Registration Nos. 33-
811-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No.___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
(Check appropriate box or boxes.)
MANNING & NAPIER INSURANCE FUND, INC.
_________________________________________________
(Exact name of registrant as specified in charter)
1100 Chase Square
Rochester, New York 14604
________________________________________ _________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (716) 325-6880
B. Reuben Auspitz or
Barbara Lapple
c/o Manning & Napier Insurance Fund, Inc.
1100 Chase Square
Rochester, NY 14604
(Name and Address of Agent For Service)
Copies to:
Judith A. Hasenauer, Esq.
Blazzard, Grodd & Hasenauer, P.C.
P.O. Box 5108
Westport, CT 06881
(203) 226-7866
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933:
$500 - Registrant is registering an indefinite number of securities under
the Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
=============================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(as required by Rule 404(c))
PART A
N-1A
- --------
Item No. Location
- -------- -------------------------
<C> <S> <C>
1. Cover Page........................... Cover Page
2. Synopsis............................. Summary
3. Condensed Financial Information...... Not Applicable
4. General Description of Registrant.... Cover Page; The Fund;
Risk and Investment
Objectives; Appendix
5. Management of the Fund............... Management
6. Capital Stock and Other Securities... Sales and Redemptions;
Net Asset Value; Tax
Status, Dividends, and
Distributions; General
Information
7. Purchase of Securities Being Offered. The Fund; Net Asset
Value; Sales and
Redemptions
8. Redemption or Repurchase............. Sales and Redemptions;
Net Asset Value
9. Pending Legal Proceedings............ Not Applicable
PART B
10. Cover Page........................... Cover Page
11. Table of Contents.................... Cover Page
12. General Information and History...... Not Applicable
13. Investment Objectives and Policies... Investment Objectives,
Policies and Restrictions
of the Fund;
Risk and Investment
Policies; Principal
Investment Restrictions;
Risks and Additional
Information about
Investment Policies;
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET (CONT'D)
(as required by Rule 404(c))
N-1A
- --------
Item No. Location
- -------- ---------------------------
<S> <C> <C>
Item 14. Management of the Fund............... Management
Item 15. Control Persons and Principal Holders
of Securities................... Management
Item 16. Investment Advisory and Other
Services........................ Management; Custodian
Item 17. Brokerage Allocation................. Management
(Portfolio Transations and
Brokerage)
Item 18. Capital Stock and Other Securities... Redemption of Shares;
Net Asset Value; Taxes;
Dividends and
Distributions; Organiza-
tion and Capitalization
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered........ Net Asset Value;
Redemption of Shares
Item 20. Tax Status........................... Taxes; Dividends and
Distributions
Item 21. Underwriters......................... Not Applicable
Item 22. Calculations of Yield Quotations of
Money Market Funds.............. Not Applicable
Item 23. Financial Statements................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
PART A
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
1100 CHASE SQUARE
ROCHESTER, NEW YORK 14604
1-800-466-3863
Manning & Napier Insurance Fund, Inc. (the "Fund"), is an open-end management
investment company that offers separate series, each a separate investment
portfolio having its own investment objective and policies. This Prospectus
relates to the six series of the Fund described below (the "Portfolios.")
Manning & Napier Advisors, Inc. (the "Advisor") acts as investment advisor to
the Fund. Shares of the Fund are offered to life insurance companies ("Life
Companies") for allocation to certain of their variable separate accounts
established for the purpose of funding variable annuity contracts and variable
life insurance policies ("Variable Contracts"). The Portfolios and their
respective investment objectives are as follows:
MANNING & NAPIER MODERATE GROWTH PORTFOLIO - seeks with equal emphasis
long-term growth and preservation of capital.
MANNING & NAPIER GROWTH PORTFOLIO - seeks long-term growth of capital. The
secondary objective is the preservation of capital.
MANNING & NAPIER EQUITY PORTFOLIO - seeks long-term growth of capital.
MANNING & NAPIER SMALL CAP PORTFOLIO - seeks to achieve long-term growth of
capital by investing principally in the equity securities of small issuers.
MANNING & NAPIER BOND PORTFOLIO - seeks to maximize total return in the form
of both income and capital appreciation by investing in fixed income
securities without regard to maturity.
MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO - seeks to achieve the high level
of long-term capital growth typically associated with the stock market.
This Prospectus provides you with the basic information you should know before
investing in the Fund. You should read this Prospectus and keep it for future
reference. A Statement of Additional Information, dated XXXXXXXXXX containing
additional information about the Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference in this Prospectus in its
entirety. You may obtain a copy of the Statement of Additional Information
without charge by contacting the Fund at the address or telephone number
listed above.
INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND IS SUBJECT TO RISK THAT MAY
CAUSE THE VALUE OF THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS
REDEEMED, THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED
BY THE INVESTOR.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The purchaser of a Variable Contract should read this Prospectus in
conjunction with the prospectus for his or her Variable Contract.
The date of this Prospectus is XXXXXXXXXX, XXXX.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
SUMMARY 1
The Fund 1
RISK AND INVESTMENT OBJECTIVES 1
RISKS AND ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES 5
PRINCIPAL INVESTMENT RESTRICTIONS 12
MANAGEMENT 12
SALES AND REDEMPTIONS 13
NET ASSET VALUE 14
PERFORMANCE INFORMATION 15
TAX STATUS, DIVIDENDS, AND DISTRIBUTIONS 16
GENERAL INFORMATION 16
APPENDIX 17
</TABLE>
SUMMARY
THE FUND
The Fund is an open-end management investment company incorporated under the
laws of the State of Maryland on November 1, 1995. The Fund offers separate
series of units of beneficial interest ("shares"). The Fund is currently
comprised of six separate Portfolios: Manning & Napier Moderate Growth
Portfolio; Manning & Napier Growth Portfolio; Manning & Napier Equity
Portfolio; Manning & Napier Small Cap Portfolio; Manning & Napier Bond
Portfolio; and Manning & Napier Maximum Horizon Portfolio. The Directors may
provide for additional Portfolios from time to time. Each Portfolio offers a
separate class of shares.
RISK AND INVESTMENT OBJECTIVES
Each Portfolio of the Fund has a different investment objective which it
pursues through separate investment policies as described below. The risks and
opportunities of each Portfolio should be examined separately. The differences
in objectives and policies among the Portfolios can be expected to affect the
return of each Portfolio and the degree of market and financial risk of each
Portfolio.
MANNING & NAPIER MODERATE GROWTH PORTFOLIO
The investment objective of the Manning & Napier Moderate Growth Portfolio
(the "Moderate Growth Portfolio") is to seek with equal emphasis long term
growth and preservation of capital. From time to time, the Advisor will vary
the proportions invested in common stocks, income-producing securities (e.g.,
debt securities and preferred stock) or cash (including foreign currency) and
cash equivalents depending on its view of their relative attractiveness in
light of market and economic conditions. Because the Moderate Growth
Portfolio's investments fluctuate in value, the Portfolio's shares will
fluctuate in value. The Advisor seeks to reduce the risk of negative returns
while seeking to obtain capital growth when it believes valuations and market
conditions are favorable. In this process the Advisor will work to try to
dampen the year-to-year swings in the market value in order to generate a more
stable rate of growth for this Portfolio relative to an investment in the
general stock market. There is no assurance that the Moderate Growth Portfolio
will attain its objective.
In pursuit of its investment objective, the Portfolio may invest in a wide
variety of equity and debt securities. Equity securities consist of common
stocks, securities convertible thereto, and warrants. The Portfolio does not
intend to invest more than 5% of the value of its total net assets in
warrants. The principal factor in selecting convertible bonds will be the
potential opportunity to benefit from movement in the stock price. There will
be no minimum rating standards for debt aspects of such securities.
Convertible bonds purchased by the Portfolio may be subject to the risk of
being called by the issuer.
The debt securities in which the Portfolio may invest in consist of corporate
debt securities, mortgage-backed securities and obligations issued or
guaranteed as to payment of principal and interest by the U.S. Government or
its agencies or instrumentalities. The Portfolio may invest in such securities
without regard to term or rating and may, from time to time, invest up to 20%
of its assets in corporate debt securities rated below investment grade, i.e.,
rated lower than BBB by Standard & Poor's Ratings Group ("S&P") or Baa by
Moody's Investors Service, Inc. ("Moody's"), or unrated securities of
comparable quality as determined by the Advisor. These securities are commonly
known as "junk bonds". Ratings of corporate bonds including lower rated bonds
are included in the Appendix. See "Risks and Additional Information about
Investment Policies - High Yield Debt Securities."
MANNING & NAPIER GROWTH PORTFOLIO
The primary investment objective of the Manning & Napier Growth Portfolio (the
"Growth Portfolio") is to provide long term growth of capital. The secondary
objective of the Growth Portfolio is the preservation of capital. From time to
time, the Advisor will vary the proportions invested in common stocks,
income-producing securities (e.g., debt securities and preferred stock) or
cash (including foreign currency) and cash equivalents depending on its view
of their relative attractiveness in light of market and economic conditions.
Because the Growth Portfolio's investments fluctuate in value, the Portfolio
shares will fluctuate in value. In pursuit of its primary objective, the
Growth Portfolio will often invest more than 50% in common stocks, and
securities convertible into common stocks, of companies the Advisor believes
have long-term growth potential. However, in light of the secondary objective
of the Growth Portfolio, it may, even under normal circumstances, invest a
substantial portion of its assets in certain debt securities, preferred stocks
or common stocks whose principal characteristic is income production rather
than growth. Such securities afford less opportunity for growth than common
stocks but they entail less risk of loss and may also offer some opportunity
for growth of capital as well as for income and relative stability. There is
no assurance that the Growth Portfolio will attain its objective.
In pursuit of its investment objective, the Growth Portfolio may invest in a
wide variety of equity and debt securities. Equity securities consist of
common stocks, securities convertible thereto, and warrants. The Portfolio
does not intend to invest more than 5% of the value of its total net assets in
warrants. The principal factor in selecting convertible bonds will be the
potential opportunity to benefit from movement in the stock price. There will
be no minimum rating standards for debt aspects of such securities.
Convertible bonds purchased by the Portfolio may be subject to the risk of
being called by the issuer.
The debt securities in which the Portfolio may invest in consist of corporate
debt securities, mortgage-backed securities and obligations issued or
guaranteed as to payment of principal and interest by the U.S. Government or
its agencies or instrumentalities. The Portfolio may invest in such securities
without regard to term or rating and may, from time to time, invest up to 20%
of its assets in corporate debt securities rated below investment grade, i.e.,
rated lower than BBB by S&P or Baa by Moody's, or unrated securities of
comparable quality as determined by the Advisor. These securities are commonly
known as "junk bonds". Ratings of corporate bonds including lower rated bonds
are included in the Appendix. See "Risks and Additional Information about
Investment Policies - High Yield Debt Securities."
MANNING & NAPIER EQUITY PORTFOLIO
The investment objective of the Manning & Napier Equity Portfolio (the "Equity
Portfolio") is long-term growth of capital. The Advisor will, under normal
circumstances, seek to increase shareholders' capital by investing principally
in common stocks of domestic and foreign issuers. Under normal circumstances,
the Portfolio will seek to have a minimum of 90% of its assets invested in
equity securities. There is no assurance that the Equity Portfolio will
attain its objective.
The Portfolio will seek investment opportunities principally in common stocks
of domestic and foreign issuers which the Advisor believes have the potential
for above average and predictable earnings growth or where the Advisor
believes the investment is under-valued for either company-specific,
industry-specific, or macro-economic reasons.
The Portfolio's investment program involves greater risks and share price
volatility than programs that invest in more conservative securities. Further,
the Portfolio does not follow a policy of active trading for short-term
profits. Therefore, the Portfolio may be more appropriate for investors with a
longer-range perspective. The Portfolio may invest in such securities without
regard to term or rating and may, from time to time, invest up to 20% of its
assets in corporate debt securities rated below investment grade, i.e., rated
lower than BBB by S&P or Baa by Moody's, or unrated securities of comparable
quality as determined by the Advisor. These securities are commonly known as
"junk bonds". Ratings of corporate bonds including lower rated bonds are
included in the Appendix. See "Risks and Additional Information about
Investment Policies - High Yield Debt Securities."
MANNING & NAPIER SMALL CAP PORTFOLIO
The investment objective of the Manning & Napier Small Cap Portfolio (the
"Small Cap Portfolio") is to provide long-term growth of capital. The
Portfolio will attempt to achieve its objective by investing primarily in
equity securities as described below. Equity securities consist of common
stocks and other securities having some of the characteristics of common
stocks, such as convertible preferred stocks, convertible bonds and warrants.
The Portfolio does not intend to invest more than 5% of the value of its total
net assets in warrants. The principal factor in selecting convertible bonds
will be the potential opportunity to benefit from movement in the stock price.
There will be no minimum rating standards for debt aspects of such securities.
Convertible bonds purchased by the Portfolio may be subject to the risk of
being called by the issuer. However, the Portfolio would not buy bonds if they
were in default as to payment of principal or interest. There is no assurance
that the Small Cap Portfolio will attain its objective.
The Portfolio seeks to achieve its investment objective by investing
principally in equity securities of small issuers. In general, a small issuer
is one which has a market capitalization of less than $700 million, or less
than the median market capitalization of the S&P Midcap Index (the median
market capitalization of the S&P Midcap Index as of the close on December 31,
1994 was approximately $943.9 million), whichever is greater at the time of
investment. The Portfolio will, under normal circumstances, have at least 65%
of the value of its total net assets invested in such securities; the balance,
if any, will be invested in equity securities of other than small issuers
considered appropriate by the Advisor. Current income is not a factor in
pursuing the Small Cap Portfolio's objective.
Investing in the equity securities of small companies involves greater risk
than investing in such securities of larger companies, because the equity
securities of small companies may have less marketability and may be subject
to more abrupt or erratic market movements than the equity securities of
larger companies. The Portfolio may invest in such securities without regard
to term or rating and may, from time to time, invest up to 20% of its assets
in corporate debt securities rated below investment grade, i.e., rated lower
than BBB by S&P or Baa by Moody's, or unrated securities of comparable quality
as determined by the Advisor. These securities are commonly known as "junk
bonds". Ratings of corporate bonds including lower rated bonds are included
in the Appendix. See "Risks and Additional Information about Investment
Policies - High Yield Debt Securities."
MANNING & NAPIER BOND PORTFOLIO
The primary objective of the Manning & Napier Bond Portfolio (the "Bond
Portfolio") is to maximize total return in the form of income and capital
appreciation consistent with the preservation of capital by investing in fixed
income securities without regard to maturity. The Bond Portfolio will, under
normal circumstances, have at least 65% of the value of its total assets
invested in a diversified portfolio consisting of the following U.S.
dollar-denominated fixed income securities: non-convertible corporate debt
securities, mortgage backed securities and government obligations. Any
remaining assets in the Bond Portfolio may be held in cash or, high quality
"money market securities," convertible debt, preferred stock, futures
contracts, and related options. There is no assurance that the Bond Portfolio
will attain its objective.
The Advisor may vary the maturities of the Bond Portfolio's securities without
restriction, depending on its evaluation of interest rate trends and other
factors affecting the fixed income markets. The Bond Portfolio will purchase
short-term securities when the risk of negative returns is high as determined
by the Advisor. Generally, the shorter the maturity of a fixed income security
the lower its yield and the lower its price volatility. The Bond Portfolio
will invest primarily in fixed income securities rated in the four highest
rating categories (Baa or higher by Moody's or BBB or higher by S&P) but may
invest up to 20% of its assets in lower-rated securities. These securities are
commonly known as "junk bonds". Securities rated Baa or BBB are considered
investment grade but may have speculative characteristics and changes in
economic conditions or circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with more
highly rated securities. See "Risks and Additional Information about
Investment Policies - High Yield Debt Securities."
MANNING & NAPIER MAXIMUM HORIZON PORTFOLIO
The primary objective of the Maximum Horizon Portfolio (the "Maximum Horizon
Portfolio") is to achieve the high level of long-term capital growth typically
associated with the stock market. The Advisor will normally concentrate the
investments of the Portfolio in common stocks, but may also utilize
income-producing securities (e.g., debt securities and preferred stock) or
cash (including foreign currency) and cash equivalents depending on its view
of their relative attractiveness in light of market and economic conditions.
Because the Maximum Horizon Portfolio's investments fluctuate in value, the
shares of the Portfolio will also fluctuate in value. There is no assurance
that the Maximum Horizon Portfolio will attain its objective.
In pursuit of its investment objective, the Maximum Horizon Portfolio may
invest in a wide variety of equity and debt securities. Equity securities
consist of common stocks, securities convertible thereto, and warrants. The
Portfolio does not intend to invest more than 5% of the value of its total net
assets in warrants. The Portfolio may purchase convertible securities when the
Advisor believes the securities will provide preservation of capital as a
result of their fixed income characteristics and have the potential to provide
long-term growth due to their equity conversion feature. There will be no
minimum rating standards for the debt aspects of such securities. Convertible
bonds purchased by the Portfolio may be subject to the risk of being called by
the issuer.
The debt securities in which the Portfolio may invest consist of corporate
debt securities, mortgage-backed securities and obligations issued or
guaranteed as to payment of principal and interest by the U.S. Government or
its agencies or instrumentalities. The Portfolio may invest in such securities
without regard to term or rating and may, from time to time, invest up to 20%
of its assets in corporate debt securities rated below investment grade, i.e.,
rated lower than BBB by S&P or Baa by Moody's, or unrated securities of
comparable quality as determined by the Advisor. These securities are commonly
known as "junk bonds". Ratings of corporate bonds including lower rated bonds
are included in the Appendix. See "Risks and Additional Information about
Investment Policies - High Yield Debt Securities."
GENERAL
For temporary defensive purposes during periods when the Advisor determines
that market conditions warrant, each Portfolio may invest up to 100% of its
assets in money market instruments (including securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, certificates of
deposit, time deposits and bankers' acceptances issued by banks or savings and
loan associations deemed creditworthy by the Advisor, commercial paper rated
A-1 by S&P or P-1 by Moody's, repurchase agreements involving such securities
and other investment companies investing solely in such securities as
permitted by applicable law) and may hold a portion of its assets in cash. For
a description of the above ratings, see the Appendix and the Statement of
Additional Information.
In addition, the Portfolio may to varying degrees use certain techniques and
strategies discussed below under "Risks and Additional Information about
Investment Policies."
RISKS AND ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Set forth below is further information about certain types of securities in
which the Portfolios may invest, as well as information about additional types
of investments and certain strategies the Portfolios may pursue. These
policies have been voluntarily adopted by the Board of Directors based upon
current circumstances and may be changed or amended by action of the Board of
Directors without prior approval of the Portfolios' shareholders. Additional
information concerning these strategies and their related risks is contained
in the Statement of Additional Information.
FOREIGN SECURITIES
Each Portfolio may invest up to 25% of its assets in foreign securities which
are not publicly traded in the United States. While the Bond Portfolio and the
bond portion of the other Portfolios generally emphasize investments in U.S.
