
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . 1,437,719 697,005
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . (5,043,846) (2,178,927)
----------- -----------
Total capital share transactions. . . . . . . . . . . . . . . . . 170,806 3,227,869
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . 423,268 4,195,870
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,026,817 9,830,947
----------- -----------
End of year (including undistributed net investment
income of $19,484 and $14,340, respectively) . . . . . . . . . . . . $14,450,085 $14,026,817
----------- -----------
----------- -----------
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,411 258,532
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . 75,550 37,193
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . (249,795) (120,463)
----------- -----------
Total capital share activity . . . . . . . . . . . . . . . . . . . . 8,166 175,262
----------- -----------
----------- -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
44 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 US 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 US dollars. For valuation of assets and liabilities on each date
of net asset value determination, foreign denominations are translated into US
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
investments and foreign currencies is included with the net realized and
unrealized gain or loss on investments and foreign currencies. 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 Portfolio hereby designates $698,067 as capital gain dividends paid during
the taxable year ended December 31, 1997.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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.
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 45
<PAGE>
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. The Advisor voluntarily reimbursed the Portfolio $25,189 for
administrative service fees.
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 $750 for
each Board meeting attended plus an annual fee of $3,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served.
NOTE C -- INVESTMENT ACTIVITY
During the year, purchases and sales of investments, other than short-term
securities, were $13,047,179 and $4,857,467, respectively.
The cost of investments owned at December 31, 1997 was substantially the same
for federal income tax and financial reporting purposes. Net unrealized
appreciation aggregated $1,302,450, of which $2,201,891 related to appreciated
investments and $899,441 related to depreciated investments.
NOTE D -- LINE OF CREDIT
Effective July 1, 1997, a financing agreement is in place with all Calvert Group
Funds and State Street Bank and Trust Company ("the Bank"). Under the agreement,
the Bank is providing an unsecured line of credit facility, in the aggregate
amount of $50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings under
this facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused portion
of the committed facility which will be allocated to all participating funds.
This fee is paid quarterly in arrears. The Fund had $213,991 outstanding
borrowings at an interest rate of 7% at December 31, 1997.
NOTE E -- SUBSEQUENT EVENT
Effective January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Global Equity
Portfolio was renamed Calvert Social International Equity Portfolio.
46 - CRI GLOBAL EQUITY PORTFOLIO ANNUAL REPORT
<PAGE>
GLOBAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . $ 18.74 $ 17.15 $ 15.89
-------- -------- --------
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . .19 .17 .27
Net realized and unrealized gain (loss) . . . . . . 2.28 2.40 1.69
-------- -------- --------
Total from investment operations. . . . . . . . . 2.47 2.57 1.96
-------- -------- --------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . (.20) (.14) (.25)
Net realized gains . . . . . . . . . . . . . . . . . (1.91) (.84) (.45)
-------- -------- --------
Total distributions . . . . . . . . . . . . . . . (2.11) (.98) (.70)
-------- -------- --------
Total increase (decrease) in net asset value . . . . . .36 1.59 1.26
-------- -------- --------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . $ 19.10 $ 18.74 $ 17.15
-------- -------- --------
-------- -------- --------
Total return . . . . . . . . . . . . . . . . . . . . . 13.23% 14.99% 12.35%
-------- -------- --------
-------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . .85% 1.02% 1.48%
-------- -------- --------
-------- -------- --------
Total expenses + . . . . . . . . . . . . . . . . . . 1.56% 1.59% 1.51%
-------- -------- --------
-------- -------- --------
Net expenses . . . . . . . . . . . . . . . . . . . . 1.17% 1.18% 1.12%
-------- -------- --------
-------- -------- --------
Expenses reimbursed. . . . . . . . . . . . . . . . . .17% .23% .39%
-------- -------- --------
-------- -------- --------
Portfolio turnover . . . . . . . . . . . . . . . . . . 35% 85% 90%
-------- -------- --------
-------- -------- --------
Average commission rate paid . . . . . . . . . . . . . $ .0399 $ .0352 NA
-------- -------- --------
-------- -------- --------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . $ 14,450 $ 14,027 $ 9,831
-------- -------- --------
-------- -------- --------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . 757 748 573
-------- -------- --------
-------- -------- --------
YEARS ENDED
--------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $ 17.72 $ 14.57
-------- --------
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .11 .11
Net realized and unrealized gain (loss) . . . . . . . . . . . . . . (.49) 4.07
-------- --------
Total from investment operations. . . . . . . . . . . . . . . . . (.38) 4.18
-------- --------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.13) (.08)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . (1.32) (.95)
-------- --------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (1.45) (1.03)
-------- --------
Total increase (decrease) in net asset value . . . . . . . . . . . . . (1.83) 3.15
-------- --------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $ 15.89 $ 17.72
-------- --------
-------- --------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.13%) 29.72%
-------- --------
-------- --------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .59% 1.00%
-------- --------
-------- --------
Total expenses + . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA
-------- --------
-------- --------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.24% .94%
-------- --------
-------- --------
Expenses reimbursed. . . . . . . . . . . . . . . . . . . . . . . . . .29% .10%
-------- --------
-------- --------
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . 84% 64%
-------- --------
-------- --------
Net assets, ending (in thousands). . . . . . . . . . . . . . . . . . . $ 7,765 $ 4,529
-------- --------
-------- --------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . . . . . . . . . 489 256
-------- --------
-------- --------
</TABLE>
+ EFFECTIVE DECEMBER 31, 1995, THIS RATIO REFLECTS TOTAL EXPENSES BEFORE
REDUCTION FOR FEES PAID INDIRECTLY; SUCH REDUCITONS ARE INCLUDED IN THE
RATIO OF NET EXPENSES.