Government securities and companies domiciled in the United States, each may
invest up to 25% in foreign securities of the same types and quality as the
domestic securities in which each Portfolio may invest when the anticipated
performance of foreign securities is believed by the Advisor to offer more
potential than domestic alternatives in keeping with the investment objectives
of each Portfolio. None of the Portfolios, will invest more than 25% of its
assets in securities issued by any one foreign government. Each Portfolio may
invest without limit in equity securities of foreign issuers that are listed
on a domestic securities exchange or are represented by American Depository
Receipts that are listed on a domestic securities exchange or are traded in
the United States on the over-the-counter market. Foreign securities may be
denominated either in U.S. dollars or foreign currencies.
Each Portfolio's restriction on investment in foreign securities is a
fundamental policy that cannot be changed without the approval of a majority,
as defined in the Investment Company Act of 1940, as amended, (the "1940
Act"), of the outstanding voting securities of a Portfolio.
There are risks in investing in foreign securities not typically involved in
domestic investing. An investment in foreign securities may be affected by
changes in currency rates and in exchange control regulations. Foreign
companies are frequently not subject to the accounting and financial reporting
standards applicable to domestic companies, and there may be less information
available about foreign issuers. There is frequently less government
regulation of foreign issuers than in the United States. In addition,
investments in foreign countries are subject to the possibility of
expropriation or confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect the value of those
investments. There may also be imposition of withholding taxes. Foreign
financial markets may have less volume and longer settlement periods than U.S.
markets which may cause liquidity problems for a Portfolio. In addition, costs
associated with transactions on foreign markets are generally higher than for
transactions in the U.S.
Obligations of foreign governmental entities are subject to various types of
governmental support and may or may not be supported by the full faith and
credit of a foreign government.
REPURCHASE AGREEMENTS
Each Portfolio may enter into repurchase agreements with respect to portfolio
securities. Under the terms of a repurchase agreement, the Portfolio purchases
securities ("collateral") from financial institutions such as banks and
broker-dealers (the "seller") which the Advisor deems to be creditworthy,
subject to the seller's agreement to repurchase them at a mutually agreed-upon
date and price. The repurchase price generally equals the price paid by the
Portfolio plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the underlying portfolio
securities).
The seller under a repurchase agreement is required to maintain the value of
the collateral held pursuant to the agreement at not less than 100% of the
repurchase price, and securities subject to repurchase agreements are held by
the Portfolio's Custodian either directly or through a securities depository.
Default by the seller would, however, expose the Portfolio to possible loss
because of adverse market action or delay in connection with the disposition
of the underlying securities. Repurchase agreements are considered to be loans
by the Portfolio under the 1940 Act.
SECURITIES LENDING
Each Portfolio may seek to increase its income by lending portfolio
securities. Such loans will usually be made to member firms (and subsidiaries
thereof) of the New York Stock Exchange and to member banks of the Federal
Reserve System, and would be required to be secured continuously by collateral
in cash, cash equivalents or U.S. Treasury securities maintained on a current
basis at an amount at least equal to the market value of the securities
loaned. If the Advisor determines to make securities loans, the value of the
securities loaned would not exceed 30% of the value of the total assets of the
Portfolio.
U.S. GOVERNMENT SECURITIES
Each Portfolio may purchase securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Direct obligations of the U.S.
Government include bills, notes and bonds issued by the U.S. Treasury and
obligations issued or guaranteed by U.S. agencies or instrumentalities. The
obligations of certain U.S. agencies (e.g., the Government National Mortgage
Association) are backed by the full faith and credit of the U.S. Government or
are supported by the agencies' right to borrow from the U.S. Treasury. The
issues of other agencies are supported only by the credit of the agency (e.g.,
the Federal National Mortgage Association).
SHORT SALES
Each Portfolio may within limits engage in short sales "against the box." A
short sale is the sale of borrowed securities; a short sale against the box
means that a Portfolio owns securities equivalent to those sold short. No more
than 25% of the net assets (taken at current value) of a Portfolio may be held
as collateral for such sales at any one time. Such short sales can be used as
a hedge and as a method of deferring realized capital gains from one taxable
year to the next for tax purposes.
FORWARD COMMITMENTS OR PURCHASES ON A WHEN-ISSUED BASIS
Each Portfolio may enter into forward commitments or purchase securities on a
when-issued basis. These securities normally are subject to settlement within
45 days of the purchase date. The interest rate realized on these securities
is fixed as of the purchase date and no interest accrues to the Portfolio
before settlement. These securities are subject to market fluctuation due to
changes in market interest rates. Each Portfolio will enter into these
arrangements with the intention of acquiring the securities in question and
not for speculative purposes and will maintain a separate account with a
segregated portfolio of high quality liquid debt instruments or cash in an
amount at least equal to the purchase price.
MORTGAGE-BACKED SECURITIES
Each Portfolio may purchase mortgage-backed securities which represent an
interest in a pool of mortgage loans. The primary government issuers or
guarantors of mortgage-backed securities are the Government National Mortgage
Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), and
the Federal Home Loan Mortgage Corporation. Mortgage-backed securities may
also be issued by other U.S. and foreign government agencies and
non-governmental entities which consist of collateralized mortgage obligations
("CMOs") and real estate mortgage investment conduits ("REMICs"). Each
Portfolio may purchase CMOs that are rated in one of the top two rating
categories by S&P or Moody's. The mortgages backing these securities include
conventional thirty-year fixed rate mortgages, graduated payment mortgages,
and adjustable rate mortgages. CMOs and REMICs backed solely by GNMA
certificates or other mortgage pass-throughs issued or guaranteed by the U.S.
Government or its agencies and instrumentalities may be supported by various
types of insurance. However, the guarantees or insurance do not extend to the
mortgage-backed securities' value, which are likely to vary inversely with
fluctuations in interest rates.
Mortgage-backed securities are in most cases "pass-through" instruments,
through which the holder receives a share of all interest and principal
payments from the mortgages underlying the certificate. Because the prepayment
characteristics of the underlying mortgages vary, it is not possible to
predict accurately the average life or realized yield of a particular issue of
pass-through certificates. During periods of declining interest rates,
prepayment of mortgages underlying mortgage-backed securities can be expected
to accelerate. When the mortgage obligations are prepaid, the Portfolio
reinvests the prepaid amounts in securities, the yield of which reflects
interest rates prevailing at the time. Moreover, prepayment of mortgages which
underlie securities purchased at a premium could result in capital losses.
HIGH YIELD DEBT SECURITIES
High risk, high yield securities rated below BBB or lower by S&P or Baa or
lower by Moody's are considered to have speculative characteristics and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. Market prices of these securities may fluctuate
more than high-rated securities and are difficult to price at times because
they are more thinly traded and less liquid securities. Market prices may
decline significantly in periods of general economic difficulty which may
follow periods of rising interest rates. Securities in the lowest rating
category may be in default. For these reasons, it is each Portfolio's policy
not to rely primarily on ratings issued by established credit rating agencies,
but to utilize such ratings in conjunction with the Advisor's own independent
and ongoing review of credit quality. In the event a security is downgraded
below these ratings after purchase, the Advisor will review and take
appropriate action with regard to the security. Each Portfolio will also seek
to minimize risk by diversifying its holdings.
ZERO-COUPON BONDS
Debt securities in which a Portfolio may invest may also include zero-coupon
bonds. Zero-coupon bonds do not require the periodic payment of interest and
are issued at a significant discount from face value. The discount
approximates the total amount of interest the bonds will accrue and compound
over the period until maturity at a rate of interest reflecting the market
rate of the security at the time of issuance. Such investments benefit the
issuer by mitigating its need for cash to meet debt service, but also require
a higher rate of return to attract investors who are willing to defer receipt
of such cash. Such investments may experience greater volatility in market
value than debt obligations which make regular payments of interest. Each
Portfolio will accrue income on such investments for tax and accounting
purposes, which is distributable to shareholders. Each Portfolio may have to
sell other securities to raise cash to satisfy this distribution requirement.
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain of the obligations purchased by a Portfolio may carry variable or
floating rates of interest, may involve a conditional or unconditional demand
feature and may include variable amount master demand notes. Such instruments
bear interest at rates which are not fixed, but which vary with changes in
specified market rates or indices, such as a Federal Reserve composite index.
The interest rate on these securities may be reset daily, weekly, quarterly,
or some other reset period and may have a floor or ceiling rate. There is a
risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates.
HEDGING TECHNIQUES
Each Portfolio has reserved the right, subject to authorization by the Board
of Directors prior to implementation, to engage in certain strategies in an
attempt to hedge the Portfolio's portfolio, to reduce the overall level of
risk that normally would be expected to be associated with its investments.
Each Portfolio may write covered call options on common stocks; may purchase
and sell (on a secured basis) put options; and may engage in closing
transactions with respect to put and call options. Each Portfolio also may
purchase forward foreign currency exchange contracts to hedge currency
exchange rate risk. In addition, each Portfolio is authorized to purchase and
sell stock index futures contracts and options on stock index futures
contracts. Each Portfolio is also authorized to conduct spot (i.e., cash
basis) currency transactions or to use currency futures contracts and options
on futures contracts and foreign currencies in order to protect against
uncertainty in the future levels of foreign currency exchange rates. These
strategies are primarily used for hedging purposes; nevertheless, there are
risks associated with these strategies as described below.
OPTIONS ON SECURITIES
A call option is a short-term contract pursuant to which the purchaser of the
option, in return for a premium, has the right to buy the security underlying
the option at a specified price at any time during the term of the option. The
writer of a call option, who receives the premium, has the obligation, upon
exercise during the option term, to deliver the underlying security against
payment of the exercise price. Conversely, a put option gives its purchaser,
in return for a premium, the right to sell the underlying equity security at a
specified price during the option term to the writer of the put option, who
receives the premium. Each Portfolio will sell call options only on a
"covered" basis, i.e., it will own the underlying security at all times, and
will write put options only on a secured basis, i.e., it will maintain an
amount equal to the exercise price in a segregated account at all times. Each
Portfolio may engage in option transactions for hedging purposes and to
realize a greater current return, through the receipt of premiums, than would
be earned on the underlying securities alone. Options traded in the
over-the-counter market will be considered illiquid unless the Fund has
entered into arrangements with U.S. Government securities dealers to dispose
of such options at a formula price based on a multiple of the original premium
plus the amount for which the option is "in the money."
STOCK INDEX FUTURES CONTRACTS AND OPTIONS ON STOCK INDEX FUTURES CONTRACTS
Each Portfolio, except the Bond Portfolio, may invest in stock index futures
contracts and options on stock index futures contracts. A stock index futures
contract is a bilateral agreement pursuant to which one party agrees to
accept, and the other party agrees to make, delivery of an amount of cash
equal to a specified dollar amount times the difference between the stock
index value at the close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery of the stocks
comprising the index is made. Options on stock index futures contracts give
the purchaser the right, in return for the premium paid, to assume a long or
short position in a futures contract.
FUTURES CONTRACTS
Each Portfolio may purchase and sell financial futures contracts on debt
securities on a commodities exchange or board of trade for certain hedging,
return enhancement and risk management purposes in accordance with applicable
regulations. A financial futures contract is an agreement to purchase or sell
an agreed amount of securities at a set price for delivery in the future. None
of the Portfolios may purchase or sell futures contracts if immediately
thereafter the sum of the amount of initial margin deposits on any such
futures (plus deposits on any other futures contracts and premiums paid in
connection with any options or futures contracts) that do not constitute "bona
fide hedging" under the Commodity Futures Trading Commission ("CFTC") rules
would exceed 5% of the liquidation value of the Portfolio's total assets after
taking into account unrealized profits and losses on such contracts. In
addition, the value of all futures contracts sold will not exceed the total
market value of the Portfolio's portfolio. The Fund will comply with
guidelines established by the Securities and Exchange Commission with respect
to covering of obligations under futures contracts and will set aside cash
and/or liquid high grade securities in a segregated account with its custodian
in the amount prescribed.
A Portfolio's successful use of futures contracts depends on the Advisor's
ability to predict the direction of the market and is subject to various
additional risks. The correlation between movements in the prices of a futures
contract and the price of the securities being hedged is imperfect and there
is a risk that the value of the securities being hedged may increase or
decrease at a greater rate than the related futures contracts, resulting in
losses to the Portfolio. Certain futures exchanges or boards of trade have
established daily limits based on the amount of the previous day's settlement
price. These daily limits may restrict the Portfolio's ability to repurchase
or sell certain futures contracts on any particular day.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A Portfolio's use of forward foreign currency contracts is limited to hedging
against movements in the value of foreign currencies relative to the U.S.
dollar in connection with specific portfolio transactions or with respect to
existing portfolio positions denominated in such currencies. A transaction
hedge involves the purchase or sale of a forward contract with respect to a
specific receivable or payable of the Portfolio while a position hedge relates
to a specific portfolio holding. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specified currency at a future
date at a price set at the time of the contract. Foreign currency exchange
contracts do not eliminate fluctuations in the values of portfolio securities
but rather allow the Portfolio to establish a rate of exchange for a future
point in time. With respect to any such forward foreign currency contract, it
will not generally be possible to match precisely the amount covered by that
contract and the value of the securities involved due to the changes in the
values of such securities resulting from market movements between the date the
forward contract is entered into and the date it matures. In addition, while
forward contracts may offer protection from losses resulting from declines in
the value of a particular foreign currency, they also limit potential gains
which might result from increases in the value of such currency. Based on
current legal interpretation, the Portfolios do not consider forward foreign
currency exchange contracts to be commodities or commodity contracts for
purposes of the Portfolios' fundamental restrictions concerning investment in
commodities or commodity contracts, as set forth in the Statement of
Additional Information.
CURRENCY FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
A currency futures contract is an agreement for the purchase or sale for
future delivery of foreign currencies. A "sale" of a currency futures contract
creates an obligation to deliver the foreign currencies called for by the
contract at a specified price on a specified date while a "purchase" of a
currency futures contract creates an obligation to acquire the foreign
currencies called for by the contract at a specified price on a specified
date. Each Portfolio will only enter into futures contracts which are traded
on national or foreign futures exchanges and which are standardized as to
maturity date and the underlying financial instrument. Options on currency
futures contracts give the purchaser the right, in return for the premium
paid, to assume a long or short position in the futures contract. None of the
Portfolios may purchase or sell future contracts if immediately thereafter the
sum of the amount of initial margin deposits on any such futures (plus
deposits on any other futures contracts and premiums paid in connection with
any options or futures contracts) that do not constitute "bona fide hedging"
under CFTC rules would exceed 5% of the liquidation value of the Portfolio's
total assets after taking into account unrealized profits and losses on such
contracts. In addition, the value of all futures contracts sold will not
exceed the total market value of the Portfolio's portfolio.
FOREIGN CURRENCY OPTIONS
A call option on a foreign currency is a short-term contract pursuant to which
the purchaser of the option, in return for a premium, has the right to buy the
currency underlying the option at a specified price at any time during the
term of the option. The writer of a call option, who receives the premium, has
the obligation, upon exercise of the option during the option term, to deliver
the underlying currency against payment of the exercise price. Conversely, a
put option on a foreign currency gives its purchaser, in return for a premium,
the right to sell the underlying currency at a specified price during the
option term to the writer of the put option, who receives the premium.
RISKS ASSOCIATED WITH HEDGING STRATEGIES
There are risks associated with the hedging strategies described above,
including the following: (1) the success of a hedging strategy may depend on
the ability of the Advisor to predict movements in the prices of individual
securities, fluctuations in domestic and foreign markets and currency exchange
rates, and movements in interest rates; (2) there may be an imperfect
correlation between the changes in market value of the securities held by a
Portfolio and the prices of currency contracts, options, futures and options
on futures; (3) there may not be a liquid secondary market for a currency
contract, option, futures contract or futures option; (4) trading restrictions
or limitations may be imposed by an exchange; and (5) government regulations,
particularly requirements for qualification as a "registered investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"), may
restrict trading in forward currency contracts, options, futures contracts and
futures options.
PRINCIPAL INVESTMENT RESTRICTIONS
Each Portfolio is subject to certain investment restrictions which are
fundamental policies that cannot be changed without the approval of the
holders of a majority, as defined in the 1940 Act, of a Portfolio's
outstanding shares.
Each Portfolio may borrow money, but only from a bank for temporary or
emergency purposes in amounts not exceeding 10% of a Portfolio's total assets
and the Portfolio will not make additional investments while borrowings
greater than 5% of its total assets are outstanding.
Each Portfolio may not, with respect to 75% of its total assets, invest more
than 5% of the value of its total assets at the time of investment in
securities of any one issuer (other than obligations issued or guaranteed by
the United States Government, its agencies or its instrumentalities). Each
Portfolio may not purchase more than 10% of the outstanding voting securities
of any one issuer.
Each Portfolio may not invest 25% or more of the value of its total assets in
securities of issuers in any one industry (other than U.S. Government
securities).
Each Portfolio will not invest more than 15% of its total net assets in
securities of issuers that are restricted from being sold to the public
without registration under the Securities Act of 1933 and illiquid securities,
including repurchase agreements with maturities of greater than seven days.
Each Portfolio may invest its assets in securities of any other investment
company (closed-end or open-end) (1) by purchase in the open market involving
only customary brokers' commissions, (2) in connection with mergers,
acquisitions of assets, or consolidation, or (3) as otherwise permitted by
law, including the 1940 Act. Each of the Portfolios may purchase shares of
closed-end investment companies that are traded on national exchanges to the
extent permitted by applicable law.
Each Portfolio may not make loans, except that each Portfolio may invest in
debt securities and repurchase agreements and may engage in securities
lending.
Additional information about the Portfolios' investment restrictions is
contained in the Statement of Additional Information.
MANAGEMENT
The overall business and affairs of the Fund are managed by its Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its Investment Advisor and Custodian. The day-to-day
operations of the Fund are delegated to the Fund's officers and to the
Advisor, 1100 Chase Square, Rochester, New York 14604. A committee made up of
investment professionals and analysts makes all the investment decisions for
the Fund.
The Advisor acts as investment advisor to the Fund. Mr. William Manning and
Mrs. Jane Napier control the Advisor by virtue of their ownership of the
securities of the Advisor. The Advisor also is generally responsible for
supervision of the overall business affairs of the Fund including supervision
of service providers to the Portfolio and direction of the Advisor's
directors, officers or employees who may be elected as officers of the Fund to
serve as such.
As of the date of this Prospectus, the Advisor supervised approximately $5
billion in assets of clients, including both individuals and institutions.
For its services to the Fund under the Investment Advisory Agreement, the
Portfolios pay the Advisor the following fees, computed daily and payable
monthly:
<TABLE>
<CAPTION>
PORTFOLIO % PER ANNUM
<S> <C>
Moderate Growth Portfolio* 1.00%
Growth Portfolio* 1.00%
Equity Portfolio* 1.00%
Small Cap Portfolio* 1.00%
Bond Portfolio .50%
Maximum Horizon Portfolio* 1.00%
</TABLE>
*This fee is higher than the mean fee paid by all other mutual Portfolios.
In addition, the Advisor is separately compensated for acting as Transfer
Agent for the Fund. The Fund is responsible for its operating expenses,
including: (i) interest and taxes; (ii) brokerage commissions; (iii)
insurance premiums; (iv) compensation and expenses of its Directors other than
those affiliated with the Advisor; (v) legal and audit expenses; (vi) fees and
expenses of the Fund's Custodian, and Accounting Services Agent, if obtained
for the Fund from an entity other than the Advisor; (vii) expenses incident to
the issuance of its shares, including issuance on the payment of, or
reinvestment of, dividends and capital gain distributions; (viii) fees and
expenses incident to the registration under federal or state securities laws
of the Fund or its shares; (ix) expenses of preparing, printing and mailing
reports and notices and proxy material to shareholders of the Fund; (x) all
other expenses incidental to holding meetings of the Fund's shareholders; (xi)
dues or assessments of or contributions to the Investment Company Institute or
any successor; and (xii) such non-recurring expenses as may arise, including
litigation affecting the Fund and the legal obligations with respect to which
the Fund may have to indemnify its officers and Directors.