N/A DISCLOSURE NOT APPLICABLE TO PRIOR PERIODS.
ANNUAL REPORT CRI GLOBAL EQUITY PORTFOLIO - 47
<PAGE>
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO
Dear Investor:
Before we begin our discussion of the economy and markets, we want to let
investors know that on January 1, 1998, Acacia Capital Corporation was renamed
Calvert Variable Series, Inc. and the Calvert Responsibly Invested Balanced
Portfolio was renamed Calvert Social Balanced Portfolio.
REVIEW
The economy expanded at a modest 2.5% estimated annualized rate, and inflation
remained tame despite strength in the labor markets. As a pre-emptive move to
keep inflation in check, the Federal Reserve adopted a slightly more restrictive
monetary policy in March by nudging its target for the federal funds rate (a key
short-term rate) higher, but left rates unchanged for the remainder of the year.
This was a fertile field for the stock market which posted an amazing fourth
consecutive year of double-digit gains, as measured by the Standard & Poor's 500
Stock Index. In general, bond yields moved higher during the first quarter then
reversed course as investors revised their expectations for the next Fed move --
first thinking the Fed would take steps to raise rates then expecting no change.
STRATEGY
We maintained the Portfolio's target asset mix of roughly 60% stocks and 40%
bonds and benefited from positive returns from both asset classes. The Balanced
Portfolio generated a return of 20.08% for the 12 months ended December 31,
1997.*
BALANCED PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN
(YEAR ENDED 12/31/97)
One year 20.08%
Five year 12.90%
Ten year 12.42%
Since inception (9/2/86) 11.20%
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT.
Bar chart here showing comparison from 12/31/87 to 12/97
CRI Balanced Portfolio $32,233
S&P 500 Index Monthly Reinvested $52,448
Lehman Aggregate Bond Index TR $24,061
* PERFORMANCE INFORMATION IS FOR THE PORTFOLIO ONLY AND DOES NOT REFLECT CHARGES
AND EXPENSES OF THE VARIABLE ANNUITY OR VARIABLE UNIVERSAL LIFE CONTRACT. PAST
PERFORMANCE DOES NOT INDICATE FUTURE RESULTS.
NEW SUBADVISORS ASSUMED MANAGEMENT OF THE PORTFOLIO EFFECTIVE FEBRUARY 1995.
EQUITY INVESTMENTS -- MANAGED BY NCM CAPITAL MANAGEMENT, INC.
Our Portfolio strategy has been to capture opportunities in three key sectors:
financial services, multi-national consumer growth and technology.
This year, stocks that contributed most to performance tended to be financial
services companies including Sunamerica, Fannie Mae, American International
Group and
48 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
MGIC Investment. This sector also held the biggest disappointment:
Green Tree Financial. Green Tree had risen to almost $50 a share when management
announced a $150 million write-off due to aggressive prepayment assumptions.
The market drove the stock to below $20 a share. In our opinion, the company's
long-term fundamentals are favorable, and we believe in their superior
management team. We took advantage of the opportunity to add to our position at
attractive prices. As of this writing, the stock had rebounded almost 40% from
its recent low.
Consumer growth companies that do business overseas were some of the first to
feel the effects of the "Asian flu," the market's term for the unfortunate
impact of the Asian financial crisis. Avon is an example of the severe price
volatility these firms have experienced. The stock has traded as high as $76 per
share and recently as low as $56 per share. Gillette has also been punished.
Our technology holdings held up well but did not match the market's exceptional
performance. This was due to investor's concerns for a slowing domestic economy
and the likelihood of increased price competition in light of Asia's economic
troubles. Key holdings continue to be IBM, Cisco, Microsoft, Compaq and
Ericsson.
FIXED-INCOME INVESTMENTS -- MANAGED BY CALVERT ASSET MANAGEMENT COMPANY, INC.
Early in the year, Calvert Asset Management Company, Inc. expected additional
Fed tightening and a corresponding rise in interest rates. Accordingly, we took
steps to shorten the Portfolio's maturity. However, as weeks passed without any
action by the Fed and without evidence of a buildup in pricing pressures, we had
reason to adopt a more bullish outlook and a less cautious stance. As rates
generally declined, this had a positive effect on the Portfolio's total return.
(When rates decline, bond prices rise.)
Since the beginning of the calendar year, we have implemented a more active
management strategy. We expect this strategy to improve the Portfolio's total
return over time. Higher portfolio trading activity will result in a higher
turnover ratio due to the Portfolio's current asset size. For the year ended,
December 31, 1997, the turnover was 905%.
OUTLOOK
Our long-term outlook for the stock market is positive and based on a forecast
for continued modest economic growth and low inflation. However, such
spectacular stock market returns can't go on forever. We expect the market will
eventually fall back closer to historical total return levels -- in the range of
10% annualized.
We remain bullish on the bond market. A flat yield curve portends moderating
economic activity which helps to keep inflation in check. Without the threat of
inflation, interest rates should remain low. We appreciate your investment in
the Balanced Portfolio.
Sincerely,
/s/ Barbara J. Krumsiek
Barbara J. Krumsiek
President and CEO
January 21, 1998
ANNUAL REPORT CRI BALANCED PORTFOLIO - 49
<PAGE>
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, 1997, and the related statement of operations for the year then
ended, statements of changes in net assets for each of the two years in the
period then ended and financial highlights for each of the four 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 the year ended December 31, 1993 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, 1997, by correspondence with the custodian and brokers. 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, 1997, 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 30, 1998
50 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SECURITIES - 59.1% SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
AIRLINES - 0.6%
AMR Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,400 $1,464,900
----------
1,464,900
----------
BANKS - MAJOR REGIONAL - 1.9%
Banc One Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,800 2,487,513
BankBoston Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,315 1,908,340
----------
4,395,853
----------
BANKS - MONEY CENTER - 2.2%
BankAmerica Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,400 1,343,200
Chase Manhattan Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 20,100 2,200,950
NationsBank Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . 21,900 1,331,794
----------
4,875,944
----------
CHEMICALS - 0.7%
Praxair, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,700 1,471,500
----------
1,471,500
----------
COMMUNICATIONS EQUIPMENT - 1.6%
Ericsson (L. M.) Telephone, Co., Class B, ADR. . . . . . . . . . . . . 63,205 2,358,337
Tellabs, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,900 1,369,463
----------
3,727,800
----------
COMPUTER - HARDWARE - 1.7%
Compaq Computer Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 41,750 2,356,266
Hewlett Packard Co.. . . . . . . . . . . . . . . . . . . . . . . . . . 20 1,250
International Business Machines. . . . . . . . . . . . . . . . . . . . 13,800 1,442,963
----------
3,800,479
----------
COMPUTER - NETWORKING - 1.5%
Cisco Systems, Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . 62,700 3,495,525
----------
3,495,525
----------
COMPUTER - PERIPHERALS - 0.5%
EMC Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,500 1,111,219
----------
1,111,219
----------
COMPUTER - SOFTWARE - 4.4%
BMC Software, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . 27,500 1,804,687
Computer Associates International, Inc.. . . . . . . . . . . . . . . . 60,866 3,218,263
Microsoft Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . 17,920 2,316,160
Oracle Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,035 1,718,843