The Advisor may use its own resources to engage in activities that may promote
the sale of the Fund, including payments to third-parties who provide
shareholder support servicing and distribution assistance.
SALES AND REDEMPTIONS
The separate accounts of the Life Companies place orders to purchase and
redeem shares of each Portfolio based on, among other things, the amount of
premium payments to be invested and surrender and transfer requests to be
effected on that day pursuant to the Variable Contracts issued by the Life
Companies. Orders received by the Fund are effected on days on which the New
York Stock Exchange is open for trading, at the net asset value per share next
determined after receipt of the order. For orders received before 4:00 p.m.
New York time, such purchases and redemptions of shares of each Portfolio are
effected at the respective net asset values per share determined as of 4:00
p.m. New York time on that day. See "Net Asset Value", below and
"Determination of Net Asset Value" in the Fund's Statement of Additional
Information. Payment for redemptions will be made within three days after
receipt of a redemption request in good order. No fee is charged the separate
accounts of the Life Companies when they redeem Portfolio shares. The Fund
may suspend the sale of shares at any time and may refuse any order to
purchase shares.
The Fund may suspend the right of redemption of shares of any Portfolio and
may postpone payment for any period: (i) during which the New York Stock
Exchange is closed other than for customary weekend and holiday closings or
during which trading on the New York Stock Exchange is restricted; (ii) when
the Securities and Exchange Commission determines that a state of emergency
exists which makes the sale of portfolio securities or the determination of
net asset value not reasonably practicable; (iii) as the Securities and
Exchange Commission may by order permit for the protection of the security
holders of the Fund; or (iv) at any time when the Fund may, under applicable
laws and regulations, suspend payment on the redemption of its shares.
Subject to the Portfolios' compliance with applicable regulations, the
Portfolios' have reserved the right to pay the redemption price either totally
or partially by a distribution in-kind of securities (instead of cash) from
the Portfolios' portfolio. The securities distributed in such a distribution
would be valued at the same amount as that assigned to them in calculating the
net asset value for the shares being sold. If a shareholder received a
distribution in-kind, it could incur brokerage or transaction charges when
converting the securities to cash.
Manning & Napier Investor Services, Inc. acts as Distributor of the Portfolio
shares and is located at the same address as the Advisor and the Portfolio.
The Distributor receives no fee from the Portfolio and there are no additional
costs to shareholders for this service. The Advisor may, from its own
resources, defray or absorb costs related to distribution, including
compensation of employees who are involved in distribution.
The Fund does not foresee any disadvantage to Variable Contract owners arising
out of the fact that the Fund offers its shares for products offered by the
Life Companies which may or may not be affiliated with each other.
Nevertheless, the Fund's Board of Directors intends to monitor events in order
to identify any material irreconcilable conflicts which may possibly arise and
to determine what action, if any, should be taken in response thereto. If
such a conflict were to occur, one or more insurance company separate accounts
might withdraw its investment in the Fund. This might force the Fund to sell
portfolio securities at disadvantageous prices.
NET ASSET VALUE
Each Portfolio calculates the net asset value of a share by dividing the total
value of its assets, less liabilities, by the number of shares outstanding.
Shares are valued as of 4:00 p.m. New York time on each day the New York
Stock Exchange is open.
The net asset value per share is the value of the Portfolios' assets, less its
liabilities, divided by the number of shares of the Series outstanding. The
value of the Portfolios' portfolio securities will be the market value of such
securities as determined based on quotes provided by a pricing service (which
uses the methodology outlined in the "Net Asset Value" section of the
Statement of Additional Information) approved by the Board of Directors, or,
in the absence of market quotations, fair value as determined in good faith by
or under the direction and control of the Board of Directors. Short-term
investments which mature in less than 60 days are normally valued at amortized
cost. Assets initially expressed in foreign currencies will be converted into
U.S. dollars as of the exchange rates quoted by any major bank. If such
quotes are not available, the exchange rates will be determined in accordance
with policies established in good faith by the Board of Directors. See the
Statement of Additional Information for further information.
PERFORMANCE INFORMATION
Performance information for each of the Portfolios may be presented from time
to time in advertisements and sales literature. The Portfolios may advertise
several types of performance information. These are the "yield," "average
annual total return" and "aggregate total return". Each of these figures is
based upon historical results and is not necessarily representative of the
future performance of any Portfolio.
The yield of a Portfolio's shares is determined by annualizing net investment
income earned per share for a stated period (normally one month or thirty
days) and dividing the result by the net asset value per share at the end of
the valuation period. The average annual total return and aggregate total
return figures measure both the net investment income generated by, and the
effect of any realized or unrealized appreciation or depreciation of the
underlying investments in, the Portfolio's portfolio for the period in
question, assuming the reinvestment of all dividends. Thus, these figures
reflect the change in the value of an investment in a Portfolio's shares
during a specified period. Average annual total return will be quoted for at
least the one, five and ten year periods ending on a recent calendar quarter
(or if such periods have not yet elapsed, at the end of a shorter period
corresponding to the life of the Portfolio). Average annual total return
figures are annualized and, therefore, represent the average annual percentage
change over the period in question. Total return figures are not annualized
and represent the aggregate percentage or dollar value change over the period
in question. For more information regarding the computation of yield, average
annual total return and aggregate total return, see "Performance Information"
in the Statement of Additional Information.
Any Fund performance information presented will also include performance
information for the insurance company separate accounts investing in the Fund
which will take into account insurance-related charges and expenses under such
insurance policies and contracts.
Advertisements concerning the Fund may from time to time compare the
performance of one or more Portfolios to various indices. Advertisements may
also contain the performance rankings assigned certain Portfolios or the
Advisor by various publications and statistical services, including, for
example, SEI, Lipper Analytical Services Mutual Funds Survey, Lipper Variable
Insurance Products Performance Analysis Service, Morningstar, Intersec
Research Survey of Non-U.S. Equity Fund Returns, Frank Russell International
Universe, Kiplinger's Personal Finance, and Financial Services Week. Any such
comparisons or rankings are based on past performance and the statistical
computation performed by publications and services, and are not necessarily
indications of future performance. Because the Portfolios are managed
investment vehicles investing in a wide variety of securities, the securities
owned by a Portfolio will not match those making up an index.
TAX STATUS, DIVIDENDS, AND DISTRIBUTIONS
Each Portfolio of the Fund intends to qualify and elect to be treated as a
regulated investment company that is taxed under the rules of Subchapter M of
the Code. As such an electing regulated investment company, a Portfolio will
not be subject to federal income tax on its net ordinary income and net
realized capital gains to the extent such income and gains are distributed to
the separate accounts of the Life Companies which hold its shares. For
further information concerning federal income tax consequences for the holders
of the Variable Contracts of the Life Companies, investors should consult the
prospectus used in connection with the issuance of their Variable Contracts.
Each of the Portfolios will declare and distribute dividends from net ordinary
income at least annually and will distribute its net realized capital gains,
if any, at least annually. Distributions of ordinary income and capital gains
will be made in shares of such Portfolios unless an election is made on behalf
of a separate account to receive distributions in cash. The Life Companies
will be informed at least annually about the amount and character of
distributions from the Fund for federal income tax purposes.
See the Statement of Additional Information for a further discussion of Taxes.
GENERAL INFORMATION
The Fund was incorporated on November 1, 1995 as a Maryland corporation. The
Board of Directors may, at its own discretion, create additional series of
shares, each of which would have separate assets and liabilities.
The Fund does not expect to hold annual meetings of shareholders but special
meetings of shareholders may be held under certain circumstances.
Shareholders of the Fund retain the right, under certain circumstances, to
request that a meeting of shareholders be held for the purpose of considering
the removal of a Director from office, and if such a request is made, the Fund
will assist with shareholder communications in connection with the meeting.
The shares of the Fund have equal rights with regard to voting, redemption,
dividends, distributions and liquidations. The Fund's shareholders will vote
in the aggregate and not by Portfolio except as otherwise expressly required
by law or when the Board of Directors determines that the matter to be voted
upon affects only the interests of the shareholders of a Portfolio. Income,
direct liabilities and direct operating expenses of a Portfolio will be
allocated directly to the Portfolio, and general liabilities and expenses of a
Portfolio will be allocated directly to the Portfolio, and general liabilities
and expenses of the Fund will be allocated among the Portfolios in proportion
to the total net assets of the Fund by the Board of Directors. The holders of
shares have no preemptive or conversion rights. Shares when issued are fully
paid and non-assessable and do not have cumulative voting rights.
Coopers & Lybrand, L.L.P. has been selected as the independent accountants of
each Portfolio and performs an annual audit of the Portfolios' accounts and
reviews the Fund's tax returns.
Boston Safe Deposit and Trust Company, is the Fund's Custodian. The Advisor,
acting as Transfer Agent, maintains its own shareholder account records, and
shareholder inquiries should be directed to Manning & Napier, P.O. Box 41118,
Rochester, New York 14604.
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
Moody's Investors Service, Inc.'s corporate bond ratings:
Aaa - Bonds which are rated Aaa are judged to be of the best quality and carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds rated Caa represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers "1", "2" and "3" to both the Aaa and Aa
rating classifications. The modifier "1" indicates that the security ranks in
the higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.
<PAGE>
Standard & Poor's Ratings Group's corporate bond ratings:
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only to a small degree.
A - Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than in higher rated categories.
Debt rated BB, B, CCC and CC is regarded, on balance, as predominately
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and CC the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties of major risk exposures to adverse conditions.
The C rating is reserved for income bonds on which no interest is being paid.
Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.'s commercial paper ratings:
P-1 - Commercial papers which are rated P-1 are judged to have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
-Leading market positions in well-established industries.
-High rates of return on funds employed.
-Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
-Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
-Well-established access to a range of financial markets and assured sources
of alternate liquidity.
P-2 - Commercial papers which are rated P-2 are judged to have a strong
ability for repayment for senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
P-3 - Commercial papers which are rated P-3 are judged to have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
Standard & Poor's Corporation's commercial paper ratings:
A-1 - This is the highest category and indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issuers designated A-1.
A-3 - Issues carrying this designation have adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.
B - Issues rated B are regarded as having only speculative capacity for timely
payment.
C - Commercial papers rated C are assigned to short-term debt obligations with
a doubtful capacity for payment.
D - Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
Statement of Additional Information dated _____________
This Statement of Additional Information is not a Prospectus, and it should be
read in conjunction with the Fund's Prospectus dated ______________, copies of
which may be obtained from Manning & Napier Advisors, Inc., 1100 Chase Square,
Rochester, NY 14604.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
- -----------------------------------------------------------------------------
DEFINITIONS B-2
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS OF THE FUND B-2
RISK AND INVESTMENT POLICIES B-2
INVESTMENT RESTRICTIONS B-16
MANAGEMENT B-18
NET ASSET VALUE B-21
REDEMPTION OF SHARES B-22
TAXES B-22
SPECIAL CONSIDERATIONS B-23
DIVIDENDS AND DISTRIBUTIONS B-24
PERFORMANCE INFORMATION B-24
SHAREHOLDER COMMUNICATIONS B-25
ORGANIZATION AND CAPITALIZATION B-25
FINANCIAL STATEMENTS B-26
</TABLE>
<PAGE>
DEFINITIONS
The "Fund" - Manning & Napier Insurance Fund, Inc.
"Advisor" Manning & Napier Advisors, Inc.,
The Fund's investment advisor.
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS OF THE FUND
The Fund currently offers shares of beneficial interest of six Portfolio (the
"Funds") with separate investment objectives and policies. The investment
objectives and policies of each of the Portfolios of the Fund are described in
the Prospectus. This Statement contains additional information concerning
certain investment practices and investment restrictions of the Fund.
Except as described below under "Investment Restrictions", the investment
objectives and policies described in the Prospectus and in this Statement of
Additional Information are not fundamental, and the Directors may change the
investment objectives and policies of a Portfolio without an affirmative vote
of shareholders of the Portfolio.
Except as otherwise noted below, the following descriptions of certain
investment policies and techniques are applicable to all of the Portfolios.
Convertible bonds purchased by the Portfolios may have a call feature.
Warrants purchased by the Fund may or may not be listed on a national
securities exchange. The Fund has no current intention to engage in "short
sales against the box". All of the Portfolios' policies regarding options
discussed below are fundamental.
RISK AND INVESTMENT POLICIES
WRITING COVERED CALL AND SECURED PUT OPTIONS
As a means of protecting their assets against market declines, and in an
attempt to earn additional income, each Portfolio may write covered call
option contracts on its securities and may purchase call options for the
purpose of terminating its outstanding obligations with respect to securities
upon which covered call option contracts have been written.
As described in the Prospectus, when a Portfolio writes a call option on
securities which it owns, it gives the purchaser of the option the right to
buy the securities at an exercise price specified in the option at any time
prior to the expiration of the option. If any option is exercised, a
Portfolio will realize the gain or loss from the sale of the underlying
security and the proceeds of the sale will be increased by the net premium
originally received on the sale of the option. By writing a covered call
option, a Portfolio may forego, in exchange for the net premium, the
opportunity to profit from an increase in the price of the underlying security
above the option's exercise price. A Portfolio will have kept the risk of
loss if the price of the security declines, but will have reduced the effect
of that risk to the extent of the premium it received when the option was
written.
A Portfolio will write only covered call options which are traded on national
securities exchanges. Currently, call options on a stock may be traded on the
Chicago Board Options Exchange and the New York, American, Pacific and
Philadelphia Stock Exchanges. Call options are issued by the Options Clearing
Corporation, which also serves as the clearing house for transactions with
respect to options. The price of a call option is paid to the writer without
refund on expiration or exercise, and no portion of the price is retained by
The Options Clearing Corporation or the exchanges listed above. Writers and
purchasers of options pay the transaction costs, which may include commissions
charged or incurred in connection with such option transactions.
A Portfolio may write only covered call options. A call option is considered
to be covered if the option writer owns the security underlying the call or
has an absolute and immediate right to acquire that security without payment
of additional cash consideration (or for additional cash consideration held in
a segregated account by its custodian) upon conversion or exchange of other
securities. A call option is also considered to be covered if the writer
holds on a unit-for-unit basis a call on the same security as the call
written, has the same expiration date and the exercise price of the call
purchased is equal to or less than the exercise price of the call written or
greater than the exercise price of the call written if the difference is
maintained in cash, Treasury bills or other liquid high grade short-term
obligations in a segregated account with its custodian, and marks the same to
market daily, all in accordance with the rules of the clearing corporations
and of the exchanges and securities laws. A Portfolio will not sell (uncover)
the securities against which options have been written until after the option
period has expired, the option has been exercised or a closing purchase has
been executed.
Options written by a Portfolio will have exercise prices which may be below
("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the
market price of the underlying security at the time the options are written.
However, a Portfolio generally will not write so-called "deep-in-the-money"
options.
The market value of a call option generally reflects the market price of the
underlying security. Other principal factors affecting market value include
supply and demand, dividend yield and interest rates, the price volatility of
the underlying security and the time remaining until the expiration date.
If a call option on a security expires unexercised, a Portfolio will realize a
short-term capital gain in the amount of the premium on the option, less all
commissions paid. Such a gain, however, may be offset by a decline in the
value of the underlying security during the option period. If a call option
is exercised, a Portfolio will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security and the proceeds of the sale of the security (exercise price minus
commission) plus the amount of the premium on the option, less all commissions
paid.
Call options may also be purchased by a Portfolio, but only to terminate
(entirely or in part) a Portfolio's obligation as a writer of a call option.
This is accomplished by making a closing purchase transaction, that is, the
purchase of a call option on the same security with the same exercise price
and expiration date as specified in the call option which had been written
previously. A closing purchase transaction with respect to calls traded on a
national securities exchange has the effect of extinguishing the obligation of
the writer of a call option. A Portfolio may enter into a closing purchase
transaction, for example, to realize a profit on an option it had previously
written, to enable it to sell the security which underlies the option, to free
itself to sell another option or to prevent its portfolio securities from
being purchased pursuant to the exercise of a call. A Portfolio may also
permit the call option to be exercised. A closing transaction cannot be
effected with respect to an optioned security once a Portfolio has received a
notice that the option is to be exercised.
The cost to a Portfolio of such a closing transaction may be greater than the
net premium received by a Portfolio upon writing the original call option. A
profit or loss from a closing purchase transaction will be realized depending
on whether the amount paid to purchase a call to close a position is less or
more than the amount received from writing the call. Any profit realized by a
Portfolio from the execution of a closing transaction may be partly or
completely offset by a reduction in the market price of the underlying
security.
A Portfolio may also write secured put options and enter into closing purchase
transactions with respect to such options. A Portfolio may write secured put
options on national securities exchanges to obtain, through the receipt of
premiums, a greater return than would be realized on the underlying securities
alone. A put option gives the purchaser of the option the right to sell, and
the writer has the obligation to buy, the underlying security at the stated
exercise price during the option period. The secured put writer retains the
risk of loss should the market value of the underlying security decline below
the exercise price of the option. During the option period, the writer of a
put option may be required at any time to make payment of the exercise price
against delivery of the underlying security. The operation of put options in
other respects is substantially identical to that of call options. A separate
account in the Fund established with the Portfolio's custodian with securities
consisting of cash or U.S. Government or other high grade liquid debt
obligations equal to the amount of the Portfolio assets that could be required
to consummate put options. For the purposes determining the adequacy of the
securities in the account, the deposited securities will be valued at market
or fair value. If the market or fair value of such securities declines,
additional cash or securities will be placed in the account daily so that the
value of the account will equal the amount of such commitments by the Fund.
A put option is secured if a Portfolio maintains in a segregated account with
its Custodian cash or U.S. Government securities in an amount not less than
the exercise price of the option at all times during the option period. A
Portfolio may write secured put options when the Advisor wishes to purchase
the underlying security for a Portfolio's portfolio at a price lower than the
current market price of the security. In such event a Portfolio would write a
secured put option at an exercise price which, reduced by the premium received
on the option, reflects the lower price it is willing to pay. The potential
gain on a secured put option is limited to the interest earned on the amount
held in U.S. Government securities plus the premium received on the option
(less the commissions paid on the transaction) while the potential loss equals
the difference between the exercise price of the option and the current market
price of the underlying securities when the put is exercised, offset by the
premium received (less the commissions paid on the transaction) and interest
earned on the amount held in U.S. Government securities.
A Portfolio may purchase put options on national securities exchanges in an
attempt to hedge against fluctuations in the value of its portfolio securities
and to protect against declines in the value of individual securities.
Purchasing a put option allows the purchaser to sell the particular security
covered by the option at a certain price (the "exercise price") at any time up
to a specified future date (the "expiration date").