Symantec Corp.*. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 987,187
----------
10,045,140
----------
CONSUMER FINANCE - 2.3%
Green Tree Financial Corp. . . . . . . . . . . . . . . . . . . . . . . 71,742 1,878,744
Umbono Investment Corp., Ltd. *. . . . . . . . . . . . . . . . . . . . 1,154,900 3,322,429
----------
5,201,173
----------
</TABLE>
ANNUAL REPORT CRI BALANCED PORTFOLIO - 51
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
DISTRIBUTORS - FOOD AND HEALTH - 1.6%
Cardinal Health, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 26,200 $1,968,275
Sysco Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,500 1,754,156
----------
3,722,431
----------
FINANCIAL - DIVERSIFIED - 4.2%
Federal National Mortgage Assn.. . . . . . . . . . . . . . . . . . . . 44,900 2,562,106
MGIC Investment Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 32,700 2,174,550
PMI Group, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,300 2,263,381
SunAmerica, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,950 2,648,363
----------
9,648,400
----------
FOODS - 3.2%
CPC International, Inc.. . . . . . . . . . . . . . . . . . . . . . . . 15,600 1,680,900
Heinz (H.J.) Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,700 2,525,381
Hershey Foods Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . 23,500 1,455,531
Interstate Bakeries Corp.. . . . . . . . . . . . . . . . . . . . . . . 41,800 1,562,275
----------
7,224,087
----------
HEALTH CARE - LONG TERM CARE - 1.7%
Healthsouth Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . 103,800 2,880,450
Sun Healthcare Group, Inc. * . . . . . . . . . . . . . . . . . . . . . 46,800 906,750
----------
3,787,200
----------
HEALTH CARE - MEDICAL PRODUCTS AND SUPPLIES - 2.0%
Guidant Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,400 1,830,150
Medtronic, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,200 2,626,087
----------
4,456,237
----------
HEALTH CARE - PHARMACEUTICAL - 2.6%
Merck & Co., Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29,500 3,134,375
Schering Plough Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 45,500 2,826,687
----------
5,961,062
----------
HOUSEHOLD PRODUCES - NON-DURABLE - 2.6%
Colgate Palmolive Co.. . . . . . . . . . . . . . . . . . . . . . . . . 28,500 2,094,750
Dial Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,200 2,355,975
Fort James Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,650 1,325,363
----------
5,776,088
----------
INSURANCE - LIFE AND HEALTH - 0.5%
Hartford Life, Inc., Class A . . . . . . . . . . . . . . . . . . . . . 23,500 1,064,844
----------
1,064,844
----------
INSURANCE - MULTI-LINE - 1.1%
American International Group, Inc. . . . . . . . . . . . . . . . . . . 23,925 2,601,844
----------
2,601,844
----------
MACHINERY - DIVERSIFIED - 1.0%
Dover Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,290 2,250,226
----------
2,250,226
----------
MANUFACTURING - DIVERSIFIED - 1.1%
Tyco International, Ltd. . . . . . . . . . . . . . . . . . . . . . . . 56,400 2,541,525
----------
2,541,525
----------
</TABLE>
52 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - SPECIALIZED - 2.5%
Avery Dennison Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 61,900 $2,770,025
Parker Hannifin Corp.. . . . . . . . . . . . . . . . . . . . . . . . . 30,600 1,403,775
Sealed Air Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . 26,100 1,611,675
----------
5,785,475
----------
NATURAL GAS - 1.0%
MCN Energy Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 53,400 2,156,025
----------
2,156,025
----------
OIL AND GAS - DRILLING AND EQUIPMENT - 1.6%
Baker Hughes, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 85,700 3,738,663
----------
3,738,663
----------
PERSONAL CARE - 1.9%
Avon Products, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 26,200 1,608,025
Gillette Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,700 2,782,119
----------
4,390,144
----------
POWER PRODUCERS - 0.6%
CalEnergy Co., Inc. *. . . . . . . . . . . . . . . . . . . . . . . . . 49,000 1,408,750
----------
1,408,750
----------
PUBLISHING - NEWSPAPERS - 0.6%
New York Times Co., Class A. . . . . . . . . . . . . . . . . . . . . . 20,900 1,382,013
----------
1,382,013
----------
RETAIL - BUILDING SUPPLIES - 0.7%
Home Depot, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,520 1,502,490
----------
1,502,490
----------
RETAIL - DEPARTMENT STORES - 0.0%
Penney (J.C.), Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 20 1,206
----------
1,206
RETAIL - DISCOUNTERS - 0.8%
Consolidated Stores Corp. *. . . . . . . . . . . . . . . . . . . . . . 42,515 1,868,003
----------
1,868,003
----------
RETAIL - DRUG STORES - 1.2%
CVS Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,700 2,799,531
----------
2,799,531
----------
RETAIL - FOOD CHAINS - 1.4%
Kroger Co. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,300 3,076,894
----------
3,076,894
----------
RETAIL - SPECIALTY - 1.3%
Autozone, Inc. * . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,300 1,429,700
Barnes and Noble, Inc. * . . . . . . . . . . . . . . . . . . . . . . . 60 2,003
Viking Office Products, Inc. * . . . . . . . . . . . . . . . . . . . . 71,700 1,563,956
----------
2,995,659
----------
</TABLE>
ANNUAL REPORT CRI BALANCED PORTFOLIO - 53
<PAGE>
<TABLE>
<CAPTION>
EQUITY SECURITIES (CONT'D) SHARES VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICES - COMMERCIAL AND CONSUMER - 2.0%
Block (H & R), Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 37,600 $1,684,950
Cendant Corp. *. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,450 2,902,969
-----------
4,587,919
-----------
SERVICES - DATA PROCESSING - 0.5%
Automatic Data Processing. . . . . . . . . . . . . . . . . . . . . . . 19,000 1,166,125
-----------
1,166,125
-----------
TELEPHONE - 3.1%
Ameritech Corp.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,395 2,527,297
Century Telephone Enterprises, Inc.. . . . . . . . . . . . . . . . . . 49,665 2,473,938
SBC Communications, Inc. . . . . . . . . . . . . . . . . . . . . . . . 26,820 1,964,565
-----------
6,965,800
-----------
TEXTILES - APPAREL - 0.3%
Jones Apparel Group, Inc. *. . . . . . . . . . . . . . . . . . . . . . 17,800 765,400
-----------
765,400
-----------
TRUCKERS - 0.6%
Lear Corp. * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,800 1,463,000
-----------
1,463,000
-----------
Total Equity Securities (Cost $101,456,714). . . . . . . . . . . 134,676,574
-----------
<CAPTION>
PRINCIPAL
CORPORATE OBLIGATIONS - 37.6% AMOUNT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Advanta Corp., 6.785%, 7/27/98 . . . . . . . . . . . . . . . . . . . . $1,000,000 988,400
Advanta National Bank, 6.45%, 10/30/00 . . . . . . . . . . . . . . . . 1,000,000 994,230
AGL Capital Trust, 8.17%, 6/1/37 . . . . . . . . . . . . . . . . . . . 1,000,000 1,060,940
AMR Corp., 9.82%, 3/7/01 . . . . . . . . . . . . . . . . . . . . . . . 25,000 27,298
BankBoston Capital Trust III VRDN, 6.688%, 6/15/27+. . . . . . . . . . 3,000,000 2,990,061
Block Financial Corp., 6.75%, 11/1/04. . . . . . . . . . . . . . . . . 1,500,000 1,518,975
BNP US Funding, LLC, 7.738%, 12/31/49. . . . . . . . . . . . . . . . . 5,500,000 5,491,161
Capital One Capital I VRDN, 7.30%, 2/1/27+ . . . . . . . . . . . . . . 1,000,000 985,961
Central Fidelity Capital Trust I VRDN, 6.758%, 4/15/27+. . . . . . . . 3,000,000 3,021,555
Chemical Bank New York Trust, 7.25%, 9/15/02 . . . . . . . . . . . . . 1,000,000 1,037,760
Chemical Bank, 6.70%, 8/15/08. . . . . . . . . . . . . . . . . . . . . 1,000,000 1,007,830
Conseco, Inc., 10.50%, 12/15/04. . . . . . . . . . . . . . . . . . . . 1,000,000 1,204,090
Continental Valorem Corp. VRDN, 6.20%, 6/1/13,
LOC: Tokai Bank Ltd. . . . . . . . . . . . . . . . . . . . . . . . . 700,000 700,000
Goldman Sachs Group, LP, 6.20%, 12/15/00 . . . . . . . . . . . . . . . 2,000,000 2,001,160
Governor & Co., 7.00%, 11/29/49 . . . . . . . . . . . . . . . . . . . 1,000,000 1,006,962
Green Tree Financial Corp., 6.50%, 9/26/02 . . . . . . . . . . . . . . 2,350,000 2,344,783
Greenpoint Capital Trust I, 9.10%, 6/1/27. . . . . . . . . . . . . . . 2,000,000 2,228,580
Household Finance Corp., 6.63%, 5/28/99. . . . . . . . . . . . . . . . 1,000,000 1,006,880
HSB Capital I VRDN, 6.668%, 7/15/27+ . . . . . . . . . . . . . . . . . 1,000,000 981,355
International Lease Finance Corp., 6.64%, 2/1/00 . . . . . . . . . . . 1,000,000 1,007,480