Purchase of a put option creates a "hedge" against a decline in the value of
the underlying security by creating the right to sell the security at a
specified price. Purchase of a put option requires payment of a premium to
the seller of that option. Payment of this premium necessarily reduces the
return available on the individual security should that security continue to
appreciate in value. In return for the premium paid, a Portfolio protects
itself against substantial losses should the security suffer a sharp decline
in value. In contrast to covered call option writing, where one obtains
greater current income at the risk of foregoing potential future gains, one
purchasing put options is in effect foregoing current income in return for
reducing the risk of potential future losses.
A Portfolio will purchase put options as a means of "locking in" profits on
securities held in the portfolio. Should a security increase in value from
the time it is initially purchased, a Portfolio may seek to lock in a certain
profit level by purchasing a put option. Should the security thereafter
continue to appreciate in value the put option will expire unexercised and the
total return on the security, if it continues to be held by a Portfolio, will
be reduced by the amount of premium paid for the put option. At the same
time, a Portfolio will continue to own the security. Should the security
decline in value below the exercise price of the put option, however, a
Portfolio may elect to exercise the option and "put" or sell the security to
the party that sold the put option to that Portfolio, at the exercise price.
In this case a Portfolio would have a higher return on the security than would
have been possible if a put option had not been purchased.
CERTAIN RISK AND OTHER FACTORS RESPECTING OPTIONS
As stated in the Prospectus, positions in options on securities may be closed
only by a closing transaction, which may be made only on an exchange which
provides a liquid secondary market for such options. Although a Portfolio
will write options only when the Advisor believes a liquid secondary market
will exist on an exchange for options of the same Portfolio, there can be no
assurance that a liquid secondary market will exist for any particular
security option. If no liquid secondary market exists respecting an option
position held, a Portfolio may not be able to close an option position, which
will prevent that Portfolio from selling any security position underlying an
option until the option expires and may have an adverse effect on its ability
effectively to hedge its security positions. A secured put option writer who
is unable to effect a closing purchase transaction would continue to bear the
risk of decline in the market price of the underlying security until the
option expires or is exercised. In addition, a secured put writer would be
unable to use the amount held in cash or U.S. Government securities as
security for the put option for other investment purposes until the exercise
or expiration of the option.
Possible reasons for the absence of a liquid secondary market on an exchange
for an option include the following: (a) insufficient trading interest in
certain options; (b) restrictions on transactions imposed by an exchange; (c)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or Portfolio of options or underlying securities; (d)
inadequacy of the facilities of an exchange or The Options Clearing
Corporation to handle trading volume; or (e) a decision by one or more
exchanges to discontinue the trading of options or impose restrictions on
types of orders.
Each of the exchanges on which options on securities are traded has
established limitations on the number of options which may be written by any
one investor or group of investors. These limitations apply regardless of
whether the options are written in different accounts or through different
brokers. It is possible that a Portfolio and certain other accounts managed
by the Advisor may constitute such a group. If so, the options positions of
the Portfolio may be aggregated with those of other clients of the Advisor.
When the Portfolio writes an over-the-counter ("OTC") option, it will enter
into a arrangement with a primary U.S. government securities dealer, which
would establish a formula price at which the Portfolio would have the absolute
right to repurchase that OTC option. This formula price would generally be
based on a multiple of the premium received for the option, plus the amount by
which the option is exercisable below the marked price of the underlying
security ("in-the-money"). For an OTC option the Fund writes, it will treat
as illiquid (for purposes of the 15% of net assets restriction on illiquid
securities, stated in the Prospectus) an amount of assets used to cover
written OTC options, equal to the formula price for the repurchase of the OTC
option less the amount by which the OTC option is "in-the-money". The Fund
will also treat as illiquid any OTC option held by it. The Securities and
Exchange Commission is evaluating the general issue of whether or not the OTC
options should be considered to be liquid securities, and the procedure
described above could be affected by the outcome of that evaluation.
Although The Options Clearing Corporation has stated that it believes (based
on forecasts provided by the exchanges on which options are traded), that its
facilities are adequate to handle the volume of reasonably anticipated options
transactions, and although each exchange has advised The Options Clearing
Corporation that it believes that its facilities will also be adequate to
handle reasonably anticipated volume, there can be no assurance that higher
than anticipated trading activity or order flow or other unforeseen events
might not at times render certain of these facilities inadequate and thereby
result in the institution of special trading procedures or restrictions.
The Portfolios will pay brokerage and other transaction costs to write and
purchase options on securities, including any closing transactions which the
Portfolio may execute. The Portfolio's program of writing and/or purchasing
such options with respect to as much of its portfolio as possible will
increase the transaction costs borne by the Fund.
STOCK INDEX FUTURES CONTRACTS AND OPTIONS ON STOCK INDEX FUTURES CONTRACTS
Each Portfolio, except for the Bond Portfolio, may enter into Stock Index
Futures Contracts to provide a hedge for a portion of the Fund's portfolio, as
a cash management tool, or as an efficient way to implement either an increase
or decrease in portfolio market exposure in response to changing market
conditions. The Portfolio may also use Index Futures as a substitute of a
comparable market position in the underlying securities. Although techniques
other than the sale and purchase of Stock Index Futures Contracts could be
used to adjust the exposure or hedge a Portfolio's portfolio, a Portfolio may
be able to do so more effectively and, perhaps, at a lower cost through the
use of Stock Index Futures Contracts.
A Stock Index Futures Contract is a contract to buy or sell units of a stock
index at a specified future date at a price agreed upon when the contract is
made. Entering into a contract to buy units of a stock index is commonly
referred to as buying or purchasing a contract or holding a long position in
the index. Entering into a contract to sell units of a stock index is
commonly referred to as selling a contract or holding a short position. A
stock index future obligates the seller to deliver (and the purchaser to take)
an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading
day of the contract and the price at which the agreement is made. No physical
delivery of the underlying stocks in the index is made. The Portfolio intend
to purchase and sell futures contracts on the stock index for which it can
obtain the best price with consideration also given to liquidity.
A Portfolio will not enter into a Stock Index Futures Contract or option
thereon if, as a result thereof: the sum of the amount of initial margin
deposits on any such futures (plus deposits on any other futures contracts and
premiums paid in connection with any options or futures contracts) that do not
constitute "bona fide hedging" under CFTC rules would exceed 5% of the
liquidation value of the Portfolio's total assets after taking into account
unrealized profits and losses on such contracts. In addition, the value of
all futures contracts sold will not exceed the total market value of the
Fund's portfolio. The Fund will comply with guidelines established by the
Securities and Exchange Commission with respect to covering of obligations
under future contracts and will set aside cash and/or liquid high grade
securities in a segregated account with its custodian in the amount
prescribed.
Unlike when the Portfolios purchase or sell an equity security, no price would
be paid or received by the Portfolios upon the purchase or sale of a Stock
Index Futures Contract. Upon entering into a Futures Contract, the Portfolio
would be required to deposit with its custodian in a segregated account in the
name of the futures broker an amount of cash or U.S. Treasury bills known as
"initial margin." The amount of initial margin required by the rules of the
exchanges is subject to change. The nature of initial margin in futures
transactions is different from that of margin in security transactions in that
Futures Contract margin does not involve the borrowing of Portfolios by the
Portfolio to finance the transactions. Rather, initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Portfolio upon termination of the futures contract, assuming
all contractual obligations have been satisfied.
Subsequent payments, called "variation margin", to and from the futures
broker, would be made on a daily basis as the price of the underlying stock
index fluctuates, making the long and short positions in the futures contract
more or less valuable, a process known as "marking to the market". For
example, when the Portfolio has purchased a Stock Index Futures Contract and
the price of that underlying stock index has risen, that futures position will
have increased in value and the Portfolio will receive from the broker a
variation margin payment equal to that increase in value. Conversely, when
the Portfolio has purchased a Stock Index Futures Contract and the price of
the stock index has declined, the position would be less valuable and the
Portfolio would be required to make a variation payment to the broker.
A Portfolio will not enter into Stock Index Futures Contracts for speculation
and will only enter into Futures Contracts which are traded on established
futures markets. The Portfolio may, however, purchase or sell Stock Index
Futures Contracts with respect to any stock index. Nevertheless, to hedge a
Portfolio's portfolio successfully, the Advisor must sell Stock Index Futures
Contracts with respect to indices whose movements will, in its judgment, have
a significant correlation with movements in the prices of the Fund's portfolio
securities.
Closing out an open Stock Index Futures Contract sale or purchase is effected
by entering into an offsetting Stock Index Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical securities and
the same delivery date. If the offsetting purchase price is less than the
original sale price, the Portfolios realize a gain; if it is more, the
Portfolios realize a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Portfolio realize a gain; if it is less,
the Portfolio realize a loss. The Portfolios must also be able to enter into
an offsetting transaction with respect to a particular Stock Index Futures
Contract at a particular time. If the Portfolios are not able to enter into
an offsetting transaction, the Portfolios will continue to be required to
maintain the margin deposits on the Stock Index Futures Contract.
The Portfolios may elect to close out some or all of their futures positions
at any time prior to their expiration. The purpose of making such a move
would be either to reduce equity exposure represented by long futures
positions or increase equity exposure represented by short futures positions.
The Portfolios may close their positions by taking opposite positions which
would operate to terminate the Portfolios' position in the Stock Index Futures
Contracts. Final determinations of variation margin would then be made,
additional cash would be required to be paid or released to the Portfolio, and
the Portfolio would realize a loss or a gain.
Stock Index Futures Contracts may be closed out only on the exchange or board
of trade where the contracts were initially traded. Although the Portfolios
intend to purchase or sell Stock Index Futures Contracts only on exchanges or
boards of trade where there appears to be an active market, there is no
assurance that a liquid market on an exchange or board of trade will exist for
any particular time. In such an event, it might not be possible to close a
Stock Index Futures Contract, and in the event of adverse price movements, the
Portfolio would continue to be required to make daily cash payments of
variation margin. However, in the event Stock Index Futures Contracts have
been used to hedge portfolio securities, the Portfolio would continue to hold
securities subject to the hedge until the Stock Index Futures Contracts could
be terminated. In such circumstances, an increase in the price of the
securities, if any, might partially or completely offset losses on the Stock
Index Futures Contract. However, as described below, there is no guarantee
that the price of the securities will, in fact, correlate with price movements
in the Futures Contract and thus provide an offset to losses on a Stock Index
Futures Contract.
There are several risks in connection with the use by the Portfolios of Stock
Index Futures Contracts as a hedging device. One risk arises because of the
imperfect correlation between movements in the prices of the Futures Contracts
and movements in the prices of securities which are the subject of the hedge.
The Advisor will, however, attempt to reduce this risk by entering into Stock
Index Futures Contracts on indices whose movements, in its judgment, will have
a significant correlation with movements in the prices of the Portfolio'
portfolio securities sought to be hedged.
Successful use of Stock Index Futures Contracts by the Portfolios for hedging
purposes is also subject to the Advisor's ability to correctly predict
movements in the direction of the market. It is possible that, when the
Portfolios have sold Futures to hedge their portfolios against a decline in
the market, the index or indices on which the Futures are written might
advance and the value of securities held in the Fund's portfolio might
decline. If this were to occur, the Portfolio would lose money on the
Futures and also would experience a decline in value in its portfolio
securities. However, while this might occur to a certain degree, the Advisor
believes that over time the value of the Fund's portfolio will tend to move in
the same direction as the securities underlying the Futures, which are
intended to correlate to the price movements of the portfolio securities
sought to be hedged. It is also possible that if the Portfolios were to
hedge against the possibility of a decline in the market (adversely affecting
stocks held in their portfolios) and stock prices instead increased, the
Portfolios would lose part or all of the benefit of increased value of those
stocks that it had hedged, because it would have offsetting losses in their
Futures positions. In addition, in such situations, if the Portfolios had
insufficient cash, they might have to sell securities to meet their daily
variation margin requirements. Such sales of securities might be, but would
not necessarily be, at increased prices (which would reflect the rising
market). The Portfolios might have to sell securities at a time when it would
be disadvantageous to do so.
In addition to the possibility that there might be an imperfect correlation,
or no correlation at all, between price movements in the Stock Index Futures
Contracts and the portion of the portfolio to be hedged, the price movements
in the Futures Contracts might not correlate perfectly with price movements in
the underlying stock index due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors might close Stock Index Futures Contracts through
offsetting transactions which could distort the normal relationship between
the index and futures markets. Second, the margin requirements in the
futures market are less onerous than margin requirements in the securities
markets, and as a result the futures market might attract more speculators
than the stock market does. Increased participation by speculators in the
futures market might also cause temporary price distortions. Due to the
possibility of price distortion in the futures market and also because of the
imperfect correlation between price movements in the stock index and movements
in the prices of Stock Index Futures Contracts, even a correct forecast of
general market trends by the Advisor might not result in a successful hedging
transaction over a very short time period.
Options on Futures give the purchaser the right, in return for the premium
paid, to assume a position in a Futures Contract (a long position if the
option is call and a short position if the option is a put), rather than to
purchase or sell the Stock Index Futures Contract, at a specified exercise
price at any time during the period of the option. Upon exercise of the
option, the delivery of the Futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's Futures margin account which represents the amount by
which the market price of the Stock Index Futures Contract, at exercise,
exceeds (in the case of a call) or is less than (in the case of a put) the
exercise price of the option on the Futures Contract. Alternatively,
settlement may be made totally in cash.
The Portfolios may seek to close out an option position on an index by writing
or buying an offsetting option covering the same index or contract and having
the same exercise price and expiration date. The ability to establish and
close out positions on such options will be subject to the development and
maintenance of a liquid secondary market. It is not certain that this market
will develop. Reasons for the absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading in
certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
Portfolio of options, or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or particular class or Portfolio
of options), in which event the secondary market on that exchange would cease
to exist, although outstanding options on the exchange that had been issued by
a clearing corporation as a result of trades on that exchange would continue
to be exercisable in accordance with their terms. There is no assurance that
higher than anticipated trading activity or other unforeseen events might not,
at times, render certain of the facilities of any of the clearing corporations
inadequate, and thereby result in the institution by an exchange of special
procedures which may interfere with timely execution of customers' orders.
FUTURES ON SECURITIES
A futures contract on a security is a binding contractual commitment which, if
held to maturity, will result in an obligation to make or accept delivery,
during a particular month, of securities having a standardized face value and
rate of return. By purchasing futures on securities, the Fund will legally
obligate itself to accept delivery of the underlying security and pay the
agreed price; by selling futures on securities, it will legally obligate
itself to make delivery of the security against payment of the agreed price.
Open futures positions on securities are valued at the most recent settlement
price, unless such price does not reflect the fair value of the contract, in
which case the positions will be valued by or under the direction of the Board
of Directors.
Positions taken in the futures markets are not normally held to maturity, but
are instead liquidated through offsetting transactions which may result in a
profit or a loss. While the Portfolio's futures contracts on securities will
usually be liquidated in this manner, it may instead make or take delivery of
the underlying securities whenever it appears economically advantageous for
the Fund to do so. A clearing corporation associated with the exchange on
which futures on securities or currency are traded guarantees that, if still
open, the sale or purchase will be performed on the settlement date.
FOREIGN CURRENCY TRANSACTIONS
In order to protect against a possible loss on investments resulting from a
decline in a particular foreign currency against the U.S. dollar or another
foreign currency, each Portfolio is authorized to enter into forward foreign
currency exchange contracts. In addition, each Portfolio is authorized to
conduct spot (i.e., cash basis) currency transactions or to use currency
futures contracts, options on such futures contracts, and options on foreign
currencies in order to protect against uncertainty in the future levels of
currency exchange rates.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Forward foreign currency exchange contracts involve an obligation to purchase
or sell a specified currency at a future date at a price set at the time of
the contract. Forward currency contracts do not eliminate fluctuations in the
values of portfolio securities but rather allow a Portfolio to establish a
rate of exchange for a future point in time. A Portfolio may enter into
forward foreign currency exchange contracts when deemed advisable by the
Advisor under only two circumstances.
First, when entering into a contract for the purchase or sale of a security in
a foreign currency, a Portfolio may enter into a forward foreign currency
exchange contract for the amount of the purchase or sale price to protect
against variations, between the date the security is purchased or sold and the
date on which payment is made or received, in the value of the foreign
currency relative to the U.S. dollar or other foreign currency. This hedging
technique is known as transaction hedging.
Second, when the Advisor anticipates that a particular foreign currency may
decline substantially relative to the U.S. dollar or other leading currencies,
in order to reduce risk, a Portfolio may enter into a forward contract to
sell, for a fixed amount, the amount of foreign currency approximating the
value of some or all of its portfolio securities denominated in such foreign
currency. This hedging technique is known as position hedging. With respect
to any such forward foreign currency contract, it will not generally be
possible to match precisely the amount covered by that contract and the value
of the securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is
entered into and the date it matures. In addition, while forward contracts
may offer protection from losses resulting from declines in the value of a
particular foreign currency, they also limit potential gains which might
result from increases in the value of such currency. A Portfolio will also
incur costs in connection with forward foreign currency exchange contracts and
conversions of foreign currencies and U.S. dollars.
A separate account of each Portfolio consisting of cash or liquid securities
equal to the amount of that Portfolio's assets that would be required to
consummate forward contracts entered into under the second circumstance, as
set forth above, will be established with the Portfolio' custodian. For the
purpose of determining the adequacy of the securities in the account, the
deposited securities will be valued at market or fair value. If the market
or fair value of such securities declines, additional cash or securities will
be placed in the account daily so that the value of the account will equal the
amount of such commitments by such Portfolios.
CURRENCY FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Each Portfolio is authorized to purchase and sell currency futures contracts
and options thereon. Currency futures contracts involve entering into
contracts for the purchase or sale for future delivery of foreign currencies.
A "sale" of a currency futures contract means the acquisition of a contractual
obligation to deliver the foreign currencies called for by the contract at a
specified price on a specified date. A "purchase" of a futures contract means
the acquisition of a contractual obligation to acquire the foreign currencies
called for by the contract at a specified price on a specified date. These
investment techniques will be used only to hedge against anticipated future
changes in exchange rates which otherwise might either adversely affect the
value of portfolio securities held by a Portfolio or adversely affect the
prices of securities which a Portfolio intends to purchase at a later date.
Such instruments will be used only in connection with permitted transaction or
position hedging and not for speculative purposes. The sum of the amount of
initial margin deposits on any such futures (plus deposits on any other
futures contracts and premiums paid in connection with any options or futures
contracts) that do not constitute "bona fide hedging" under CFTC rules would
exceed 5% of the liquidation value of a Portfolio's total assets after taking
into account unrealized profits and losses on such contracts. In addition,
the value of all futures contracts sold will not exceed the total market value
of a Fund's portfolio. The Fund will comply with guidelines established by
the Securities and Exchange Commission with respect to covering of obligations
under future contracts and will set aside cash and/or liquid high grade
securities in a segregated account with its custodian in the amount
prescribed.
Although the Portfolios intend to purchase or sell futures contracts only if
there is an active market for such contracts, no assurance can be given that a
liquid market will exist for any particular contract at any particular time.
In addition, due to the risk of an imperfect correlation between securities in
the Fund's portfolio that are the subject of a hedging transaction and the
futures contract used as a hedging device, it is possible that the hedge will
not be fully effective in that, for example, losses on the portfolio
securities may be in excess of gains on the futures contract or losses on the
futures contract may be in excess of the gains on the portfolio securities
that were the subject of the hedge.
Brokerage fees are incurred when a futures contract is bought or sold and
margin deposits must be maintained. Although futures contracts typically
require actual delivery of and payment for financial instruments or
currencies, the contracts are usually closed out before the delivery date.
Closing out an open futures contract sale or purchase is effected by entering
into an offsetting futures contract purchase or sale, respectively, for the
same aggregate amount of the identical type of financial instrument or
currency and the same delivery date. If the offsetting purchase price is less
than the original sale price, a Portfolio realizes a gain; if it is more, a
Portfolio realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, a Portfolio realizes a gain; if it is less,
a Portfolio realizes a loss. The transaction costs must also be included in
these calculations. There can be no assurance, however, that a Portfolio will
be able to enter into an offsetting transaction with respect to a particular
contract at a particular time. If a Portfolio is not able to enter into an
offsetting transaction, a Portfolio will continue to be required to maintain
the margin deposits on the contract. The ability to establish and close out
positions on such options will be subject to the development and maintenance
of a liquid secondary market. It is not certain that this market will
develop. Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading in certain
options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
Portfolio of options, or underlying securities;(iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or particular class or Portfolio
of options), in which event the secondary market on that exchange would cease
to exist, although outstanding options on the exchange that had been issued by
a clearing corporation as a result of trades on that exchange would continue
to be exercisable in accordance with their terms. There is no assurance that
higher than anticipated trading activity or other unforeseen events might not,
at times, render certain of the facilities of any of the clearing corporations
inadequate, and thereby result in the institution by an exchange of special
procedures which may interfere with timely execution of customers' orders.
An option on a futures contract gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract (a long position
if the option is a call and a short position if the option is a put) at a
specified price at any time during the option exercise period. The writer of
the option is required upon exercise to assume an offsetting futures position
(a short position if the option is a call and a long position if the option is
a put). Upon exercise of the option, the assumption of offsetting futures
positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin
account which represents the amount by which the market price of the futures
contract, at exercise, exceeds, in the case of a call, or is less than, in the
case of a put, the exercise price of the option on the futures contract.
Call options sold by the Portfolios with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying the futures contract, or the placement
of cash or liquid securities in a segregated account to fulfill the
obligations undertaken by the futures contract. A put option sold by the
Portfolio is covered when, among other things, cash or liquid securities are
placed in a segregated account to fulfill the obligations undertaken.
FOREIGN CURRENCY OPTIONS
Each Portfolio is authorized to purchase and write put and call options on
foreign currencies. A call option is a short-term contract pursuant to which
the purchaser, in return for a premium, has the right to buy the currency
underlying the option at a specified price at any time during the term of the
option. The writer of the call option, who receives the premium, has the
obligation, upon exercise of the option during the option period, to deliver
the underlying currency against payment of the exercise price. A put option
is a similar contract that gives its purchaser, in return for a premium, the
right to sell the underlying currency at a specified price during the term of
the option. The writer of the put option, who receives the premium, has the
obligation, upon exercise of the option during the option period, to buy the
underlying currency at the exercise price. The Portfolio will use currency
options only in order to hedge against the risk of fluctuations of foreign
exchange rates related to securities held in its portfolio or which it intends
to purchase and to earn a high return by receiving a premium for writing
options. Options on foreign currencies are affected by all of those factors
which influence foreign exchange rates and investments generally.
OBLIGATIONS OF SUPRANATIONAL AGENCIES
Currently, the Bond Portfolio and the Equity Portfolio may purchase securities
issued or guaranteed by supranational agencies including, but not limited to,
the following: Asian Development Bank, Inter-American Development Bank,
International Bank for Reconstruction and Development (World Bank), African
Development Bank, European Coal and Steel Community, European Economic
Community, European Investment Bank and the Nordic Investment Bank. For
concentration purposes, supranational entities are considered an industry.
U.S. GOVERNMENT SECURITIES
Each Portfolio may invest in debt obligations of varying maturities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. Direct
obligations of the U.S. Treasury which are backed by the full faith and credit
of the U.S. Government, include a variety of Treasury securities that differ
only in their interest rates, maturities and dates of issuance. U.S.
Government agencies or instrumentalities which issue or guarantee securities
include, but are not limited to, the Federal Housing Administration, Federal
National Mortgage Association, Farmers Home Administration, Export-Import Bank
of the United States, Small Business Administration, Governmental National
Mortgage Association, General Services Administration, Central Bank for
Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks, Maritime
Administration, the Tennessee Valley Authority, District of Columbia Armory
Board and the Student Loan Marketing Association.
Obligations of U.S. Government agencies and instrumentalities may or may not
be supported by the full faith and credit of the United States. Some are
backed by the right of the issuer to borrow from the U.S. Treasury; others by
discretionary authority of the U.S. Government to purchase the agencies'
obligations; while still others, such as the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. In the
case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitment. A Portfolio will
invest in securities of such instrumentality only when the Advisor is
satisfied that the credit risk with respect to any instrumentality is minimal.
MORTGAGE-BACKED SECURITIES
Each Portfolio may invest in mortgage-backed securities issued or guaranteed
by U.S. Government agencies or instrumentalities such as the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), and the Federal Home Loan Mortgage Corporation
("FHLMC"). Obligations of GNMA are backed by the full faith and credit of the
United States Government. Obligations of FNMA and FHLMC are not backed by the
full faith and credit of the United States Government but are considered to be
of high quality since they are considered to be instrumentalities of the
United States. The market value and interest yield of these mortgage-backed
securities can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in
a pool of federally insured mortgage loans with a maximum maturity of 30
years. However, due to scheduled and unscheduled principal payments on the
underlying loans, these securities have a shorter average maturity and,
therefore, less principal volatility than a comparable 30-year bond. Since
prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular mortgage-backed security. The scheduled
monthly interest and principal payments relating to mortgages in the pool will
be "passed through" to investors. Government mortgage-backed securities
differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest.
In addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages. Although these securities may offer
yields higher than those available from other types of U.S. Government
securities, mortgage-backed securities may be less effective than other types
of securities as a means of "locking in" attractive long-term rates because of
the prepayment feature. For instance, when interest rates decline, the value
of these securities likely will not rise as much as comparable debt securities
due to the prepayment feature. In addition, these prepayments can cause the
price of a mortgage-backed security originally purchased at a premium to
decline in price to its par value, which may result in a loss.
Each Portfolio may also invest in collateralized mortgage obligations ("CMOs")
and real estate mortgage investment conduits ("REMICs"), which are rated in
one of the two top categories by Standard & Poor's Corporation ("S&P") or
Moody's Investors Service ("Moody's"). CMOs are securities collateralized by
mortgages, mortgage pass-throughs, mortgage pay-through bonds (bonds
representing an interest in a pool of mortgages where the cash flow generated
from the mortgage collateral pool is dedicated to bond repayment), and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuer's general Portfolios and additionally secured by a first lien on a pool
of single family detached properties). Many CMOs are issued with a number of
classes or Portfolio which have different maturities and are retired in
sequence. Investors purchasing such CMOs in the shortest maturities receive
or are credited with their pro rata portion of the scheduled payments of
interest and principal on the underlying mortgages plus all unscheduled
prepayments of principal up to a predetermined portion of the total CMO
obligation. Until that portion of such CMO obligation is repaid, investors in
the longer maturities receive interest only. Accordingly, the CMOs in the
longer maturity Portfolio are less likely than other mortgage pass-throughs to
be prepaid prior to their stated maturity. Although some of mortgages
underlying CMOs may be supported by various types of insurance, and some CMOs
may be backed by GNMA certificates of other mortgage pass-throughs issued or
guaranteed by U.S. Government agencies or instrumentalities, the CMOs
themselves are not generally guaranteed.
REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured
by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
CONVERTIBLE SECURITIES
Convertible Securities in which the Portfolios invest may be converted at
either a stated price or stated rate into underlying shares of common stock
thus enabling the investor to benefit from increases in the market price of
the common stock. Convertible securities provide higher yields than the
underlying equity, but generally offer lower yields than non-convertible
securities of similar quality. Like bonds, the value of convertible
securities fluctuates in relation to changes in interest rates and, in
addition, also fluctuates in relation to the underlying common stock.
WARRANTS
Warrants may be considered more speculative than certain other types of
investments because they (1) do not carry rights to dividends or voting rights
with respect to the securities which it entitles the holder to purchase, and
(2) do not represent any rights in the assets of the issuer.
INVESTMENT IN RESTRICTED SECURITIES
Each Portfolio may invest in "restricted securities" subject to the 15% of net
assets limitation regarding illiquid securities. Restricted securities are
securities which were originally sold in private placements and which have not
been registered under the Securities Act of 1933, as amended (the "1933 Act").
Such securities generally have been considered illiquid because they may be
resold only subject to statutory restrictions and delays or if registered
under the 1933 Act. The Securities and Exchange Commission ("SEC") adopted
Rule 144A to provide for a safe harbor exemption from the registration
requirements of the 1933 Act for resales of restricted securities to
"qualified institutional buyers". The result has been the development of a
more liquid and efficient institutional resale market for restricted
securities. Rule 144A securities may be liquid if properly determined by the
Board of Directors.
The expenses of registration of restricted securities will be negotiated at
the time the securities are purchased by a Portfolio. When registration is
required, a considerable period may elapse between a decision to sell the
securities and the time the sale would be permitted. Thus, a Portfolio may
not be able to obtain as favorable a price as that prevailing at the time of
the decision to sell. A Portfolio may also acquire through private
placements securities having contractual resale restrictions, which might
prevent the sale of such securities at a time when such a sale otherwise would
be desirable.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental and may not be changed
with respect to any Portfolio without the approval of a majority of the
outstanding voting securities of that Fund. Under the Investment Company Act
of 1940 and the rules thereunder, "majority of the outstanding voting
securities" of a Portfolio means the lesser of (1) 67% of the shares of that
Portfolio present at a meeting if the holders of more than 50% of the
outstanding shares of that Portfolio are present in person or by proxy, and
(2) more than 50% of the outstanding shares of that Fund. Any investment
restrictions which involve a maximum percentage of securities or assets shall
not be considered to be violated unless an excess over the percentage occurs
immediately after, and is caused by, an acquisition or encumbrance of
securities or assets of, or borrowings by or on behalf of, a Portfolio, as the
case may be.
The Fund may not, on behalf of a Portfolio:
1. Purchase securities on margin (but a Portfolio may obtain such
short-term credits as may be necessary for the clearance of transactions);
2. Make short sales of securities or maintain a short position, unless
at all times when a short position is open it owns an equal amount of such
securities or securities convertible into or exchangeable, without payment of
any further consideration, for securities of the same issue as, and equal in
amount to, the securities sold short (short sale "against-the-box"), and
unless not more than 25% of a Portfolio's net assets (taken at a current
value) are held as collateral for such sales at any one time;
3. Issue senior securities or pledge its assets, except that each
Portfolio invest in futures contracts and related options;
4. Buy or sell commodities or commodity contracts, provided that each
Portfolio may enter into all types of futures and forward contracts on
currency, securities, economic and other indices and may purchase and sell
options on such futures contracts, or buy or sell real estate or interests in
real estate, although it may purchase and sell securities which are secured by
real estate and securities of companies which invest or deal in real estate.
5. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under certain federal securities laws;
6. Make investments for the purpose of exercising control or management;
7. Participate on a joint or joint and several basis in any trading
account in securities;
8. Under the Investment Company Act of 1940 and the rules and
regulations thereunder, each Portfolio is prohibited from acquiring the
securities of other investment companies if, as a result of such acquisition,
such Portfolio owns more than 3% of the total voting stock of the company;
securities issued by any one investment company represent more than 5% of its
total assets; or securities (other than treasury stock) issued by all
investment companies represent more than 10% of the total assets of a
Portfolio. These investment companies typically incur fees that are separate
from those fees incurred directly by the Portfolio. A Portfolio's purchase of
such investment companies would indirectly bear a proportionate share of the
operating expenses of such investment companies, including advisory fees. The
Portfolios will not purchase or retain securities issued by open-end
investment companies (other than money market Portfolios for temporary
investment).
9. Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the common stocks of companies
which invest in or sponsor such programs;
10. Purchase foreign securities if as a result of the purchase of such
securities more than 25% of a Portfolio's assets ^ would be invested in
foreign securities provided that this restriction shall not apply to foreign
securities that are listed on a domestic securities exchange or represented by
American depository receipts that are traded either on a domestic securities
exchange or in the United States on the over-the-counter market.
11. The Portfolio's investment policies with respect to options and with
respect to stock and currency futures and options on either are subject to the
following fundamental limitations: (1) with respect to any Portfolio, the
aggregate value of the securities underlying calls or obligations underlying
puts determined as of the date options are sold shall not exceed 25% of the
assets of the Portfolio; (2) a Portfolio will not enter into any option
transaction if immediately thereafter, the aggregate premiums paid on all such
options which are held at any time would exceed 20% of the total net assets of
the Portfolio; (3) the aggregate margin deposits required on all futures or
options thereon held at any time by a Portfolio will not exceed 5% of the
total assets of the Portfolio; (4) the security underlying the put or call is
within the investment policies of each Portfolio and the option is issued by
the Options Clearing Corporations; and (5) the Portfolio may buy and sell puts
and calls on securities and options on financial futures if such options are
listed on a national securities or commodities exchange.
PORTFOLIO TURNOVER
An annual portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities (excluding
certain debt securities) for a year and dividing that amount by the monthly
average of the market value of such securities during the year. The Fund
expects that its turnover rate generally will be less than 100%. However,
turnover will in fact be determined by market conditions and opportunities,
and therefore it is impossible to estimate the turnover rate with confidence.
MANAGEMENT
The Directors and officers of the Fund are:
<TABLE>
<CAPTION>
Position Principal occupations
Name, address and age with Fund During past five years
- ------------------------ --------------------------- ------------------------------------------
<S> <C> <C>
B. Reuben Auspitz* President & Vice President, Manning & Napier
1100 Chase Square Director Fund, Inc., since 1984
Rochester, NY 14604 Executive Vice President, Manning &
DOB: 3/18/47 Napier Advisors, Inc.
Director, President and Treasurer,
Manning & Napier Advisory Advantage
Corporation
Director and President, Manning &
Napier Investor Services, Inc.
Director, Manning & Napier Leveraged
Investing Company, Inc., since 1994
Director, Chairman of the Board &
Treasurer, Exeter Fund Company,
since 1994
Martin Birmingham Director Trustee, The Freedom Forum,
Lincoln Tower, 16th since 1980
Floor Director, Manning & Napier Fund,
Rochester, NY 14604 Inc., since 1994
DOB: 10/30/21
Harris H. Rusitzky Director Director, Manning & Napier Fund,
One Grove Street Inc., since 1985
Pittsford, NY 14534 Director and member of the Executive
DOB: 1/9/35 Committee of Vari-Care, Inc. (chain
of nursing homes) from 1970-1993
President, The Greening Group, since 1994
Director and Corporate Executive,
Serve-Rite Corporation, from 1965-
1994
Peter L. Faber* Director Partner - Kaye, Scholer, Fierman,
1211 Avenue of the Hays & Handler (law firm)from 1984-
Americas 1985
New York, New York 10036 Director, Manning & Napier Fund,
DOB: 4/29/38 Inc., since 1987
Partner - McDermott, Will & Emery
(law firm) since October 1, 1995
Michael M. Magiera Vice President Investment Analyst, Manning & Napier
1100 Chase Square Advisors, Inc. from 1988-1994
Rochester, NY 14604 Manager Director, Fund Group,
DOB: 4/27/66 Manning & Napier Advisors, Inc.
since 1994
Barbara Lapple Corporate Secretary Compliance Officer, Manning & Napier
1100 Chase Square Advisors, Inc. since 1984
Rochester, NY 14604 Corporate Secretary & Compliance
DOB: 7/26/59 Officer, Manning & Napier Investor
Services, Inc., since 1990
Corporate Secretary, Manning &
Napier Fund, Inc., since 1990
Corporate Secretary, Manning &
Napier Leveraged Investing Company,
Inc., since 1994
Timothy P. Mullaney, CPA Treasurer & Chief Financial Principal, Marketing Opportunity
1100 Chase Square Officer Group (self-employed) since 1990
Rochester, NY 14604 Manning & Napier Advisors, Inc.
DOB: 1/29/68 since 1994
Manning & Napier Fund, Inc., since
1994
</TABLE>
* Interested Director of the Fund within the meaning of the Investment
Company Act of 1940 (the "1940 Act").
The only Committee of the Corporation is an Audit Committee whose members are
B. Reuben Auspitz and Harris H. Rusitzky.
Directors affiliated with the Advisor do not receive fees from the Fund. Mr.
Faber is deemed to be an interested person of the investment advisor because
his firm provides legal services to the Advisor. Each Director who is not
affiliated with the Advisor shall receive an annual fee of $5,000. Annual
fees will be calculated monthly and prorated. Each Director who is not
affiliated with the Advisor shall receive $500 per Board Meeting attended for
each active Series of the Fund, plus $500 for any Committee Meeting held on a
day on which a Board Meeting is not held.
THE ADVISOR
Manning & Napier Advisors, Inc. ("Advisor") acts as the Fund's investment
advisor. The Portfolio pays the Advisor for the services performed a fee as
set forth in the Prospectus. The Investment Advisory Agreement (the
"Agreement") between the Fund and the Advisor provides that in the event the
expenses of the Fund (including the fee of the Advisor but excluding:
(i)brokerage commissions; (ii) interest; (iii) taxes; and (iv) extraordinary
expenses except for those incurred by the Fund as a result of litigation in
connection with a suit involving a claim for recovery by the Fund, or as a
result of litigation involving a defense against a liability asserted against
the Fund, provided that, if the Advisor made the decision or took the action
which resulted in such claim the Advisor acted in good faith without gross
negligence or misconduct, and for any indemnification paid by the Fund to its
officers, directors and advisers in accordance with applicable state and
federal laws as a result of such litigation) for any fiscal year exceed the
limits set by applicable regulations of state securities commissions, the
Advisor will reduce its fee by the amount of such excess. Any such
reductions or refunds are accrued and paid in the same manner as the Advisor's
fee and are subject to readjustment during the year.
The Agreement states that the Advisor shall give the Fund the benefit of its
best judgment and effort in rendering services thereunder, but the Advisor
shall not be liable for any loss sustained by reason of the purchase, sale or
retention of any security, whether or not such purchase, sale or retention
shall have been based upon its own investigation and research or upon
investigation and research made by any other individual, firm or corporation,
if such purchase, sale or retention shall have been made and such other
individual, firm or corporation shall have been selected in good faith. The
Agreement also states that nothing contained therein shall, however, be
construed to protect the Advisor against any liability to the Fund or its
security holders by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under the Agreement.
In the Agreement, the Fund agrees that the words "Manning & Napier" in its
name are derived from the name of the Advisor and is the property of the
Advisor for copyright and all other purposes and that therefore such word may
be freely used by the Advisor as to other investment companies or other
investment products; the Fund further agrees that, in the event that the
Advisor ceases to be the Fund's investment advisor for any reason, the Fund
will (unless the Advisor otherwise consents in writing) promptly take all
necessary steps to change its name to a name not including the words "Manning
& Napier." The Agreement also provides that it is agreed that the Advisor
shall have no responsibility or liability for the accuracy or completeness of
the Fund's Registration Statement under the 1940 Act or the Securities Act of
1933 except for information supplied by the Advisor for inclusion therein; the
Fund agrees to indemnify the Advisor to the full extent permitted by the
Fund's Articles of Incorporation.