Interpool, Inc., 7.35%, 8/1/07 . . . . . . . . . . . . . . . . . . . . 4,000,000 4,001,040
Liberty Property, 6.95%, 12/1/06 . . . . . . . . . . . . . . . . . . . 2,000,000 2,003,180
Mark IV Industries, Inc., 7.50%, 9/1/07. . . . . . . . . . . . . . . . 2,000,000 1,992,500
McKesson Fin Co., 6.55%, 11/1/02 . . . . . . . . . . . . . . . . . . . 2,000,000 2,014,720
Medpartners, Inc., 6.875%, 9/1/00. . . . . . . . . . . . . . . . . . . 5,000,000 4,955,345
Merita Bank Ltd., 7.15%, 12/29/49. . . . . . . . . . . . . . . . . . . 7,500,000 7,593,742
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
54 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL
CORPORATE OBLIGATIONS - (CONT'D) AMOUNT VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
National Australia Bank, Ltd., 6.40%, 12/10/07 . . . . . . . . . . . . $2,500,000 $2,509,250
National City Bank, 7.25%, 7/15/10 . . . . . . . . . . . . . . . . . . 1,870,000 1,956,955
Puget Sound Energy Capital Trust I, 8.231%, 6/1/27 . . . . . . . . . . 2,000,000 2,116,440
Puget Sound Energy Consv., 6.23%, 7/11/02. . . . . . . . . . . . . . . 2,000,000 2,002,860
Riggs Capital ll, 8.875%, 3/15/27. . . . . . . . . . . . . . . . . . . 500,000 544,520
San Mateo, CA Redevelopment Agency, 7.125%, 8/1/08 . . . . . . . . . . 3,585,000 3,639,743
Security Benefit Life Co., 8.75%, 5/15/16. . . . . . . . . . . . . . . 2,000,000 2,272,804
Sovereign Bancorp, Inc., 6.75%, 9/1/00 . . . . . . . . . . . . . . . . 1,250,000 1,249,325
Sun Life CDA US Trust I, 8.526%, 5/29/49 . . . . . . . . . . . . . . . 4,000,000 4,353,840
Suntrust Capital I VRDN, 6.545%, 5/15/27+. . . . . . . . . . . . . . . 1,000,000 987,374
World Com, Inc., 7.55%, 4/1/04 . . . . . . . . . . . . . . . . . . . . 3,000,000 3,132,960
Xerox Capital Trust I, 8.00%, 2/1/27 . . . . . . . . . . . . . . . . . 5,250,000 5,574,030
Zurich Capital Trust, 8.376, 6/1/37. . . . . . . . . . . . . . . . . . 1,000,000 1,103,950
------------
Total Corporate Obligations (Cost $84,963,024) . . . . . . . . . . . 85,610,039
------------
REPURCHASE AGREEMENTS - 1.5%
- -----------------------------------------------------------------------------------------------------
Donaldson, Lufkin Jenrette: 6.55%, dated 12/31/97, due 1/2/98
(Collateral: $3,589,784, FNMA, 6.56%, 12/17/02). . . . . . . . . . . . 3,500,000 3,500,000
------------
Total Repurchase Agreements (Cost $3,500,000). . . . . . . . . . . . 3,500,000
------------
MUNICIPAL OBLIGATIONS - 0.9%
- -----------------------------------------------------------------------------------------------------
Maryland State Economic Development Corp., 8.00%,
10/1/05. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,033,480
Maryland State Economic Development Corp., 8.625%,
10/1/19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000 882,427
------------
Total Municipal Obligations (Cost $1,750,000). . . . . . . . . . . . 1,915,907
------------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES - 0.3%
- -----------------------------------------------------------------------------------------------------
WNH Ltd. Partnership, 9.40%, 10/1/99 . . . . . . . . . . . . . . . . . 705,000 745,453
------------
Total U.S. Government Agencies and Instrumentalities
(Cost $720,980). . . . . . . . . . . . . . . . . . . . . . . . . . 745,453
------------
OTHER DEBT - 0.3%
- -----------------------------------------------------------------------------------------------------
Chickasaw Nation, Oklahoma, 10.00%, 8/1/03# . . . . . . . . . . . . . 1,000,000 600,000
------------
Total Other Debt (Cost $1,000,000) . . . . . . . . . . . . . . . . . 600,000
------------
TOTAL INVESTMENTS (Cost $193,390,718) - 99.7% . . . . . . . . . . 227,047,973
Other assets and liabilities, net - 0.3%. . . . . . . . . . . . . 786,002
------------
NET ASSETS - 100% . . . . . . . . . . . . . . . . . . . . . . . . $227,833,975
------------
------------
</TABLE>
+ OPTIONAL TENDER FEATURE GIVE THESE SECURITIES A SHORTER EFFECTIVE MATURITY
DATE.
* NON-INCOME PRODUCING
# THIS SECURITY IS IN DEFAULT AND WAS VALUED BY THE BOARD OF DIRECTORS.
SEE NOTE A.
EXPLANATION OF GUARANTEES ABBREVIATIONS:
LOC: LETTER OF CREDIT VRDN: VARIABLE RATE DEMAND NOTES
SEE NOTES TO FINANCIAL STATEMENTS.