The Advisor is the Fund's Transfer Agent. The Advisor is separately
compensated for acting as Transfer Agent to the fund.
Manning &
Napier Investor Services, Inc., acts as Distributor of the Fund shares and is
located at the same address as the Advisor and the Fund. There will be no
additional costs for this service.
CUSTODIAN AND INDEPENDENT ACCOUNTANT
The custodian is Boston Safe Deposit and Fund Company, One Cabot Road, 3rd
Floor, Medford, MA 02155-5159. Boston Safe Deposit and Trust Company may, at
its own expense, employ a sub-custodian on behalf of the foreign securities
held by the Fund, provided that Boston Safe Deposit and Trust Company shall
remain liable for all its duties as custodian. The Fund's independent
accountants are Coopers & Lybrand, L.L.P., One Post Office Square, Boston, MA
02109.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Agreement states that in connection with its duties to arrange for the
purchase and the sale of securities held in the portfolio of the Fund by
placing purchase and sale orders for the Fund, the Advisor shall select such
broker-dealers ("brokers") as shall, in the Advisor's judgment, implement the
policy of the Fund to achieve "best execution", i.e., prompt and efficient
execution at the most favorable securities price. In making such selection,
the Advisor is authorized in the Agreement to consider the reliability,
integrity and financial condition of the broker, the size and difficulty in
executing the order and the value of the expected contribution of the broker
to the investment performance of the Fund on a continuing basis. The Advisor
is also authorized to consider whether a broker provides brokerage and/or
research services to the Fund and/or other accounts of the Advisor. The Fund
understands that a substantial amount of its portfolio transactions may be
transacted with primary market makers acting as principal on a net basis, with
no brokerage commissions being paid by the Fund. Such principal transactions
may, however, result in a profit to market makers. In certain instances the
Advisor may make purchases of underwritten issues for the Fund at prices which
include underwriting fees. The Agreement states that the commissions paid to
such brokers may be higher than another broker would have charged if a good
faith determination is made by the Advisor that the commission is reasonable
in relation to the services provided, viewed in terms of either that
particular transaction or the Advisor's overall responsibilities as to the
accounts as to which it exercises investment discretion and that the Advisor
shall use its judgment in determining that the amount of commissions paid are
reasonable in relation to the value of brokerage and research services
provided. The Advisor is further authorized to allocate the orders placed by
it on behalf of the Fund to such brokers or dealers who also provide research
or statistical material, or other services, to the Fund, the Advisor, or any
affiliate of either. Such allocation shall be in such amounts and proportions
as the Advisor shall determine, and the Advisor shall report on such
allocations regularly to the Fund, indicating the broker-dealers to whom such
allocations have been made and the basis therefore.
The research services discussed above may be in written form or through direct
contact with individuals and may include information as to particular
companies and securities as well as market economic or institutional areas and
information assisting the Fund in the valuation of its investments. The
research which the Advisor receives for the Fund's brokerage commissions,
whether or not useful to the Fund may be useful to the Advisor in managing the
accounts of the Advisor's other advisory clients. Similarly, the research
received for the commissions of such accounts may be useful to the Fund.
NET ASSET VALUE
The net asset value is determined on each day that the New York Stock Exchange
is open for trading. In determining the net asset value of the Fund's shares,
common stocks that are listed on national securities exchanges or the NASDAQ
National Market System are valued at the last sale price on the exchange on
which each stock is principally traded as of the close of the New York Stock
Exchange (which is currently 4:00 p.m., Eastern time), or, in the absence of
recorded sales, at the closing bid prices on such exchanges or on such System.
Unlisted securities that are not included in such National Market System are
valued at the quoted bid prices in the over-the-counter market. All
securities initially expressed in foreign currencies will be converted to U.S.
dollars at the exchange rates quoted at the close of the New York markets.
Short securities positions are accounted for at value, using the same method
of valuation described above. Securities and other assets for which market
quotations are not readily available are valued by appraisal at their fair
value as determined in good faith by the Advisor under procedures established
by and under the general supervision and responsibility of the Fund's Board of
Directors. The Advisor may use a pricing service to obtain the value of the
Fund's portfolio securities where the prices provided by such pricing service
are believed to reflect the fair market value of such securities. The
methods used by the pricing service and the valuations so established will be
reviewed by the Advisor under the general supervision of the Fund's Board of
Directors. Several pricing services are available, one or more of which may
be used as approved by the Fund's Board of Directors.
REDEMPTION OF SHARES
PAYMENT FOR SHARES REDEEMED
Payment for shares presented for redemption may be delayed more than three
days only for (1) any period (A) during which the New York Stock Exchange is
closed other than customary week-end and holiday closings or (B) during which
trading on the New York Stock Exchange is restricted; (2) for any period
during which an emergency exists as a result of which (A) disposal by the Fund
of securities owned by it is not reasonably practicable or (B) it is not
reasonably practicable for the Fund to determine the value of its net assets;
or (3) for such other periods as the Securities and Exchange Commission may by
order permit.
REDEMPTION IN KIND
If the Board of Directors determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of the Fund, in lieu of
cash in conformity with applicable rules of the Securities and Exchange
Commission. The Fund, however, has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Portfolio is obligated to redeem shares
solely in cash up to the lesser of $250,000 or one per cent of the net asset
value of the Fund during any 90 day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, the Fund will have the
option of redeeming the excess in cash or in kind. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage costs in converting the
assets into cash.
TAXES
Each Portfolio of the Fund intends to qualify each year and elect to be taxed
as a regulated investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Portfolio will not be subject to federal
income tax on any of its net investment income or net realized capital gains
that are distributed to the separate account of the Life Companies.
In order to qualify as a "regulated investment company," a Portfolio must,
among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities, or foreign currencies, and
other income (including gains from options, futures, or forward contracts)
derived with respect to its business of investing in such stock, securities,
or currencies; (b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (including stock and securities) held less
than three months; (c) diversify its holdings so that, at the close of each
quarter of its taxable year, (i) at least 50% of the value of its total assets
consists of cash, cash items, U.S. Government Securities, and other securities
limited generally with respect to any one issuer to not more than 5% of the
total assets of the Portfolio and not more than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its
assets is invested in the securities of any issuer (other than U.S. Government
Securities). In order to receive the favorable tax treatment accorded
regulated investment companies and their shareholders, moreover, a Portfolio
must in general distribute at least 90% of its interest, dividends, net
short-term capital gain, and certain other income each year.
With respect to investment income and gains received by a Portfolio from
sources outside the United States, such income and gains may be subject to
foreign taxes which are withheld at the source. The effective rate of foreign
taxes in which a Portfolio will be subject depends on the specific countries
in which its assets will be invested and the extent of the assets invested in
each such country and therefore cannot be determined in advance.
A Portfolio's ability to use options, futures, and forward contracts and other
hedging techniques, and to engage in certain other transactions, may be
limited by tax considerations. A Portfolio's transactions in
foreign-currency-denominated debt instruments and its hedging activities will
likely produce a difference between its book income and its taxable income.
This difference may cause a portion of the Portfolio's distributions of book
income to constitute returns of capital for tax purposes or require the
Portfolio to make distributions exceeding book income in order to permit the
Fund to continue to qualify, and be taxed under Subchapter M of the Code, as a
regulated investment company.
Under federal income tax law, a portion of the difference between the purchase
price of zero-coupon securities in which a Portfolio has invested and their
face value ("original issue discount") is considered to be income to the
Portfolio each year, even though the Portfolio will not receive cash interest
payments from these securities. This original issue discount (imputed income)
will comprise a part of the net investment income of the Portfolio which must
be distributed to shareholders in order to maintain the qualification of the
Portfolio as a regulated investment company and to avoid federal income tax at
the level of the Fund.
It is the policy of each of the Portfolios to meet the requirements of the
Code to qualify as a regulated investment company that is taxed pursuant to
Subchapter M of the Code. One of these requirements is that less than 30% of a
Portfolio's gross income must be derived from gains from sale or other
disposition of securities held for less than three months (with special rules
applying to so-called designated hedges). Accordingly, a Portfolio will be
restricted in selling securities held or considered under Code rules to have
been held less than three months, and in engaging in hedging or other
activities (including entering into options, futures, or short-sale
transactions) which may cause the Fund's holding period in certain of its
assets to be less than three months.
This discussion of the federal income tax and state tax treatment of the Fund
and its shareholders is based on the law as of the date of this Statement of
Additional Information. It does not describe in any respect the tax treatment
or offsets of any insurance or other product pursuant to which investments in
the Fund may be made.
SPECIAL CONSIDERATIONS
The Portfolios serve as the underlying investments for Variable Contracts
issued through separate accounts of the Life Companies which may or may not be
affiliated.
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of segregated asset accounts that Portfolio contracts such
as the Variable Contracts, which are in addition to the diversification
requirements imposed on the Portfolios by the 1940 Act and Subchapter M.
Failure to satisfy those standards would result in imposition of Federal
income tax on a Variable Contract owner with respect to earnings allocable to
the Variable Contract prior to the receipt of payments thereunder. Section
817(h)(2) provides that a segregated asset account that Portfolios contracts
such as the Variable Contracts is treated as meeting the diversification
standards if, as of the close of each quarter, the assets in the account meet
the diversification requirements for a regulated investment company and no
more than 55% of those assets consist of cash, cash items, U.S. Government
securities and securities of other regulated investment companies. There is an
exception for securities issued by the Treasury Department in connection with
variable life insurance policies.
The Treasury Regulations amplify the diversification standards set forth in
Section 817(h) and provide an alternative to the provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if (i) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (ii) no more than 70% of such
value is represented by any two investments; (iii) no more than 80% of such
value is represented by any three investments; and (iv) no more than 90% of
such value is represented by any four investments. For purposes of these
Regulations all securities of the same issuer are treated as a single
investment, and each United States government agency or instrumentality shall
be treated as a separate issuer.
Each Portfolio will be managed in such a manner a to comply with these
diversification requirements. It is possible that, in order to comply with
these requirements, less desirable investment decisions may be made which
would affect the investment performance of a Fund.
DIVIDENDS AND DISTRIBUTIONS
Each of the Portfolios will declare and distribute dividends from net
investment income, if any, and will distribute its net realized capital gains,
if any, at least annually. Both dividends and capital gain distributions will
be made in shares of such Portfolios unless an election is made on behalf of a
separate account to receive dividends and capital gain distributions in cash.
PERFORMANCE INFORMATION
(a) A Portfolio's yield is presented for a specified 30-day period (the "base
period"). Yield is based on the amount determined by (i) calculating the
aggregate of dividends and interest earned by the Portfolio during the base
period less expenses accrued for that period, and (ii) dividing that amount by
the product of (A) the average daily number of shares of the Portfolio
outstanding during the base period and entitled to receive dividends and (B)
the net asset value per share of the Portfolio on the last day of the base
period. The result is annualized on a compounding basis to determine the
Portfolio's yield. For this calculation, interest earned on debt obligations
held by a Portfolio is generally calculated using the yield to maturity (or
first expected call date) of such obligations based on their market values
(or, in the case of receivables-backed securities such as Ginnie Maes, based
on cost). Dividends on equity securities are accrued daily at their stated
dividend rates.
Total return of a Portfolio for periods longer than one year is determined by
calculating the actual dollar amount of investment return on a $1,000
investment in the Portfolio made at the beginning of each period, then
calculating the average annual compounded rate of return which would produce
the same investment return on the $1,000 investment over the same period.
Total return for a period of one year or less is equal to the actual
investment return on a $1,000 investment in the Portfolio during that period.
Total return calculations assume that all Portfolio distributions are
reinvested at net asset value on their respective reinvestment dates.
From time to time, Advisor may reduce its compensation or assume expenses in
respect of the operations of a Portfolio in order to reduce the Portfolio's
expenses. Any such waiver or assumption would increase a Portfolio's yield
and total return during the period of the waiver or assumption.
SHAREHOLDER COMMUNICATIONS
Owners of Variable Contracts issued by the Life Companies for which shares of
one or more Portfolios are the investment vehicle are entitled to receive from
the Life Companies unaudited semi-annual financial statements and audited
year-end financial statements certified by the Fund's independent public
accountants. Each report will show the investments owned by the Portfolios
and the market value thereof and will provide other information about the Fund
and its operations.
ORGANIZATION AND CAPITALIZATION
The Fund is an open-end investment company incorporated under the laws of the
State of Maryland on November 1, 1995.
Shares entitle their holders to one vote per share, with fractional shares
voting proportionally; however, a separate vote will be taken by each
Portfolio on matters affecting an individual Fund. For example, a change in a
fundamental investment policy for the Manning & Napier Growth Portfolio would
be voted upon only by shareholders of that Fund. Additionally, approval of
the Investment Advisory Agreement is a matter to be determined separately by
each Fund. Approval by the shareholders of one Portfolio is effective as to
that Fund. Shares have noncumulative voting rights.
Additional Portfolios may be created from time to time with different
investment objectives or for use as funding vehicles for different variable
life insurance policies or variable annuity contracts. Any additional
Portfolios may be managed by investment advisers other than the current
Advisor. In addition, the Directors have the right, subject to any necessary
regulatory approvals, to create more than one class of shares in a Portfolio,
with the classes being subject to different charges and expenses and having
such other different rights as the Directors may prescribe and to terminate
any Portfolio of the Fund.
FINANCIAL STATEMENTS
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Not Applicable. Registrant has not yet commenced investment operations.
(B) EXHIBITS
(1) Articles of Incorporation. Filed Herewith.
(2) By-laws. Filed Herewith.
(3) Not Applicable
(4) Not Applicable
(5) Form of Investment Advisory Agreement.*
(6) Not Applicable
(7) Not Applicable
(8) Form of Custodian Agreement.*
(9) Form of Transfer Agent Agreement between the Registrant and
Manning & Napier Advisors, Inc.*
(10) Consent and Opinion of Counsel.*
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
(*To be filed by amendment.)
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
None
ITEM 27. INDEMNIFICATION
Reference is made to subparagraph (b) of paragraph (7) of Article SEVENTH of
Registrant's Articles of Incorporation, which reflects the positions taken in
Investment Company Act Release No. 11330. Insofar as indemnification for
liability arising under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a trustee, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND
SUB-ADVISERS
Manning & Napier Advisors, Inc. is the investment advisor of the Registrant.
For information as to the business, profession, vocation or employment of a
substantial nature of Manning & Napier Advisors, Inc., its directors and
officers, reference is made to Part B of this Registration Statement and to
Form ADV (File No. 801-10733) as filed under the Investment Advisers Act of
1940 by Manning & Napier Advisors, Inc.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Not Applicable
(b) Manning & Napier Investor Services, Inc. is the Distributor
of the Registrant's shares.
<TABLE>
<CAPTION>
Name & Principal Positions & Offices Positions & Offices
Business Address with Distributor with Registrant
- ------------------- -------------------- -------------------
<S> <C> <C>
B. Reuben Auspitz President & Director Director
1100 Chase Square
Rochester, NY 14604
Julie Raschella Director N/A
1100 Chase Square
Rochester, NY 14604
Beth A. Hendershot Treasurer N/A
1100 Chase Square
Rochester, NY 14604
Barbara A. Lapple Corporate Secretary Corporate Secretary
1100 Chase Square
Rochester, NY 14604
George Nobiliski Director N/A
1100 Chase Square
Rochester, NY 14604
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of Registrant except
for the records required by Rule 31a-1(b)(2)(a) and (b), which are in the
possession of the Custodian.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth in Parts A and B of this Registration Statement, the
Registrant is not a party to any management-related service contract.
ITEM 32. UNDERTAKINGS
Registrant undertakes to file a Post-Effective Amendment to this Registration
Statement, using financial statements which need not be certified, within four
to six months from the effective date of Registrant's 1933 Act Registration
Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rochester, and State of New York on the 30th day of
November, 1995.
<TABLE>
<CAPTION>
<S> <C>
MANNING & NAPIER INSURANCE FUND, INC.
By: /s/B. Reuben Auspitz
-------------------------------------
B. Reuben Auspitz, President
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/B. Reuben Auspitz Principal Executive Officer 12-01-95
- ----------------------- --------
B. Reuben Auspitz and Director
/s/Michael M. Magiera Officer 12-01-95
- ----------------------- --------
Michael M. Magiera
/s/Martin F. Birmingham Director 12-01-95
- ----------------------- --------
Martin F. Birmingham
/s/Harris H. Rusitzky Director 12-01-95
- ----------------------- --------
Harris H. Rusitzky
/s/Peter L. Faber Director 12-01-95
- ----------------------- --------
Peter L. Faber
/s/Timothy P. Mullaney Treasurer 12-01-95
- ----------------------- --------
Timothy P. Mullaney
</TABLE>
PAGE>
EXHIBITS
TO
FORM N-1A
FOR
MANNING & NAPIER INSURANCE FUND, INC.
<PAGE>
INDEX TO EXHIBITS
PAGE
(1) Articles of Incorporation
(2) By-laws
EXHIBIT 1
ARTICLES OF INCORPORATION
<PAGE>
ARTICLES OF INCORPORATION
OF
MANNING & NAPIER INSURANCE FUND, INC.
FIRST: THE UNDERSIGNED, B. Reuben Auspitz, whose address is 1100 Chase
Square, Rochester, New York 14604, being more than 18 years of age, does under
and by virtue of the general laws of the State of Maryland, act as
incorporator to form a corporation.
SECOND: the name of the corporation is MANNING & NAPIER INSURANCE FUND,
INC. (hereinafter called the "Corporation").
THIRD: The purpose or purposes for which the Corporation is formed are as
follows:
(1) To hold, invest and reinvest its funds, and in connection therewith,
to hold part or all of its funds in cash, and to purchase or otherwise
acquire, hold for investment or otherwise sell, assign, negotiate, transfer,
exchange or otherwise dispose of or turn to account or realize upon,
securities (which term "securities" shall for the purposes of these Articles
of Incorporation, without limitation the generality thereof, be deemed to
include any stocks, shares, bonds, debentures, notes, mortgages or other
obligations, and any options, certificates, receipts, warrants or other
instruments representing rights to receive, purchase, sell or subscribe for
the same, or evidencing or representing any other rights or interests therein,
or in any property or assets) created or issued by any issuer (which term
"issuer" shall for the purpose of these Articles of Incorporation, without
limitation of the generally thereof, be deemed to include any persons, firms,
associations, corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof), or commodities (which term
"commodities" shall for the purposes of these Articles of Incorporation,
without limitation of the generality thereof, be deemed to include any
tangible or intangible which is, or contracts relating to which are, traded on
any commodities exchange, and any contract, certificate, receipt or other
instruments representing rights to receive, purchase, sell or subscribe for
the same, or evidencing or representing any other rights or interests therein)
or put and call options relating to securities or commodities; and to exercise
as owner or holder of any securities, commodities or put and call options, all
rights, powers and privileges in respect thereof; and to do any and all acts
and things for the preserva-tion, protection, improvement and enhancement in
value of any or all such securities, commodities or options.
(2) To borrow money and pledge assets in connection with any of the
objects or purposes of the Corporation, and to issue notes or other
obligations evidencing such borrows, to the extent permitted by the 1940 Act
(which term, the "1940 Act," shall for the purposes of these Articles of
Incorporation mean the Investment Company Act of 1940, as from time to time
amended, and any rule, regulation or order thereunder) and by the
Corporation's fundamental investment policies under the 1940 Act.
(3) To issue and sell shares of its own capital stock in such amounts and
on such terms and conditions, or such purposes and for such amount or kind or
consideration (including, without limitation thereto, securities) now or
hereafter permitted by the laws of Maryland and by these Articles of
Incorporation, as its Board of Directors may determine.
4) To purchase or otherwise acquire, hold, dispose of, resell, transfer,
reissue or cancel (all without the vote of consent of the stockholders of the
Corporation) shares of its capital stock, in any manner and to the extent now
or hereafter permitted by the laws of Maryland and by these Articles of
Incorporation.
(5) To conduct its business in all its branches at one or more offices in
Maryland and elsewhere in any part of the world, without restriction or limit
as to extent.
(6) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates, or to the extent now or
hereafter remitted by the laws of Maryland, as a member of, or as the owner
or holder of any securities of any issuer, and in connection therewith to make
or enter into such deeds or contracts with any issuer and to do such acts and
things and to exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
(7) To do any and all such further acts and things and to exercise any
and all such further powers as may be necessary, incidental, relative,
conductive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise expressly
provided, be in no way limited or restricted by reference to, or inference
from the terms of any other clause of this or any other Article of these
Articles of Incorporation, and shall be regarded as independent, and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of
the Corporation now or hereafter conferred by the laws of the State of
Maryland, nor shall the expression of one thing be deemed to exclude another,
though it be of like nature, not expressed; provided, however, that the
Corporation shall not have power to carry on within the State of Maryland any
business whatsoever the carrying on of which would create a purpose that
would make it subject to a special provision under the laws of said State; nor
shall it carry on any business, or exercise any powers, in any other state,
territory, district or country except to the extent that the same may
lawfully be carried on or exercised under the laws thereof.
FOURTH: The address of the place at which the principal office of the
Corporation in the State of Maryland is located is c/o The Corporation Trust
Incorporated, 32 South Street, Baltimore, Maryland 21202. The name of the
resident agent of the Corporation is The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202.
FIFTH:
(l) The total number of shares of stock of all classes (which term, as
used herein, shall include a class designated as a "Series" as set forth
below) which the Corporation has authority to issue is 500,000,000 shares.
The number of the shares of stock of each class is such number, if any, of
shares of unissued stock as is classified or reclassified into such class by
the Corporation's Board of Directors pursuant to the authority contained in
Section 2-105 of the Maryland General Corporation Law (or any successor
provision). The par value of the shares of stock of each class is one cent
per share. The aggregate par value of all the shares of all classes is
$5,000,000. A description of each class, including any pre-ferences,
conversion or other rights, voting powers, restric-tions, limitations as to
dividends, qualifications and terms and conditions of redemptions is set forth
below. Unless and until the Corporation's Board of Directors classifies
unissued stock into one or more classes which are in addition to a single
outstanding class, or after the Board has reclassified issued stock of one or
more classes into a single class, all shares of stock of the Corporation shall
be of a single class designated as "Capital Stock." The Board of Directors of
the Corporation may classify unissued shares into one or more additional
classes which shall, together with the issued shares of stock of the
Corporation, have such designations as the Board shall determine (provided
that such designation shall include the word "Class"), and which shall be
treated for all purposes other than as to dividends as if all shares were
shares of one class. The dividends payable to the holders of each such class
shall, subject to any applicable rule, regulation or order of the Securities
and Exchange Commission or other applicable law or regulation, be determined
by the Board and need not be individually declared but may be declared and
paid in accordance with a formula adopted by the Board. The Board of
Directors of the Corporation may in the alternative classify unissued shares
into one or more additional classes, which shall, together with the issued
shares of stock of the Corporation, have such designations as the Board may
determine (provided that such designation shall include the word "Series"),
and shall, subject to any applicable rule, regulation or order of the
Securities and Exchange Commission or other applicable law or regulation, have
the following characteristics.
(a) All consideration received by the Corporation for the issue or sale
of shares of stock of each such class, together with all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to the class of shares or stock with respect to which such
assets, payments, or funds were received by the Corporation for all purposes,
subject only to the rights of creditors, and shall be so handled upon the
books of account of the Corporation. Such assets, income, earnings, profits
and proceeds thereof, including any proceeds derived from the sale, exchange
or liquidation thereof, any asset derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" such class.
(b) Dividends or distributions on shares of any such class of stock,
whether payable in stock or cash, shall be paid only out of earnings, surplus
or other assets belonging to such class and need not be individually declared
but may be declared and paid in accordance with a formula adopted by the Board
of Directors of the Corporation.
(c) In the event of the liquidation or dissolution of the Corporation,
shareholders of each such class shall be entitled to receive, as a class, out
of the assets of the Corporation available for distribution to shareholders,
but other than general assets not belonging to any particular class of stock,
the assets belonging to such class; and the assets so distributable to the
shareholders of any such class shall be distributed among such shareholders in
proportion to the number of shares of such class held by them and recorded on
the books of the Corporation. In the event that there are any general assets
not belonging to any particular class of stock and available for distribution,
such distribution shall be made to the holders of stock of all classes in
proportion to the asset value of the respective classes.
(d) The assets belonging to any such class of stock shall be charged
with the liabilities in respect to such class and shall also be charged with
its share of the general liabilities of the Corporation, in proportion to the
asset value of the respective classes. The determination of the Board of
Directors shall be conclusive as to the amount of liabilities, including
accrued expenses and reserves, and as to the allocation of the same as to
given class, and as to whether the same, or general assets of the Corporation,
are allocated to one or more classes. The liabilities so allocated to a class
are herein referred to as "liabilities belonging to" such class.
(e) At all meetings of stockholders each stockholder of each share of
stock of each such class of the Corporation shall be entitled to one vote for
each share of stock irrespective of the class standing in his name on the
books of the Corporation, except that where a vote of the holders of the
shares of stock of any class, or of more than one class, voting by class, is
required by the 1940 Act and/or Maryland law as to any proposal, only the
holders of such class or classes, voting by class, shall be entitled to vote
upon such proposal and the holders of any other class or classes shall not be
entitled to vote thereon. Any fractional share, if any such fractional shares
are outstanding, shall carry proportionately all the rights of a whole share,
including the right to vote and the right to receive dividends.
(f) The provisions of paragraph (2) of this Article FIFTH relating to
voting shall apply when the Corporation has only one class of shares
outstanding or when the Corporation has more than one class of shares
outstanding but which differ only as to their dividend rights.
(g) When the Corporation has more than one class of shares outstanding
having separate assets and liabilities: (i) the redemption rights provided to
the holders of the Corporation's shares shall be deemed to apply only to the
assets belonging to the class of stock in question; and (ii) the net asset
value per share computation as provided for in Article SEVENTH shall be
applied as if each such class of shares were the Corporation as referred to in
such computation, but with its assets limited to the assets belonging to such
class and its liabilities limited to the liabilities belonging to such class.
(2) At all meetings of stockholders each stockholder of the Corporation
shall be entitled to one vote for each share of stock standing in his name on
the books of the Corporation. Any fractional share, if any such fractional
shares are outstanding, shall carry proportionately all the rights of a whole
share, including the right to vote and the right to receive dividends. (3)
Each holder of the capital stock (which term as used in the remainder or these
Articles of Incorporation shall be deemed to refer to stock of any class or
series) of the Corporation, upon proper written request (including signature
guarantees, if required at the Board of Directors) to the Corporation, or
other proper non-written request if so determined by the Board of Directors,
accompanied, when stock certificates representing such shares are outstanding,
by surrender of the appropriate stock certificate or certificates in proper
form for transfer, or any such other form as the Board of Directors may
provide, shall be entitled to require the Corporation to redeem all or any
part of the capital stock standing in the name of such holder on the books of
the Corporation, at the net asset value of such shares. The method of
computing such net asset value, the time as of which such net asset value
shall be computed and the time within the Corporation shall make payment
therefore shall be determined as hereinafter provided in Article SEVENTH of
these Articles of Incorporation. Notwithstanding the foregoing, the right of
the holders of the capital stock shall be suspended when such suspension is
required under the 1940 Act and may be suspended when such suspension is
permitted under the 1940 Act.
(4) All shares of the capital stock of the Corporation now or hereafter
authorized shall be subject to redemption and redeemable, in the sense used in
the Maryland General Corporation Law, at the redemption price for any such
shares, determined in the manner set out in these Articles of Incorporation.
The number of the authorized shares of the stock of any class of the
Corporation shall not be reduced by the number of shares of such class
redeemed or purchased by it; shares redeemed or purchased shall be retired
automatically and shall have the status of authorized but unissued stock.
(5) Notwithstanding any provision of Maryland law requiring any action to
be taken or authorized by the affirmative vote of the holders of a majority or
other designated proportion of the shares, or of any class or series of
shares, or to be otherwise taken or authorized by a vote of the stockholders
of the Corporation, such action shall be effective and valid if taken or
authorized by the affirmative vote of the holders of a majority of the total
number of shares (or a majority of the total number of shares of such class or
series) outstanding and entitled to vote thereon pursuant to the provisions of
these Articles of Incorporation.
(6) No holder of capital stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock of
the Corporation which it may issue or sell (whether out of the number of
shares authorized by these Articles of Incorporation, or out of any shares of
the stock of the Corporation acquired by it after the issue thereof, or
otherwise) other than such right, if any, as the Board of Directors, in its
discretion, may determine.
(7) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of these Articles of Incorporation.
SIXTH: The number of Directors of the Corporation shall be four, and the
names or those who shall act as such until the first annual meeting or until
their successors are duly chosen and qualified are as follows:
B. Reuben Auspitz
Martin Birmingham
Peter L. Faber
Harris H. Rusitzky.
However, the By-Laws of the Corporation may fix the number of Directors
at a number greater or less than that named in these Articles of Incorporation
and may authorize the Board of Directors, by the vote of a majority of the
entire Board of Directors, to increase or decrease the number of Directors
fixed by these Articles of Incorporation or by the By-Laws within a limit
specified in the By-Laws, provided that in no case shall the number of
Directors be less than the minimum number required by the laws of Maryland,
and to fill the vacancies created by any such increase in the number of
Directors. Unless otherwise provided by the By-Laws of the Corporation, the
Directors of the Corporation need not be stockholders therein.
SEVENTH: The following provisions are hereby adopted for the purpose of
defining and regulating the powers of the Corporation and the Directors and
stockholders.
(1) The By-Laws of the Corporation may divide the Directors of the
Corporation into classes and prescribe the tenure of office of the several
classes, but no class shall be elected for a period shorter than that from the
time of the election following the division into classes until the next annual
meeting and thereafter for a period shorter than the interval between annual
meetings or for a period shorter than five years, and the term of office of
at least one class shall expire each year. Notwithstanding the foregoing, no
such division into classes shall be made prior to the first annual meeting of
stockholders of the Corporation.
(2) The holders of shares of the Corporation shall have only such rights
to inspect the records, documents, accounts and books of the Corporation as
are provided by Maryland law, subject to reasonable regulations of the Board
of Directors, not contrary to Maryland law, as to whether and to what extent,
and at which times and places, and under what conditions and regulations such
rights shall be exercised.
(3) Any officer elected or appointed by the Board of Directors or by any
committee of said Board or by the stock-holders or otherwise, may be removed
at any time with or without cause, in such lawful manner as may be provided in
the By-Laws of the Corporation. A Director may be removed only as permitted
by Maryland law.
(4) Unless the By-Laws provide otherwise, the Board of Directors of the
Corporation shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep the
books of the Corporation, outside of said State at such places as may from
time to time be designated by them.
(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the express provisions of the laws of
Maryland, of these Articles of Incorporation and of the By-Laws of the
Corporation.
(6) Shares of stock in other corporations shall be voted by the President
or a Vice-President, or such officer or officers of the Corporation or such
other person or persons as the Board of Directors shall designate for the
purpose, or by a proxy or proxies thereunto duly authorized by the Board of
Directors, except as otherwise ordered by vote of the holders of a majority of
the shares of the capital stock of the Corporation outstanding and entitled to
vote in respect thereto.
(7)(a) The Corporation may enter into a management or investment
advisory contract or underwriting contract and other contracts with, and may
otherwise do business with any manager or investment adviser for the
Corporation and/or principal underwriter of the Corporation or any subsidiary
or affiliate of any such manager or investment adviser and/or principal
underwriter and may permit any such firm or corporation to enter into any
contracts or other arrangements with any other firm or corporation relating to
the Corporation notwithstanding that the Board of Directors of the Corporation
may be composed in part of partners, directors, officers or employees of any
such firm or corporation, and officers of the Corporation may have been or may
be or become partners, directors, officers or employees of any such firm or
corporation; and in the absence of fraud the Corporation and any such firm or
corporation may deal freely with each other, and no such contract or
transaction between the Corporation and any such firm or corporation shall be
invalidated or in any way adversely affected thereby, nor shall any director
or officer of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any other persons for any loss incurred
by it or him solely because of the existence of any such contract or
transaction; provided that nothing herein shall protect any director or
officer of the Corporation against any liability to the Corporation or to its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
(b) (i) As used in this subparagraph (b) or this paragraph (7) of this
Article SEVENTH, the following terms shall have the meanings set forth below:
(A) The term "indemnitee" shall mean any present or former director,
officer or employee of the Corporation (which term as used in this paragraph
(7) shall include a "corporation" as defined in the applicable provisions of
the Maryland General Corporation Law as it may be amended from time to time or
in any successor statute concerning indemnification) and any person who while
a director, officer or employee of the Corporation is or was serving at the
request of the Corporation as a director, officer, partner, trustee or
employee or agent or another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan, any present or former investment
adviser of the Corporation and the heirs, executors, administra-tors and
successors of any of the foregoing; however, whenever conduct by an indemnitee
is referred to, the conduct shall be that of the original indemnitee rather
than that of the heir, executor, administrator or successor.
(B) The term "covered proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, to which an indemnitee is or was a party or is threatened to
be made a party by reason of the fact or facts under which he or it is an
indemnitee as defined above; provided, however, that "covered proceeding"
shall not mean any proceeding by or in the right of the Corporation.
(C) The term "covered derivative proceeding" shall mean any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, brought by or in the right of the
Corporation, to which an indemnitee is or was a party or its threatened to be
made a party by reason of the fact or facts under which he or it is an
indemnitee as defined above.
(D) The term "disabling conduct" shall mean willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office in question and, in the case of a director or former
director of the Corporation, such director's or former director's failure to
meet the standard of conduct set forth in applicable provisions of the
Maryland General Corporation Law as it may be amended from time to time, or in
any successor statutory provision, concerning such indemnification.
(E) The term "covered expenses" shall mean judgments, penalties, fines,
settlements and reasonable expenses (including attorneys' fees) actually
incurred by an indemnitee in connection with a covered proceeding or covered
derivative proceeding.
(F) The term "adjudication or liability" shall mean, as to any covered
proceeding or covered derivative proceeding and as to any indemnitee, an
adverse determination as to the indemnitee whether by judgment, order,
settlement, conviction or upon a plea of nolo contender or its equivalent.
(ii) The Corporation shall indemnify each indemnitee to the fullest
extent permitted under the laws of Maryland and under the 1940 Act, to the
extent such indemnification under the 1940 Act is consonant with the fullest
extent of indemnification permitted under the laws of Maryland and not
otherwise limited by these Articles of Incorporation, but shall not indemnify
any indemnitee for any covered expenses in any covered proceeding or covered
derivative proceeding if there has been an adjudication of liability against
such indemnitee expressly based on a finding of disabling conduct.
Furthermore, the Corporation shall not indemnify any director or former
director in contravention of the laws of Maryland, nor, specifically, in any
covered derivative proceeding in which such director or former director shall
have been adjudged to be liable to the Corporation.
(iii) Except as set forth in (ii) above or as otherwise provided in the
applicable provisions on indemnification contained in the Maryland General
Corporation Law or any successor statute, the Corporation shall indemnify any
indemnitee other than a director or former director in any covered proceeding
or covered derivative proceeding, whether or not there is an adjudication of
liability as to such indemnitee, and shall indemnify any indemnitee who is a
director or former director for covered expenses in any covered proceeding and
for only reasonable expenses in any covered derivative proceeding in which the
director shall not have been adjudged liable to the Corporation, if a
determination has been made that indemnification is permissible since the
indemnitee was not liable by reason of disabling conduct, such determination
to be made by (A) a final decision of the court or other body before which the
covered proceeding or covered derivative proceeding was brought, or (B) in the
absence cf such court decision, a reasonable determination, based on a review
of the facts, by either (I) the vote of a majority of a quorum of directors
who are neither "interested persons," as defined in the 1940 Act, of the
Corporation, nor parties to the covered proceeding or (II) any special
independent legal counsel in a written opinion, such legal counsel to be
selected in accordance with applicable provisions of the Maryland General
Corporation Law concerning indemnification of directors; or (C) by the vote of
the stockholders. In voting on such matter, or in giving such opinion, such
directors or counsel may consider that the dismissal of a covered proceeding
or covered derivative proceeding against an indemnitee for insufficiency of
evidence of any disabling conduct with which the indemnitee has been charged
would provide reasonable assurance that the indemnitee was not liable by
reason of disabling conduct. In the event such determination is made by legal
counsel, authorization of indemnification and determination as to
reasonableness of expenses shall be made as provided in the provision of the
Maryland General Corporation Law, or any successor statute, concerning
indemnification of directors.
(iv) Covered expenses (or reasonable expenses in connection with a
director's request in a covered derivative proceeding) incurred by an
indemnitee in connection with a proceeding or covered derivative proceeding
shall be advanced by the Corporation to such indemnitee prior to the final
disposition of such proceeding upon the request of such indemnitee for such
advance, upon receipt by the Corporation of (A) a written affirmation by the
indemnitee of his good faith belief that he has not engaged in disabling
conduct which would preclude indemnification and (B) the written undertaking
by or on behalf of the indemnitee to repay the advance unless it is ultimately
determined that the indemnitee is entitled to indemnification hereunder,
furthermore such expenses may be advanced only if one or more of the following
occurs: the indemnitee provides security for such undertaking; or the
Corporation is insured against losses arising out of any lawful advances; or
there shall have been a determination made in accordance with either review
process provided in (iii)(B)(I) or (II) above, based on a review of the
readily available facts (as opposed to a full trial-type inquiry) that there
is reason to believe that the indemnitee ultimately will be found entitled to
indemnification and that such facts should not preclude indemnification under
applicable provisions of the Maryland General Corporation Law or any successor
statute on indemnification.
(v) Nothing herein shall be deemed to affect the right of the Corporation
and/or any indemnitee to acquire and pay for any insurance covering any or all
indemnities to the extent permitted by the 1940 Act or to affect any other
indemnification rights to which any indemnitee may be entitled to the extent
permitted by the 1940 Act and the laws of Maryland.