ANNUAL REPORT CRI BALANCED PORTFOLIO - 55
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investments in securities, at value . . . . . . . . . . . . . . . . . . . . . . . . $227,047,973
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658,827
Receivable for securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,456,451
Interest and dividends receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,359,252
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,492
-------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,527,995
-------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------
Payable for securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 6,457,338
Payable for shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,399
Payable to Calvert Asset Management Company, Inc.. . . . . . . . . . . . . . . . . . 138,358
Payable to Calvert Shareholder Services, Inc.. . . . . . . . . . . . . . . . . . . . 5,675
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 25,250
-------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,694,020
-------------
Net assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $227,833,975
-------------
-------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------
Par value and paid-in capital applicable to 114,966,537 shares of common
stock outstanding; $1 par value, 300,000,000 shares authorized . . . . . . . . . . $192,545,756
Undistributed net investment income (loss) . . . . . . . . . . . . . . . . . . . . . 515,324
Accumulated net realized gains (losses) on investments and foreign currencies. . . . 1,115,640
Net unrealized appreciation (depreciation) on investments. . . . . . . . . . . . . . 33,657,255
-------------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $227,833,975
-------------
-------------
NET ASSET VALUE PER SHARE . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.982
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
56 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
BALANCED PORTFOLIO
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET INVESTMENT INCOME
- ----------------------------------------------------------------------------------------------------
<S> <C>
Investment Income
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,517,678
Dividend income (net of foreign taxes of $1,487) . . . . . . . . . . . . . . . . . 1,106,085
-------------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,623,763
-------------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,339,036
Transfer agency fees and expenses. . . . . . . . . . . . . . . . . . . . . . . . . 45,533
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,277
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,906
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,129
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,014
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,845
-------------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,543,740
Fees paid indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,906)
-------------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,487,834
-------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 5,135,929
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,577,825
Foreign currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-------------
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,577,885
-------------
Change in unrealized appreciation or depreciation on investments . . . . . . . . . . 19,045,338
-------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,623,223
-------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . $34,759,152
-------------
</TABLE>
ANNUAL REPORT CRI BALANCED PORTFOLIO - 57
<PAGE>
BALANCED PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . $5,135,929 $3,649,653
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . 10,577,885 9,057,850
Change in unrealized appreciation or depreciation. . . . . . . . . . 19,045,338 3,628,677
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . 34,759,152 16,336,180
------------- ------------
Distributions to shareholders from
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (5,000,858) (3,502,338)
Net realized gain on investments . . . . . . . . . . . . . . . . . . (10,847,850) (8,620,000)
------------- ------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (15,848,708) (12,122,338)
------------- ------------
Capital share transactions
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,260,144 38,725,037
Shares issued from merger (Note A) . . . . . . . . . . . . . . . . . -- 3,670,827
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . 15,848,708 12,122,338
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . (12,658,315) (7,496,263)
------------- ------------
Total capital share transactions. . . . . . . . . . . . . . . . . 47,450,537 47,021,939
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . 66,360,981 51,235,781
NET ASSETS
- ----------------------------------------------------------------------------------------------------
Beginning of year. . . . . . . . . . . . . . . . . . . . . . . . . . . 161,472,994 110,237,213
------------- ------------
End of year (including undistributed net investment
income of $515,324 and $380,193, respectively) . . . . . . . . . . . $227,833,975 $161,472,994
------------- ------------
------------- ------------
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------
Shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,441,316 21,664,978
Shares issued from merger (Note A) . . . . . . . . . . . . . . . . . . -- 2,061,104
Reinvestment of distributions. . . . . . . . . . . . . . . . . . . . . 7,996,320 6,833,336
Shares redeemed. . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,516,580) (4,241,957)
------------- ------------
Total capital share activity . . . . . . . . . . . . . . . . . . . . 23,921,056 26,317,461
------------- ------------
------------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
58 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 Portfolio'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.
In determining fair value, the Board considers all relevant qualitative and
quantitative information available. These factors are subject to change over
time and are reviewed periodically. The values assigned to fair value
investments are based on available information and do not necessarily represent
amounts that might ultimately be realized, since such amounts depend on future
developments inherent in long-term investments. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market of the investments
existed, and the differences could be material.
At December 31, 1997, $600,000 or 0.3% of net assets were valued by 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. Although risk is mitigated by the
collateral, the Fund could experience a delay in recovering its value and a
possible loss of income or value if the counterparty fails to perform in
accordance with the terms of the agreement.
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
ANNUAL REPORT CRI BALANCED PORTFOLIO - 59
<PAGE>
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
investments is included with the net realized and unrealized gain or loss on
investments. 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 Portfolio hereby designates $9,564,208 as capital gain dividends paid during
the taxable year ended December 31, 1997.
For corporate shareholders of CRI Balanced Portfolio, a total of 17% of the
income dividends paid during the taxable year ended December 31, 1997 qualifies
for the dividends received deduction.
ESTIMATES: The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts 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.
CRI BALANCED PORTFOLIO - 60 ANNUAL REPORT
<PAGE>
Each Director who is not affiliated with the Advisor received a fee of $750 for
each Board meeting attended plus an annual fee of $3,000 for Directors not
serving on other Calvert Fund Boards. Director's fees are allocated to each of
the portfolios served.
NOTE C -- INVESTMENT ACTIVITY
During the year, purchases and sales of investments, other than short-term
securities, were $1,613,393,963 and $1,581,175,141, respectively. U.S.
government security purchases were $982,086,893 and sales were $1,017,332,623.