(8) The computation of net asset value of each share of capital stock, as
referred to in these Articles of Incorporation, shall be determined as
provided in the 1940 Act, and, except as so provided, shall be computed in
accordance with the following rules:
(a) The net asset value of each share of stock of the Corporation
tendered to the Corporation for redemption shall be determined as of the close
of business on the New York Stock Exchange next succeeding the tender of such
share;
(b) The net asset value of each share of stock of the Corporation for the
purpose of the issue of such share shall be determined as of the close of
business on the New York Stock Exchange next succeeding the receipt of an
order to purchase such share;
(c) The net asset value of each share of stock of the Corporation, as of
the close of business on the New York Stock Exchange on any day, shall be the
quotient obtained by dividing the value, as at such close, of the net assets
of the Corporation (i.e., the value of the assets of the Corporation less the
liabilities of the Corporation exclusive of the par value of its shares and
surplus) by the total number of shares of stock of the Corporation outstanding
at such close. The assets and liabilities of the Corporation shall be
determined in accordance with generally accepted accounting principles;
provided, however, that in determining the liabilities, there shall be
included such reserves for taxes or contingent liabilities as may be
authorized or approved by the Board of Directors, and provided further that in
connection with the accrual of any fee or refund payable to or by an
investment adviser of the Corporation, the amount of which accrual is not
definitely determinable as of any time at which the net asset value of each
share of the capital stock of the Corporation is being determined due to the
contingent nature of such fee or refund, the Board of Directors is authorized
to establish formulae from time to time for such accrual, on the basis of the
contingencies in question to the date of such determination, or on such other
basis as the Board of Directors may establish;
(d) Capital stock to be issued shall be deemed to be outstanding as of
the time of the determination of the net asset per share applicable to such
issuance and the net price thereof shall be deemed to be an asset of the
Corporation;
(e) Capital stock to be redeemed by the Corporation shall be deemed to be
outstanding until the time of the determination of the net asset value
applicable to such redemption and thereupon and until paid the redemption vice
thereof shall be deemed to be a liability of the Corporation;
(f) Capital stock voluntarily purchased or contracted to be purchased by
the Corporation pursuant to the provisions of paragraph 8(h) of this Article
SEVENTH shall be deemed to be outstanding until the later of (i) the time of
the making of such purchase or contract to purchase or (ii) the time as of
which the purchase price is determined; and thereupon and until paid, the
purchase price thereof shall be deemed to be a liability of the Corporation;
(g) The net asset value of each share of the capital stock of the
Corporation, as of any time other than the close of business on the New York
Stock Exchange on any day, may be determined by applying to the net asset
value as of the close of business on that Exchange on the preceding business
day, computed as provided in paragraph 8(c) of this Article SEVENTH, such
adjustments as are authorized by or pursuant to the direction of the Board of
Directors and designed reasonably to reflect any material changes in the
market value of securities and other assets held and any other material
changes in the assets or liabilities of the Corporation and in the number of
its outstanding shares which shall have taken place since the close of
business on such preceding business day;
(h) In addition to the foregoing, the Board of Directors is empowered, in
its absolute discretion, to establish other bases or times, or both, for
determining the net asset value of each share of capital stock of the
Corporation in accordance with the 1940 Act and to authorize the voluntary
purchase by the Corporation, either directly or through an agent, of shares of
capital stock of the Corporation upon such terms and conditions and for such
consideration as the Board of Directors shall deem advisable in accordance
with the 1940 Act;
(i) Except as otherwise permitted by the 1940 Act, payment of the net
asset value of capital stock of the Corporation properly surrendered to it for
redemption shall be made by the Corporation within seven days after tender of
such stock to the Corporation for such purpose plus any period of time during
which the right of the holders of the capital stock of the Corporation to
require the Corporation to redeem such capital stock has been suspended. Any
such payment may be made in portfolio securities of the Corporation and/or in
cash, as the Board of Directors shall deem advisable, and no shareholder shall
have a right, other than as determined by the Board of Directors, to have his
shares redeemed in kind;
(j) The Board of Directors is empowered to cause the redemption of the
shares held in any account if the aggregate net asset value of such shares
(taken at cost or value, as determined by the Board) is less than $25,000, or
such lesser amount as the Board may fix, upon such notice to the shareholders
in question, with such permission to increase the investment in question and
upon such other terms and conditions as may be fixed by the Board of Directors
in accordance with the 1940 Act;
(k) In the event that any person advances the organizational expenses of
the Corporation, such advances shall become an obligation of the Corporation,
subject to such terms and conditions as may be fixed by, and on a date fixed
by, or determined in accordance with criteria fixed by the Board of Directors,
to be amortized over a period or periods to be fixed by the Board;
(l) Whenever any action is taken under these Articles of Incorporation
under any authorization to take action which is permitted by the 1940 Act,
such action shall be deemed to have been properly taken if such action is in
accordance with the construction of the 1940 Act then in effect as expressed
in "no action" letters of the staff of the Securities and Exchange Commission
or any release, rule, regulation or order under the 1940 Act or any decision
of a court of competent jurisdiction notwithstanding that any of the foregoing
shall later be found to be invalid or otherwise reversed or modified by any of
the foregoing;
(m) Each prospectus of the Corporation (which term "prospectus" as used
herein shall include any related statement of additional information) which is
in effect from time to time relating to its shares under the Securities Act of
1933 shall be considered as part of the minutes of the proceedings of the
Board of Directors of the Corporation and as reflective of action required or
permitted to be taken by such Board under these Articles of Incorporation or
by the By-Laws of the Corporation, whether or not copies of such prospectus
are included in the minute book(s) of the Corporation; provided, however, that
nothing herein contained shall affect the liability of any Director under the
Securities Act of 1933 and/or the 1940 Act.
(n) Whenever under these Articles of Incorporation, the Board of
Directors of the Corporation is permitted or required to place a value on
assets cf the Corporation, such action may be delegated by the Board, and/or
determined in accordance with a formula determined by the Board, to the extent
permitted by the 1940 Act.
EIGHTH: The Corporation agrees that the words "Manning & Napier" included
in the name of the Corporation shall be pursuant to a royalty-free
non-exclusive license from Manning & Napier Advisors, Inc., its successors and
assigns incidental to and as part of an advisory relationship between the
Corporation and Manning & Napier Advisors, Inc. The license may be terminated
by Manning & Napier Advisors, Inc. in the event such investment advisory
relationship should cease, and thereupon the Corpora-tion, the holders of its
capital stock and its officer and directors shall promptly take whatever
action may be necessary to change the Corporation's name so as to eliminate
references to the words "Manning & Napier". The Corporation further agrees
that it has no objection to the use of the words "Manning & Napier" by any
other entity authorized by Manning & Napier, Inc. or any successor.
NINTH: From time to time, any of the provisions of the Articles of
Incorporation may be amended, altered or repealed (including any amendment
which changes the terms of any of the outstanding stock by classification,
reclassification or otherwise), upon the vote of the holders of a majority of
the shares of capital stock of the Corporation at the time outstanding and
entitled to vote, and other provisions which under the statutes of the State
of Maryland at the time in force may be lawfully contained in articles of
incorporation, may added to inserted upon such a vote and all rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are granted subject to the provision of this Article NINTH.
The term "these Articles of Incorporation" as used herein and in the
By-Laws or the Corporation shall be deemed mean these Articles or
Incorporation as from time to time amended and restated.
IN WITNESS WHEREOF, the undersigned incorporator who executed the
foregoing Articles of Incorporation hereby acknow-ledges the same to be his
act and further acknowledges that to the best of his knowledge, information
and belief the matters and facts set forth therein are true in all material
respects under the penalties of perjury.
Dated the 1st day of November, 1995.
/s/B. Reuben Auspitz
B. Reuben Auspitz
STATE OF NEW YORK )
) SS.:
COUNTY OF MONROE )
This is to certify that on this 1st day of November, 1995, before me, the
subscriber, a Notary Public of the State of New York, personally appeared B.
Reuben Auspitz, and he acknowledged the foregoing Articles of Incorporation to
be his act.
Witness my hand and Notarial Seal the day and year above written.
/s/Brenda F. Oathout
Brenda F. Oathout
Notary Public
[Seal]
Notary Public State of New York
Qualified in Livingston County
Commission Expires: 6/30/97
EXHIBIT 2
BY - LAWS
<PAGE>
MANNING & NAPIER INSURANCE FUND, INC.
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders shall
be held at the principal office of the Corporation or at any such place within
or without the State of Maryland as may from time to time be designated by the
Board of Directors and stated in the notice of meeting.
Section 2. Annual Meeting. An annual meeting of the stockholders of
the Corporation shall not be required to be held in any year in which
stockholders are not required to elect directors under the Investment Company
Act of 1940 (the "1940 Act") even if the Corporation is holding a meeting of
the stockholders for a purpose other than the election of directors. If the
Corporation is required by the 1940 Act to hold a meeting to elect directors,
the meeting shall be designated as the Annual Meeting of stockholders for that
year and shall be held within 120 days after the occurrence of an event
requiring the election of directors. The Board of Directors may, in its
discretion, hold a meeting to be designated as the Annual Meeting of
stockholders on a date within the thirty-one day period, March 16 through
April 15, in any year where an election of directors by stockholders is not
required under the 1940 Act. The date of an Annual Meetings: shall be set by
appropriate resolution of the Board of Directors, and stockholders shall vote
on the election of directors and transact any other business as may be
properly brought before the Annual Meeting.
Section 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of the stockholders for any purpose or purposes may be
called by the President or by the Chairman of the Board of Directors, if any,
or by the Board of Directors, and shall be called by the Secretary upon
receipt of the request in writing signed by stockholders holding not less than
one quarter in amount of the entire capital stock issued and outstanding and
entitled to vote thereat. Such request shall state the purpose or purposes of
the proposed meeting.
Section 4. Notice of Meetings of Stockholders. Written or printed
notice of every meeting of stockholders, stating the time and place thereof
(and the general nature of the business proposed to be transacted at any
special or extraordinary meeting), shall be given to each stockholder entitled
to vote thereat not less than the minimum nor more than the maximum number of
days permitted under the laws of Maryland, by leaving the same with him or at
his residence or usual place of business or by mailing it, postage prepaid,
and addressed to him at his address as it appears upon the books of the
Corporation.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the
meeting, either before or after the holding thereof, waives such notice.
Section 5. Record Dates. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, to exercise any
rights in respect of any stock or for the purpose of any other lawful action,
the Board of Directors may fix in advance a record date which shall not be
less than the minimum nor more than the maximum number of days prior to the
scheduled date of such meeting or prior to such action, as the case may be,
permitted by the laws of Maryland. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting, unless the Board of Directors fixes a new
record date for the adjourned meeting.
Section 6. Quorum, Adjournment of Meetings. The presence in person or
by proxy of the holders of the record of one-third of the shares of the stock
of the Corporation issued and outstanding and entitled to vote thereat, shall
constitute a quorum at all meetings of the stockholders. If at any meeting of
the stockholders there shall be less than a quorum present, the stockholders
present at such meeting may, without further notice, adjourn the same from
time to time until a quorum shall attend, but no business shall be transacted
at any such adjourned meeting except such as might have been lawfully
transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. At all meetings of stockholders,
every stockholder of record entitled to vote thereat shall be entitled to vote
at such meeting either in person or by proxy appointed by instrument in
writing subscribed by such stockholder or his duly authorized attorney. No
proxy which is dated more than eleven months before the meeting at which it is
offered shall be accepted, unless such proxy shall, on its face, name a longer
period for which it is to remain in force.
All elections shall be had and all questions decided by majority of the
votes cast at a duly constituted meeting, except as otherwise provided in the
Articles of Incorporation or in these By-Laws or by specific statutory
provision superseding the restrictions and limitations contained in the
Articles of Incorporation or in these By-Laws.
At any election of Directors, the Board of Directors prior thereto may,
or, if they have not so acted, the chairman of the meeting may, and upon the
request of the holders of ten percent of the stock entitled to vote at such
election shall, appoint two inspectors of election who shall first subscribe
an oath or affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their ability,
and shall after the election make a certificate of the result of the vote
taken. No candidate for the office of Director shall be appointed such
Inspector.
The chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote shall be taken upon the request of the
holders of ten percent of the stock entitled to vote on such election matter.
Section 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board of Directors,
or if a Chairman shall not have been elected or be present, by the President,
or if he shall not be present, by a Vice-President, or if none of them is
present, by a chairman to be elected at the meeting. The Secretary of the
Corporation, if present, shall act as secretary of such meetings, or if he is
not present, an Assistant Secretary shall so act; if neither the Secretary
nor an Assistant Secretary is present, then the chairman of the meeting shall
appoint a secretary.
Section 9. Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of, and all ballots shall be received and canvassed by, the secretary of the
meeting, who shall decide all questions touching the qualifications of
voters, the validity of the proxies, and the acceptance or rejection of votes,
unless inspectors of election shall have been appointed as provided in these
By-Laws, in which event such inspectors of election shall decide all such
questions.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Number of Tenure of Office. The business and affairs of
the Corporation shall be conducted and managed by a Board of Directors
consisting of that number of Directors specified by the Articles of
Incorporation as originally filed, which number may be increased or decreased
as provided in Section 3 of this Article. Each Director shall hold office
until the annual meeting of stockholders of the Corporation next succeeding
his election or until his successor is duly elected and qualifies. Directors
need not be stockholders.
Section 2. Vacancies. Subject to the provisions of the Investment
Company Act of 1940 or any rule, regulation or order thereunder (collectively
referred to herein as the "1940 Act"), any vacancy in the Board of Directors
occurring otherwise than by reason of any increase in the number of Directors
authorized for the Corporation shall be filled in accordance with the
applicable laws of Maryland.
Section 3. Increase or Decrease in Number of Directors. By the vote
of a majority of the entire Board, the Board of Directors may increase the
number of Directors to a number not exceeding fifteen, and may elect Directors
to fill the vacancies created by any such increase in the number of Directors,
to hold office until the next annual meeting of the stockholders or until
their successors are duly elected and qualify. By a vote of a majority of the
entire Board, the Board of Directors likewise may decrease the number of
Directors to a number not less than three, but the tenure of office of any
Director shall not be affected by any such decrease made by the Board. In the
event that after proxy material has been printed or otherwise reproduced for a
meeting of stockholders at which Directors are to be elected, any one or more
nominees for Director nominated by management of the Corporation dies or
becomes incapacitated and thereby unable to serve in such office, the
authorized number of Directors shall be reduced automatically by the number of
such deceased or incapacitated nominees, and such deceased or incapacitated
nominee's name shall be stricken automatically from the names of those
nominated, unless the Board of Directors prior to the meeting shall determine
otherwise.
Section 4. Place of Meeting. The Directors may hold their meetings,
have one or more offices, and keep the books of the Corporation outside the
State of Maryland, at any office or offices of the Corporation or at any other
place as they may from time to
time by resolution determine, or, in the case of meetings, as they may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be held from time to time upon call of the President or the
Chairman of the Board of Directors, if any, or of a majority of the Directors,
by oral, telegraphic or written notice duly served on, sent or mailed to each
Director not less than one day before each such meeting. No notice need be
given to any Director who attends in person or to any Director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Such notice or waiver of notice need not
state the purpose or purposes of such meeting.
Section 7. Quorum. One-third of the Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two Directors. If at any meeting of the Board
there shall be less than a quorum present (in person or by open telephone
line, to the extent permitted by the 1940 Act), a majority of those present
may adjourn the meeting from time to time until a quorum shall have been
obtained. The act of the majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may otherwise specifically provided by statute, by the Articles of
Incorporation or by these By-Laws.
Section 8. Executive Committee. By the affirmative vote of a majority
of the entire Board, the Board of Directors may elect from the Directors an
Executive Committee to consist of such number of Directors as the Board may
from time to time determine. The Board of Directors by such affirmative vote
shall have power at any time to change the members of such Committee and may
fill vacancies in the Committee by election from the Directors. When the
Board of Directors is not in session, the Executive Committee shall have and
may exercise any or all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation (including the power
to authorize the seal of the Corporation to be affixed to all papers which may
require it) except as provided by law. The Executive Committee may fix its
own rules of procedure and may meet, when and as provided by such rules or by
resolution of the Board of Directors, but in every case the presence of a
majority shall be necessary to constitute a quorum. In the absence of any
member of the Executive Committee the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint a member of the Board of
Directors to act in the place of such absent member.
Section 9. Other Committees. By the affirmative vote of a majority of
the entire Board, the Board of Directors may appoint other committees which
shall in each case consist of such number of members (not less than two) and
shall have and may exercise such powers as the Board may determine in the
resolution appointing them. A majority of all members of any such committee
may determine its action and fix the time and place of its meetings, unless
the Board of Directors shall otherwise provide. The Board of Directors shall
have power at any time to change the members and powers of such committee, to
fill vacancies, and to discharge any such committee.
Section 10. Informal Action by and Telephone Meetings of Directors and
Committees. Any action required or permitted to be taken at any meeting of
the Board of Directors or any committee thereof may be taken, except as
otherwise required by the 1940 Act, if a written consent to such action is
signed by all members of the Board, or of such committee, as the case may be,
and filed with the minutes of the proceedings of the Board or Committee.
Subject to the 1940 Act, members of the Board of Directors or a committee
thereof may participate in a meeting by means of a conference telephone or
similar communications equipment; such participation shall, except as
otherwise required by the 1940 Act, have the same effect as presence in
person.
Section 11. Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as may from
time to time be voted by the Board of Directors.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors. These may include a
Chairman of the Board of Directors, who shall be a Director, and shall include
a President, one or more Vice-Presidents (the number thereof to be determined
by the Board of Directors), a Secretary and a Treasurer. The Board of
Directors or the Executive Committee may also in their discretion appoint
Assistant Secretaries, Assistant Treasurers and other officers, agents and
employees, each of whom shall hold office at the pleasure of the Board or
Executive Committee, or until his earlier resignation, removal or other
termination of employment and shall have such authority and perform such
duties as the Board or Executive Committee may determine. The Board or
Directors may fill any vacancy which may occur in any office. Any two
offices, except those of President and vice-President, may be held by the same
person, but no officer shall execute, acknowledge or verify any instrument in
more than one capacity, if such instrument is required by law or these By-Laws
to be executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall
be one year and until their respective successors are chosen and qualified;
however, any officer may be removed from office at any time with or without
cause by the vote of a majority of the entire Board of Directors.
Section 3. Powers and Duties. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices,
as well as such powers and duties as may from time to time be conferred by the
Board of Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
Section 1. Certificate of Shares. Each stockholder of the Corporation
upon request shall be entitled to a certificate or certificates evidencing his
interest in the Corporation, in such form as the Board of Directors may from
time to time prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person
or by his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of shares of the
same class, duly endorsed or accompanied by proper instruments of assignment
and transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require; in the case of shares not
represented by certificates, the same or similar requirements may be imposed
by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the name and address of the stockholders and the number of shares
held by them respectively, shall be kept at the principal offices of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
the transfer agent of the corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may determine the conditions upon which a new certificate of stock
of the Corporation of any class may be issued in place of a certificate which
is alleged to have been lost, stolen or destroyed; and may, in their
discretion, require the owner of such certificate or his legal representative
to give bond, with sufficient surety to the Corporation and the transfer
agent, if any, to indemnify it and such transfer agent against any and all
loss claims which may arise by reason of the issue of a new certificate in the
place of the one so lost, stolen or destroyed.
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed from time to time by
the Board of Directors.
ARTICLE VII
AMENDMENT OF BY-LAWS
The By-Laws of the Corporation may be altered, amended, added to or
repealed by the stockholders or by majority vote of the entire Board of
Directors, but any such alteration, amendment, addition or repeal of the
By-Laws by action of the Board of Directors may be altered or repealed by the
stockholders.