The cost of investments owned at December 31, 1997 was substantially the same
for federal income tax purposes and financial reporting purposes. Net unrealized
appreciation aggregated $33,657,255, of which $35,122,763 related to appreciated
securities and $1,465,508 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 derived prices.
NOTE D -- LINE OF CREDIT
Effective July 1, 1997, a financing agreement is in place with all Calvert Group
Funds and State Street Bank and Trust Company ("the Bank"). Under the agreement,
the Bank is providing an unsecured line of credit facility, in the aggregate
amount of $50 million ($25 million committed and $25 million uncommitted), to be
accessed by the Funds for temporary or emergency purposes only. Borrowings under
this facility bear interest at the overnight Federal Funds Rate plus .50% per
annum. A commitment fee of .10% per annum will be incurred on the unused portion
of the committed facility which will be allocated to all participating funds.
This fee is paid quarterly in arrears. The Fund had no loans outstanding
pursuant to this line of credit at December 31, 1997.
NOTE E -- SUBSEQUENT EVENT
Effective January 1, 1998, Acacia Capital Corporation was renamed Calvert
Variable Series, Inc. and the Calvert Responsibly Invested Balanced Portfolio
was renamed Calvert Social Balanced Portfolio.
ANNUAL REPORT CRI BALANCED PORTFOLIO - 61
<PAGE>
BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $1.774 $1.703 $1.440
--------- -------- --------
--------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .047 .040 .050
Net realized and unrealized gain (loss) . . . . . . . . . . . . . . .309 .175 .380
--------- -------- --------
Total from investment operations. . . . . . . . . . . . . . . . . .356 .215 .430
--------- -------- --------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.047) (.042) (.040)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . (.101) (.102) (.127)
--------- -------- --------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (.148) (.144) (.167)
--------- -------- --------
Total increase (decrease) in net asset value . . . . . . . . . . . . . .208 .071 .263
--------- -------- --------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $1.982 $1.774 $1.703
--------- -------- --------
--------- -------- --------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.08% 12.62% 29.87%
--------- -------- --------
--------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . 2.66% 2.71% 3.08%
--------- -------- --------
--------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .80% .81% .83%
--------- -------- --------
--------- -------- --------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77% .78% .81%
--------- -------- --------
--------- -------- --------
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . 905% 99% 163%
--------- -------- --------
--------- -------- --------
Average commission rate paid . . . . . . . . . . . . . . . . . . . . . $.0500 $.0481 NA
--------- -------- --------
--------- -------- --------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . . . . . . . . . $227,834 $161,473 $110,237
--------- -------- --------
--------- -------- --------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . . . . . . . . . 114,967 91,045 64,728
--------- -------- --------
--------- -------- --------
<CAPTION>
YEARS ENDED
--------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING . . . . . . . . . . . . . . . . . . . . . . $1.537 $1.465
-------- --------
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . .046 .045
Net realized and unrealized gain (loss). . . . . . . . . . . . . . . (.097) .072
-------- --------
Total from investment operations. . . . . . . . . . . . . . . . . (.051) .117
-------- --------
DISTRIBUTIONS FROM
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . (.046) (.045)
Net realized gains . . . . . . . . . . . . . . . . . . . . . . . . . -- --
-------- --------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (.046) (.045)
-------- --------
Total increase (decrease) in net asset value . . . . . . . . . . . . . (.097) .072
-------- --------
NET ASSET VALUE, ENDING. . . . . . . . . . . . . . . . . . . . . . . . $1.440 $1.537
-------- --------
-------- --------
Total return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3.30%) 8.00%
-------- --------
RATIOS TO AVERAGE NET ASSETS:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . 3.39% 3.69%
-------- --------
-------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . NA NA
-------- --------
-------- --------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80% .81%
-------- --------
-------- --------
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . . . 43% 14%
-------- --------
-------- --------
NET ASSETS, ENDING (IN THOUSANDS). . . . . . . . . . . . . . . . . . . $66,593 $54,000
-------- --------
-------- --------
Number of shares outstanding,
ending (in thousands). . . . . . . . . . . . . . . . . . . . . . . . 46,244 35,142
-------- --------
-------- --------
</TABLE>
+ EFFECTIVE DECEMBER 31, 1995, THIS RATIO REFLECTS TOTAL EXPENSES BEFORE
REDUCTION FOR FEES PAID INDIRECTLY; SUCH REDUCTIONS ARE INCLUDED IN THE
RATIO OF NET EXPENSES.
NA DISCLOSURE NOT APPLICABLE TO PRIOR PERIODS.
62 - CRI BALANCED PORTFOLIO ANNUAL REPORT
<PAGE>
ACACIA
CAPITAL
CORPORATION
CALVERT
RESPONSIBLY
INVESTED
PORTFOLIOS
ANNUAL REPORT
DECEMBER 31, 1997
